Okay. We're going go ahead and get started. I'm Tycho Peterson. It's my pleasure to introduce our next company this afternoon, Orasure Technologies. Just a reminder, if people have questions, to submit those through the conference website, and we'll try to get to them over the Q and A.
With that, let me turn it over to Steven.
Thank you, Tycho. Hello, everyone. I'm Steven Tang. I'm the President and Chief Executive Officer of OraSure Technologies. Before we get started, I'd like to ask everyone to turn to Slide two and remind you that we'll be talking about forward looking views, which contain uncertainty and are subject to this forward looking statement disclaimer.
Turning to slide three. Let's all imagine a world where answers to the world's toughest health care questions are readily available such as am I HIV positive? Do I have COVID nineteen? Is there a relationship between cancer and the microbiome? That's where the OraSure family of companies operates.
Our innovative sampling tools, analytical services, and effortless diagnostics unlock access to accurate, essential information that advances global health and well-being. We are experts in infectious disease, helping to solve the world's most difficult diagnostic challenges, and our sample collection and analysis technologies make us leaders in genomics in the emerging microbiome field. I'd like to walk you through the investment rationale for ORSURE. We are executing on a multiple near term COVID-nineteen opportunities as well as other long term growth drivers. Sample collection kits developed by our DNA Genotec subsidiary are an integral component of laboratory molecular tests for COVID-nineteen and are generating significant revenue.
We are also developing two tests that we believe could be key contributors to the COVID nineteen testing paradigm. The COVID nineteen rapid antigen self test and the lab based oral fluid OraSure SARS CoV two antibody ELISA. Both of these tests have received funding from BARDA, a division of the U. S. Department of Health and Human Services.
Early on in the pandemic, we understood that increasing our manufacturing capacity will be key to meeting demand. We are in the midst of an initiative to expand our capacity for COVID-nineteen tests and sample collection kits. Outside of COVID, we continue to see tremendous growth potential in market leading products and services focused on the microbiome and multiomics. Our ability to provide customers with both genomic and microbiome products and services is an important foundation for OraSure to become the leading source for multiomics tools and analytics. Lastly, we have $264,000,000 in cash on our balance sheet with no debt, supporting our ongoing business development activities.
These have generated four acquisitions and one divestiture since January of twenty nineteen. Since becoming CEO of OraSure in 2018, I have focused the company on an innovation driven growth strategy. We are using our core businesses and robust balance sheet to build a company with products and services that are in high demand and have significant growth opportunities. Orser can now offer customers end to end solutions that will take them all the way from sample to answer. We drive across multiple layers of the information and data to understand health, wellness and disease states, all thanks to our differentiated products with competitive profiles in large markets, some like the microbiome and multiomics, and they're very early stages of upside potential to come.
On Slide four, you'll see we divide our business into three areas: Diagnostics, which includes our tests for infectious disease and risk assessment, account for 48% of our revenues in 2019 Sampling tools, which includes our molecular collection devices, accounted for another 48% of revenue. And services, which includes our microbiome and laboratory analytical services, accounted for the remaining 4% of revenue. Drilling down a bit deeper, looking at sampling tools, our subsidiaries DNA Genotec and Novosanis offer best in class sample collection and stabilization devices. In the services arena, our Diversigen subsidiary is a pioneer in the emerging microbiome field, offering data analytics giving a multiomic view to health and wellness. And in diagnostics, we offer a selection of high value actionable options for infectious disease testing and substance abuse testing.
Turning to Slide five, we have years of innovation and expertise in infectious disease diagnostics. We have the first and only rapid HIV in home test approved by the FDA and the only World Health Organization prequalified rapid oral HIV self test. Our ORACWIC rapid Ebola antigen test is the first rapid diagnostic test the FDA cleared for marketing in The U. S. For the Ebola virus.
Our technologies are the ideal platform for the emerging trends in diagnostic testing. Our proven OraQuick lateral flow platform for HIV, HCV, and Ebola provides accurate and easy to administer test methods that are currently and well suited for the current COVID-nineteen testing dynamic where rapid and accurate in home self testing will be critical to get us through the pandemic. As you see on Slide six, OraSure is developing test and sample collection solutions for COVID-nineteen across three modalities, molecular, antigen, and antibody. Our portfolio of COVID-nineteen tests and collection kits all feature convenient, pain free self collection and can help increase access to testing, alleviate the burden on the healthcare system, minimize exposure risk to healthcare workers, and conserve much needed PPE. While the progress on vaccines is welcomed and encouraging, vaccines alone will not be the silver bullet that solves the COVID-nineteen pandemic.
The success of a vaccine program will depend on overcoming complex global production, logistical, and public health education challenges. As we're beginning to see, these challenges are significant. Consequently, testing will remain a critical component for managing the spread of this virus for the foreseeable future. We believe there's plenty of room in the market. In December, the Rockefeller Foundation report called for 300,000,000 tests per month, and that's just to safely reopen America's public schools.
Globally, December could be much higher. Multiple tests from multiple manufacturers will be required to meet the massive global need. We're confident in our position, given our wealth of experience and our legacy in developing and scaling rapid tests for viruses, including HIV, HCV, and Ebola, and our strong track record of working with regulators to successfully bring them to market. Remember, our in home over the counter self test for HIV was the first test of its kind infectious disease that's approved by the FDA. Let's take a closer look at our COVID activities, starting with our molecular sample collection kits on slide seven.
As I previously mentioned, our sample collection devices are already being used for COVID nineteen molecular testing and have generated $27,000,000 in COVID-nineteen related sales through the third quarter of twenty twenty. They offer all in one easy, reliable and noninvasive self collection of oral fluid samples and preserve high quality DNA and RNA with ambient temperature stability. Saliva has been demonstrated to be an effective sample for molecular testing, and self collection of COVID-nineteen samples supports social distancing, helps keep health care workers safe and concerns PPE. Two of our sample collection devices, OraCollect RNA and Omnigene oral received EUAs from the FDA in October. Our collection kits are also included in seven customer EUAs and lab validated workflows and are incorporated into back to school and back to work programs nationwide.
Our sample collection kits are included in tests available at Albertsons pharmacies and at Costco. Moreover, we were delighted when Time Magazine included Omnigene oral on its list of best inventions of 2020. As the need for testing continues unabated, we believe the expanded use of our molecular collection products shows great promise. Turning to Slide eight, OraSure is in the final stages of developing a rapid antigen test that subject to receipt of emergency use authorization from the FDA, test for active COVID-nineteen infections using nasal samples self collected from lower nostril. As we've learned from our in home HIV test, simplicity and ease of use are paramount when it comes to self tests.
Our COVID nineteen rapid antigen self test is designed to be performed anytime, anywhere with no app, instrumentation, batteries, or laboratory analyses needed to interpret the results. Essentially, it's a lab on a swab. The workflow is very straightforward with one step from swab to result. The user would simply collect a sample and insert the swab into a buffer solution. This visually read test is very similar to an at home pregnancy test with two lines indicating a positive result and one line indicating a negative result.
By contrast, other antigen tests require instrumentation or multiple precise steps to achieve claim sensitivity and specificity. Turning to Slide nine, subject to an FDA EUA, we intend to introduce our antigen tests to the market in three stages: a professional use test for use in clinical and nonclinical settings a prescription self test for use by individuals, employers, universities and public health and over the counter self test for use by consumers without a prescription. We expect to apply for the first EUA in the first quarter of twenty twenty one. Once approved, our test would enable fast, frequent testing that provides results in minutes, not hours, and would offer real time information about whether an individual is currently infectious and contagious. Our OraQuick platform is scalable to millions of tests worldwide.
Turning to our antibody test on slide 10, we have developed an enzyme linked immunosorbent assay or ELISA for the detection of human anti SARS CoV-two antibodies that uses oral fluids as a sample. To date, there are no oral fluid COVID-nineteen antibody tests. Ours has the potential to be the first. Antibody tests are well suited for community surveillance and seroprevalence studies to identify people who have antibodies against COVID-nineteen. Oral sample collection is quick, painless, noninvasive, and requires less human contact than a blood draw, minimizing the need for personal protective equipment and reducing exposure to potentially infected patients.
We are working with FDA to bring this test to market. Looking to Slide 11, let me now turn to manufacturing capacity, where we're investing to significantly expand the number of tests and collection devices we're able to provide to help combat the pandemic and meet this unprecedented demand. As outlined here, we've already begun the process of expanding our manufacturing capacity for our COVID-nineteen tests and collection kits, and we intend to continue that expansion far into twenty twenty one. We're essentially planning to double our capacity for products over the year. We're also investigating possibilities of partnering with others or sublicing to third parties to further expand our ability to meet anticipated demands in all areas, which would add the capacity that I just outlined.
I'd also like to briefly touch on some of the components of our non COVID-nineteen business, starting with our HIV tests on Slide 12. As we know, testing is critical to identifying HIV positive patients and linking them to care. An estimated thirty eight million people have HIV, yet twenty one percent of them do not know their status. As I noted earlier, OraSure has the first and only rapid HIV in home test approved by the FDA and the first and only World Health Organization prequalified rapid oral HIV self test. These simple, easy to use, and easy to deliver oral fluid kits can deliver results in twenty minutes, helping to link patients to care.
We are the leading player in international HIV self tests with significant market share. International sales of our OraQuick HIV self test increased 17% in the third quarter of twenty twenty compared to the third quarter of twenty nineteen, largely due to higher sales in Africa. More than two thirds of all people living with HIV are in Sub Saharan Africa. We see opportunities in Africa, Europe, Eastern Europe, Central Asia, Latin America, as well as domestically. Turning to slide 13, the federal government's initiative, Ending the A Plan for America, has set a bold goal of ending the HIV epidemic in The United States by 02/1930.
We've been encouraged to see proposals to significantly increase federal funding for the initiative in fiscal year 2021. Reaching the difficult to reach populations will be key to achieving this goal. Rapid testing that can be brought into the communities is seen as an important tool. With the FDA's only approved in home or self test on the market, Warshore is well positioned to play a key role in the plan for America and capitalize on the market opportunities it represents. It's important that the HIV self testing continues despite COVID-nineteen.
We've seen many public health departments increase purchases of our FDA approved in home HIV tests in order to enable their clients to continue HIV testing without having to come to a clinic. In fact, CDC and other government agencies have encouraged health departments at all levels to consider HIV self testing as an additional testing strategy to reach persons most affected. This speaks to the usability and convenience of our at home tests and allows individuals to test themselves and receive the results by themselves at home. Turning to our molecular business on Slide 14. Our DNA Genotek subsidiary is a pioneer in DNA and RNA sample collection, stabilization and preparation products.
As Time Magazine noted, DNA Genetech has done for DNA collection what Google has done for web searches, made it ridiculously simple and efficient. I've talked about how our collection kits are being used for molecular testing for COVID-nineteen. Our innovative sample collection technology, which stabilizes human DNA for long periods of time at ambient temperatures, was originally developed to help study the human genome. Our technology provides the magic, behind human genetics, genomics, just like Intel is the magic behind personal computers. Turning now to Slide 15.
The microbiome is made up of trillions of microorganisms that live on us and in us. We've leveraged DNA Genotec's expertise in developing saliva collection and stabilization devices for the human genome to develop easy to use technology to snapshot the ever changing microbiome. Our collection tools help researchers explore the changes in the microbiome and the implications for nutrition, disease, therapeutic interventions, lifestyle, and even longevity. While the microbiome is a relatively new field and a longer term focus for our business, we believe there is significant potential. Prior to the pandemic, multiple research reports projected a compounded annual growth rate of 16% for the microbiome markets from 2019 to 2024.
Thanks to our acquisitions of microbiome services companies CoreBiome and Diversigen, which now operate under the Diversigen brand, we are able to offer end to end microbiome solutions all the way from sample collection to analysis. Our customers include academic researchers and pharmaceutical companies that are developing therapeutics for Crohn's disease, colitis, and irritable bowel syndrome. We see great promise in this area. As we look further into the future, we see an opportunity beyond our genomic and microbiome businesses in the broader field of multi omics, which is illustrated on slide 16, which offers a multifactorial examination of an individual's health. Scientists can look at multiple ombs such as the genome and the microbiome simultaneously.
This multilayered view can generate new understanding of the pathology of numerous diseases such as obesity, diabetes, Parkinson's, autism and cancer. Before I close, I'd like to touch briefly on business development on Slide 17, where we are using our robust balance sheet to create revenue and shareholder value. COVID-nineteen has certainly complicated the business development picture, but we are continuing to see acquisitions that are accretive to our innovation growth strategy. On Slide 18, in closing, our business momentum is strong. We expect that trend to continue.
We see COVID-nineteen testing as a robust part of our business for now and the foreseeable future. With molecular collection devices already driving significant revenue and our antibody antigen tests on the road to commercialization, Oresure is poised for continued and sustained growth. Our work with COVID-nineteen team will help accelerate our growth significantly, and we expect to emerge from the pandemic a stronger and larger company. With that, I thank you for your attention, and I'm happy to take some of your questions. Tycho?
Great. Thanks, Steven. Maybe just I'll start off on the timelines around the OTC antigen test. Can you just kind of confirm you're still tracking toward the first quarter EUA submission for professional use? And then also you've noted that the prescription at home is an OTC submission will shortly follow suit.
So maybe just update on timelines there?
Yes. The timeline that you noted is still within sites. We feel very confident about that. And what we've been working towards, Tycho, is compressing the time lag between each of those submissions. And so we're hoping to get to ultimately OTC self test as soon as possible.
And what are some of the details involved in the antigen test clinical trials that will allow for that transition from professional e way to OTC e way?
Those are the step minimizations that I'm talking about. So there are several steps and different requirements for each of the EUAs, among them usability studies for self tests as well as testing for asymptomatic patients. And all those are in our protocol designs and are ready to be implemented.
I know Tim Stensel and others at FDA have been very active in trying to get more at home tests approved. We saw Lucera, Abbott. Maybe just touch a little bit on how you think about the competitive dynamics in the at home setting? And do you think the majority of the market kind of shifts this way from centralized testing over time?
Well, I believe we're going to get more than our fair share of business because our test design is, as I've noted in the presentation, a one step test. I think there's a very high probability that there will be several winners amongst text makers that are looking at self tests, much in the same way that there are going to be several winners in the vaccine development and implementation front. There's just, I think, pent up demand in the marketplace for self tests overall. That Rockefeller study that I mentioned that looks at, you know, 300,000,000 tests per day in order to get kids back to school is noteworthy because not any single or several diagnostic companies could provide that volume of tests. And so there was extremely high demand.
So are you will you be negotiating, like, with some of these kind of larger, you know, populations, school districts, you know, and others that would kind of want to broadly adopt? Is that is that part of the strategy?
It is part of the strategy. We've already received inbound interest from large employer, groups, from K through 12 to higher education groups, as well as state governments. I think the incoming, administration and it's prioritized, testing as well as the vaccine, will help better coordinate our efforts here and make sure that we get tests to the people that need them faster.
How about, in terms of requirements? You know, you in your slide, you mentioned airlines, entertainment venues, you know, I mean, to what degree do you think you're gonna actually see, you know, stricter requirements of, you know, testing before you get on a flight, before you go into a concert?
I think that's actually the only way we're gonna be able to gather in mass, and hopefully at some point without masks and, shoulder to shoulder, which is the way we're used to getting together. Right? But that's only gonna be enabled by increasing herd immunity through the vaccine and also through vigilant testing to make sure that nobody's infectious of that event. And so I we see a a huge market in in that regard to getting us back to normal, whether it's travel or entertainment or employer groups or k through 12 or higher education. All those are large buying groups in in large markets.
Obviously, as the virus has mutated, there's a lot of focus on newer strains. What's your kind of strategy there to incorporate some of the newer strains that are emerging South African and otherwise?
Yeah. I think this is a natural consequence of the virus being as as infective as it is. And, you know, humans are very efficient bioreactors for mutation and we're seeing that play out. So far, none of that has affected the target antigen which we're using for our tests. But we're going to be extremely vigilant to make sure that that remains the case and also prepare backup plans if we need different antigens to be deployed for the test.
So I think you're right to note that recent development and we're on it.
You know, there was recent news, I think it was Buffalo Bills, you know, required people to take a test before they went into the stadium, but it was a PCR test in a centralized fashion. I mean, how do you think about that dynamic, you know, given some of the bad press antigen testing has received overall?
Well, I think we're just not accustomed to the notion of precise tests that are used infrequently and rapid tests that are used frequently. And that's because they've just not been widely deployed. So you hear voices in the wilderness like Michael Minna talking about fast and frequent testing and the need to have an A test and a B test so you can validate if you're truly positive. So I think that dynamic will play out, and that really does speak for the fact that we need multiple rapid antigen tests in the market and also a backup plan with molecular tests to be used on occasion. So I think that the scenario that you mentioned with the Buffalo Bills will play out more often and at larger scale once we have more rapid antigen tests.
Do you see a bigger opportunity outside The U. S. For the rapid antigen test, like the rapid HIV test?
We do and I think that's where our expertise and the hard work we've done to open up markets in low and middle income countries around the world for HIV self tests will serve us well. You know, the most recent reports are that low and middle income countries will not receive the vaccination in a widespread way for several years now. And that's just because of the buying habits of the more sophisticated economies as well as just the shortage overall to get the get get to these populations that, can only afford it with, with government buying. So I think we play very strongly into that area, and that's why we see the COVID nineteen opportunities, particularly the rapid antigen test, to be durable over many years, perhaps as long as 2025.
You know, you you touched on your plans to kind of scale capacity from 35,000,000 tests, per year now. I mean, do you assume you can sell everything you can make over the next year?
I think that is the plan. And I think we are approaching that certainly for the molecular collection devices as we ramp up supply there. But we've done the calculation very carefully on the expansion to make sure that we're making sound financial and economic decisions. But that is I think that is in the works very soon.
And what's your view of what the tail of testing looks like into 2022 and beyond?
Well, I think, we'll move from the pandemic to the endemic phase, and the need to test frequently will go above and beyond what we've seen for the seasonal flu. And, the need to have, tests available to continue to test for COVID nineteen will last well beyond 2022, certainly in the sophisticated economies. And then for the low and middle income countries, you know, perhaps well into 2027 or or 02/1930, unfortunately. But I think that's the the state of play, for this virus and, the the world populations.
And then just kind of rounding it out on the portfolio, the PCR collection devices for saliva oral fluid, they've seen a nice step up. Just an anecdote, we're using them at J. B. Morgan for our send out tests. So great to see that.
How do you think about scaling that up and where the incremental demand there comes from?
Well, first of all, thank you for being a customer. We appreciate it. We see the step up continue to happen. So I mentioned that we sold 27 over $27,000,000 in sales through the third quarter, and we're seeing demand building for 2021 and beyond. And it just turns out that, you know, saliva is is really the the preferred way to sample folks because they can do it on their own.
You don't have to consume health care resources, whether it's health care workers' time and effort or or their risk or PPE or swabs, these can all be avoided by by using a self collection, saliva kit. So I think we are seeing strong demand, through 2021, but even beyond that based on, the needs of reopening.
Yes. I mean, I guess how much upside do you expect in the near term as cases are going up pretty quickly around the collection kits?
Well, I think that we're forecasting 2021 to be a major step up over 2020. We already did $27,000,000 up to the third quarter, last year. So and that's the whole rationale, by the way, by our manufacturing capacity expansion and even our further look at expansion beyond that in other facilities.
How about kind of nasal saliva, you know, that debate, any pushback, you know, around doing saliva over nasal from your perspective?
Well, saliva is a tremendous analyte for molecular tests and that's been proven. Obviously, JPMorgan thinks so in utilizing our kits. For the antigen test, we found that the best reservoir is actually the nose. And remembering that the difference between antigen tests and molecular tests is there's no amplification for antigen tests. And so the need to find the reservoir where the virus exists makes sense for it to be in the nose.
For our antibody test, which would, at current course and speed, be the first oral fluid based antibody test on the market, it turns out saliva and oral fluids are a great analyte. Much of saliva, I think, as you know, is either water or white blood cells. And so you're to have a strong correlation to the immunochemistry you need to make ELISA assays work.
And then what do you see as the role of your antibody test? Why is the need to do it in a decentralized fashion? Why do you need quicker turnaround time? How do you think about the competitive test from other competitive threat from other serology tests or T cell COVID tests, things like that?
Yes. It turns out that there are over 300 tests on the market that the FDA has put on the mark is permitted on the market with EUAs. Many are rapid tests. Ours is a lab based test. But the key point is they're all of them are blood based tests.
And so as we think about surveillance and and seroprevalence enabled largely by the vaccine, we're gonna need to figure out whether we're reaching herd immunity and quantify that. And so, the combination of our oral fluid collection kit with our ELISA based assay will qualitatively let you know who has antibodies in a population. There will probably be next generation products that are have differentiate between IgM, IgA, and IgG fractions, as well as quantify those fractions towards better characterization of herd immunity. But, I think it will become a valuable tool for public health officials and policymakers to determine which parts of the countries or which part of the world have reached herd immunity and therefore can get back to normal more quickly and also enable travel between those sites.
And how do you get people to take an antibody test? I mean, you know, it's hard enough to get, you know, enough people to take a COVID test and a vaccine, of course. So what what would be kind of the motivating factor? I mean, you do you think employers would require it of employees or, you know, payers would require it? What what what's the driving force for people to actually go out and get do an antibody test?
Well, I think if the carrot is you get back to normal life faster, I think we can all subscribe to that. And so I think the perhaps one of the biggest misnomers about the vaccine is even with the widespread vaccine, we're still gonna have to wear mask and social distance until we're convinced we've reached herd immunity. And so the carrot is once a community has reached herd immunity, we can more or less go back to normal. And I'm hoping, we can find motivating factors either through employers or incentives or public health officials to get us there. But what makes our product for antibody testing so, so special is it's it's an oral fluid based test.
And so you could conceivably self administer it with the with the proper approval, and you don't have to draw blood to take the test. And I think what we've learned through our human genomics, work is that people are much more likely to subscribe, enroll in these studies faster and at higher numbers if they can simply provide saliva or fluid versus blood. I think that's the that's the key to a widespread adoption of an antibody test.
Maybe last one on COVID and then I want to hit on the rest of the business. But, you know, for the international market, do you you expect some sort of subsidy like you have with the Bill and Melinda Gates Foundation for HIV or?
I I think that that that would be extremely helpful if the global consortium took on some of the practices they've used for eradicating HIV, some of which involves subsidy of products like ours. But I think what it's also incumbent on us to create flexibility and pricing through COGS reduction, and that's what we've set out to do also. We set out to do that for our HIV product line. And because the manufacturing lines we're commissioning for COVID-nineteen are essentially the same setups, I think we can envision the same economies of scale and cost reduction as well.
Maybe shifting to the base business then, in infectious disease, can you just talk a little bit about both international and U. S. Trends in HIV? International has held up actually okay during the pandemic. Is double digit still doable this year?
And then how do you think about The U. S. Market?
Well, were up 17% in the third quarter versus, third quarter twenty nineteen for international HIV. We we are impressed by the growth in spite of the pandemic, but I think what it demonstrates is that when you have political and economic will to eradicate disease, testing is a major enabler. So we've seen that in Sub Saharan Africa in particular. So I hope that translates well for COVID. The rest of the base business, I think, has in some ways been affected by the pandemic.
Certainly in the domestic front, with clinics closed, our HIV professional tests sales were off there, offset a bit by the sales of HIV self tests, as I mentioned in my remarks, because without clinics open, only way to get to people is for them to self test. You know, the collateral damage of the opioid crisis here in The US has caused a rise in HIV and HCV. The Plan for America ending the HIV epidemic had had, you know, the fundamentals in place for us to grow off of that base, both for HIV and HCV. And eventually, I think we'll return to those growth rates.
How about, you know, the molecular collections business, you know, commercial traction has been strong for Genomic Kids as we think about, you know, academic labs and PopSeq and some of these other programs getting back up and running. You know, are you seeing, you know, an acceleration there?
I think we will see it. We haven't seen it yet. Interestingly enough, many of the companies involved in population sequencing turned their attention towards COVID-nineteen during the pandemic. And so you see a shift in business focus there. But ultimately, the need for genomic testing to determine health risks, let's say cancer biomarkers within your genome and monitor those over time are going to be extremely important.
So that hasn't changed in terms of the need to have that knowledge. I think it's just been, paused because of the pandemic. So we see strong growth in that sector in particular. I think we've also seen, surprising, resiliency in the ancestry and heritage piece of consumer genomics as well. That's probably enabled by the fact that people are spending a lot of time at home and are looking for things to do.
We even see an uptick, by the way, in the testing for canine genomes because of the number of dogs that have been adopted, during the pandemic, and people are curious about their lineage. So it's not all bad for the stay at home pandemic world as it affects OraSure.
Can you maybe touch on the integration of Diversigen and CoreBiome in terms of kind of cross selling with the legacy molecular collections business?
Yes. That integration has gone extremely well. And I really have to thank our employees in Diversigen and CoreBiome who brought those companies together in the midst of the pandemic. We moved from two separate facilities, one in St. Paul, Minnesota and the other in Houston, Texas, brand new facility that will provide economies of scale for both operations.
We're trading under the Diversigen brand, but we're powered by CoreBiome's exceptional analytical engine and artificial intelligence engine behind it. So that's gone that's one of the key bright spots in what's happened during the pandemic is staying on track with that consolidation and operation in consolidating the brands.
I'm going to maybe ask a couple for Roberto, put him in the hot seat for minute here. On this margin line, how you think about the gives and takes as the lab services business becomes a larger portion of the revenue mix? And what are the optimal gross margins for legacy Orsure and then the D and A business product line ex COVID?
Sure. So historically, the gross margin percentages for the legacy business on the diagnostic side have been on the order of 55% to 60%, and a DNAG and a tech on on the order of 60% to 65%. That's before the addition of the microbiome services. Services businesses typically have lower gross margin percentages. So as that business grows, we expect that to take the margin on the DNA Genentech side down a bit.
That said, for, the COVID nineteen opportunities, we are seeing that, leveraging our existing COG infrastructure, getting savings from manufacturing and and bulk purchasing of raw materials means that the COVID nineteen products are likely to be higher gross margin products. So over the next couple of years, because the growth of those will be far in excess of the growth microbiome services, we do expect to see some, benefit to gross margin percentage, that could then persist, beyond the next couple of years.
And then how about dropping it through to to operating margin? You know, what what sort of, you know, OpEx investments do you need to to scale up and accelerate, particularly on the molecular collection side? Or how much actually you think will drop through?
So on molecular collection, we expect to see benefits from growth in revenues there. It's largely lab workers. And so as long as you can put more, products, more samples through, we'll see operational benefits. As far as the COVID nineteen opportunities, you know, those are very those are driven largely by large bulk purchasers. So growth in sales and marketing is likely to be much lower than the gross revenues that we'll see there.
And the R and D investment has already occurred. So, we see some good opportunities to leverage on the bottom line, with the growth in revenues that we're going to be seeing.
And then capital deployment, M and A has obviously been a big part of the story. How are feeling about the current funnel, seller expectations? Is this going to be a big year for bolt on deals? What's your view?
Well, pipeline has never been fuller in terms of opportunities, particularly inbound opportunities. Tycho, we've maintained, we will do the right deal at the right time with the right valuation. The valuations are interesting these days, particularly those companies that have some sort of COVID focus. So we're being very disciplined in the way we look at those type of opportunities. And they're really what we're trying to avoid is sort of the bubble mentality about COVID-nineteen and sort of racing to get to consolidate assets and resources that serve only one purpose.
If they can serve more than one purpose and give us adjacencies and multiplex opportunities, we can certainly look at those as well. But it's been an interesting environment, lots of inbound activity. I think we are actively in the market of doing deals. That's why we did the capital raise last year. That's why our balance sheet is $264,000,000 in cash and no debt.
But we'll also be careful because due diligence itself is rather interesting in the pandemic without the usual amount of contact with the principles. So all in, I think we remain very optimistic based on our own initiatives and the inbound interest that we've received in companies that want to work with us.
Is it fair to say strategically, you know, you would stick with infectious disease, sample collection, microbiome, some of these kind of, you know, you already have a big presence in or would you cast a wider net?
Well, our balance sheet gives us a lot of optionality. And so I think that our first preference would be to make sure it's adjacent to our current business units and adjacent to our expertise. But we are also in the market for more transformative acquisitions or mergers as well that might create bigger, stronger entities as a result of those. So everything is on the table as far as the pipeline and then discernment and due diligence and analysis come very soon behind that.
Great. Well, we hit the top of the session. So I want to thank you both for taking the time. Was a great overview. Enjoy the rest of the conference and talk to you soon.
Thank you, Tycho.
Thank you, Tycho.