Good afternoon, everyone, and welcome to the OraSure Technologies 2020 First Quarter Financial Results Conference Call and Simultaneous Webcast. As a reminder, today's conference is being recorded. [Operator Instructions]. OraSure Technologies issued a press release at approximately 4:00 p.m. Eastern Time today regarding its 2020 first quarter financial results and certain other matters. The press release is available on our website at www.orasure.com, or by calling 610-882-1820. If you go to our website, the press release can be found by opening the Investor Relations page and clicking on the link for Press Releases. With us today are Dr. Stephen Tang, President and Chief Executive Officer; and Mr. Roberto Cuca, Chief Financial Officer. Dr. Tang and Mr. Cuca will begin with opening statements, which will be followed with a question-and-answer session. Before I turn the call over to Dr. Tang, you should note that this call may contain certain forward-looking statements, including statements with respect to revenues, expenses, profitability, earnings or loss per share and other financial performance, product development, performance, shipments and markets, business plans, regulatory filings and approvals, expectations and strategies. Actual results could be significantly different. Factors that could affect results are discussed more fully in the company's SEC filings, including its registration statement, its annual report on Form 10-K for the year ended December 31, 2019, its quarterly reports on Form 10-Q and its other SEC filings. Although forward-looking statements help to provide complete information about future prospects, listeners should keep in mind that forward-looking statements are based solely on information available to management as of today. The company undertakes no obligation to update any forward-looking statements to reflect events or circumstances after this call. With that, I would like to turn the call over to Dr. Stephen Tang.

Thank you, Jane. Good evening, everyone, and welcome to our call. Before we begin, on behalf of all of us at OraSure, I would like to express our sincere gratitude to the health care providers on the front lines, fighting the COVID-19 pandemic, especially today, which is National Nurses Day. We would also like to acknowledge all those workers who are performing jobs that keep our country and society functioning. Your dedication, bravery and importance are vital to us. I also must thank all of our employees. Their outstanding efforts play an important role in helping people around the world. Our employees are being put to the test every day, and they are responding with tenacity and excellence. I have never been prouder to lead our exceptional company. OraSure has a storied history of rising to the occasion of challenging health circumstances, having developed high-quality diagnostic tests for HIV, HCV and Ebola. As you can imagine, we are doing everything we can to bring our expertise with infectious disease diagnostics in sample collection to the battle against COVID-19. On the testing front, we are developing a pan-SARS coronavirus rapid antigen in-home self-test that uses oral fluid samples and an ELISA-based test for the detection of human anti-SARS-CoV-2 antibodies in oral fluid specimens. Our molecular solutions business unit is working with laboratories and researchers to demonstrate the effectiveness of our sample collection technologies for coronavirus testing. Later in the call, I will update you on our progress on these items. Turning to the first quarter. I'm pleased to report that OraSure is off to a good start in 2020 with solid financial results. The coronavirus pandemic is certainly affecting our business and I'll discuss that in a minute. But it's important to note that any negative impact from COVID-19 in Q1…

Thanks, Steve, and good evening, everyone, again. Our first quarter net revenues increased 5% to $31.6 million from the $30.1 million reported in the first quarter of 2019. Our net product and services revenues increased to $30.9 million, growing 9% compared to the prior year period. Notably, the first quarter of 2019 included cryosurgical revenue of $2.6 million, which did not recur in 2020 since we sold this line of business in August of 2019. Excluding these sales dollars from Q1 2019 revenues, and the contribution to Diversigen, which we acquired in the fourth quarter of 2019, would result in an aggregate product and services revenue increase of 13% in the first quarter of 2020. As Steve mentioned, international HIV sales increased 74% to $6.9 million from $4 million in the first quarter of 2019 due to higher sales of our HIV Self-Test into Africa. Domestic HIV sales decreased 2% to $4.2 million from $4.3 million in 2019 due to COVID-19 stay-at-home orders and the resulting deferral or shutdown of public health testing activities. This was offset by the launch of our In-Home HIV test into a new retail channel and the increased use of this OTC product in public health settings in reaction to COVID 19. Domestic HCV sales decreased 18% in the first quarter of 2020 to $1.5 million from $1.8 million in the prior year period, also largely due to the cessation of testing programs as a result of COVID-19 as well as the redirection of funding away from the HCV testing to COVID testing. International HCV sales in the first quarter of 2020 decreased 25% to $1.1 million from $1.5 million in the same period of 2019, primarily due to lower sales into Asia. Our total molecular revenues, including other revenues, increased 16% to $13.8 million…

Thank you, Roberto. Turning now to infectious disease. Our global HIV business continued to deliver strong performance with revenue increases -- increasing 34% in the first quarter compared to the first quarter of 2019. Major driver was a 74% increase in international HIV revenue. We shipped 2 million HIV Self-Tests to international markets in Q1. This business rose 98% compared to the year-ago quarter, as established countries continue to scale up testing and new countries begin to come online. Our domestic business was down 2% for the first quarter. COVID-19 pandemic is having its greatest impact on our domestic HIV business and global HCV business. During the first quarter, most domestic HIV testing programs were either reduced or put on hold, which lowered demand for our professional products. Because it started later in the quarter, our Q1 results were not significantly affected. In contrast, international HIV testing remains strong, and we experienced only relatively minor issues resulting from COVID-19 related to shipping product overseas, which we were able to manage effectively. If the COVID-19 pandemic begins to subside by the middle of the year, we believe there's a good chance it will have a little impact on our HIV Self-Test sales in future periods. However, we expect the downward revenue pressure from COVID-19 to continue in the domestic HIV business. How long this will last and the exact impact on revenues will depend on when the COVID-19 pandemic is resolved, and the stay-at-home and social distancing restrictions are lifted. Apart from COVID-19, we remain optimistic about HIV Self-Testing. Population Services International has indicated it will extend the Self-Testing Africa, or STAR, initiative to 7 new countries: India, Indonesia, Uganda, Nigeria, Tanzania, Cameroon and Mozambique, under Phase III of that initiative. We expect to receive orders under this phase to begin…

[Operator Instructions]. Your first question comes from the line of Jacob Johnson with Stephens.

First question. On the rapid test, I think there's -- just broadly around COVID testing, there's been a lot of questions about sensitivity and specificity of these tests in the market. Can you just give us any kind of color or insight into the sensitivity and specificity you are looking to achieve with this rapid test or would be adequate for a test like that?

Yes. Thanks for the question, Jacob. So we have a long history of having sensitivity and specificity across our product portfolio in the high-90s, so above 95% for both specificity and sensitivity. We have not locked in a design yet, so I can't share with you yet what our current specifications are. But I can tell you that for our Ebola rapid antigen test, we had a positive correlation of 97.1% and a negative correlation of 100% for use of that product with oral cadaver fluids in the U.S.

Got it. I appreciate the color, Steve. I guess the follow-up here. On the rapid test, I think you referred to it as an at-home test. But is this a test that could be like the multiple-use opportunity? Is this something that could be used in a manufacturing facility to ensure that employees don't have COVID? Just kind of what's the opportunity in terms of volume?

We think the opportunity is very large. The reason that we're targeting in-home self-tests for FDA clearance purposes is to make it as widely available as possible. But you're absolutely right, it could be equally purchased not just by individuals, but by anybody that needs to ensure the safety of, let's say, their workforce or a school, large gatherings of people, public health. And so buying segments can be viewed as extremely large, if you consider that it's likely that employers will need to test folks for whether they're infectious or not before returning to work. Certainly schools will want to know that as well and any large gathering sporting events and the like will have to test as well. So that's why we've looked for the broadest application possible, which would be clearance for a self-test.

Your next question comes from the line of Andrew Cooper with Raymond James.

I guess, first one, I know it's very early for this, but when we think about the -- some of these tests that you're working on, do you have a sense for relative to -- I guess, for pricing relative to -- a home test, obviously, bringing a little bit different value proposition than what most of the other folks are out there talking about developing on the market. How do you think about that relative to what you'll be bringing to the table from a pricing perspective? And then I have a follow-up after that.

Thanks, Andrew. We have probably a unique set of experiences in pricing because we're one of the few companies, the only one that has both professional and over-the-counter products sold in the U.S. as well as product design for global public health. So we have not yet come up with pricing for particular segments of the market or match it with volume. And that's something we will consider as we get closer to the product launch. But I think our experience with HIV across the world, in the U.S. and abroad will be very instructive.

Okay. That's helpful. And then I guess kind of secondly, when we think about manufacturing capacity, obviously, it's easy to get really carried away with where demand could go. But can you give us just maybe a reminder of kind of where you are on OraQuick capacity and how do you think about potentially ramping that should there be demand when tests launch?

Sure. Well, I shared that in the first quarter of 2020, we shipped 2 million HIV Self-Tests. In the fourth quarter of 2019, we shared that we shipped 2.9 million HIV Self-Tests. So you can tell, if you do the math there, that we are in the range just on the HIV Self-Tests of tens of millions of tests per year. Depending on the estimates that you're looking at for the amount of widespread testing that may be done to get back to normal, that number is significantly higher than tens of millions. By some reports, that's somewhere between 3 million and 30 million tests per day. And so that's why we're looking at scale up possibilities and massive scale up possibilities for that antigen test today. And by the way, the same goes for our molecular sample collection kits, which could be in high demand also as an alternative to the nasopharyngeal and the oropharyngeal swabs that are currently used. So we are looking at capacity increases across the corporation, in some cases massive increases in capacity.

Your next question comes from the line of David Westenberg with Guggenheim Securities.

Excuse my ignorance in sub-Saharan Africa, but what is it like on the ground there in terms of COVID and potential socially distancing measures? I'm just trying to think about maybe the next 6 months, year, what it could look like on the ground for self-testing? I mean or...

David, are you asking about HIV Self-Testing or COVID-19 self-testing?

No, I'm actually asking about COVID -- what the -- like what the public policy looks like there? I mean I'm guessing there's going to be country differences. But is there a general way that COVID-19 is being treated in sub-Saharan African countries, particularly ones where you have higher penetration of your HIV tests? I'm just trying to think about what kind of measures that would be in place that might stall HIV testing?

I see. So first of all, I think we shared that, certainly, in the first quarter, we -- our sales of HIV Self-Test into Africa and the rest of the world was as expected, and that led to a 74% increase year-over-year for the first quarter. We expect that to continue, provided that shipping isn't an issue. And so far, that seems to be working out. The interlink between HIV and COVID is rather interesting. So first of all, as a reminder, Africa is in the southern hemisphere, so they are now just entering the winter months. And so a traditional flu and cold season is just upon them right now. And that's, of course, where we started with COVID-19 in the northern hemisphere around the winter months. So we're watching that situation very carefully. Also important to remember is that immunocompromised patients are the most susceptible to COVID-19 and the most susceptible to morbidity from COVID-19. So it's absolutely imperative we continue HIV testing in Africa as COVID-19 begins to enter the seasonal cycle there. We also believe that ultimately, the sales channels that we have developed for HIV Self-Test in sub-Saharan Africa and elsewhere, that is primarily selling to ministries of health and individual countries, will be the same for selling COVID-19 self-tests should we get approved and launch in the fall and winter. So I think it ultimately ends up being a tailwind for us overall for both the HIV and the COVID -- potential COVID business.

Got it. And so when we think of OraSure, we think of this as HIV -- in the infectious disease business, you think of it as an HCV, HIV kind of business, and then you have these infectious diseases that come along the way like Ebola and Zika and now COVID. Now you've developed these tests fairly on track, these new tests. Thinking about this in like a 3- to 5-year time frame, I mean, do you see OraSure as a little bit more of a wide menu infectious disease company? Just I'm just kind of picking up on the key learnings that you're getting from this COVID testing and how you might apply this to maybe future activities in R&D? And that's all I have.

Thanks, David. I think we view ourselves as quick learners. And so I think having served the needs of the HIV pandemic globally, the Ebola pandemic, which thankfully was mainly isolated to certain parts of the world, it didn't spread the way the COVID-19 is spread today. Has been instructive. And obviously, we're learning a lot about serving the needs of COVID-19 today. And hopefully, as a global society, we'll be better prepared God forbid in the next pandemic. So I think the way to view us is a learning organization that is focused on meeting unmet needs for global public health. And the reason I think we've been able to respond so quickly for COVID-19 everywhere, from sample collection to development of this antigen test and development of this antibody test is that these are skills and capabilities we've developed over time, not just technically, but in terms of scale up, for sales and marketing and channel development to get product to customer effectively. So I think we've just been fortunate to be extremely well positioned based on all those experiences. And I think that as we look ahead, there'll be, I think, more opportunities to serve global public health and the needs of public health and other areas in the U.S. in particular.

I'm going to go ahead and root against another public health crisis, sorry?

We are with you 100%, but we're there if needed, certainly.

Your next question comes from the line of Brandon Couillard with Jefferies.

Roberto or Stephen, just [Technical Difficulty] outlook. I understand there are some parts of the business that you may be negatively impacted. But should we think about the headwinds from COVID-19 actually outweigh the potential tailwinds? Or is it actually a net positive theoretically in 2Q?

I think as we shared in our message today, Brandon, I think that we see a lot of strength there, tailwinds are more apparent than the headwinds. But I don't think you can count the headwinds, and that's why we were so explicit in the areas where we saw them in terms of HCV testing in the U.S., in terms of serving the academic market for molecular. But I think of that we're seeing a book of business that's related to COVID growing every week of this crisis. And so while we are withdrawing guidance for the full year, I think that we see -- we're very optimistic about our overall prospects.

And on the molecular business, was there any benefit in the first quarter from order timing that might have been favorable? And then secondly, the $3.6 million of revenue you -- booking in the second quarter from labs using the oral fluid collection to study COVID-19, is that just based on orders that you've received to date? Or could that number actually be much higher as the quarter continues to play out?

Yes. So [Technical Difficulty], but remember, most people were in stay-at-home or social distancing towards the middle end of March, which would put it towards the end of the quarter. So I don't think there was much that was forward [indiscernible] in the first quarter. And then related to the $3.6 million second quarter COVID-related sample collection, that's a current number. That's not a projection for the full quarter. That's what we have currently in play is what we know today. But as I said, that situation is changing nearly weekly. And it's triggered by things like the Biocerna EUA announcement earlier this week. And I think we're expecting to see couple of announcements like that coming up in the coming weeks.

That brings to the end of the Q&A session of today's call. I will now turn the call over to Dr. Tang for closing remarks.

Thank you, everyone, for participating on today's call and for your continued interest in OraSure. Have a good afternoon and evening, and please stay safe and be well.

This concludes today's conference. You may now disconnect.