Earnings Call Transcript - OSUR Q1 2020

Operator, Operator

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. 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.

Stephen Tang, CEO

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 healthcare 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 was largely offset by additional product uptake in response to the pandemic. As a result, the company's sales were in line with our own expectations from before the onset of the pandemic. Because our company is considered an essential business, we are permitted to continue operating in the various states and countries where our employees are located. A large number of our employees can fulfill their job functions remotely and are working from home in accordance with local stay-at-home requirements. A key group of employees who must be on-site are primarily manufacturing, warehouse, laboratory, and R&D personnel. We have implemented enhanced hygiene and social distancing protocols to ensure their safety. Fortunately, we've had only one instance of COVID-19 infection reported among the more than 470 employees company-wide. That employee, who is field-based, is now recovered. And for that, we are very grateful. The COVID-19 pandemic is having a mixed impact on OraSure. We saw some downward pressure from COVID-19 on revenues in our domestic professional HIV and HCV businesses and in our molecular sales to the academic market in Q1 as HIV and HCV testing programs and molecular research programs have been delayed or terminated because of COVID-19. In our services business, revenue were also impacted as customers who could not access samples housed at academic or medical facilities that were to be sent to our microbiome services lab for processing. We see these trends continuing with a likely bigger impact on future quarters. However, sales of our In-Home HIV tests are rising as public health HIV testing programs in the U.S. are increasingly using our over-the-counter product as they adjust sampling strategies in response to COVID-19. We are also seeing increased sales of our existing molecular saliva collection kits and oral swabs, as some customers moved from blood to saliva collection due to difficulties collecting blood samples under current circumstances. Assuming we're successful in our development and regulatory efforts, we anticipate that the new coronavirus testing products we're working on and the expanded use of some existing molecular collection products could make significant contributions later this year, especially as the need for COVID-19 testing increases. Our manufacturing operations have been unaffected by the pandemic. We have not had any significant disruptions from our suppliers. Importantly, we expect that to continue. With respect to logistics, we have seen additional challenges for international shipments, particularly by our Thailand contract supplier, largely due to a reduction in the availability of airfreight, closing of customs offices in certain countries, and transport congestion. We have generally been able to work around these issues by using more sea freight. Accordingly, our shipping costs are and will continue to be a bit higher for certain destinations. We are considering several options to expand current capacity to make sufficient quantities to support the growing demand for existing products as well as demand for COVID-19 products in development. We'll share more information about these options, once relevant and timely. So despite the many moving parts and uncertainties surrounding the impact of COVID-19, we believe OraSure is well positioned to maintain its base business and to play an important role in fighting the pandemic. Turning briefly to the highlights from Q1. Net revenues of $31.6 million represent a 5% increase from the year-ago period. We achieved this increase despite the absence of our cryosurgical product line, which we sold in 2019. Excluding revenues from our cryosurgical business, which we sold in August of 2019 and revenues from our newest subsidiary, Diversigen, which we acquired in November of 2019, net revenues grew 8%. International HIV sales increased a robust 74% for the first quarter compared to 2019, largely due to the strength of our HIV Self-Test. This performance continues a trend we saw throughout 2019, and we expect that to continue in future periods. Our molecular collection systems product and service revenues for Q1 grew 25%, largely due to renewed genomic sales growth and a strong financial performance by our laboratory services business. Our genomic business grew 14% in the first quarter compared to last year. This was largely due to the shifts from blood to saliva testing by certain customers, as I mentioned earlier. We saw a 237% increase in laboratory service revenue for Q1, primarily due to the addition of Diversigen, which we acquired in late 2019. Net loss from the first quarter was higher than the prior year as a result of greater cost of goods sold, increased R&D spend and charges and costs associated with our business development activity as we continue to prioritize the identification and pursuit of external acquisition opportunities, consistent with our long-term innovation growth strategy, all partially offset by higher foreign exchange gains. Finally, our cash balances at the end of the quarter totaled $176 million. This significant cash balance, coupled with the absence of debt on our balance sheet, will enable us to weather the type of uncertainties presented by COVID-19 pandemic, while pursuing our innovation growth strategy. So we are pleased with the way 2020 has started and look forward to delivering a successful rest of the year despite the challenges that may arise from COVID-19. And with that, I'll now turn things over to Roberto for a financial review of the quarter.

Roberto Cuca, CFO

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 in the first quarter compared to $11.9 million in 2019. Royalty income declined 59% to $446,000 in the first quarter of 2020 from $1.1 million in the same period of 2019. This reflects the continuing challenges faced in the consumer genomics and ancestry market. Genomics product revenues increased 14% to $9.1 million in 2020 compared to $8.1 million in 2019 due to organic growth of existing customers and a shift from blood to saliva collection by customers using both sample types due to the inability to collect blood samples as a result of restrictions related to COVID-19. Microbiome product sales remained largely flat at $1.6 million in both the first quarters of 2020 and 2019. Lab service revenues generated by our subsidiaries, CoreBiome and Diversigen, increased 237% to $2.4 million in the first quarter of 2020 from $717,000 in the same period of 2019, largely due to the inclusion of revenues generated by Diversigen, which was acquired in the fourth quarter of 2019. Gross profit percentage for the first quarter of 2020 was 51% compared to 60% reported for the first quarter of 2019. The decline is related to a revenue mix higher in sales of lower gross profit percentage products and services, including the addition of microbiome services acquisitions and the absence of higher-margin cryosurgical product sales as well as increased international freight costs, higher scrap and spoilage expense and a decline in other revenues, which contribute 100% to the gross profit percentage. Our operating expenses for the first quarter of 2020 were $24.2 million compared to $21.9 million in the comparable period of 2019. The increase in the operating expense in the first quarter of 2020 was largely due to increasing staffing costs, higher lab supply and consulting costs in support of bioinformatics and new product initiatives, increased legal fees and the inclusion of operating expenses incurred by Diversigen. We reported a net loss of $7.3 million or $0.12 per share on a fully diluted basis for the first quarter of 2020 compared to a net loss of $3.3 million or $0.05 per share for the first quarter of 2019. Results in these periods included acquisition-related charges of $1.1 million and $1.3 million, respectively. Results in Q1 2019 also included $597,000 of transaction expenses. These charges amounted to approximately $0.02 and $0.03 in the first quarters of 2020 and 2019, respectively. As Steve mentioned, we continue to maintain a solid cash and liquidity position. Our cash and investments balance at March 31, 2020, was $176.2 million compared to $189.8 million at December 31, 2019. Cash generated by operating activities during the 3 months ended March 31, 2020, was $2.5 million compared to $528,000 in the same period of 2019. As Steve will describe in a bit more detail shortly, the COVID-19 pandemic will likely not just exert downward pressure on certain existing lines of business but will also present new opportunities for both existing products and services and for development efforts we are undertaking to address COVID-19 testing needs specifically. The net effect of these future opportunities and challenges is difficult to predict reliably, and for this reason, we are withdrawing financial guidance for 2020. However, I do want to reiterate that this is because of the difficult to predict potential upside as well as downside presented by the pandemic. With that, I will now turn the call back over to Steve for further business updates.

Stephen Tang, CEO

Thank you, Roberto. Moving to infectious disease, our global HIV business showed impressive growth with a 34% increase in revenue during the first quarter compared to the same period in 2019. A key factor was a 74% rise in international HIV revenue. We delivered 2 million HIV Self-Tests to international markets in the first quarter, marking a 98% increase from the same quarter last year, as established countries enhance testing and new countries begin to implement it. Conversely, our domestic business saw a 2% decline in the first quarter due to the COVID-19 pandemic, which has significantly impacted our domestic HIV and global HCV businesses. Many domestic HIV testing programs were reduced or suspended this quarter, resulting in lower demand for our professional products. However, the later onset of the pandemic in the quarter meant our Q1 results were not greatly affected. Internationally, HIV testing remains robust, and we faced only minor COVID-19 related shipping issues, which we managed well. Should the pandemic begin to ease by mid-year, we believe that our HIV Self-Test sales should be minimally affected in the future. However, we do anticipate continued downward pressure on revenue from our domestic HIV business. The duration of this impact and its specific financial implications will hinge on when the pandemic ends and associated restrictions are lifted. Beyond COVID-19, we have a positive outlook for HIV Self-Testing. Population Services International plans to expand the Self-Testing Africa initiative to seven new countries: India, Indonesia, Uganda, Nigeria, Tanzania, Cameroon, and Mozambique, under Phase III of the program. We expect to start receiving orders for this phase in the second quarter, with shipments scheduled for the third and fourth quarters. The scale of this program should be comparable to the 750,000 tests procured under Phase I. Not only will Phase III boost volume, but it will also support additional countries in launching national HIV Self-Testing programs. Furthermore, the President's Emergency Plan for AIDS Relief has advised its funded countries to consider increasing HIV self-testing during the pandemic to facilitate continued testing while adhering to social distancing guidelines. The importance of HIV Self-Testing during the pandemic is also being recognized nationally. Although sales of our professional HIV tests have been adversely affected, many public health departments are increasing orders of our FDA-approved in-home HIV test to allow their clients to test without needing to visit clinics. Recently, the Centers for Disease Control and Prevention urged all funded sites to utilize in-home self-testing for HIV to maintain testing adherence to safety regulations during the COVID-19 crisis. Given that we possess the only FDA-approved in-home HIV Self-Test, we foresee a positive impact on our revenues, although it may not completely counterbalance the pressure on our professional HIV line. Ultimately, the full effect will rely on how the COVID-19 situation evolves. Briefly addressing HCV, revenues for this sector declined in Q1 compared to the same period last year, as many U.S. testing programs were halted amid shifts in resources towards COVID-19 response. Depending on the resolution of the COVID-19 crisis, we expect this business to return to more normal revenue levels. Our international operations were not significantly impacted by COVID-19 in Q1, though we did experience a drop in sales in Asia. Despite COVID-19 challenges, we see several potential opportunities that may be significant. In April, we announced a contract with the Biomedical Advanced Research and Development Authority to develop a rapid antigen in-home self-test for pan-SARS coronavirus using oral fluid samples. This funding will assist in covering development costs and obtaining emergency use authorization from the FDA. If all goes according to plan, we anticipate launching this test by early fall 2020. The oral fluid antigen self-test will enable individuals to detect current infections from home using a less invasive oral sample collection method. As BARDA has stated publicly, such a test could significantly alleviate stress on healthcare systems and laboratories while also safeguarding healthcare providers. Conducting tests for millions at home and isolating the infected individuals will help protect our communities and assist in economic recovery. Additionally, we are working on an oral fluid microplate test for coronavirus antibodies, which will operate on high-volume laboratory systems. Samples can be self-collected using our OraSure device and then mailed for testing. These antibody tests will show previous infections, helping to determine immunity to COVID-19 and whether individuals can safely return to work and normal activities. We aim to complete this test and receive EUA approval by early summer. Finally, we are exploring collaborations with various organizations domestically and internationally, some of which aim to fund expanded production capacity as we evaluate potential demand scenarios for our products. We are also looking into third-party partnerships for developing and commercializing different coronavirus testing products beyond what we are currently working on. We will provide updates on these collaborations as they progress.

Roberto Cuca, CFO

Turning to the Molecular Solutions segment, revenues from our molecular business increased by 25% compared to Q1 2019. Our commercial genomics business performed strongly, benefiting from organic growth and higher purchases from customers who previously used both saliva and blood collection methods but are now leaning more towards saliva due to challenges in obtaining blood samples during the COVID-19 pandemic. In Q1, we added 31 new commercial customers and saw a 44% increase in the number of customers using both our genomics and microbiome products, along with some services. We also received a general use 510(k) clearance for our Oragene Dx product line, which strengthens our regulatory position and makes it easier for test providers to use Oragene Dx for their molecular tests. However, sales to academic customers were negatively affected by COVID-19 as many paused non-COVID research activities, impacting our genomics, microbiome, and urine collection kit sales to that market. We are confident that our genomics business and the disease risk management and microbiome sectors will return to double-digit annual growth after the pandemic. Similar to the Infectious Disease segments, we are witnessing numerous opportunities for increased business related to COVID-19, which may significantly offset any negative revenue impacts in our Molecular segment. With ongoing issues surrounding sample collection and testing capacity, the medical community is actively seeking alternatives to the standard methods of collecting oropharyngeal and nasopharyngeal samples for COVID-19 testing. Several studies have shown that saliva is not only quicker and more comfortable for both patients and healthcare providers, but it is also technically more effective for detecting COVID-19. Our product lines, particularly Oragene Dx, ORAcollect RNA, and OMNIgene Oral, are ideally suited for this application. Our proprietary stabilization chemistries are effective in maintaining viral DNA and RNA. Millions of customers have utilized our Oragene Dx products in both home and professional environments, and it is the only device of its type to receive 510(k) clearance. It is safe, non-toxic, and user-friendly, making it an ideal choice for self-collection of samples for COVID-19 testing, whether at home or under supervision in clinical settings. We are collaborating with various laboratories and diagnostic companies to validate our sample collection products for use with COVID-19 tests and are confident that our devices will be compatible with many leading extraction techniques and testing platforms. We have engaged with over 150 customers globally, united by the common goal of expanding the range of COVID-19 tests available and offering convenient collection solutions. These customers include genetic test manufacturers, commercial labs, and teaching hospitals. So far, we have shipped COVID validation kits to over 60 customers and currently hold 10 significant purchase orders expected to generate approximately $3.6 million in Q2 revenue, with more anticipated soon. As announced on Monday, the first COVID-19-related emergency use authorization incorporating one of our devices was granted last week by the FDA to Biocerna, LLC. This EUA allows the use of our ORAcollect RNA kit for collecting anterior nasal samples for Biocerna’s COVID-19 assay. We foresee this being the first of multiple EUAs involving our devices for COVID-19 testing using both nasal and saliva samples in professional and at-home environments. Alongside the data we are gathering with our customers, we are conducting several ongoing studies to validate the safety and usability of our collection devices for COVID-19 testing, including studies for at-home sample collection. Preliminary results are promising, and we aim to use these findings to broaden our regulatory clearances. To address the rising demand for our products, we have been increasing production capacity across our suppliers and expect to utilize multiple shifts to enhance our production capabilities.

Stephen Tang, CEO

Finally, in the lab service area, we've seen a consistent demand for lab services from our existing commercial customers with dedicated microbiome projects. However, we anticipate a short-term weakening in the overall microbiome services market as major pharmaceutical companies refocus efforts due to COVID-19. As I noted previously, there have been some delays in the academic market due to COVID-19 restrictions because of limited access to microbiome samples. We are continuing to integrate our microbiome laboratory businesses. On May 8th, CoreBiome service operation will relocate to a new, state-of-the-art 17,000 square foot facility in St. Paul, Minnesota. This facility has been designed to absorb the integration of both the legacy CoreBiome and Diversigen laboratory operations as well as part of our bioinformatics and software teams. The lab is expected to be 100% operational for our CoreBiome customers on May 18. Relocation of the Diversigen laboratory operations will begin in mid-May with a target date for completion near the end of the third quarter 2020. Along with the physical integration, we'll be consolidating the branding for microbiome service organizations under the Diversigen name. We are in the final stretches for this rebranding work. And within the next few weeks, all microbiome services will be operating under the Diversigen name with a new logo. A final topic I want to cover is the recent organizational changes we have announced. Tony Zezzo, who is the business unit leader in charge of our infectious disease business unit, will be retiring this summer. Tony has been with the company for almost 10 years and has made significant contributions, including the global commercialization of our rapid HCV test and the substantial growth in our HIV franchise. His dedication and steady leadership will certainly be missed and we wish him well in his retirement. Tony's successor will be Lisa Nibauer, who will be joining OraSure after serving for the past 8 years with Becton Dickinson, most recently as Vice President and General Manager of BD's Medication Delivery Solutions business. Lisa has extensive general management, sales, and marketing responsibility, both at BD and in other large companies and has exactly the skills we needed for this role. I'm confident that she will be a strong leader for this important segment of our business. We've also recently announced several Board changes. Dr. David Shulkin, was formerly Secretary of the U.S. Department of Veterans Affairs, joined the Board last month and is now serving on the Audit Committee and Nominating and Corporate Governance Committee. David has a long history and distinguished career in the medical, public health, and public health fields and has served at the highest level within our federal government. His track record of strong executive leadership will enable him to be a significant contributor to the Board. We also announced the upcoming departure of two Board members. Dr. Aradhana Sarin, who joined the Board in 2018 and currently serves as Chair of the Audit Committee and a member of the Nominating and Corporate Governance Committee, will be leaving the Board prior to our annual meeting so that she can devote more time to our duties as Chief Financial Officer of Alexion Pharmaceuticals. In addition, Chuck Patrick, who has been with the Board for almost 14 years and serves as a member of the Audit Committee and a member of the Nominating and Corporate Governance Committee, will be retiring from the Board effective May 16th. Both Aradhana and Chuck have been strong contributors to the Board and their advice and counsel will be missed. We wish them both much success in their future endeavors. In closing, 2020 is off to a good start with a solid Q1 performance in spite of the pandemic. Our HIV Self-Testing business is expected to continue to grow strongly. We are proud to leverage our expertise to help fight COVID-19. We believe the opportunity is for a new rapid oral fluid in-home coronavirus antigen test and a laboratory-based oral fluid antibody test, along with the expanded use of our molecular saliva collection products, are promising and could generate revenues well in excess of any revenue loss as a result of the COVID-19 pandemic. Despite the uncertain current environment, our future is bright. We are strong financially. We have the technical and management capabilities on board to enable us to successfully capture the opportunities before us. At the same time, we continue to execute against our innovation growth strategy, the continued evaluation, and pursuit of external acquisitions. We look forward to reporting back any significant new developments as they become available. And with that, we will now take your questions. Operator, please proceed.

Operator, Operator

Your first question comes from Jacob Johnson with Stephens.

Jacob Johnson, Analyst

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?

Stephen Tang, CEO

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.

Jacob Johnson, Analyst

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?

Stephen Tang, CEO

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.

Operator, Operator

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

Andrew Cooper, Analyst

I understand it's early to discuss this, but regarding the tests you're developing, do you have any insights on how their pricing will compare to home tests? This seems to offer a somewhat different value proposition than what others in the market are working on. How do you envision pricing in relation to this? I have a follow-up question after that.

Stephen Tang, CEO

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 matched 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.

Andrew Cooper, Analyst

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?

Stephen Tang, CEO

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.

Operator, Operator

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

David Westenberg, Analyst

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...

Stephen Tang, CEO

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

David Westenberg, Analyst

No, I'm actually inquiring about COVID and what the public policy looks like in that regard. I'm assuming there will be differences between countries, but is there a general approach to how COVID-19 is being managed in sub-Saharan African countries, particularly those where your HIV tests are more widely used? I'm trying to consider what measures might be in place that could hinder HIV testing.

Stephen Tang, CEO

I see. First of all, I want to mention that in the first quarter, our sales of HIV Self-Test in Africa and globally met our expectations, resulting in a 74% year-over-year increase. We anticipate this trend to continue, assuming shipping remains stable, and so far, it appears to be going well. The connection between HIV and COVID is quite intriguing. It's important to remember that Africa is currently entering its winter months, which marks the onset of the traditional flu and cold season. This situation echoes the beginning of COVID-19 in the northern hemisphere during winter. Therefore, we are closely monitoring the developments. Additionally, immunocompromised individuals are the most vulnerable to COVID-19 and experience higher rates of complications from it. Hence, it is crucial to maintain HIV testing in Africa as COVID-19 starts to align with seasonal patterns there. We also believe that the sales channels we've established for HIV Self-Test in sub-Saharan Africa, primarily through health ministries and individual countries, will similarly apply to selling COVID-19 self-tests if we receive approval and launch during the fall and winter. Ultimately, I think this will provide a favorable boost for both our HIV and potential COVID business.

David Westenberg, Analyst

Got it. When we think of OraSure, we see it as part of the infectious disease sector, primarily focusing on HIV and HCV, along with emerging diseases like Ebola, Zika, and now COVID. You have developed new tests that are progressing well. Looking ahead over the next 3 to 5 years, do you envision OraSure expanding into a broader infectious disease company? I'm curious about the insights you’re gaining from COVID testing and how you might leverage those in future research and development. That’s all I have.

Stephen Tang, CEO

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 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 as 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 will 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.

David Westenberg, Analyst

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

Stephen Tang, CEO

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

Operator, Operator

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

Brandon Couillard, Analyst

Roberto or Stephen, just on the 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?

Stephen Tang, CEO

I think as we mentioned in our message today, Brandon, we are seeing significant strength, and the positive factors are more noticeable than the negative ones. However, we cannot ignore the challenges, which is why we specifically highlighted areas where we see them, such as HCV testing in the U.S. and serving the academic market for molecular. Despite this, we are observing growth in our book of business related to COVID every week during this crisis. Therefore, while we are withdrawing our guidance for the full year, we remain very optimistic about our overall prospects.

Brandon Couillard, Analyst

Regarding the molecular business, was there any advantage in the first quarter from order timing that could have been beneficial? Additionally, is the $3.6 million in revenue for the second quarter from labs using the oral fluid collection to study COVID-19 based solely on orders received so far, or is it possible that this number could actually be significantly higher as the quarter progresses?

Stephen Tang, CEO

Yes. So, 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 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.

Operator, Operator

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.

Stephen Tang, CEO

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.

Operator, Operator

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