NEW YORK – OraSure Technologies announced Thursday after the close of the market that it has acquired Cambridge, Massachusetts-based Sherlock Biosciences.
"Sherlock brings valuable capabilities with an advanced molecular platform that aims to deliver lab-like accuracy in a format that expands access to diagnostic insights through convenient, effortless tests," OraSure President and CEO Carrie Eglinton Manner said in a statement.
On a call with investors following the announcement, Manner said that the acquisition involves an upfront cash consideration of $5 million, $20 million in milestone payments contingent on US Food and Drug Administration regulatory approval of Sherlock's chlamydia and gonorrhea assay, and a low-single-digit royalty on future sales. OraSure also expects to invest $25 million in the completion of ongoing clinical trials of the test, as well as manufacturing scale-up and launch.
OraSure rebuilt its cash balance from $170 million to $279 million over the past few years following a restructuring, Manner said, and achieved cash breakeven in the third quarter of 2024. The Sherlock acquisition is also part of the firm's broader strategy incorporating expansion of its portfolio of diagnostic tests and sample management solutions. The strategy prioritizes low-cost, instrument-free assays, and OraSure also recently invested in assay developer Sapphiros and formed a distribution partnership for Diagnostics Direct's Syphilis Health Check test.
Sherlock is expected to expand OraSure's presence in rapid diagnostics for sexually transmitted infections and in molecular diagnostics with its testing platforms and in-development 30-minute Chlamydia trachomatis (CT) and Neisseria gonorrhoeae (NG) test.
The CT/NG self-test is currently in clinical studies of both symptomatic and asymptomatic testing, Manner said, and is expected to be submitted to the FDA by the end of 2025. Subject to regulatory approval, the test is suited for over-the-counter purchase using self-collected swab samples and isothermal amplification, OraSure also said in a statement Thursday.
With a total addressable market of more than $1.5 billion, the test is anticipated to contribute to the Bethlehem, Pennsylvania-based firm's revenues in fiscal year 2026 leveraging OraSure's infrastructure, commercial capabilities, customer relationships, and presence in public health channels. OraSure said the test may also drive market expansion, as the majority of CT/NG screening happens in centralized labs.
"We believe there is a significant opportunity for commercial expansion in public health and to partner with online health channels and retailers to offer an innovative instrument-free [over-the-counter] test," she said on the call. There is also potential market expansion into self-testing in a market "where privacy is a key priority for people concerned about sexually transmitted infections," she added.
Although there are many molecular STI assays currently vying for the expanding decentralized CT/NG testing space, Manner said that Sherlock meets the requirements of being rapid, instrument-free, and low cost.
Sherlock's pipeline also includes additional molecular tests and next-generation technology platforms, including ambient temperature amplification and CRISPR technologies with the potential to reduce cost and improve performance.
Sherlock was founded in 2019 using core technologies licensed from the Broad Institute and Harvard's Office of Technology Development. The firm subsequently licensed ambient temperature amplification technology from the Wyss institute and acquired Sense Biodetection along with its handheld isothermal nucleic acid amplification system.
More recently, Sherlock partnered with the US Administration for Strategic Response and Preparedness' Biomedical Advanced Research and Development Authority (BARDA) to develop a single-use, battery-operated home flu test.
"What we like about the next-generation technologies that Sherlock has been advancing, including CRISPR, is they represent opportunities for improvement in performance and … the potential to improve detection," Manner said.
Shares of OraSure were down 4 percent at $3.64 in Friday morning trading on the Nasdaq.