A Cowen & Co. analyst said Tuesday that New York City health officials' decision to halt oral testing with Orasure Technologies Inc.'s OraQuick rapid HIV test at its 10 STD clinics may hurt the company's near-term sales, but a Lazard analyst said the accuracy issues could in fact be related to how the test was administered.
The OraQuick Advance is a test that rapidly screens saliva and blood samples for antibodies to both HIV-1 and HIV-2. The company said Monday there always is a small possibility of false positive results, but maintains that the test is 99.8 percent accurate, based on nationwide use in more than 400 testing sites.
New York City Health Department officials recently stopped using OraQuick Advance at its 10 STD clinics as an oral test, citing specificity issues, after reporting "a somewhat elevated number of discordant test results from October 2007 through April 2008." Officials still are using it to screen blood samples.
Orasure said it is working with the NYC Department of Health and the Centers for Disease Control and Prevention to better understand the performance at the STD clinic sites.
Cowen analyst Sara Michelmore said Orasure was in communication with NYC officials prior to their decision to suspend oral testing, but were unfortunately unsuccessful in their attempt to root out the problem. The investigation is ongoing and the CDC also is probing the matter, with the agency considering publishing an alert for health officials in its weekly report.
"News of the performance issues could negatively impact OraQuick sales near term (although the sites involved now are immaterial), and add to a challenging near-term financial outlook of OSUR in front of key new product launches from the company's pipeline," Michelmore said in a note to clients. She maintained a "Neutral" rating on the stock.
But Lazard Capital Markets analyst Jeffrey Frelick said "you cannot necessarily rule out operator influence" in reviewing the higher-than-usual false positives, given the test's overall nationwide accuracy and the volume of 5,000 tests per month.
"We believe that following its investigation, the CDC will continue to endorse oral collection technology for HIV screening," Frelick said in a note to investors, backing a "Buy" rating and $12 price target on the stock. "The OraSure test continues to perform above the FDA threshold, within its expected performance range, and positive tests are always confirmed, regardless of the methodology or collection mode."
In late morning trading, shares were flat at $4.51.
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