Chembio Diagnostics, Inc.
Q1 2020 Earnings Call Transcript

Published: 5 May 2020

[Operator:]

Ladies and gentlemen, thank you all for standing-by and thank you for joining us today, for this Chembio First Quarter 2020 Earnings Conference Call and Webcast. As a reminder, all phone participants are in a listen-only mode. [Operator Instructions].And now to get started, with opening remarks and introduction, I am pleased to turn the floor over to Philip Taylor, with Investor Relations. Good afternoon, Philip.

[Philip Taylor:]

Thank you. Before we begin today, let me remind you that the company's remarks made during this conference call today, May 04, 2020 include forward-looking statements within the meaning of the Securities Act of 1933 concerning the current beliefs of the company.Forward-looking statements are subject to numerous assumptions, risks and uncertainties, many of which are beyond Chembio's control, including risks and uncertainties described from time to time in Chembio's SEC filings including those under Risk Factors and elsewhere in Chembio's Annual Report on Form 10-K for 2019.Chembio's results may differ materially from those projected. Chembio undertakes no obligation to publicly revise or update any forward-looking statements made today. I encourage you to review all of the company's filings with the SEC concerning these and other matters.With that, I’d like to turn the call over to Gail Page, Executive Chair.

[Gail Page:]

Thank you, Philip. Thank you all for joining us today. I am pleased to be speaking with you as Executive Chair of the Chembio’s Diagnostics Board of Directors.I will start the call with another view of our corporate strategic pivot, to address the COVID-19 pandemic. Next, President and Chief Executive Officer, Rick Eberly, will discuss the operational changes we have made in order to execute this opportunity. Then Chief Financial Officer, Neil Goldman, will detail the financial results of the first quarter, before we open up the call for Q&A.To begin, we must address how the COVID-19 pandemic has completely disrupted society and our company as we know it. And I would like to recognize the dedication of the entire Chembio organization throughout these unprecedented circumstances.The COVID-19 pandemic has presented our team with an opportunity to leverage our expertise to help society and drive significant new revenue for the business. We have acted quickly to make the strategic shift required to position the business to capture this opportunity.As we said this time, the appropriate adjustments have been made and all possible precautions have been taken to ensure the health and safety of our employees, customers and community. There is now a seasoned team leading the transformation of Chembio by instilling a new corporate culture in the organization.A significant component of our transformation that's underway through project Renaissance, which we touched on in our year-end 2019 earnings calls. With this initiative we have made changes to increase efficiency, while better aligning cost with revenue.We will continue to develop as a proactive nimble and strategic organization that anticipates the needs of our customers, while maintaining the highest level of quality across our products and services. We are excited to announce that in the near future, we will be launching new marketing and PR initiatives to showcase the new Chembio.Now I will take time to describe our strategic transition. After broad considerations and diligent evaluation, we took a measured approach to address the needs of the COVID-19 testing market with a commercially viable solution.We identified a clinically significant opportunity to meet the needs of the market with a serological test that can create long term value for the company and provide the customers with the necessary tools to address various testing needs. Methodically we've pivoted the organization to focus on the development and commercialization of such a test.With our expertise in infectious disease point of care testing, we are fortunate to be ideally positioned to address specific needs and offer valuable solutions for the significant problems posed by this and other pandemic. We are a known entity that responds in an expeditious manner, as was demonstrated by our response to the Ebola and Zika outbreaks, and now COVID-19.These achievements are credited to our proprietary DPP technology, which is a highly orthodox advanced lateral flow testing platform with the ability to MultiFLEX or the technological biomarkers from a single patient sample. We were confident that we have the technology and the team lead by Javan Esfandiari, our Chief Product and Technology Officer capable of creating a premier antibody test.In another simply short period of time, we've developed the COVID-19 serological testing system received FDA and EUA and began shipping tests to customers in the U.S. and Brazil. The system incorporates both portable micro reader 1 and micro reader 2 analyzers, both produced by Chembio Germany to read the test in just 15 seconds and provide the numerical results.The numerical results help monitor infection progressions and reduces the possibility of human error in visual interpretation required with other tests in the market. These features allow for decent product testing, and enable healthcare providers to utilize the system in a variety of health care locations.The highly contagious the deadly nature of this virus is changing the way people interact and function in everyday life. This situation has created unique needs and expanded use cases for diagnostic testing. We believe our test provides benefits like ease of use of fingerstick blood, quick 15 minutes test times with 15 seconds read time, has sensitivity and specificity and all portable analyzers that provide discreet numerical readings for both IGG and IBM antibodies. And this makes it highly versatile.Applications for the DPP COVID-19 system includes the improving clinical outcome for monitoring infection progression in individuals, community population surveillance to determine herd immunity, and helping to evaluate potential therapeutic treatments for the vaccine as well as the vaccine development process.Because the test uses a finger stick blood sample, the test could be conducted in wide variety of setting that do not have significant infrastructure. All of these features make it a desirable tool in many existing markets in addition to those that are emerging.This broad utility provides access to diverse customer base. These potential customers range from various hospital departments, state and city health departments, ambulatory surgery center, physicians' offices, health clinics, urgent care center, pharmacies and nursing homes.Additionally, outside the non-healthcare arena, there has been interest from larger institutions and employers as the world thinks about their path back to work, and for individuals who would like to know that they've been exposed and their own immune status. We are pleased to be experiencing significant demand from across these groups.Currently our focus and target customers are hospitals, labs, state and city health department in the region that has been most affected by the pandemic. Our long-term goal is to utilize this time of change as a catalyst for which we will position Chembio to fully realize the potential of the technology and the team behind it.To not only serve the infectious disease market, but just for this opportunity that complement the infrastructure we have built. We're seeing unprecedented gains and we're working hard to address those in a thoughtful manner, which serves our customers and our shareholders alike.Now, I'd like to turn the call over to President and CEO, Rick Eberly to discuss further internal operations.

[Rick Eberly:]

Thank you, Gail. It has been an incredible for six weeks in my new role as CEO. My focus in the initial period began internally with taking a deep dive into each functional team across the business. From end to end, I have been inspired by the skill and dedication of every employee at this company.We are facing a tremendous challenge and opportunity in the time of great uncertainty and the way this organization has responded to pivot to focus on the COVID-19 opportunity is truly impressive. We have set high goals for ourselves and we know how important our technology is in combating this pandemic.I am pleased with the way everyone has executed priorities above and beyond our aggressive goals. Chembio's DPP technology and reputation for scientific excellence is initially what attracted me to this company and its value has never been more evident.Currently and for the near-term, we will remain focused on the transformational opportunity we have in front of us. With the DPP COVID-19 system we have achieved three significant regulatory approvals. One of the first FDA Emergency Use Authorizations or EUA, Anvisa Emergency Use in Brazil, and most recently as announced today the CE mark for Europe.These three regulatory approvals represent a large footprint in the global testing market that Chembio is pursuing. In the United States, we are expanding our internal sales and marketing, customer service and commercial infrastructure to meet the market demands for COVID-19 testing.We're also in discussions with major national distributors in the United States and our distribution partners internationally to increase our presence in the global market. Our goal is to become the gold standard and decentralized testing.Because we're the only FDA e-way approved fingersick test. We can penetrate many diverse markets. To address this focus, we have a three prom strategy. First, utilize our internal sales group combined with a contract sales force. Secondly, leverage our relationships with key national distributors. And third, build partnerships with large strategic healthcare providers that can help accelerate entry into new channels, such as back to work programs.On the manufacturing front, we have shifted our manufacturing resources to focus on COVID-19 tests and a record production to make as many tests as quickly as possible, while maintaining the quality that customers expect with Chembio. This is an intricate process, but our systems were strategically built to be flexible as we have always manufactured tests of order.As early as February, the team was very proactive and ordering the needed moles for the increase in production working with our supply base and sourcing the quality reagents needed to assure we had plenty of supply to serve our production and research needs for the early launch phase and beyond.The manufacturing team has been working to incorporate all available resources to increase our capacity to meet the demand of the market, while maintaining the quality we are known for. Additionally, we've been hiring additional personnel to support a full second shift and expand our customer service.With all this in mind, our goal is to produce 1 million tests in May. From here we anticipate ramping production incrementally each month according to market demand. The opportunity to scale further will be contemplated as we have a better understanding of long-term demand.We have designed and will seek to implement a capacity growth plan intended to ramp production each month to reach a target run rate of 2 million tests per month by the end of the third quarter of 2020. Our actual growth and capacity will be tied to market demand and other typical factors.We are working closely with our suppliers on forecasting future requirements, and through strong collaborative efforts to feel confident in our ability to acquire materials as we increase production. We currently hold sufficient inventory of micro reader analyzers to satisfy new customers in the coming quarters.And we have coordinated with our German facility to synchronize analyzer production with the customer demand. In January, the team established key initiatives to serve as the focus to drive profitable growth for the company. These priorities include maximizing the infectious disease vertical, creating a formal R&D service vertical and tightening our cost structure.In the first quarter, we generated a total revenue of $6.9 million and product revenue of $5.7 million, declines of 20% and 14% respectively, compared to the first quarter of the prior year. We did experience disruption in the quarter as customers worldwide were affected by the pandemic.In the first quarter, we did not recognize or generate any revenue from the sale of COVID-19 systems. There are many recent press reports about the proliferation of poor quality COVID-19 serology tests in the market. And that the FDA has not reviewed their performance data.We recognize that this is causing some confusion and damaging the perception of antibody testing in general. We believe there might be pressure to remove all non-FDA approved tests from the market, and we believe that would be a positive development for our healthcare system.Chembio's product has been reviewed by the FDA after extensive US-based clinical evaluations. The accuracy of the DPP COVID-19 system after 11 days post the onset of symptoms is 100% for total antibodies.This is based on our data that was submitted to and reviewed by the FDA for the EUA. Chembio performed its rigorous clinical evaluations for the FDA's EUA approval at Stony Brook University. Following these evaluations in April 2020, Stony Brook Medicine selected our DPP COVID-19 system to recruit patients who have recovered from a COVID-19 infection to participate in a study.The study is intended to determine if convalescence blood plasma, which is the plasma from people that have recovered from COVID-19 can help treat hospitalized patients with an active COVID-19 infection.This collaboration followed Stony Brook University Hospital's receipt of FDA approval to hopper convalescent blood plasma treatment to a station through a randomized control study, and is expected to enroll up to 500 patients from the Long Island area.The Chembio's DPP COVID-19 system is being used to confirm that patients were infected with COVID-19 and now have adequate levels of IgG antibodies to make them eligible to donate convalescent plasma. The study will assess the safety and efficacy of the use of convalescent plasma versus standard plasma and hospitalized patients with a confirmed COVID-19 diagnosis.In addition to the study mentioned above, Stony Brook University also undertook a study to evaluate over 500 healthcare workers including doctors, nurses, and frontline responders to evaluate the accuracy of the DPP COVID-19 system.We've been notified that the results of this second study have been submitted to the Journal of the American Medical Association for public attention. Outside the COVID-19 area, during the quarter we received a $1.5 million order from UNICEF for a MultiFLEX Zika IgM IgG system, and recently received a subsequent $1.5 million order from UNICEF for MultiFLEX, Zika, chikungunya and dengue, IgM and IgG systems.Each port order is part of the previously announced long term agreement with UNICEF and includes the potential for an additional $2 million order, bringing the total potential value of the long term agreements to $7 million.We are also really pleased to report that we have completed the reproducibility study for our DPP HIV syphilis MultiFLEX test. The data was submitted to the FDA and will undergo their formal review. Following the review, we will continue the pursuit of the associated CLIA waiver.In the R&D services vertical Chembio attracted industry leading organizations to conduct scientific development work. We continue to make progress with our collaborators AstraZeneca and Takeda Pharmaceuticals. As you can imagine, these entities are also discovering their new needs as it relates to testing for COVID-19.In their trials and this could present an entirely new opportunity for Chembio. The technical feasibility study in collaboration with Takeda has been completed. Incremental funding has been provided for the next phase of the program.Now, I’ll turn the call over to Neil, for the details of our first quarter financial performance.

[Neil Goldman:]

Thanks, Rick and good afternoon everyone. First, I would like to provide an update on project Renaissance, which is our expense reduction program that we announced during our 2019 year-end conference call.We have taken measures to right size the organization, reduce operating expenses and remove other non-essential costs. As part of this evaluation, we have taken steps to retrench our Malaysian facility and reduce the entire workforce there.We are preserving our corporation in Malaysia and our product registrations will remain active, allowing for continuing operations if needed in the future. At this time investments there is not enabled the profitable growth upon which we are focused.Based on these activities, the company expects to report a restructuring charge ranging from $0.3 million to $0.6 million during the three months ended June 30, 2020. Now moving to the quarterly results, net product sales for the first quarter of 2020 was $5.7 million, a decrease of 13.7% compared to the prior year quarter.For the three months ended March 31 2020, total revenue was $6.9 million, a decrease of 19.7% compared to the prior year quarter. License and royalty and R&D and grant revenues combined for the three months ended March 31 2020 were $1.1 million a decrease of 40.4% compared to the prior year period.R&D revenues related to the timing and cadence of program performance obligations, which do not always occur in a certain period, but we continue to incur certain of these expenses. Compared to the three months that ended March 31 2019, net product sales experienced gains in Latin America and Asia.These were more than offset by lower sales in Africa, Europe, and the United States that we believe reflected a diversion in funding from HIV to COVID-19. The decrease in R&D and grant revenue was related to the completion of a BARDA funded program that ran through 2019.Excluding the BARDA program and focusing on what is described as exchange transactions - revenue from our R&D services vertical actually increased by $134,000 or 17% compared to the prior year period.Gross product margins during the three months ended March 31 2020 declined by $0.3 million compared to the prior year period. This corresponded to an 80 basis points decline for 24.3% in the three months ended March 31 2019 to 23.5% in the three months ended March 31 2020.The gross profit margin reduction resulted from a combination of the impact of fixed overhead on our overall lower product sales volume and unfavorable geographic mix on average selling prices. Other expenses, which include research and development and selling general and administrative expenses combined were $6.1 million for the three months ended March 31 2020 compared to $6.2 million in the prior year period.R&D costs declined modestly by $0.3 million, selling general and administrative expenses increased by $0.5 million or 12% for the three months ended March 31 2020 compared to the prior year period. However, $0.4 million of the increase represented one time severance and related costs and acquisition costs for a net SG&A increase of $0.1 million or 4%.Acquisition cost during the first quarter of 2020 and 2019 correspond to the company's acquisition of Orangelife and opTricon in the fourth quarters of 2019 and 2018 respectively. The $0.3 million decrease in these costs related to the statutory audit requirement of opTricon's pre-acquisition financial statements that was not required for Orangelife.Net loss from the three quarters ended March 31 2020 was $5 million or $0.29 per diluted share compared to a net loss of $2.8 million or $0.16 per diluted share in the prior year period. On the balance sheet, cash and cash equivalents as of March 31 2020, totaled $11.2 million, net working capital is a December 31, 2018 was $19.8 million.Now I'll turn the call back to Rick for concluding remarks.

[Rick Eberly:]

Thank you, Neil. As we touched on previously, we expect COVID-19 systems to drive significant incremental revenue in the future and will be a main driver in the infectious disease vertical. There is a very large market that has experienced exponential growth in the past month and continues to unfold many new markets, including interest from outside historical healthcare verticals, such as companies with back to work programs.We were very optimistic about this opportunity and confident in our ability to take significant share in this market and sustain a leadership position for the long term. We are taking this opportunity with COVID-19 to pivot the company into a high value diagnostics company, creating an R&D services vertical, and expanding our commercialization strategy to focus on diversifying our products from low margin tender driven products to higher value higher margin products.We are not abandoning our leadership and our base business. But we'll build our future product portfolio off of the platform of our legacy products and technologies. The DPP COVID-19 system is providing this opportunity for us. So thank you for joining us today. And we look forward to updating you on our next call.And with that, we will now open it up to questions. Operator?

[Operator:]

Rick, thank you. [Operator Instructions] We'll hear first from Per Ostlund with Craig-Hallum. Please go ahead.

[Per Ostlund:]

Thank you. Good afternoon, everybody. Rick, I want to start with your comment about material revenue acceleration. Naturally, this is top of mind for everybody. In the absence of formal guidance, and I'm sure the desire on your part to remain very conservative.I'm wondering if there's a way that we can get a sense of visibility into the second quarter, if not necessarily beyond that at this point. Simply for no other reason because the range of outcomes here is incredibly stalk.We look at a $7 million-ish number in Q1. And based on the production that you have at your disposal today, and seemingly a lot of demand the numbers for Q2 and Q3 could be enormously higher. So anything directionally on that front would be a great place to start. Thanks.

[Rick Eberly:]

Thanks Per. Thanks for the question. So, we got our EUA approval three weeks ago. And we started manufacturing at that point and gearing up manufacturing. And we just started selling about a week ago. So we started shipping products in the U.S. about two weeks ago.So we're very, very early on in the cycle if you will post the launch of the product. So all I can say Per is that at this point the demand is very, very strong. We're in a position right now that we are selling everything that we are manufacturing.So we're pretty optimistic that as we gear up manufacturing. And I laid out that plan for you on the call, we're hopeful the demand will continue to grow. So as our capacity expands, we'll be able to sell everything we make. As you know, the uncertainty about the future demand is still a question. But so far, the initial demand from our early launch plans looks very strong.

[Per Ostlund:]

Okay. That's helpful. It's obviously great to know that you're selling everything you can make. So on the point of that demand, curious - and you alluded to it, I think in prepared remarks here too. But like to get a little bit better handle on where that demand is coming from?How much of it is U.S. versus OUS? How might the CE mark influence or impact that. And then as well as the end user, the end customer, how is it sort of breaking down between the hospitals, the physician offices, the state and local governments, corporates and what have you?

[Rick Eberly:]

Yeah Per, right now we're seeing demand from across the market, from hospitals to physician's office laboratories, to state health departments, city health departments. I think if you've been reading, all the information, the press, I mean people just can't get their hands on enough test.And so right now we're seeing demand coming in from pretty much every channel. And so we - our future strategy is to, as I said, expand our distribution strategy, to expand our internal selling efforts.And those channels right now are all open to us. And I think as time goes along, we'll look for if there's a particular niche channel that we need to reinforce with either a distribution strategy or our own contract sales force, we will add those as necessary.

[Per Ostlund:]

Okay. As far as the demand goes it is, on the pricing side of things, is it remaining relatively consistent with what you've said on some recent investor calls kind of that ballpark $20 to $30 range per test?

[Rick Eberly:]

That’s what we're seeing in the market. Yes. Yeah, we haven't seen or heard of any other changes to that price range coming in from the market. So we're still sort of leading. That's the market range for the pricing.

[Per Ostlund:]

Okay. I'll ask one more and then I promise I'll let somebody ask questions. In light of the - and you mentioned, I think Gail might mentioned it in her remarks, the relative noise out there about antibody testing and still the relatively small number of new ways granted 10, 11 of them in the serological realm.As far as I can tell you're one of the few rapids, you're the only numerical result and you're the only fingerstick. How difficult is it to get that message out, when there's so much other noise about other tests and maybe some other concerns about quality of other antibody tests that are out there.And there's a clear waiver makes sense for you at some point here given what looks to be a relatively easy to use system? Thanks.

[Gail Page:]

Hi Per. This is Gail. I think it's important that the FDA has been tightening down on those that have done the FDA notification and that's we got it I think was released in later today. And I think for a lot of those people on the call that talk to me early on, one of the things we talked about was that there was lot of noise in the market that it would leave itself out.I think now you're dependent on swing back. I think there are three - and our category that has the EUA. And as you said, we're dealing with fingersticks. So I think we're very well positioned. I think you'll see a lot of those fallout, the indication today where they had 10 days to file for their Emergency Use Authorization.So I think that's really going to change and get rid of a lot of the noise that's in the market. So I think that's very beneficial for people like us that we may not necessarily be first, but we intend to be the best in the market.

[Rick Eberly:]

I would just add that we took a very measured approach in our clinical studies, which is why we got to fingerstick claims in our studies. So we didn't raise to the FDA notification process. We took a measured approach. Made sure our clinical valuations were strong and data look good. And we had differentiated features in the product that allows us to rollout into a diverse market.

[Per Ostlund:]

Very good. Just on the clear waiver, though. Does that make sense kind of intermediate term or longer term to pursue that as well?

[Gail Page:]

Yes. Of course we are dialoging with the FDA or what their requirements are going to be like. And we will work collaboratively with them.

[Per Ostlund:]

Great. Thank you. I appreciate all the answers.

[Operator:]

Thank you for your question, Per. Next, we'll hear from Kyle Bauser at Dougherty and Company. Please go ahead Kyle. Your line is open.

[Kyle Bauser:]

Great. Thanks for taking the questions and congratulations on all the progress over the last just two months here. A lot of updates here and I appreciate the comments on the plans to manufacture 1 million tests this month and eventually ramping up to 2 million per month by the end of Q3.Can you talk a bit about the makeup of the current capacity? Are you making most of the test manually, or is line one producing COVID test now, is it a mix?

[Rick Eberly:]

Kyle, this is Rick. Thanks for the question. That’s a really great question. We are scaling our production using all of our resources, those are manual production lines as well as are automated production lines. So, at this point we have a manufacturing plan that we are right on schedule to reach to 1 million units in May, and then ramp up to 2 million units by the end of the third quarter.So, I think in my prepared remarks, I mentioned we’re hiring additional people to have a second shift. And so right now we’re using all manufacturing resources plus what we’re adding to maintain that manufacturing plant.

[Kyle Bauser:]

Got it. And then I believe the automated line three that you’ve talked about in the past is going to be dedicated to sure check. But how about line two? And when might that be up and running for COVID? And will that be part of the incremental ramp to get to 2 million per month by the end of Q3?

[Gail Page:]

Kyle, this is Gail. I think what I had discussed on our fire side chat and the three cases we have had. We have products that we’re trying to manufacture, we’re trying to decode it, but we don’t want to get into too many specific.But the idea here is that we’re going to utilize our automation where needed. We're going to utilize semi-automated works where we want to use it. But the idea is that to achieve the ultimate manufacturing goals.And right now it's all changing a lot. So we're trying not to get wrapped up into line one line two semi-automated. The point is that we're running algorithms. We've got a great manufacturing crew. And the idea is to get these tests manufactured in a very high quality situation.

[Kyle Bauser:]

Got it. Now it's fair. Kind of digging in the weeds here, I think the takeaway is that you're going to be doing 1 million this month, ramping to 2 million per month. So, that's great. Regarding the FDA coming out today and now expecting as you talked about antibody test developers to file for EUAs, it's clearly a benefit for Chembio. The updates are also going to require these developers to hit a minimum accuracy threshold. So we'll see a lot of these competitors drop off the market I imagine even more than what we've already seen.And since you put together a pretty comprehensive application for the EUA, seems like this could be leveraged for subsequent applications. Can you talk about any potential plans to file a formal 510k and potentially a MultiFLEX tests that could be used on a seasonal basis? It seems like there'd be an opportunity to leverage funding from someplace like BARDA for a test like this. Thanks.

[Gail Page:]

Okay, great. I'm going to Javan speak to that today.

[Javan Esfandiari:]

Hi, Kyle. Yes, we have a plan two move forward with 510k as we discussed also, if this was possible EUA. We do have also other product under developed and as we try to [indiscernible].

[Kyle Bauser:]

Got it. Thanks. And then just lastly, if I may. You talked about in the prepared remarks a little bit about being in discussion with major distributors in the U.S. Can you talk about exclusivity that you already have in place with current partners? And just any other color about how you're thinking about partnering with someone else in the U.S.?

[Rick Eberly:]

Yeah. So Kyle, we have a previous set of distributors that we've used in the past for our core products. So we're in discussions with our U.S. distributors as well as our international distributors. And as we make progress in those discussions, we will make that public.

[Kyle Bauser:]

Okay. Thanks for taking my questions.

[Rick Eberly:]

Thanks, Kyle.

[Operator:]

Max Masucci at Canaccord Genuity. Hello, and good afternoon. Your line is open.

[Patrick O'Donnell:]

Hello, this is Patrick O'Donnell on for Max Masucci. Thanks for taking the question.

[Operator:]

Thank you, Patrick.

[Patrick O'Donnell:]

So looking at this first off, when for any of the contracts you're signing with customers for your serology test, how should we think about the duration of these contracts? And are there any requirements for minimum purchasing agreements, whether that be weekly, monthly, or annually?

[Rick Eberly:]

Patrick, this is Rick, thanks for the question. It's really too early to answer that question only because right now as I said before, the demand coming in from the market is exceeding our capacity. So, at this point we are taking minimum order quantities as a part of our strategy to ensure that customers are getting an adequate supply, but not too much or too little.But right now, from a contracting perspective we're not at that level. And as we move forward, as customers want to contract, we will entertain that.

[Patrick O'Donnell:]

Thank you. And then one more question. Most of the focus for the serology test opportunity has been looking at the United States. But this is a global pandemic. And as you mentioned, you have relations including the $4 million contract in Brazil. So could you provide any color on how we should look at international demand for your testing?

[Rick Eberly:]

Well, one of the reasons we got to see in the market is because we're seeing tremendous demand come from Europe. In Brazil, the company has had a longstanding excellent relationship with the Ministry of Health. And they were the first to move in terms of Anvisa approval.So we had distribution partners around the world, Latin America, Europe, Asia. And we are in discussions with those distribution partners in some new additional distribution partners to help reach the demand, not only here in the United States, but internationally.

[Patrick O'Donnell:]

Thank you.

[Operator:]

Next, we'll hear from Bruce Jackson with the Benchmark Company. Hi, Bruce.

[Bruce Jackson:]

Hi, good afternoon and thank you for taking my questions. First, on the order for Brazil, did you ship the entire order or just part of it?

[Gail Page:]

The way the Brazil order was positioned that it was shipped over a period of time. And we're just shipping properly, purchase order how it's laid out.

[Bruce Jackson:]

Okay. Then my second question is about the numeric result and the ability to measure antibody tighter. Is this potentially a quantitative result? Can you make any quantitative claims? Do you plan on giving any labeling for that? And then if you could just generally comment on the importance of doing that, I'd appreciate it.

[Javan Esfandiari:]

Hi, this is Javan. It is not fully quantitative. Of course it can quantitative, didn't have to be recalibrated for. But for at this point, it's like the semi quantitative. It is measure the level of the IgM and IgG. That's what we provide you there.So we did put in our IFU and hydration value, which was very useful for the program. Rick was talking about the qualitative screening because it was very helpful that to show that the level of IgG selection criteria.

[Bruce Jackson:]

All right, thank you for taking my questions. And congratulations on all the progress.

[Rick Eberly:]

Thank you, Bruce.

[Operator:]

And this is the operator. At this time, I'll turn it back to you, Rick and our leadership team for any additional or closing remarks.

[Rick Eberly:]

All right. I just want to thank everyone for joining us today. And we look forward to our next update. Have a great day. Thank you.

[Operator:]

Ladies and gentlemen, this does conclude today's conference. And we thank you all for your participation. You may now disconnect your lines. And we hope that you have a great day.