Chembio Diagnostics (CEMI)

Philip Taylor IR
Richard Eberly President, CEO & Director
Neil Goldman EVP, CFO & Secretary
Per Ostlund Craig-Hallum
Kyle Bauser Colliers Securities
Bruce Jackson The Benchmark Company
Call transcript
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Good day, ladies and gentlemen, and welcome to the Chembio Second Quarter 2021 Earnings Conference Call and Webcast. [Operator Instructions]. It is now my pleasure to turn the floor over to your host, Philip Taylor, with Investor Relations. Sir, the floor is yours.

Philip Taylor

Thank you, operator.

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

Richard Eberly

afternoon all for regulatory, second commercial, question-and-answer to in objectives. Thank across I session. financials development, share product and excited and then you, will up conclude address our open Neil thank will business I'm detail, us Philip. for today. and call on call, you quarter Good updates today's Well, the the joining operational a

XXXX. making during $XX.X antigen supply in test quarter, to can COVID for shipments test our file to pandemic. with Before under of already the highlighting initial we antigen second second our addressing success achievements needs our the physicians for of Starting believe dive support in into begin DPP I of COVID-XX by the to of half in order financial want million SARS-CoV-X Brazil's delivery we company the the opportunity largest recent and XXXX. We've commercial Health Ministry urgent history, that the to and be made

HIV for shipment order, the to test also $X supported We purchase by Ethiopia. a million received global fund

gross of $XX.X July. offering at-the-market date, proceeds financial in equity we side million Importantly, have program to on we through the late raised launched an

capital, Our the which will initiatives net proceeds deeper traction. in they working mean support to deploying strengthened and provided for Later future we have Since into development forward. establish these the we are our we sheet. balance help call, our commercial to dive accomplishments and from this ATM quarter business end, meaningfully offering the product going what

royalty and revenues going to million, grant of total the including of Government generated combined million, quarter, R&D revenue compared period. and $X.X to $X.X second we the of XX% and where $X.X second were in Now X%, the prior product revenues, representing growth revenue quarter respectively, license income, of million. XXXX

United products new and mind, areas product higher these clinical or diagnostic in product to progress. Chembio, aforementioned potentially current platforms demand X are Currently, in leverage we operating receiving and #X, States. outpatient large operating a where, include are with market. testing the While features diagnostic long ministries purchase diseases. our and to test of in our variety increase due infectious We've for expanded attractive have obtained acute have in average were milestones commercial received products, considering of markets clinical transmitted quarter of results, of SURE recent test wide and physician for are orders trial and application meaningful that a and demographically, care our under the we're STAT-PAK, our the provide pleased rapid profitability hospitals, other criteria infrastructure expectations With diseases performance a solutions remain of we point-of-care Chembio. products with for innovative availability; and create high and the wide in factors DPP a or underserved and We we customers, and outcomes. geriatric include infectious due which diseases, such below #X, include reference insect existing with focus population, products rapid at propelling commercial offices, and our of market globally share. unique diagnosis as the arise diseases health. differentiated committed delays having prevalence need rapid focus advancements previously development At our in the are results the multiplexing. high to treatment clinically. that laboratories, These Of that to opportunities vector -- commercializing regionally, centers Many timing developed drivers which plans for our achieving diseases, NGOs, to internally we our awards, patient products sexually care growing aimed With our diagnostics respiratory note, branded orders variety infectious anticipated as technology and globally, the gastroenterology, Board including test diseases, a strategy market prices. DPP to selling backdrop, second to opportunities impacts rapid urgent claims, benefits #X, outlined CHECK, efforts on

near workers broader to diagnostic space other of urgent average on testing results, the days, our differentiated Europe technology lab-based for that our weeks, research us selling testing. decentralized need expanding our gain they disease aware opportunity We we've customers, on of actively turnaround states will to offer methodical immediate a is results the for prices test point-of-care patient approach of our receiving new pandemic, the downfall evaluate not U.S., products. patients. height to to to understanding patients' health We be a high-value needs the could the drivers, PCR spreading virus. the experienced not value management. conducted The hand, markets slow many deep PCR submitted of market menu and internally of to for has applications now testing take care leading anticipate provides the base. patients allow are Anyone calculated to growth providers who test is if acutely point-of-care care other At pandemic, health start a of to throughout access are analyzing results Rapid and to both that the higher of providing broad-based COVID-XX communicated or the for customer care and leveraging our in with existing adoption the the and rapid

We sale are in approval committed Brazil, of marketing tests and antigen to offering visa for we CE Internationally, portfolio have point-of-care and approved Mark and for COVID-XX Europe respectively. tests. a rapid antibody under

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for of for program to their of HIV XX% their by and April HIV of -- staffing, by their has the the compared of tests who initiative, identified matters by that XX% control. To undetectable our from have tests. treatment the limitations bodies. during people and vital on operational chain, Nations on before supply XXXX have the XX% global turning may Brazil, be to same HIV-positive disruptive purchase COVID-XX HIV this affected HIV to September outside on XXXX, know for XX% HIV-positive note the order number HIV for of end, status, covered an on joint in It's levels impact United status the intended health our large the XXXX of April in liquidity, targets important call The report our portfolio fell the on viral other that XX-XX-XX the touch Neil. delivery the of of addressing of targets are of over As full testing period remain achieved need public treatment, be XX-XX-XX to people Asia now to and Chembio's and suppression I Fund period we order people know will As according market focused with and our by a infrastructure Global to will on Africa across pandemic. the HIV and will

Here, over related the the of steps facility, are will United past manufacturing operations bit, discuss With test our year, in test decision final as States. a our to the Malaysia the mentioned, entirety our manufacturing have processes. in automate which taken Neil to we

reduce improved appropriate margins, continue product take increase steps costs. manufacturing and to We will add able capacity, to efficiency, our intended

over needs. be the the will to our support turn of managed to orders resources and that ensure significant As their customers call and now we to our Neil we scale our just meet I production financials. will the for on details production received, schedules

Neil Goldman

Thanks, Rick.

BARDA, of XXXX, the prior million. X to $X.X the government combined to X of for XX% the license the program was June million first $XX.X million, by revenue For income, through total ended and the $X.X million, our growth this revenues cumulative prior XX, compared was increase XXXX, prior under achieving our Product compared XXXX million, representing and the million, million the quarter with months $X.X grant revenues, XX% second year were increase period. of revenue program income $X.X an year quarter grant of earned $X.X under to period. for year compared was to Of period. an Government X% ended XXXX R&D XX, June milestones bringing months this $X.X of royalty

reflected margins were revenues not the the quarter are year period, the BARDA. DPP by obligations, administrative cadence general always and increased product part approximately $X.X X of certain each from our expenses XX-month increase Both principally government respiratory associated team. compliance grant and certain incur and occur the of XX, credit the in of we to system in of panel, SARS-Cov-X increased do the that and total in awards minimum our related but rolling and primarily R&D expenses, and timing test are summarized The commercial in covenant the revenue unfavorably product $X.X a increased the program to FDA year impacted and a were the of the to to performance continue pursuit release. to Our in EUA as we covered press during gross at for general prior increased ended the related income XXXX, period costs June R&D million months impacted expenses. XX, XXXX, agreement. with by ended to which the in inventory. with revenue million wipe-down related fees expanded with X margin in months June was Product work time of for a regulatory The and Antigen year associated of clinical and Selling, EUA million, administrative the that costs by period. factors million during period. U.S. the by prior an XXXX number compared by professional prior $X.X the margins DPP charge which Gross an second XXX(k) from selling, compared $X.X

the we net, of from second operations. XXXX, improvements net $X.X for of write-off intangible the leasehold a and loss net with non-cash right-of-use leases assets During Malaysian impairment assets quarter associated recognized million all our

HIV-X/X X at STAT-PAK would its reliance which were Health labor produced on that our orders informed of XX, manual automated lines XXXX, would of performed manual prequalification the been the the among and our mix being which of things, -- products manufacturing review that otherwise automated The had Organization had Assay of U.S. on operations we the have timing and our World facilities could restarted production processes, other During our ended of our there. Malaysian June reduce products months prioritized customer we manufacture on the time any produced. depend on, at

million the loss of ended net offering. Net and recognized to loss share the restructuring compared of related advance in months support $X.XX share costs $X.X or losses in $X.XX related the also executing prior costs X of $X.X a to fees share million for $X.XX $X.XX the diluted We or restructuring of year June XXXX million to to for diluted per compared as XXXX reflected the the per share The in of million work ATM asset quarter second or impairment, year prior net period. $X.X diluted well or professional per and $X $X.X XX, was structuring as period. million

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

as or second to of to an agreement. to compliance On to cash an cash up the the at-the-market time quarter, enabling in that with minimum of discretion board's stock. the credit as the sell of covenant shares equity we $XX of end Subsequent from company at aggregate the time XXXX, million June common the proceeds the have agreement, July X,XXX,XXX company at XX, gross the capital ATM, date our ATM XXXX, XX, XXXX, as a shares of of offering was net proceeds entered balance placement $XX.X into Net $XX.X Our was of of issuance in stock million. through $XX.X the company's XX, fee From Net program. price common approximately of The working of and other of weighted of average July costs, raised million. $X.XX. been of transaction estimated million realized

To as concern Monday. company's detail do be outside this amount the As Form saw quarter we date to have X that that, from are which our about about going people are financial potential you determined of likely press by the going we we are within help release understand concern that to many press in year filing to and second statements control, elected we issued current considerations the the ability this after which fair a to release our on include issued, XX-Q our afternoon, doubt planning continue afternoon. substantial our a raise of conditions,

takeaway the of recognition is by technical in and we example, with receiving refer the the staffing, related we us of to position, finally and GAAP uncertainties the liquidity customer of had orders. through July The the consider, success for raising by how number to by delivery that company's requires purchase ATM revenue that. of milestones significant under analysis purchase the covered new significant may please under be pleased other the matters in outside tests around and capital are while The So regarding our other the strengthening and the of achievement orders control. affected government orders company's uncertainties and limitations the full supply liquidity, grants chain, particularly

pursuant which press to prospect the Rick raising mitigating not further of of release to other for However, the company's remarks. additional refer please under the control. I'll effect beyond now offering GAAP, details. capital back call give Again, and turn going-in-de the to concluding ATM analysis to are plans, many for the the does

Richard Eberly

in rapid as are penetration To we ever Chembio's point-of-care you, the ability Thank diagnostic drive as testing confident market. into Neil. deeper to conclude,

to to selling average We prioritizing product continue remain portfolio, of to we high invest our committed our price strategy resources markets. broaden and

laser-focused profitability. and on progress to long-term are on We growth tremendous on commercial a driving Recently, our we path regulatory both made fronts.

our large received orders recent we recent STAT-PAK this purchase enter by and as look the build for on DPP to momentum half year. are We second the HIV-X/X our test positive of We the we Antigen tests. encouraged SARS-CoV-X

products other BARDA working as to our we With work forward stakeholders such as the please operator, the well FDA the look channels. also key as as to new call with through up We open that, questions. regulatory

Neil Goldman

first at from the and Capital questions. floor (Operator question Instructions) coming Ostlund Ladies now today is for open is gentlemen, Craig-Hallum Our Per Group.

Per Ostlund

the guess, over of -- I'll that congratulations it. last sizable first so picture, out weeks, philosophical and that announced couple the on want I to if with Maybe start orders a question, big those. foremost, I and word here use for you've

order you've when just Given that's the orders the there, $XX company-wide Brazil in generated out that the and obviously yearly right past, million around against your received juxtaposed you of order other order what to revenue frankly, partner you've the that specifically, an out that too take from some gigantic you careful to to your you chain guess, I such much that are and take -- asked get guess, need fulfill that, on you I consider called not supply you the it. and When guess, caveats generally I and staffing in of is across think ability to that first like extra do geographies. feel or that, how want consider reason, much. to And large or press release, speaking, a like be Bio-Manguinhos a I and liquidity, long-standing thoughts I foremost? have that was

Richard Eberly

Thank XX Bio-Manguinhos for XX history. many are as delighted organization has your years a the couple Number of know, partner dating for a and long-standing We back you as been you congratulations. one, a know, company Chembio's Brazilian to reasons. certainly with

response to in government's pandemic were we the on part delighted So, Brazilian Brazil. absolutely at a that's to the play going

get of considerations over to decisions our we of committing into with long anticipation point as the we were time discussions around needs. to to a orders. the the of the Per, investments place the in in their as about actually since to been remarks a some purchase order. infrastructure the well talk part We've the we and in of them XXXX of in X downsizing prepared large to a made place did early organization. very, X But organization in the So Bio-Manguinhos relative year years in these manufacturing and put forth. increase to very obviously It so contract of our where took the had took some in efficiencies automation We December last we the

to the of to management continue produce goods some year. So going well had and as chains we finished deeper production decisions half first the make during as some supply as

our up of considered product scale as of to we a how ramp manual we product combination as production the our we So could fast well. as and that that consider ongoing the automation ability production well of

prior as So put a look to even well have could how manual scale got that, at the in soon -- the orders. production we of plans and we as we to purchase these as combination fulfill order to organization we through our lines place automated adding as

plan initiated we to these by scaling was release, well So team, orders. fulfill and and our our shipments mentioned the vetted we Brazil have to production rapidly that some operations we already that team, our press are in now regulatory

way but at as this it. get can it looked to on it, we So, philosophically one is look at if we deliver we

chain cassettes schedules. And so well expansion et the out. with plan our swabs, closely to their line the is in to working to of et with our ensure together now supply was cetera, from materials We're cetera, thought put partners very, supply biologicals and needed very production

Neil Goldman

heard in is those able highlight ramps on add about, for when just any why outside Monday it's are they opportunities control why up that with to can the Per, to press as this. or along filed and and talking are you this that I'll And the like this a And factors the our to to you company's of to about company. control and that the on responsibility quickly our in read Neil, create that, that's of be you've release, me number orders that's XX-Q will, there respond

Per Ostlund

I agree. No, Yes.

order anything you I had seen. unlike mean, reasonable. entirely obviously, size, of think that's I this is in

to million $XX.X and you as what that the Ethiopian Is -- precipitated my Those to revenue guess, order. goes to antigen fair that, antigen the order for the expect, COVID events, question. planned, assuming of then being production and all I else HIV respectively. Brazilian and XXXX XXXX that would be equal, then would the say? So was Maybe that sort related delivery

Richard Eberly

feel XXXX. plan The internal has plan the we HIV extending into early the delivery plan that Yes, Per.

some so that gives the delivery for schedule of indication HIV And you the products.

of XXXX, antigen our our plan. delivery through products the is production the Brazil, COVID current terms is for that plan and In and

Per Ostlund


I there order Let the extent nearest the me these guess, on tell you can target us end. for have as hoping more or, articulate I far to probably there? ask in as you can Brazilian a but it, contract, that. more orders specifically can is that you're you that's margin hoping you anything speak for you it's one product that ASP about -- guess To since in the the you're anything

Richard Eberly

in not order. competitive some Yes. Brazil competition for that Per, reasons, we've been with quite we Obviously, disclosed for the competing because this particular for time. margin we product have some have do

the and/or pricing due or they're that. whether to the it's #X, our choosing #X, to business to product largely margin, relative see didn't is the making competitors very Brazilian that that disclosed the haven't to, sensitive ministry they're we health with, diagnostics. do want the we manufacturers commitments to vaccines So,

Brazilian in we respect So to wanted well. that of regard the Health Ministry as

figured too. Okay. That's but figured ask of fair. one. I last kind say, That's had what I you'd I One to

as chain, up foremost? just of here With anything first Is I there. development, on focused the is capital specifically the and in really from traction that working supply be be shoring know it standpoint, proceeds -- or July, focal it and in in investment commercial points guess, have further, raised a and issue the in what's balance year-end there inventory, you you're I sort mentioned product sheet that or you what nearest

Neil Goldman

Per, I'll Yes. It's that, take Neil.

is can agreement, balance the our sheet a at-the-market describes a review the of of and are and supplement with of as the we you go that, as purposes, prospectus use other working shore to filed that certainly, So but it corporate in the that. use part proceeds proceeds aligned capital and related

like now we've imagine. That of can our to to large course there, we the in decisions. is those be to validates you to inventory to pleased we're leverage product certainly received believe, as year, it might continuing of remarks certainly the As very to quickly on as to as well just we ability never down you and these highlighted business along to as that them we've point being as be our on, well this respond of in for at Brazil orders to in -- able our made delivering we've as ability customers talked calls related move quickly the happens prior but and Rick for investing anticipation about done, touched these and both and our in them decisions prepared conscious

Richard Eberly

Europe, States of the like United when the other dating I joined I selling in executing than is the back on much world very that the about around had that focused where would for Per, plan. future a developing is and the higher Chembio, year markets things developing is we've And that, the product price strategic add business we that our last world. of to to importance talked one were average longer-range portfolio the traditional

to on and share. have into panel disease beyond market continue building the where significant we portfolio So presence will other and the we execute antigen some of states a product respiratory

this we've us will time. the that funding initiatives quite so been go articulating to for some strategic help longer-range And


Bauser question next today Our is Colliers. coming from at Kyle

Kyle Bauser

Or expected and any kept. able quarters being to should about of any how margins that? are potentially Maybe we past write-downs you I'll above write-downs start forward, XXX% in other And know previous X%? on that be actually, gross a on I with gross general, margin. quarters. How had could GAAP inventory gross margin thinking basis subsequent get in thinking we see should going I there in guidance we was back think on product we the some just

Richard Eberly

this assessment simple. in associated to products There I'll with opportunities them, obvious, with in from and that's process Well, which commercial in with time we occur that there. that circumstances changed particular this is happened, no need I'll opportunities stating In regulatory were But there would pure were how some case that opportunities bar. still X% it just works. estimates and them And absolute leave were of be now, we some there we recognizing represent to change recognized product start them that's happens that other any and that it that that is if your dating inventory associated be associated patent and expirations related case, the what like the internationally. and things time, this approval to thought that had

historically. As they margin have levels quarter at overall relative the which you to from a were product can down been our standpoint, during tell revenues product

for that and Hopefully, fits there into this cover some overhead to of simply factor a you. manufacturing helps that overhead is related the manufacturing that amounts. So those that absorption certainly, needing in a dimension clarify to things plays

Kyle Bauser

of And BioMeditech product to presumably offerings. the switching of how ahead helpful. the How of test this -- looks been in in-licensing respiratory sales like kind demand That's has been? product what have for Princeton the will traction respiratory you your panel. understand the it. own the How traction the Got have allow respiratory of maybe to marketplace

things just product. So kind within of wondering licensed how are going

Richard Eberly

calls, we're prior point Yes, to certainly, of season right a flu not generate the on ahead on as interest, market, we in strategy early strategic our view, of talked in Kyle. From here customer season be flu able to the about was to be market now. the the see

portfolio uptake strategy our So there's on wanted in to point product a begin the in we it. of the be and we're right some a view, based start position have from market limited to that fact to now. experiencing selling But not season flu the

positioned seen now, CDC's lot physician weeks. we importantly guidance that last recently So We're the just seeing and And think be beginning COVID most flu. centers, to came couple of care about out as going urgent interest, season, differentiate labs, of with they we've within to able the to are into flu how we be and a head orders. seen office the -- to between have

to begin antigen-only increase. see to beginning transition season, we'll panel. And to level market we're we COVID see interest think that as a I So the flu approach respiratory multiplex testing the from

Kyle Bauser

data. lastly, on maybe here, needed before just factors maybe the tricky know to color what submit how timing but can gating are of answer provide new going. left waiver, the more is some I on have some achieving And discussions you then Have questions, been waiver? CLIA that you

Richard Eberly

we're think we're the And have review. soon very in we're communicate that as not, of about believe is what certainly that answering moving excited for and in I near award the actual as And we're discussions we're a them in have all what we'll news the pretty decision process with the some future. in about or part CLIA we think But But that any the waiver that. excited we discussions We discussions is active forward. I hopefully, we'll that can't those with are. the FDA. questions, talk fact active


coming Our The Bruce Benchmark from Company. is question Jackson last at today

Bruce Jackson

Brazil. couple still testing, A a questions those terms about fever They've disease been testing. in immediate needing shifted COVID-XX they or has to for Are customer to tests, be of needs? focus of very good over tropical going their tropical the

Richard Eberly

it. COVID-XX taken pandemic how of Obviously, dealing a of in they're terms attention Brazil the their has in lot with

COVID-XX right them diseases, Dengue, other Chikungunya, still do the now pandemic. the attention country. less the we given exist they in of the see tropical Zika, seriousness But So seeing

So largely around with X the to COVID-XX. most discussions over months X has our last of been them months

of very a talk long We and they've appears, with about large of to long, situation. a to is because the most Chembio attention to customer against drawn HIV it your But Bruce, for continue them fight that funding HIV been time. COVID-XX

Neil Goldman

what continued tell ongoing which, an you I some and of that is at level infectious that some tests continue be routinely. level be Bruce, to making is of granularly, other disease has that they're and I and can to be level there ongoing get continued we're them during to to COVID-XX for Yes. shipping ordering the level, quantifying pandemic, there obvious reasons, won't into

Bruce Jackson

up will have were how need that And ramped million how you they're to Okay. out time the much able of you ship do that some get Good. another hold shipment? terms production to How $XX And inventory. in long until order, -- going of then them? to of much

Neil Goldman


our lots So Brazil to Bruce, map in imagine, we've as time with you that. friends plan for of a to might out had work

them plan working the of teams So valued we're that disappear part what with we it's and us, period of now that reflects to as beneficial by I scaling a their that it Certainly, as to of needed that's supply the process our Having and and over ability scale the Rick to order. both on questions addresses remarks materials base, towards. up needs, product to the them fulfill we're aligned them meet and to be and of have is talked materials some the on started. product about get the with And production our not our earlier Rick ship the earlier almost described finished supply literally prepared that ongoing as up the to those with after to ongoing having of to receiving as needs. in well order hand is unquestionably and up business able approved as purchase immediately time in

Richard Eberly

that down product Yes. up that able we've I goes from to they have the would ensure Brazil had the we in to QC actually with the Bio-Manguinhos add is Bruce, as recently relationship due to release making do to since scale smoothly. product, to the process operations the award that testing, if that, their their staff collaborative accept internal the be

up plan ability Brazil as their synced scale-up product our with well. we've to accept in So

very operational the So feel we about a their partnership up the our and operational progress as will scale-up both be be it's making through scale in rest been process, we we'll good harmony collaborative and year. with in of the

Neil Goldman

at our as as you in our personnel Rio. our team from well both in as U.S. located here And subsidiary that's imagine, included might team the


Thank you.

We further at have queue no this questions the time. in

Richard Eberly

Okay. Have Thank your you, I concludes we look want will operator, a for call. you That today. afternoon. there. to for forward your just and our good And call our next help thank to time,


today's Thank This gentlemen. does event. conclude you, ladies and

day. may Thank a You time, this disconnect at your and for have wonderful you participation.