Filed by Epitope, Inc.
pursuant to Rule 425
under the Securities Act
of 1933, as amended
Subject Company: STC Technologies, Inc.
Commission File No. 132-01850
On May 6, 2000, Epitope, Inc., an Oregon corporation, STC Technologies, Inc., a
Delaware corporation, and Epitope Merger Sub, Inc., a Delaware corporation,
executed a definitive Agreement and Plan of Merger.
The following are slides related to the above noted transaction to be presented
to analysts on May 11, 2000.
RISKS AND MORE INFORMATION
Forward-Looking Statements
--------------------------
o Statements about future events or performance are "forward-looking
statements"
o Actual results may differ significantly, depending on:
- Whether the companies realize benefits expected from the merger
- Whether the merger is approved by shareholders
- Whether the merger results in unexpected liabilities
- The "Risk Factors" described in Epitope's 1999 10-K
o Forward-looking statements are much less reliable than historical information
Merger Information
------------------
o Detailed information will appear in:
- A Registration Statement to be filed with the SEC
- A Proxy Statement/Prospectus to be mailed to shareholders
o INVESTORS ARE URGED TO READ THESE DOCUMENTS BECAUSE THEY CONTAIN IMPORTANT
INFORMATION
o Both will be available free at the SEC's web site (www.sec.gov) or from
Epitope
o Epitope personnel may solicit proxies in favor of the merger
o Their interests in the merger will be described in the Proxy
Statement/Prospectus
[Logo]
Epitope, Inc.
to be renamed
OraSure Technologies, Inc.
Deutsche Banc Alex.Brown
2000 HEALTH CARE CONFERENCE
May 11, 2000
Epitope and STC Technologies to Merge
$200 MILLION ALL-STOCK DEAL
CREATES ORAL FLUID AND
POINT-OF-CARE MEDICAL
DIAGNOSTICS LEADER
[EPITOPE LOGO] + [STC TECHNOLOGIES, INC. LOGO] =
diagnostic solutions for the new millennium
[ORASURE TECHNOLOGIES, INC. LOGO]
diagnostic solutions for the new millennium
[LOGO]
OraSure Technologies
--------------------
THE WORLD'S PREMIER ORAL FLUID DIAGNOSTICS COMPANY
o Merging the top two oral fluid companies hits our mission dead-center
o Epitope - OraSure
Infectious disease
OraQuick
o STC - Top oral fluid assay company
Drugs of Abuse,
UPT technology Cotinine
ORAL FLUID IS THE FUTURE OF DIAGNOSTICS
o Non-invasive - testing without needles
o Collection anytime, anywhere
o Broad variety of analytes available for development (e.g., cancer markers,
diabetic markers, genetic tests)
o Point-of-care ready - lab accuracy with point-of-care convenience
o Cost efficient - eliminates collection cost ($7-15)
- --------------------------------------------------------------------------------
WE ARE POSITIONED TO CHANGE THE CURRENT SELECTION AND TESTING PARADIGMS.
- --------------------------------------------------------------------------------
WE WILL IMPROVE MILLIONS OF LIVES.
----------------------------------
POINT OF CARE TESTING IS INEVITABLE
o Immediate results means quicker treatment
o New technology allowing accuracy comparable with labs at lower costs
o Just as personal computers distributed computing power to desktop, new
technologies are bringing testing to the clinic/hospital tabletop
- --------------------------------------------------------------------------------
WE WILL REDEFINE RAPID POINT-OF-CARE TESTING TO AND BRING IT TO ORAL FLUIDS
- --------------------------------------------------------------------------------
TECHNOLOGY PLATFORMS
o OraQuick(TM) - Oral fluid rapid-test device
- Visually read
- HIV product launched in July 2000 at International Aids
Conference in Durban, South Africa
- Entering trials for US approval, target PMA submission by Q1
2001
o OraSure(TM) - Oral fluid collection and preservation device for laboratory
based testing
- Only oral fluid device approved for HIV, drugs of abuse
- Major markets - public health and insurance testing
- Significant product line expansion possibilities with
UPT-hepatitis, syphilis, diabetic markets, cancer markers
TECHNOLOGY PLATFORMS
o UPlink(TM) - Point-of-care rapid-test instrument based on UPT
(up-converting phosphor technology)
- Multiple specimen types, multiplex capability
- More sensitive than competing POC instruments
- First product, for drugs of abuse testing, will be submitted
to FDA for approval in Q1 2001
- Particularly well suited to oral fluid, where extra
sensitivity is critical
o UPT(TM) - Premiere label technology - zero background noise, "pin-drop
clarity"
- Broad market applications
- Multiple specimen types
- Multiple tests on one sample simultaneously (multiplexed)
OraQuick(R) HIV-1/2
[Photo of OraQuick(R) Device] o Perfect for public health outreach testing
and third world
o Benefit of immediate feedback and counseling
o Extremely cost efficient
o Early clinical results indicate laboratory-
level accuracy
o Ready-made $100 million international
rapid-test market being served strictly with
whole blood tests
Epitope and STC have highly complimentary product lines and customer lists in
lab-based oral fluid testing
Collection Assay
Device
HIV Confirm only
Cocaine EPTO STC
Lab-
based Nicotine EPTO STC
oral NIDA-5 EPTO STC
fluid
testing Syphilis EPTO
Hepatitis EPTO
By coordinating and collaborating, STC/Epitope can:
o Expand the testing menu
o Capture both collection device and assay revenues on new tests
o Grow oral fluid testing's share of key markets:
- PUBLIC HEALTH
- DRUGS OF ABUSE
- INSURANCE
The more tests available, the more attractive oral fluid gets
- -------------------------------------------------------------
Who is STC?
STC is a privately held company that develops,
manufactures, and markets proprietary
in vitro diagnostic products and medical devices
for us in clinical labs, physicians' offices,
and workplace testing. Since its founding in 1987,
STC has twice been named to Inc. magazine's list
of the 500 Fastest-Growing Private
Companies in America.
STC Business Highlights
- - 31% compounded revenue growth - 10 years
- - Diverse product mix of in vitro diagnostic products and medical devices
- - Long-term business partnerships
- - Revenue and cash flow annuities
- - Niche market leadership
- - Sales and distribution networks
- - Great gross margins
- - Low cost producer/GMP facility
- - Strong research capabilities
- - Strong product commercialization track record
- - Regulatory expertise, especially oral fluids
- - Strong balance sheet.
CURRENT BUSINESS PRODUCTS
Insurance Risk Assessment Drugs of Abuse Testing
[photo of testing reagents] [photo of testing reagents]
On-Site Alcohol Testing Physicians' Offices Portable
Cryosurgical System
[photo of testing device] [photo of physician using system
with patient]
MARKET LEADERSHIP
Oral Fluid Testing
- - Sold 3 million tests in 1999 for detecting nicotine and cocaine for insurance
risk assessment
- - Sold 400,000 Q.E.D.(R) Saliva Alcohol Tests in 1999
- - First and only company with FDA clearance to sell lab-based microplate test
kits for drugs of abuse (DOA) testing from an oral fluid sample
- - STC working with regulators to draft oral fluid drug testing standards for
the workplace
- - Committed to leading the emerging oral fluid drug testing market, both for
lab-based and on-site testing solutions.
[Intercept logo]
Intercept(TM)
The Oral Fluid Drug Test
[photo of Intercept(TM) devices]
INTERCEPT(TM) DOA Testing
- - Compete in $300 million drug testing market
- - Compete in $800 million specimen collection market
- - Secured exclusive distribution rights for Epitope's proprietary oral fluid
collection device for DOA testing
- - Signed up LabOne as exclusive distributor for sales to workplace testing
market
- - Signed up LabOne as turn-key laboratory testing service for Intercept(TM)
- - Launched introductory marketing programs and 4intercept.com web site in
February 2000
UP-CONVERTING PHOSPHOR
TECHNOLOGY
STC is developing a proprietary
platform label detection
technology called UPT(TM)
(Up-Converting Phosphor
Technology).
UPT(TM) Combines Biological and
Video Display Technologies
[photo of television screen] + [graphic of biotechnology symbol]
o Particles from o Biotechnology
a TV screen
[graphic of biotechnology symbol with biological sample]
o UPT(TM) Bio-Particles
WHAT IS UP-CONVERSION?
[graphic of high and low energy, Ultraviolet/Visible/Infrared Wavelength
UPT(TM) converts lower to higher energy with up and down arrows]
KEY UPT(TM) FEATURES
[graphic of UPT(TM) Visible and Infrared]
- Multiple colors (multiplexed testing)
- No background
- High sensitivity (10-18M)
- Permanent record (no fading)
- Supports miniaturization
- Interference free
- Suitable for any testing matrix
BROAD MARKET APPLICATIONS
[circular graphic of UPT(TM) applications for:
High Throughput Drug Screening
In Vitro Diagnostics
Chemical & Biological Warfare
Food & Environmental Testing
Veterinary Testing
Surgical Imaging
Genomics & Pharmacogenomic Applications
Image Analysis/Miniaturized Platforms]
Deal Terms
A Merger of Equals
- --------------------------------------------------------------------------------
o Consideration: 20.0 million Epitope shares (versus 20.5 million current
Epitope shares including all options and warrants)
o Structure: stock-for-stock merger
o Accounting Treatment: pooling of interest
o Tax Treatment: tax free merger under section 368 of IRS code
o Collars: asymmetrical based on Epitope's 20 day average share price
o Closing Conditions: shareholder approval, no material adverse change
Summary of Collar
[graphic of STC implied equity purchase price (vertical axis ranging from 125 to
300) and Edward 20 day average stock price (horizontal axis ranging from 6.00 to
15.00]
Range of Stock Prices Purchase Price/Shares
- --------------------- ---------------------
$6.00-8.00 Fixed Shares (25 million)
8.00-10.00 $200 million fixed purchase price
10.00-13.00 Fixed shares (20 million)
13.00+ $260 million fixed purchase price
12 Months ended 3/31/00
Epitope STC Combined
----------------------------------
REVENUES 11.5 14.7 26.2
GROSS MARGIN 6.9 10.1 17.0
60% 69% 65%
SGA 7.8 5.6 13.4
OPERATING INC (PRE R&D) (0.9) 4.5 3.6
RESEARCH & DEV 2.5 5.1 7.6
OPERATING INC. (3.4) (0.6) (4.0)
ASSETS 17.1 19.2 36.3
CASH 11.4 8.6 20.0
LTD 0.0 (6.6) (6.6)
Cost Synergies
o $2 million
o Corporate overhead savings
o Operational synergies
- BRING ORASURE MANUFACTURING IN-HOUSE
- COMBINED LATERAL-FLOW MANUFACTURING SKILL AND SHARED EQUIPMENT WILL BE
LEVERAGED INTO LOW-COST, HIGH-VOLUME MANUFACTURING FOR ORAQUICK AND UPT
- MERGER IS ACCRETIVE TO EPITOPE EPS WITH SYNERGIES AT $500,000 OR ABOVE
New Product Pipeline for Years to Come
Near Term
- ---------
o OraQuick HIV international launch 7/00, domestic launch 2002
o UPlink point-of-care drug testing system launch, Q2 2001
Long Term
- ---------
o Full product line of infectious disease OraQuick tests (e.g., Hep C, Hep B,
etc.)
o Full range of oral fluid tests on UPlink platform for physician office,
hospitals, nursing homes, home health
Post-Deal Strategic Priorities
o Launch OraQuick HIV in international markets by the end of the summer
o Submit OraQuick HIV for FDA approval by 1/01
o Submit UPlink drugs of abuse product for FDA approval by 12/31/00
o Grow base product lines by 20% or more
o Achieve $2 million in cost synergies
o Explore joint development agreements in other markets with UPT technology
o Expand OraQuick and OraSure product lines to include other analytes
- HEPATITIS, H. PYLORI, SYPHILIS, OTHER INFECTIOUS DISEASES
- DIABETIC AND CARDIAC MARKERS