The U.S. government has decided to give OraSure Technologies, Inc. (NASDAQ: OSUR) some money to help accelerate the development of oral test for the Zika virus. The funding is for $16.6 million and it comes in the form of a six-year contract. However, keep in mind that OraSure will not receive the entire contract amount at once.
The initial commitment is $7 million
Initially, the government will release $7 million to OraSure Technologies, Inc. (NASDAQ: OSUR) for the development of its oral test for Zika. The company will have to access an additional $9.6 million under the funding agreement.
OraSure intends to use the government funding to finance clinical activities for its oral test kits for Zika. The funds will also go toward obtaining regulatory approvals for the product.
However, OraSure has not yet said whether the money that the government is giving it will be adequate to foot the bills of the product development. Nevertheless, the funding does provide a much-needed financial boost for the company as it works on a product that could halt the spread of Zika virus.
Zika virus infection is spreading in Florida. The virus is causing pregnant women to deliver babies with unusually small heads, which is associated with poor brain development.
OraSure Technologies, Inc. (NASDAQ: OSUR) is planning to provide an update on the progress of the development of its oral test during its next earnings call.
Although there are already tests to detect Zika virus in blood and tissue samples, OraSure says its oral test is better at early detection.
The company’s portion includes oral tests for Ebola and HIV. According to the company’s CEO, Douglas A. Michels, the oral test for Zika virus that they are developing will be valuation in dealing with the current and future outbreaks.
Rating upgrade – OraSure Technologies, Inc. (NASDAQ: OSUR)
Analysts at Canaccord Genuity moved to raise their price target on the stock of OraSure Technologies, Inc. (NASDAQ: OSUR) immediately it emerged that the company had won a $16.6 million government contract for Zika virus test kit. Their new price target is $10, up from the prior $7. The analysts have a BUY rating on the stock.