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OraSure Rises to Highest Price Since 2005 on HIV Test

Updated on
OraSure Rises to Highest Price Since 2005 on Test’s Approval
OraSure Technologies Inc. Oral Fluid HIV-1 Test. Source: OraSure Technologies Inc via Bloomberg

OraSure Technologies Inc. rose to its highest value in almost seven years after the company won U.S. regulatory approval for the first at-home HIV test that lets people get results without using a doctor or laboratory.

OraSure gained 10 percent to $13.36 at the close in New York, following the Food and Drug Administration’s decision on July 3 to allow sales of the nonprescription saliva test. U.S. markets were closed yesterday for the Fourth of July. The shares reached $13.65, their highest price since Dec. 5, 2005.

About 250,000 people at risk of HIV aren’t tested, a number that the device may reduce, said advisers to the FDA who supported approval. Bethlehem, Pennsylvania-based OraSure may become a takeover target and its shares could rise to $17 in the next year, said Spencer Nam, an analyst with ThinkEquity LLC.

“I see these guys really cornering the market for a while,” said Nam, who is based in Boston and has a buy rating on OraSure shares. “There are a few companies that have HIV tests, but none that have oral fluid tests.”

It’s too soon to say what companies might be interested in buying OraSure, Nam said. Douglas Michels, OraSure president and chief executive officer, declined to comment on whether the company had been approached as an acquisition target.

“Our objective is to build a very large, healthy and profitable business and that’s our sole focus,” Michels said in a telephone interview.

Product Pricing

Johnson & Johnson, which tried and failed to market its own over-the-counter HIV test kit in the late 1990s, may be a potential buyer, said Scott Gleason, a Little Rock, Arkansas-based analyst with Stephens Inc. Gleason, who has an overweight rating on OraSure, said he expects the shares to climb to $15 within the next year.

“We do not comment on market speculation,” said Al Wasilewski, a spokesman for New Brunswick, New Jersey-based J&J.

The OraQuick In-Home HIV Test offers results within 20 to 40 minutes and can be sold without a prescription. If the price for the product is set at $40, sales may reach $20 million next year, said Caroline Corner, a senior analyst with McNicoll, Lewis & Vlak in New York, before the agency’s announcement.

The retail market potential will total more than $500 million, Michels said. While OraSure hasn’t disclosed how much it will charge for the test, Michels said the company anticipates a price of less than $60. Retailers typically receive as much as a 35 percent discount, he said.

The test should be available by October in 30,000 stores, such as Walgreen Co. locations, and online, Michels said.

Targeted Customers

About 1.2 million people in the U.S. have HIV, the virus that causes AIDS, and 20 percent of those people are unaware they are infected, according to the Centers for Disease Control and Prevention.

OraSure expects its product to be bought by people who don’t test themselves now and by people seeing a doctor for screenings who want to test more frequently, according to a transcript of a company conference call with analysts today.

OraSure also markets the only FDA-approved rapid test that detects HIV antibodies in oral fluid and provides results in a clinic or doctor’s office. Other at-home kits, such as Home Access Health Corp.’s Express HIV Test System, require users to send blood samples to a laboratory.

More than 16,000 people with AIDS were estimated to have died in 2008, the CDC said. About 50,000 new U.S. cases are reported a year, according to the CDC.

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