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Chembio Diagnostics (CEMI)

Participants
Philip Taylor IR
Rick Eberly President and CEO
Neil Goldman EVP and CFO
Kyle Bauser Collier Securities
Call transcript
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Operator

Good day, ladies and gentlemen, and welcome to the Chembio Third Quarter 2020 Earnings Conference Call and webcast. [Operator instructions] And the floor will be opened for your questions and comments following the presentation. At this time, it is my pleasure to turn the floor over to your host, Mr. Philip Taylor. Sir, the floor is yours.

Philip Taylor

operator. you, Thank

considered Risk let to matters. during begin, Chembio’s may with assumptions, on including They you quarterly those from may to Rick Chembio’s control. the Chembio SEC. may that predictions, company’s Chembio’s statements its Before judgment current XX-Q forward-looking and differ uncertainties undertakes and Including conference me numerous Officer. second Form uncertainties, call concerning these made for be that and time information today. projected. this the of publicly or Chembio’s to XXXX, These no of any today, remarks made for Chief forward-looking XXXX. filings, XXXX the risks Eberly, estimates factors time represent SEC we future. other remind in forward-looking. November include however, update statement under other the Chembio’s are, to that, which Form in many encourage those you report all annual risks over the revise results Executive to SEC described on the and and review or its subject call With filings to I’d are report Chembio’s elsewhere from beyond with filings President materially I and turn for Including obligation of like XX-K X, quarter

Rick Eberly

earnings for conference Thank third XXXX call. you all joining quarter Chembio’s

for top our are it developing global Chembio, you workers, a for you the the will providing to health several like the say conclude begin, a new team discuss made and across Today, third and DPP manage priority to is we to Neil who the will that results, pandemic. progress business model patients financial million, a the third we a would Thank of $XX.X milestones our that around pandemic implementing discuss dedication can quarter performance $X.X launch help of to and completing we for of detailed we world. Before start, have including open will quarter, representing centered X% Then consequences. up From facing the that at of of I million, To portfolio total regulatory care of was growth this the and and I everyone product to including X%, development tests tests. caring their revenue respectively, and the we far-reaching call revenue COVID-XX period. recognize decline together, important prior with are compared our in questions. thank

revenues, the Our improvement results from quarter. our third COVID-XX United demonstrate in systems total second quarter States the outside in DPP which IgM/IgG include shipped revenue

We on the also made progress fronts. development and product significant regulatory

we Authorization submissions for communicated, third quarters, and FDA new ahead antigen milestones antibody previously EUA, accomplished with set early by and tests in both applications early the COVID-XX goals or and Emergency fourth to respectively. U.S. of to As Use September end for submit schedule, the October, a respectively. of the We’ve

or premarket last FDA PMA approval HIV-Syphilis for DPP month. received system also our We

beginning by and reshaped the be the products, and disease effective legacy has higher-value has the behavior testing for primarily of We disease population among States to permanently pandemic of the proven targeted in United potential our systems U.S. sexually sold consisting and transmission. care The protocols. the how mark Impacts point-of-care society both for Looking have managing will transmitted most infection functions. tools to internationally. Diagnostic are of use of that and infectious diversification COVID-XX build pandemic health testing forward, to these tests foundation our intend disease tests tropical into upon customers. diagnostic fever change

is performed. experiencing and importantly, locations most unprecedented tests to where in Chembio, available the of are proliferation testing We types the

required for of on medical controlling Central to while using and diagnostic minutes, critical causing Specifically, information. point-of-care are laboratory, increased to delivered the many test retail received results results like on to and volumes challenges also our pharmacies. can because still care decentralized is to result Rapid virus drop large infrastructure XX access health offices, with clinicians DPP factors of and across point-of-care virus alleviate or its diagnostic immediately, preparation volumes. found like can providers The wider care tests This tracing. testing Extreme in to rapid making testing provides and locations are wide overwhelmed the this blood to to patients fingertip contact the for led decisions site. Chembio’s has across XX systems easy some critical and testing in test DPP We’ve care This patient convenient a high make proprietary to urgent and adoption for the from proven of helps doctor’s samples. a health patient reference versatility spread quarantine and platform technology be the COVID-XX with mini later. pandemic increases the to patients in throughput bottlenecks do sample of variety a high-quality, centers that tests require it be clinics, days continue increase point-of-care have time a both to small laboratories complex for instruments be transmission. the seen risk delay tests impact and not use cases. variety alternative use

detect single than For to advanced greater multiplexing, X value delivering test the clinical DPP patient tests. results a rapid sample, distinct platform other from up can

more the Objective Micro for it real-time be of Reader The of early results Because easy seconds. produced Chembio’s our we pandemic. Micro patients, Reader be well realized assessed, solutions. battery-operated approximately site. of the interpretations developing types reduce possibility well designed applications, platform, are error in COVID-XX use, a for testing testing still the while often. to visual DPP for suited rapid they portable, the of optical to by on our in highly actual more reports where are enable tests. that certain of These on results the make have portfolio locations, patients ideally the by For testing, solutions that many systems can more test XX human analyzer features clinically suited in in way DPP flexibility to DPP testing required decentralized provide was to been experienced Making opportunity results

have second affordable beyond, out that patient one by Reader was variety set the any different to evaluate offer in customers United and We in the received a provide antibody analyzer. great an ability antibody and both of experienced These portable tests will or setback. test. to success using Micro a for of XXXX, care scenarios, significant same and an clinicians, setting antigen health well the generated test first In optical of achieved EUAs the we We sales. quarter and States the

the EUA implemented antibody a EUA, And antibody to of for the the following test. months X June, revocation tests. new results of that our evaluate the in the FDA methodology change However, triggered

designing took we new disappointing, action, immediate While a test. antibody

manufacturer. and testing binding IgM/IgG Antigen in Micro as the the designed of September, of evaluation homes uses to the antigen They of increasing tests assay the patients antibody multiplex XXX optical detect application assist with will We the to for single immunity system had who a become population develop DPP Reader viral vaccines. Reader virus a exposure in antibody guide X the from FDA’s DPP detect the grant an and will the the patients other SARS-CoV-X able system, with by antibodies test in include a to DPP the testing were a role growing is technology, and DPP detect [indiscernible] patient sample domain the It ultimately in infection. submitted to in interacts SARS-CoV-X blood With an detecting vaccines a both of test. antigen produces numerical as objective receptor in infections for introduction the ability a minutes. provides likely portfolio in status. independently million a individuals’ illustrated SARS-CoV-X decisions. the only use antigen high BARDA, response just antigens with development body new DPP and submission elderly new a swab that, evaluating results, such U.S. of from antigen choice IgG named To a knowledge nasal test combined the X a could our play complement system. most antibody consists codify has methodology quickly contact of this We was our nursing The completed fingerstick is Micro method just the invasive eventual purchase in an of evaluating help that test additional active to XX tests that government’s beginning Rapid FDA, inform test with point-of-care from intend for as It to antibody following cases confirming XX minutes. patients. risk U.S., It In to IgM in tests and antigen we of COVID-XX to a virus research the SARS-COV-X immune EUA blood EUA responses antibodies diagnosis populations determining provide application a overall analyzer. the months. determine SARS-CoV-X with COVID-XX we The how diagnosis, believe minimally to body of test rapid test test. cases in screening

tests. conducted and we for of just in The possible. launch waiver, the settings. to our on EUA EUA and we And to a application focused was claim, point-of-care produce FDA. application the to were for a We in tests test for as designation Transitioning greater as crucial in known providing is less health focused COVID We���ve support testing assistance. complex disease Previously for the providing strategy allow family clinics look submitting infectious been the as be a under traditionally variety to NGO tests which on commercial both customers. few our the would review our HIV also months. now Internationally, data thankful are high-performing their their test. a States, guidance governments forward ability by basic achieving submit to United to We in CLIA soon

tests, physician launch pivot low-cost customers. or provided the to workers, we information our model As discussed efficient strategy Micro no just of COVID and can and on homes growth focus draw calls, address centers, our urgent health systems labs, ensuring to business of medical patients. a allow on patient substantial health of The skilled effective under easy-to-use for required opportunity setting, test clinics, more centers, most we deliver the the our emergency in facilities. tests state The nursing to these offices, any are driving city U.S. by a care each important providing diverse traditional prior nursing markets. and interested and and markets Potential rooms, $X,XXX. care results in health departments, care settings using to are landscape purchase hospital services. our infrastructure across health health set for DPP conduct test include for investment Reader beyond accurate in Customers care training testing There’s is

combine industry. our sales will who with We established direct the channels across force have distributors

been representatives in our Key have commercial Given the since managerial of customer built. marketing positions prior this spring. and been infrastructure underway service experience, build-out sales, the has across

to at distribution team an example, is relationships with For national on of trained we experienced large acquired distributors, The DPP now deepen Fisher platform. director Healthcare the our distribution.

following place, and We to Brazil, Internationally, our commercial up strong we are are have across we Africa team to quickly ramp in continue authorizations. expand ready Europe, organizations will with and to service. that and partner footprint. to leading excited relationships strategy The product

sales of revenues quarter United tests outside States. Third include antibody the the shipped product

and in customers Micro have test offering are a have against test all COVID-XX remain systems. forward, of one any a test. a Readers of many Testing Moving Micro who in run competitors competitive customers, our only with they maintained Reader, our include and our type portfolio. dialogue provides This systems we can once they interested advantage

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to in physician for represents the CLIA rapid are HIV-Syphilis to the can approval we PMA family transmitted system testing multiplex from use test approve office available from both forward our This includes step a is rapid the hospital the working and process we a moderately and XX,XXX with test labs are syphilis this sample. which FDA, complex The We to test, HIV with distributors to test. significant this labs now a would pleased Reader. labs, locations pursuing received waiver health detect for a sites, clinical and very DPP first planning approximately single rigorous have is certificate. diseases. approval this that expand patient are waiver. Micro from The the enable and The complex To to moderately public clinics conduct sexually

up such, untreated virus. As that to submission. pregnant can and in forward that who reproductive disease to Co-infection CDC with with generate the of fold age the during cases. an and if increased according to delivery consistent of moving XXXX, in a Prevention, has infection Control Congenital or and rise. X also infant for CLIA increase syphilis still lead acquired Disease during the to before individuals the we women cases estimated in syphilis U.S. has of from active result on for of Centers XX% four with XX% studies required in are to an contracting in infections XXXX the death birth waiver HIV women up the the reported HIV syphilis increased same And to active to rates X XXX.X% by among exposed XXX.X% to risk the the years syphilis fetus are of may The data have infection, period. syphilis

treatment, Chembio’s HIV that can congenital a care test U.S. of of can point-of-care syphilis diseases. of at the and could in both they still hope United to preventable States onto clinicians Health diagnosing or women. help their at setting. effected and patients CDC syphilis, risk And Department while HIV-Syphilis effective learn treatment the may and significantly our be are through reduced status mother-to-child and so in the reduce disease is unaware living of more at people be we infection patients treatment. connected By HIV co-infection Human pregnant individuals these testing getting know, tested testing X of to that HIV system prenatal DPP you The According are assist X transmission Services, infection. infected improving to least access people be annually. higher can recommends HIV in with their As

a disruptions. tropical test continued by Report our Ensuring to on caused chain test our As production away from last the made international the We for schedules. and deliver scale in Bill to testing. are we discussed The testing well a have priority. in place the our manufacture global to essential disruptions the our close of The the processes well focused of on conference launch we HIV formulated, is our commitments COVID production legacy it. support additional to disease In call, these Melinda returns is divert and our ramping manufacturing look are with resources add to test as global anticipation funding the as while XXXX positioned pandemic to & and result HIV new our coordinating up suite supply facilities of contact production top currently forward prevention to re-expansion supporting has support Foundation’s a is full products, Goalkeepers products. of of and remain on customers of plan on states our that and HIV suffering logistics and funders

past assembly. provides We the will for and scalability, both common factor, portfolio technology manual tests will and in same made production and and consistency production advantages provide to our automated according and form flexibility further demand. quality our capitalize DPP scale production of automated To years, set manufacturing The maintaining X commonality, significant efficiency, that a which investments over we improve lines this the standards. while have on use

Now, quarter to over the I third details turn will Neil on call the financials. for

Neil Goldman

Thanks, Rick.

year compared growth and decrease quarter. XXXX, X XXXX to X million, of quarter a increase royalty XX, September revenues for $X.X and program of September for compared third cadence year XX, months period. the revenues incur at prior quarter. representing of of grant which year do R&D but License million, period, to expenses. million, timing Net related combined $X.X XXXX, X% we occur the were performance not the X% the the product were to obligations, certain the of to and For the months total R&D a ended and $XX.X revenue always prior was sales the of prior compared an to XX% certain continue ended

and model development testing the of As of tests our same COVID-XX. third quarter, legacy to COVID-XX infectious customers implementing products. of disease toward focusing the continue resources we Rick our on and described, continued time, business their much commercialization during resources our new At the devote

have for accounting revocation that of requirements continued Our for outside as recognize revenues of on September have customer the declined margins accepted system ended recognized million principles The period. antibody months FDA’s for during decrease significant X COVID-XX the to opportunities XXXX, system $X.X system we the the September the at the reasons, delayed reflected compared principal product were quarter X U.S. I the year time; Gross systems XXXX. impact second generally IgM/IgG of from systems unused now in described revenue. quarter for the to a of precluded IgM/IgG DPP quarter ended recall quarter The the of COVID-XX the during DPP third met sale not the customers within resulting The the of negative the XXXX; included also by during prior to of months some U.S. third our XXXX the internationally. It revenues XX, during of during XX, EUA XXXX, X during revenues product our U.S. second as antibody that the shipments the that previously of XXXX. developments.

we geographic XX.X% unfavorable product quarter we third average our only of of XXXX in First, in To period. have lower highest to with product countries X.X% product in year sales U.S., the sales selling sales concentration the prices mix the much product during compared experienced where with prices. were selling higher sales of illustrate, net prior average

have of Additionally, of the period. selling net sales to of the sales, sales IgM/IgG total sales U.S. product in combination U.S. absolute year of pandemic in the COVID-XX to Africa, the during have reduction of the tests, as lowest sic HIV of a our revocation impact described and product precluded quarter compared XX.X% percent third systems XX.X% in The the where the June quarter from during XXXX Rick prior a prices XXXX sales terms resulted represented in XXXX average as in both for earlier. FDA’s on we third demand and

automated Second, we million such months of at million. the or the general as or items modestly $X.XX per XX, of quarter of compared the to months including together end loss in XX, September in manufacturing the second triggered period. by manufacturing administrative shifts and XXXX X activities to increased diluted year was with to increased ended recall experienced a qualifying the the lines. those share $X.X the XXXX, $X.X inefficiencies, Offsetting related operational prior XXXX, to million the per or by products compared starting product the these million schedules was expenses the million X quarter diluted Selling, period. quarter expenses and $X.X research a share, combined $X.X in shipments $X.XX period. million of net Other compared recognition September year in outside expenses, for year R&D administrative were September which and loss prior prior XX, were previously general XXXX, ended XX% ended U.S. as for $X.X from selling, includes by $X.X deferred of that described. of into net development and revenue third XXXX, the I costs Net

cash capital, remarks. XXXX, sheet, for cash On as now Rick the XXXX, September equivalents, as of XX, I’ll working call of the $XX.X million. concluding XX, $XX.X totaled back balance million. September and to turn Net was

Rick Eberly

Neal. you, Thank

to have development a portfolio growing FDA; the applications product been the to the leader an COVID-XX antibody X submitted testing make would our COVID-XX. as few in of for strategy address months, have pandemic. we executed the Chembio past antigen and approved Over and needs stated, regulatory point-of-care EUA

surges opportunity pandemic offer we some solutions to in numbers our the the future. are As the record forward across to case in to looking United states near States, the COVID-XX

in clinicians to the system, access clinicians supply. DPP Our point-of-care never for U.S. I’m testing. has utility rapid been COVID-XX promising. fully setting patients health care of with outpace health care system. continues market technology testing. far outlook of has consistent improve across Chembio realizing And and decentralize platform commercial the expedited The our of team’s The has ability every long-term that accelerated diagnostic success. message to so offers across Both proud the is shown That our are growth positions clinical to and technology That more been for organization, why the our expanding demand development and solutions. sustained

to you as look our We thank PPP on us need. like be are able for business you drive testing new execute Again, I would their with hard our open for times. updating of our work call these model. dedication joining in And employees to today. systems point-of-care to that, the trying in up please for operator, questions. and forward we humbled continue of to adoption this Thank kind We to

Operator

Bauser Collier at [Operator We’ll Kyle to go Securities. first instructions]

Kyle Bauser

caught So, I sure I want make to this. just

test? was COVID submitted You application? this data after for talked Was your requested that FDA waiver. about, you Rick, for CLIA antigen the submitting a data the by And

Rick Eberly

Yes. Well, I was referring data. CLIA to waiver the

part that are of We to the EUA as a the FDA submitting submission.

our And SARS-CoV-X waiver. antigen to so, have a DPP for CLIA plan the is test

Kyle Bauser

the shortly And same it a so thereafter. at or that as time like, could potential sounds approval, come

Rick Eberly

correct, that’s Yes, Kyle.

Kyle Bauser

sense the by the get to the for a QX, it’s the a for antigen tests for just less is decision. how many a currently and how know lot being antigen of side. COVID are timing test, Obviously, FDA I’m each? do antibody And evaluated you trying

Rick Eberly

talk try weekly doing of test. FDA, don’t review have to town we numbers and about speed their up does they’re Kyle, into I visibility the exact process. antigen the meeting know Yes, for antibody to both the their and what in backlog great hall submissions the the

very communicating, their And staying changes obviously are what to the to we process. any FDA So very, it. close review relative is to

that. And so, continue monitor will to we

is that very the review speed And get to and able our process hope near the will future. reviewed approved we’ll applications in Our up. be

Kyle Bauser

time. I And are then to may, I’ll just just X system, ask might then dynamics stumbled in the COVID nice see this to there both revenue gen Neil, approved. antibody QX? us multiplex same right on an tests more the There lastly, test. market DPP compelling any really HIV-Syphilis regarding is in update these if here? the give hit at now line And an you the get the for for that that marketplace Can value were that proposition some competitors the compared pretty so HIV-only

So any if the of pricing. update will And on market this there? premium have dynamics kind

Neil Goldman

Yes.

first second I’ll Rick part. of take the think, part take and the I that, Karl, will

that we’re sold tell that to order into up included $X.X I QX sales that, you earlier on to to can our of there for in of initial continue which is was not So revenues beyond going international Bio-Manguinhos. ship in million QX. get And But side. or announced amount tests our the year some will are the being taken that this

Rick Eberly

is Kyle, Rick. So this

DPP the that of dynamics extremely for yes, HIV-Syphilis the approval terms test, by we’re market FDA. excited the In about

mode. in full distribution Our partners commercial a launch team, with our are along

and HIV long providing are actively our such Syphilis talked for market testing product. to now a We are has selling time. been that The combination who about the of dynamics distributors, information the are

get product process in X approved. to years, around order approval that PMA was Our

approval. And so, delighted we finally that were to get

So promoting marketing we test. are and the actively

That of in the the transmission about clinical we cases HIV talked For we’ve remarks. prepared use and talked about, numbers. in some issue co-infections public that about for the the in patients, terms talked mother-to-child of that health we also

So the commercial engaged. organization is fully

selling that are product, actively hoping QX product. revenue some we’re and the We have to for

Operator

And to Instructions]. today’s back conference the any conclude will I’ll for or closing that now management Q&A. additional turn [Operator comments.

Rick Eberly

thank We to time you Jess. for look communication you, future. your in today, the really further forward we and Thank

good everyone. you. a have Thank day, So

Operator

a We ask for -- will disconnect and thank you you conclude this can gentlemen, call. your Ladies that day. and have and at participation, today’s time, that great