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Chembio Diagnostics (CEMI)

Participants
Philip Taylor IR
John Sperzel President, CEO
Neil Goldman CFO
Per Ostlund Craig-Hallum Capital Group
Kyle Bauser Dougherty & Company
Bruce Jackson The Benchmark Company
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to your Chembio Diagnostics Fourth Quarter and Full-Year 2018 Earnings Conference Call and Webcast. [Operator Instructions] At this time, it is my pleasure to turn the floor over to Mr. Philip Taylor. The floor is yours.

Philip Taylor

Thank you.

meaning let this you X, current conference forward-looking within today, remarks the XXXX beliefs begin Act statements during Securities made call the of we the me concerning that remind Company's include of Company. Before XXXX the the of Today March

risk uncertainties today. including may time including and publicly and statements that, uncertainties to risks XX-K over factors Forward-looking President and review I described no subject Chembio's materially those in filings to projected. are those all annual obligation which the from Form differ XX-Q. quarterly Company's Sperzel, numerous Executive revise to Chembio of these are With to any Officer. Chembio's its to update reports the and matters. SEC and filings other undertakes turn call SEC beyond under John risks time made Chembio's on in assumptions, John? Chief many encourage Chembio's results subsequent elsewhere Form or concerning three control, I'd on you report XXXX from statements to like and forward-looking for

John Sperzel

about XXXX joining Philip. milestone company's in Thanks, Chembio increasingly and the potential. confident had we for today. long-term year are a Thank us you

XXXX advantages of for confidence achieved million give obtained revenue The handheld opTricon, we in And revenue first acquired XXXX analyzers. which we strategic full-year $XX for to the million. strengthened produced representing portfolio $XX of prior-year provide optical delivered team we regulatory the We we XX% our Our the guidance and initial disease infectious nearly million, to $XX.X to AstraZeneca. growth of addition tests. compared XX test approval momentum through and million the developed XXXX

Chembio financial gross targets by our toward progress we announced start each previously against team priorities. set XX% we conclude blocks financial XXXX. growth revenue in and we XXXX As by XXXX, priorities. review by then the building year-end our with Today XXXX reviewing drive four performance and to achieved XXXX performance our in of and will priorities, of efficiency, $XXX we our margins X-year million priorities The XXXX will operating and our

priority first our was core Our to infectious business. disease expand

infectious totaling driven Africa, XX%. sales we Latin X-year business where by regions America continuing $XX.X adopt $XX.X where Europe XXXX. million, disease in by in which and to Leading our in product Ethiopia testing Brazil Increasing sales recognized of the models. we XXX%, to growth included was as during growth a increased these we grow and Europe more Revenue XXXX, recognized and winning XXXX During during XX%, respectively. million tender government in $X.X drivers self countries was sales XX% increased million HIV

to was and leverage patented scientific our priority second expertise. DPP Our technology

for will eliminating pregnant the the on importance we We clinical for women, to test child to include us toward we collect plan is additional to HIV both support the submitted we States PMA opportunities. which made option given Administration and was both XXXX, Food significant with additional claim protesting syphilis. this FDA provided and mother which data of believe to HIV eight of an data, essential a transmission weeks. estimate syphilis to The approval. United and pipeline During are progressing agent agreeable XXXX. we to and The data seems the HIV Drug In multiple February, progress syphilis in take

these our Zika products XXXX. previously during chikungunya were chikungunya, for Health submitted approved dengue Brazil Brazil's by begin and suit tests and hopeful Micro of approved in will multiplex Anvisa, believe Agency. We our dengue Reader Our test, be following test review test to test Zika, and Regulatory these we're selling

test. focus granted the the and fourth that now during quarter of shifted and emergency was our novel authorization Food we’ve Our XXXX, commercialization Administration by Ebola test use Drug of toward

test, Zika Zika the the test is government the in only authorized use which world. by rapid BARDA U.S FDA or funded emergency is Our

status, of under also sell for currently submission, test nearing the quarter we're we funded XXXX, the XXX(k) completion Zika is second the of end clinical support our of by which and While planned EUA BARDA. an studies FDA to

HIV prequalification Mark submitted fourth quarter XXXX. in during for note feedback filings that the test product and for received use. XXXX. first WHO of quarter same Our XXXX self Mark on for prequalification these to the professional was important It's and during CE of CE of already anticipate WHO the quarter the second We

developed a in FDA pathway de pre-submission collaboration obtained pivotal study regulatory working with market AstraZeneca support novo agreement We're process, a to to this first Mark. eosinophilic Our develop test U.S respiratory test on pathway. including the disease for CE a in its regulatory the approval, through the

update the filing trial timing will XXX(k) clinical with on the and We have we agreement the of once the FDA.

worldwide. broaden third was Our and priority to sales marketing our channels

way XX which registrations product Latin which Historically, commercial the sales. in regions, product and we distributors countries During limited products important never two added America for were XXXX, the expansion Asia, commercial registered plus most and paves opportunities. numerous company's these Southeast in additional and throughout

priority automate essential scaling step view manufacturing business in margins. was U.S to an our fourth our and enhancing as Our we operations, gross which

to our we as XXXX, our of products. manufacturing took line, and we first efficiency automated ordered improve which fully quarter will the nearly production of end infectious first capacity, disease and increased delivery expand XXXX. XX test global produced by demand the During of as million begin To responded mentioned, we for

analyzer business center our DPP a of of opTricon as The its the commercial to activities. provide Control complete test our was technology was to technology integration happy and for operating Finally imperative our we significant the the is quantitative commercial Berlin hub. by well acquisition and of as in Operationally, integrate company. optical optical report we're market business continue as our is is enabled to development of this milestone a ability capabilities both optical advantage. for results facility excellence the European as our

team of proud the what XXXX. are We accomplished in Chembio

financial now and will fourth Goldman Neil? results. Neil CFO, Our review full-year quarter our

Neil Goldman

quarter fourth quarter of beginning of compared for sales by quarter selling fourth of $X.X Gross of of increase our were fourth XXXX, product opTricon's the well with quarter XXXX. costs share the XX.X% $X.X XXXX the percent compared of statement fourth the period. and gross the share $X were million, The compared fourth diluted product research lower for Other prices quarter $X.X XXXX. the fourth and to million in the and In resulted development the and of we XXXX, quarter costs. revenue of margin current XXXX. excluding the fourth revenues compared combined margin X, loss License of XXXX general Gross million completed of increase XXXX fourth total which opTricon increase XX% selling, as loss an fourth million was related a each with XX.X% was quarter per in XX% XXXX with XXXX million, process. the In XXXX. dollars quarter in compared includes in diluted consolidated margin and Net of of quarter to primarily grant to the and the XX% million, $X.X million associated compared from for expenses, fourth XXXX. the operations scaling sales to was and royalty XXXX, for an results $X.X was as and lower November quarter the markets of of net percent prior-year of to of compared R&D average the November quarter the to fourth decreased John. $X.XX XXXX. $X Net acquisition milestone Thanks, an acquisition of or or assembly of XX% fourth production mix administrative per quarter includes labor from manual product expenses of $X.XX

milestone lower XX.X% Total Europe. to XX% increase to compared of milestone XXXX. XXXX million, array increase Net for from revenues collaborators, margin in XXXX. and $XX.X XXXX results. in revenues product and financial grant to a grant compared $XX.X gains America from XX% product an AstraZeneca, product for million, including benefited sales Africa, prices XXXX. strong mix compared sales revenues current BARDA. scaling average manual R&D process. assembly in costs from resulted associated XXXX were royalty as million, margin an Gross to XX.X% R&D of from percentage was $X.X primarily full-year of Latin were XXXX Net Now selling to well for XXXX XX% in with sales XXXX markets percent totaled LumiraDx with benefited increase and lower XXXX. and of of turning product as The labor the compared broadening gross for License and production and an

million to $XX our costs. basis, per related development year. in revenues. may milestone per XXXX, been or and with share increased product fully and margins. in an R&D million sales were $X.X we to we growth was acquisition net costs relates each As the approximately Had Other on on looked impact have expenses general environment, which for been have manufacturing automation the administrative at During advance would margins $XX.X research automated? includes pro our XXXX, XX% selling, gross a forma expenses product and towards million correlated $X.X The a diluted increased in million we and have share diluted excluding and commissions or million automated compared Net with $X.X compared $X.XX related XXXX, primarily XXXX XXXX. to of increase grant loss loss R&D $X.XX for gross

XX, December totaled the and million. cash XXXX equivalents of $XX.X as On sheet, balance cash

November of lines XX,XXX plans. end support million offering completed operations. consolidate, During XXXX, improve purchase and million, our and XXXX, third capital initial foot completed provides long-term underwritten the necessary second public expand $XX.X facility which the to that generated automated signed a We and deposits manufacturing a subsequently to of the on proceeds an lease we our made subsequent on GmbH net opTricon $X.X XXXX our to square of

Finally, our I will on touch guidance.

of the and half mentioned, approximately full-year believe revenue on second expectations, in the half XX% million Based John year. will approximately split and $XX be we between $XX XXXX in As million. XXXX the expect XX% year of the first we current revenue

final following be with our the XX-k SEC As matter, will my we week. next

priorities. turn John Now our call the to discuss XXXX I will back to

John Sperzel

Thanks, Neil.

first As Chembio pipeline, on focused XXXX, the One, our with commercialization. R&D we our and the three expand prepare is priorities. Two, expanding priority, team commercialization. advance look growth. for our Starting three to

by our years, product two such products team. believe plan as and revenue be last XX%, dengue, We core including HIV testing, to respectively. primarily HIV channels and will by driven expand the commercial Over new XXXX, plus Zika In we registrations, distribution products, HIV-syphilis, increased our chikungunya. self and growth XX% we

In fact, during lead we an European commercial the first quarter to experienced Abbott our have executive from of efforts. XXXX,

award $XX.X for Brazil $X.X and new a UNICEF today and totaling customer million. million As funnel order including of test sales million we a enter previously Ethiopia. and up our $X.X is strong, Plus announced to announced from in XXXX, U.S Zika our in Zika dengue, $X.X a orders we chikungunya million conditional

our Moving offers made of to optical combination science pipeline. funded second proving external and technology and world a programs priority, technology, from newly DPP enhanced multiplexing technology capable and outstanding R&D results. progress, The our of attracting leading quantitative combination organizations. funding advancing sensitivity, We our powerful providing advancing internally acquired and our

look funded our During product to additional all development and initiatives, XXXX growth externally advance new pipeline announced providing we current opportunities. at aimed

Following the of reader. the DPP developed opTricon prototype on generation already we've optical analyzer technology a patented next as same the the based acquisition, working micro

plans Berlin development during team to in XXXX. complete Our this

preparing for third the priority, to Moving growth.

To end million took are of mentioned two the which in capacity which fully our of manufacturing we These to XXXX, by for on first automated three the line of United increase States fully lines will the we quarter. based the end during As automated a be U.S operational $XX two annual be future tests growth, our XXXX. first ordered additional earlier, to operational lines, by shift prepare will operation. plan approximately production manufacturing delivery manufacturing

XX a our million Malaysia two shift on addition, annual capacity operation. In approximately is based in tests

of third lease To Malaysia previously WHO will we're distribute our Hauppauge, these our occurring products, Africa. Malaysia in square million In the and facility a technology Chembio U.S commercialization we and phases, in and XXXX facilities? investments administrative for Malaysia margin will technology prequalification HIV the now by Investing significant catalysts anticipate products the on to the half to our of XXXX, revenues the multiple our move facility of Leverage XXXX margins of functions. warehouse and significant in pipeline, XXXX. expanding consolidated development allow during products Focus the delivered to pursuing discussed, of allow commercialization prequalification to $XXX U.S year-end expand, build facilities. consolidate, U.S facility in an quarter growth key we into our of XX% the a in our with first expansion We during As and for be questions. XXXX. will to XXXX. by foot manufacturing our future foundation made manufacturing platform, XXXX. signed XX,XXX growth. and team on gives and our which R&D proven have In in and reach second to with execute advancing opportunity, summary, a STAT-PAK open and and can York. us We on automation, improve higher quarter experienced plans. up that, us R&D New it production confidence a improved capital add of Operator? e gross beginning manufacture WHO to teams With market

Operator

Capital. Craig-Hallum we Instructions] [Operator our take And with you. first Thank from Ostlund question will Per

Per Ostlund

guess congratulations obvious guidance. question and Thanks. Neil introduction my I is Good afternoon, question first of the XXXX. on XXXX an the excellent maybe John and

targets You things. a itself, of don’t ago. out specifically front that Day go, the you Analyst month longer on guys as your of about these here, your type To me put step out too in to far term the skies take at type get to strike the XXXX

took So of evaluate for the extent in to going when to the you and that emerge sufficient were is and you room a your upside it other come that what number that out year. to where safe self might some approach say that with inputs pretty opportunities you the later the measured to that

John Sperzel

approach, we it out the for is process. thank at the Per. the next Analyst as fair put you acknowledging our that It's to targets This measured long-term in step Meeting. characterize a And

million the We in between strong out we million strong and pretty and might add, I have year business, in guidance funnel, going into confidence XXXX. for our that of a XX confident revenue $XX confidence feel first increasing with a and pipeline half the in putting

Per Ostlund

Excellent.

Very good. Okay.

conditions congratulations So agreement? on award. purchase maybe meeting then related UNICEF timeline then And is news, have you the of any the maybe the for turning test. as the as to expectations today’s Do far it since that same

having Brazil is Anvisa. ideally maybe protracted, And review all then that been there sales have assay, pending. combination to that commercial Have Brazil still the XXXX is alluded making would made expected or during awards guess, triple from anything, it well. besides You is combination you anymore at of assay still as the being in a in the I

John Sperzel

Okay, great. Thank you, Per.

that press attention. some typically comment the would release issue was one was that make me this my to let call we up First, brought start to Apparently hung for technical reason.

want let way. that on know So I people just that is the

questions obviously your get press today's from to pleased release So pretty about we’re UNICEF, that. about

have and antibodies. a minutes XX provides results for diagnostic test both in IGG rapid We IGM that

of provides drop So it actually test that results a blood multiplex six XX in is a single with minutes.

the reward. for to UNICEF or world and CE clear end July nothing that there's requirement they us mark So August. us like else meet in by a and the gave that is recognizes a the it's of that There

clear add a was an terms to that One that press globally. Xx On other that that is average thing achieve might selling of timing. product in sell of between the test. price that and is going to that in HIV price basis Xx target release is typical to UNICEF the a I that average So not we're the somewhere we have

talk we test selling of And what average order of it perfect So particular that that’s uplifting terms an when higher about we gross about. margins. overall have that are commercializing and example up in talking it developing price

Per Ostlund

[multiple Very, speaker] very

Neil Goldman

of approval, the we is same line the process As at chikungunya with goal and We both and is getting just your test in to going at literally combination Zika terms Brazil It's IMCQS believe far saw question. test follow Anvisa it's our a with step on multiplex test two-step that Reader. Brazil. our concerned, that as continue the or Micro

that. about confident pretty are we So

We are the test that. we have on confident about results the visibility of

So has Ministry issued -- Brazil. the of award been the and in not Health from

for tests XXXX. those For

it. get to hopeful still are we So

Per Ostlund

laying the early regional that and Coming you that me someone and is Last in. opTricon, new start to in jump then talk initiatives jump kind it's initial to miss for to rarely your head groundwork Okay. some initiatives of water obviously very of your can Excellent. back here the for I'll the the one -- Coming back some but let's in. there that.

John Sperzel

Okay.

parts. So that I take will in two

about -- of about as, think operation, development. First, the we’ve talking as operationally in the I’m opTricon, that how the both acquisition I doing in integral this commercially talked were part year we’ve well and of and become an everything product had we

So, test almost regulatory an we’ve part it's numerous It was submissions. every with or the Collaborator, single optical disease in infectious of that our that requires reader. Whether pipeline.

past, were first organization collaborators company, important So came the development us you talked product we product important was business hands strategically on do this times directly standpoint often company, to potential territories that rights global all application. standpoint, the that was Getting the rights meeting diagnostic incredibly it And whether standpoint. it both our commercial owning for no yet. became not gave to applications the or it was a it, that Pharma and question a a for in and times the from really government company. in product have up was just all Often with answer to development a we

completely so table. off we’ve the taken And that

already sit down that partners one OEM allowed of the for specifications We number part will, potential we And next been have response business The it at thing and show quickly first that a now showed with together that on priority, in And an the Berlin generation of us enhanced the you the has to tighter put specifically side have taking being -- do We in outstanding. been speed allows and collaborators our us New do wouldn’t other that they without if XX or City. owning working have product one that we to able our not to family. customers, development level @ Analyst the to of out analyzer. Day, that are is and the York had. prototype profile, team prototype it

Per Ostlund

guys. sense. Perfect Thanks,

John Sperzel

you Thank bet. Per. You

Operator

you. Thank

question comes from next Dougherty Our with Company. Kyle & Bauser

Kyle Bauser

questions. Hi. Good evening. Thanks for taking the

So, appreciate on during the progress analysts with your update AstraZeneca the day.

disease, for disease. And in -- this you’ve approved Can diagnostic pretty AstraZeneca's this lot degree its be be conjunction a is There's different Japan. applications. contribute to of that clearance Fasenra it's XXXX respiratory which assume in we Chembio and will Europe mentioned the a to general opportunity eosinophilic You with would used will guidance, to U.S., the the extend what you about any can now. your speak since pretty

Dr. David Roth

Yes, hi, Kyle. you. Thank

we developed in opinion in their we hand how in and material at identifying that -- starting We that are during embargoed is. your do in We this know will up is on that if application of be, we some revenue I of Day the will Europe say the say to the specifically AstraZeneca do a agents different what generate mentioned revenue. key anticipate can't it starting not compounds question, or we process has terms was allowed in believes number point, -- part completed leaders Analyst But XXXX. product for. potential that first testing. picked time, that specifically don’t what to it at will believe it across you getting but if can't initially was question say of of this -- That start second will. or What that the I drugs start

Kyle Bauser

the then -- of margin. And guide so gross XX% thanks. Okay,

XXXX. are that XX%. automation had-to- years, would have in had We and hit our five you full said It

from will you it. quickly is the of much like expansion, it and talk all, at can that least, to So New subsequent pretty automation end percent of main that. XXXX that first come factors At York margin seems what other get would be by that about XX the [indiscernible] after then gross in of the

Neil Goldman

hi. Yes, Its Neil.

our so assessment could did together with strategy important of colleague. back suddenly and that business felt taking is with they of That’s your that is share an what that and about correct. and appreciate been we we’ve So executing to on, the analysis important part people why went that

yes, towards gaps nice the us So, direction XX%. that

in infectious to And ones alluded as our John price into get both with of The second products common disease many higher are units as to test piece our And across that’s developed well and in portfolio, collaborators. part profile as example, associated the that being theme the through an program. second portfolio target. the the margin average selling is it its is a

Kyle Bauser

All right. congrats questions taking and great. the That’s Thanks on for XXXX.

John Sperzel

through to the Thank was very Thanks. want just are you. focused those proceed. as pipeline those saying are as we everyone we obviously I on update on -- they advancing

Kyle Bauser

you. Thank

Operator

Thank you.

with Benchmark Company. our will from Bruce We next Jackson question The take

Bruce Jackson

Hi. the contract. Congratulations on UNICEF

that and Mark quarter the CE be all over in The is incorporated into is timeframe. It's kind it it the the guidance. first the will revenues and just is backend going in question then, in be is, And fourth August third July, that revenue your fourth expected or of given to spread quarter loaded be can quarter?

John Sperzel

Mark. So We in the literally not or our our CE on conditional. award UNICEF that got Again, getting in It's guidance. was award yesterday plan dependent it's morning.

have yet, We from gain CE we to award would of latter extend that, filed are it the be so not part XXXX. the in for to sales Mark able

Bruce Jackson

going And piece data resubmit the to weeks. the like it. It's then, like expand test, it, collecting Got take be labeling. package you the combination What and some syphilis going X there a that? plus Is to happens new analysis to about data you discussed it got help HIV of everything. to Okay. with after

timing you So data. get it looks anticipated the the new after

John Sperzel

question. Great

while officially data. that stopped, has days collect we clock the XXX were clock. the There So, on

that’s to it, legal we will have. time they data resubmit has all So period clock Doesn’t agency the the the they data. collect the that mean continue. that the time of that’s will time, that when that And review amount that take and we

Bruce Jackson

the of question revenue, to guidance. of the coming the Is little product incremental be a Okay. from mix over XXXX most And on XXXX. the last revenue similar

John Sperzel

it of comes think most product I revenue. from

Bruce Jackson

Okay. That’s it for me. Think you.

John Sperzel

Great. Bruce. Thank you,

Operator

additional over for questions any at I to closing further now turn John this to or There the no conference appear time. remarks. be Sperzel will

John Sperzel

great year Chembio. a for was XXXX

on established evening. next we look We a to our updating XXXX the have very you have much and progress forward on great Thank priorities you and quarter. clear for

Operator

does you. today’s This conclude Thank conference.

You a day. may great now disconnect and have