Chembio Diagnostics, Inc.
Q4 2019 Earnings Call Transcript

Published: 13 Mar 2020

[Operator:]

Greetings and welcome to the Chembio Fourth Quarter and Full Year 2019 Earnings Conference Call and Webcast. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions]. As a reminder this conference is being recorded.It is my pleasure to introduce your host Lynn Lewis, Investor Relations. Thank you Lynn. You may begin.

[Lynn Lewis:]

Thank you so much. Before we begin today, let me remind you that the company's remarks made during this conference call today, March 12, 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 2018. 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 would like to turn the call over to Gail Page, Interim President and Chief Executive Officer at Chembio.

[Gail Page:]

Thank you for joining us. I am pleased to be speaking with you today as a interim president and CEO and also to introduce Richard Eberly who is joining Chembio as our permanent president and CEO. I would like to begin the call by highlighting several recent accomplishments and then talking about where our [share business today] and our position for success going forward. I will then turn the call over to Neil who will review our financials.Before we dive into the quarterly updates, I would like to comment on the transition since the beginning of the year. First I would like to thank the management team and the shareholders for your support over the past couple of months. This has allowed us to provide the continuity needed and remain focused on our key initiatives. Second to realize the cost improvements from our investments and extend our [indiscernible] by decreasing our cash burn we have created project [indiscernible] this initiative brings into focus the key drivers of the businesses we live forward. Third the board of directors has appointed Richard Eberly to serve as the next CEO. Rick is an industry veteran who will bring a wealth of experience to the company. Lastly, we just announced this morning a strategic partnership with LumiraDx which demonstrates our ability to leverage our assets in an expeditious manner on opportunities present themselves.During the commentary I will provide more detail with regards to our new CEO and the announcement around the COVID19 strategic partnership. We had a busy implemented year at Chembio 2019 and as you know 2020 well positioned for success. But first I would like to address our financial results that we were disappointed with the reduced rate of growth in our product revenues versus prior years. Our U.S. and European businesses were up but they were mitigated by shortfalls in Africa and Asia. We believe this is in large part due to the timing of annual tenders. Our total revenue shortfall was principally driven by the decrease in R&D and grant revenues which relates to the cadence of our collaboration work with customers such as AstraZeneca and Takeda.Now I would like to review a number of recent highlights from last year and the start of this year. We closed the acquisition of a privately held resilient manufacturer and distributor point-of-care diagnostics tests for infectious diseases which is now operating as a wholly owned subsidiary of Chembio's now known as Chembio Diagnostics Brazil. This is a key step in expanding our presence and business in Brazil enables access to markets outside of federal governments including States and private sectors as well as its states for future growth opportunities for all of our products.We receive two important approvals by the World Health Organization. First we received the WHO pre-qualification approval of our Malaysian manufacturing facility which allows the company to cost-effectively manufacturers our STAT-PAK HIV tests in Malaysia and supply them to international markets. We are pleased to announce that we began shipping in the fourth quarter of 2019.The production in this facility we expect [indiscernible] to be reduced and our global production capacity to increase. This will provide opportunities to pursue new business and paves the way for future qualifications to produce other tests in this facility. Our second approval is the WHO pre-qualification for SURE CHECK HIV self-test which allows the company to expand commercialization of what we believe is the easiest to use HIV self-test available.Earlier we announced the award for the DPP Zika IgM IgD System for $1.5 million from UNICEF and expect to start shipping products in. We entered into a collaboration with Shire Human Genetic Therapies a wholly owned subsidiaries of Takeda Pharmaceuticals in earlier this week we announced that we have completed the technical feasibility phase which supports their ongoing research programs with indicated rare disease therapeutic areas. We are pleased to have completed the feasibility phase which demonstrates once again the diverse applications of Chembio technologies. Our team successfully provided quantitative results and approximately 15 minutes from the small 10 microliters drop of the fingertip blood using our tests of DPP platform and handheld obstacle analyzer.In addition Takeda has now provided a [indiscernible] funding for the next phase of the program. We entered into a worldwide strategic partnerships with LumiraDx Ltd. to develop point-of-care diagnostic tests for the detection of the COVID-19 virus as well as IgM and IgD antibodies. All of those from LumiraDx and Chembio DPP platforms. This expands and strengthens our existing relationship with LumiraDx and further demonstrates our scientific expertise and the versatility of our DPP platform. There are joint efforts we expect the new products to provide comprehensive solutions to the new demand surrounding the worldwide testing needs for COVID-19.We generated fourth quarter total revenue of $6.9 million and product revenue of $5.5 million representing an increase of 3.9% and 17.9% respectively compared to the prior year period. Product revenues were driven by Brazil, Latin America, Europe and the U.S. In the U.S. HIV landscape continues to grow organically. Regarding Brazil we continue to work with our partners Bio-Manguinhos to provide the federal government with STD and tropical disease tests. The 2020 award has not yet been granted and we continue to make progress towards securing this important business.Also we have made significant strides to integrating the Orangelife organization which we have now renamed Chembio Diagnostics Brazil. With this team our focus is the regional state and local customers. We began recognizing revenues from this organization in December and expected contribution to growth as the Chembio product portfolio achieved registration.After careful review, we have created several parties within the commercial organization. First to maximize infectious disease verticals through ongoing product improvements and targeting additional menu. Second by creating a formal service vertical which will focus on pharma and collaboration. We have demonstrated the depth and breadth of our novel technology platform and expect to expand upon these efforts. This will allow us to provide oversight more efficiently to achieve profitable revenue and expand our offerings.Lastly to examine the possibility of including other products technology and platforms that are complementary and take advantage of our system manufacturing capabilities as well as a regulatory and commercial infrastructure. Relative to advancing our R&D pipeline we achieved CE marked for SURE CHECK HIV self-test and we have two upcoming FDA approvals pending. These include the PMA approval for DPP HIV syphilis multiplex tests and micro reader system which we communicated previously they need to repeat the reproducibility study. I am pleased to report those are on track.The [indiscernible] approval for BARDA [indiscernible] DPP's with the IBM System with micro readers. We continue the successful integration of Chembio Diagnostics Germany. This team has successfully completed development of the second generation analyzers and achieved the [EMR]. We continue to focus on our opportunities to expand the existing OEM business as we move forward. In addition we continue to pursue research and collaboration in the area of [indiscernible].Operationally we also make significant progress to add capacity for continuing growth. Our U.S. manufacturing automation strategy is designed to increase both margins as well as increased production capacity, efficiency and flexibility. As you recall we commenced production of DPP tests on line number one early in 2019. Line number two is slated to be operational in the second quarter and we expect line number three to be operational mid-year. Obviously we're continuing to monitor how the COVID-19 pandemic might impact our supply chain and technical support for our automation program. We are putting in place backup plans should they be needed. Regarding the facilities we were just our schedule to accommodate our project renaissance goals and objectives.Looking ahead these are the initiatives that we will focus on. Decreasing the BARDA and extending our cash runway, expand our sales and marketing efforts to drive more profitable revenue. We are open to bolt on technologies and intend to grow organically and be opportunistic. To that end we have hired a CEO who can transition with me and continue to execute the combination as we have discussed on this call today. Next we must successfully complete the integration of Chembio Germany, Chembio Malaysia and Chembio Brazil.We have a great team and [we have] collective intelligence to continue to create shareholder value. With that I am pleased to introduce Rick Eberly. Rick will make a few comments and we will have announced Rick joining today and his official start day will be of this coming Monday the 16. With that Rick.

[Richard Eberly:]

Good afternoon. Thank you Gail for the introduction. I'm excited to join Chembio as the next CEO. It is clear to see that Chembio has a talented and motivated team. I want to thank the Board of Directors and Gail as the interim CEO for their vote of confidence in my leadership skills, industry experience and track record of success in the rapid infectious disease market. I look forward to a strong collaborative relationship with the Board of Directors and working closely with Gail over the next several months to ensure a smooth transition of leadership. Chembio's success penetrating global infectious disease markets, expanding applications for the DPP product platform and automated manufacturing are things I believe we can build upon immediately. The strong platform technology has attracted some of the largest collaboration partners in the industry. The company's investment and manufacturing automation will enable efficient scaling of operations to compete in the global infectious disease market. The expansion of the disease state categories provides the opportunity to diversify growth in both revenue and profitability.Again I look forward to contributing my past 23 years of international experience and expanding global capabilities through acquisitions, commercial partnerships and expanded manufacturing capability. Finally, I'm excited to meet and work with the members of the Chembio investment community. Having worked as a senior executive for a public company for many years I'm committed to work with the Board of Directors, the shareholders, customers and employees of Chembio to ensure a continued supply of high-quality products to our customers, a great place to work for our employees and a stronger return on value for our shareholders. So thank you.

[Gail Page:]

I want to echo Rick's comments and remarks and that we had a remarkable team and opportunity with that I will turn to Neil to provide details on our financial results.

[Neil Goldman:]

Thanks Gail and good afternoon everyone and I echo Gail's comments and looking forward to having Rick join the team. Net sales for 2019 were $28.8 million, an increase of 3.3% compared to the prior year. For the year ended 2019 total revenue was $34.5 million, a decrease of 0.3% compared to the prior year. License, royalty, R&D and grant revenues combined for 2019 were $5.6 million, a decrease of 15.7% compared to the prior year. R&D revenue is related to the timing and cadence of program performance obligations which do not always occur in a certain period but we continue to encourage certain of the expenses.As Gail described earlier compared to the prior year net product sales experience gains in the U.S., Europe and Latin America. U.S. sales benefited for winning back a large public health program and other competitive opportunities and Latin America benefited from the initial sales of our tests for Zika, dengue and chikungunya in Brazil. These sales were offset by lower sales in Asia and Africa which we believe is in large part due to the timing of annual tenders. The relatively flat results in total revenue was principally driven by the decrease in R&D and grant revenue which relates to the cadence of our collaboration work with customers such as AstraZeneca and Takeda.Growth of product margins improved by $1.1 million compared to the prior year. This correspond into a 340 basis points improvement from 19% in 2018 to 22.4% in 2019. The growth of product margin improvement resulted from the impact of geographic mix on average selling price, initial benefits from our first automated assembly line, reduced contract labor costs and the increase in product revenues.Other expenses which includes research and development and selling general and administrative expenses were $24.7 million for 2019 compared to $19.6 million in the prior year. R&D costs were relatively flat as the increase in clinical and regulatory costs related to new product registrations and ongoing work related to the DPP HIV syphilis PMA was offset by a decrease in other research and development costs corresponding with the decrease in R&D revenue that I mentioned earlier.The $5 million increase in SG&A primarily related to $0.9 million of additional costs from having Chembio Diagnostics Germany on board now, $1.1 million higher non-cash equity compensation costs and $0.7 million of rent and other costs related to leasing our new facility in Happauge New York which were also partially non-cash in 2019 to the upfront period without any base rent payments.Net loss in 2019 was $13.7 million or $0.81 per diluted share compared to a net loss of $7.9 million or $0.54 per diluted share in the prior year. On the balance sheet cash and cash equivalents as of December 31, 2019 totaled $18.3 million. Net working capital as of December 31, 2019 was $26 million.With that we will now open it up for questions. Operator please go ahead. Thank you.

[Operator:]

Thank you. We will now be conducting a question-and-answer session, [Operator Instructions] Your first question comes from Kyle Bauser from Dougherty & Company. Please go ahead.

[Kyle Bauser:]

Thanks. Hi Gail and welcome to board Rick. Thanks for your comments here.

[Richard Eberly:]

Thank you Kyle.

[Kyle Bauser:]

So I'll start off with the partnership with Lumira DX. How long can we anticipate taking to develop a test and then subsequently to get the okay from the FDA? Maybe you can just kind of walk us through timelines and next steps here?

[Gail Page:]

I certainly do the best I can Kyle. As far as timing I think the only thing we're prepared to comment on today is obviously we believe bringing the two organizations together where really prepared this and it will be done very expeditiously. Obviously we have been doing some feasibility work and monitoring and measuring things as they have developed. So it's our goal to obviously bring something to the market as soon as possible but we want to bring something that commercially viable, something that can make a difference and it's not just noise in the market. Does that help you?

[Kyle Bauser:]

Yes. That's helpful and just following up on that so of course the DPP platform seems perfect for an accurate test here as it relates to COVID-19 but can you talk about what Lumira will provide in this partnership? I know in the previous partnership for infectious disease testing they provided funding but it looks like they're going to be utilizing their own platform as well. So how does the partnership look and kind of who's doing what?

[Gail Page:]

Sure. So obviously we bring a lot of scientific expertise to the table as LumiraDX and we brought this together so that we can put our collective intelligence together. They have a tremendous distribution network and this is the case where it is a strategic partnership and we built it in the spirit of the win-win so that both sides are properly incentivized and rewarded. Our goal is to bring the products to market on both platforms and LumiraDX will sell DPP and their own platform. We will -- I think it's in the 8k we'll talk a little bit more about as we further develop the program but this is really a program where it is in the spirit of the true strategic partnership.

[Kyle Bauser:]

Sure. Okay. Thanks and any to the extent you can share, I mean any estimates to how much of your own capital you'll be committing to COVID-19 and further you are talks with local governments or foundations for grants around this test?

[Gail Page:]

Yes, certainly in the discussions but obviously our working capital is very precious to us. So we understand that. Now I think the point out here that's important is our box does have clearance and there's test labs [indiscernible] mark so when you think about it there's the best of this world here with all the products that we can develop and that we have on the table and there is obviously component to this where Lumira is funding the development on their box.

[Kyle Bauser:]

Okay. Thanks. And then just lastly here can you walk us, sorry?

[Gail Page:]

Sure. Go ahead.

[Kyle Bauser:]

Can you just walk us through related to the Takeda partnership? So the feasibility is done. Can you speak about what the next phase of this project entails? And you mentioned it triggered a subsequent tranche of funding. Can you speak to the level of capital that was triggered?

[Gail Page:]

So I'm going to refer that to Javan who is our chief technology officer and Javan will just give a brief comment on the next phase of development.

[Javan Esfandiari:]

Hello this is Javan. We basically have as we made the press release we completed the feasibility and we are now in the phase 2, the full development program. That's what it is and as soon as we complete development, free to design then we would move to validation and verification.

[Kyle Bauser:]

Okay. Then the level of funding for the tranche? I don't know if I got that.

[Neil Goldman:]

Yes, Kyle as you may remember from previous newer programs going back over the last year and a half or two we've gotten away from disclosing those amounts for competitive reasons.

[Kyle Bauser:]

Okay. Understood. Thanks so much for taking the questions. That's it for me.

[Gail Page:]

Kyle, [indiscernible] if you have any more we'd like to follow up.

[Kyle Bauser:]

Sounds great.

[Operator:]

Thank you. Your next question comes from Max Masucci from Canaccord Genuity. Please go ahead.

[Max Masucci:]

Hi, good afternoon.

[Gail Page:]

Hey Max.

[Max Masucci:]

Hey. So your global organization, I would imagine the public health organizations are a bit preoccupied with COVID-19 right now. How some of those conversations been going lately and how could COVID-19 affect the traditional timing and cadence of these government tenders?

[Gail Page:]

I don't think that we haven't seen that would be an issue at this point in time but this is a very dynamic situation in the market and the best we can do is make sure that we're in touch with everybody and monitoring it daily but we haven't seen at this point but we don't know how to, it's very hard to project that at the moment of how we might change but we haven't seen anything relative to impacting our other orders.

[Max Masucci:]

Okay. That's great to hear and then on LumiraDX so how, maybe Javan can answer this one, how’s the proposed test address some of the issues with the existing tests that are available but in shortage right now and then from a scientific standpoint how confident are you that this is possible and then how fast could the turnaround time be?

[Gail Page:]

Sure. So let me comment and then I'll have Javan comment. I think when you think about putting the profit of these two companies together and you put it together in the form of strategic partnerships where we're all bringing to table one of the things that we've all thought about is we monitored this situation. I hope that everyone will respect that we did not [indiscernible] we have been very internally focused on understanding what's going on monitoring the dynamics. Then understanding what is it ultimately the market is kind of need in testing. So we think about speed. We think about time to market and we think about the collective intelligence of what the merit of the table in addition to Chembio is and like I said is when you bring all this together and you put it together to everybody is incentivizing and awarded we think we're going to bring a big difference and I describe this to a lot of the folks internally that we don't want to be another company just making noise, when we come to the table we want to do something that's significant and it makes a difference and that has some aftermarket impact because at some point time this will calm down so to speak. So we want to make sure that we've got something that will be valid to the market as we move forward relative to our ability what we've done. I'll turn it over to Javan to make a comment.

[Javan Esfandiari:]

I want to try to explain very shortly. As far as what are we developing and how competitive will be based on information we release, we are developing two sets of the product. One is the direct antigen that we are looking for virus that will be based on samples like the swab. The other will be a serological aspect as a similar dose product that we have developed and approved IgM and IgD detection which we have been seeing the value added for monitoring and surveillance program. Obviously, as Gail mentioned we will use the expertise of two companies. We have been working with LumiraDX for a credit of the time and we have also extensive networking with government agency, university, access to the reagents, access to the sample and knowing the novel. So basically that's what we think we can bring the competitive product line to the market.

[Max Masucci:]

That's very helpful. Thanks. And then one more if I can. I guess how would you characterize awareness levels for from potential customers of HIV syphilis in the value in the multiplex test? And then would you say that there are customers that are waiting for approval pent up demand to order and so what once this does get approved would you expect the adoption curve to maybe be a little bit steeper or more just to push out to that adoption curve?

[Gail Page:]

So if I understood you right you're asking about the [combo] HIV syphilis?

[Max Masucci:]

Yes.

[Gail Page:]

Right. When we put out the updated press release, when I talk to many many people, many of our investors about that one of the things that's important with the HIV syphilis combo is either we don't have aspirations that we're going to take business away that belong to Quest or [indiscernible] but there is a big market out there, it's very concerned with the mother-baby transition and transmission and when you think about it if they can have both the [indiscernible] at one time that's a big benefit. So what's going to be important is when we get that approval, it's also just subsequently get our clear waiver approval and that's going to put a say to a lot of the markets where they really want that HIV syphilis combo test like that it's very high risk and it's a very important test to help us penetrate the U.S. market.

[Max Masucci:]

Okay. Great. So thanks for taking the question and Rick congrats on the new role. Looking forward to working with you.

[Richard Eberly:]

Thank you Max likewise.

[Operator:]

Thank you. [Operator Instructions] Your next question comes from Bruce Jackson from Benchmark company. Please go ahead.

[Bruce Jackson:]

Hi, thank you for taking the questions. If I could get an update on the AstraZeneca test that would be great.

[Gail Page:]

Okay, Bruce one second I am going to pass the mic over to Javan.

[Javan Esfandiari:]

As we have communicated. We complete the development. We achieved the [C marking] with a product. So right now we are in discussion with AstraZeneca for continued clinical trial they are doing in Europe and that's what we are doing at this point.

[Bruce Jackson:]

Okay and then you made an announcement about the [indiscernible] diagnostic test with Takeda completing an important milestone. Do you have a rough idea of when that might actually reach the market?

[Gail Page:]

We have site into that at this moment. As you can imagine we're part of an overall research program in that entity that focused on rare diseases. So the good news is that we're continuing to be a part of that and we will progress that but we don't have any insight into that.

[Bruce Jackson:]

Okay. The next question is on the contract with Ethiopia which is a three-year contract and that's going to come to the end of its term this year. How do you feel about your prospects for getting that contract renewed after December 2020?

[Neil Goldman:]

Yes hi it's Neil Bruce. So what I can tell you is we are in the Ethiopian algorithm and as a quick reminder for everyone in most nations in Africa HIV testing follows an algorithm where there's a screening which is the first level and then there's if you receive a positive the first level there's a confirmatory which is the second level and then if it's gets confirmed then you have HIV and if there is despair results there's a third level algorithm. So we are in the first level position in Ethiopia which we think positions us well for the renewal of that and at the appropriate time we'll enter into negotiations and comment on that in due course.

[Bruce Jackson:]

Okay and then last question is on just about your pursuit of the COVID-19 testing. You guys are really known for blood-borne infectious agents. This is your first venture I think into the respiratory area. I'm just curious to know why you decided that this was something that you wanted to pursue and what's long-term market potential do you think for a rapid test product compared to a standard laboratory based product?

[Neil Goldman:]

So we do, so there's a two-fold answer for your question. We do have experience of respiratory products. We have not maybe marketed but we have a several years ago extensive program with CDC on flu but the product that we are now recommending is really is a screening program based on other product and based on other outbreak we have been in recent outbreaks like Ebola, Zika. So our platform, our analyzer it fit very well because as you may know we are talking about the large population [indiscernible] and we believe that our platform will provide a big value on that. Also the relation goes with Lumira has hopes of value here because they have a experience in respiratory area. So this is the reason we think this added value here.

[Bruce Jackson:]

Okay. So more to the point how does the test change the treatment of the patient? So is this test if it's available in a rapid format going to change the way that the patient is treated or will the clinicians start treating the patients and then want to follow up later with the other tests. So I guess what I'm driving at is what's the point of having a rapid COVID-19 test?

[Neil Goldman:]

Obviously this is a very dynamic process right now. So we talking to agencies and it is a big demand on the testings and that it is just evolving every day. Sometimes by every hour. So here we are we think that we have a platform. We have a technology. We have expertise. We can bring added value but many of those question you are asking is discussing right now in all agency and we are contributing, we are trying to be part of that discussion and so how that test will be used is not verified, not for us, not for everyone right now. But we think we can with a partnership here be part of the discussions and contribute.

[Operator:]

Thank you. There are no further questions at this time. I'll now hand back. Pardon me, there is actually one more question. Your next question comes from Per Ostlund from Craig-Hallum Capital Group. Please go ahead.

[Per Ostlund:]

Good afternoon everybody. Sorry for the 11th hour star one.

[Gail Page:]

That's okay. That's global.

[Per Ostlund:]

I apologize in advance if I duplicate anything because I was trying to be in two places at once. So just to follow up on Bruce's question with as it relates to LumiraDX. So you've got a strategic partnership there in place where you're going to be introducing a number of products in collaboration with Lumira over a period of time. I'm curious in terms of how you structure that relationship if COVID-19 kind of jumps the queue on anything or are the things that you were working on with Lumira is the cadence that you were looking for call it this year and next you're more or less intact and that this is just going to get kind of bolted on to the side of it.

[Gail Page:]

So that's [indiscernible] question. I need to be careful here because how we interact what we do with Lumira, we want to respect their confidentiality if you will. What I can say is that if you'll notice that this is an entirely new agreement. This is a strategic partnership. This is one where those boxes will have the test both Lumira will be selling the DPP as well as their own box. There's a lot more in this agreement that again properly incentivizes and rewards both of us for getting the test to the market in a very expeditious manner but also again to point out that we're all very focused taking all the intelligence of LumiraDX and all the intelligence here to make sure we have something that's commercially viable. It's just like years ago we had to get a test for the flu right. So sometime you go the doctor you need to know do I have the flu or no not right. There's all kinds of new viruses and that goes back to well why do you need to know. What you need to know? You stay home and you don't get on the plane if you got the flu or you don't whatever. So I think that we have a lot of expertise and bringing these types of things to the market. We have the platform.They have a collective intelligence but I think it's, we're very optimistic and we're sorting out all the details.

[Per Ostlund:]

Okay. That's entirely fair. Another question that potentially would have gotten touched upon but in realizing that this might be a tiny bit short-sighted just given the rapidity of the COVID-19 development but are you finding with the government and non-government agencies are you finding that there, I don't know if there's if a reluctance necessarily to commit to purchasing or completing tenders in other venues right now besides COVID-19 while they're simply scrambling to try to make sure that they've got the appropriate response to the current outbreak or is it a situation where they're trying to do it all at once realizing that these other infectious diseases don't stop well this one --

[Gail Page:]

Yes. What I can say is the state. I mean we've not seen COVID impacts the business from that standpoint where they're saying oh I'm not going to do this because I have to deal with this. Look HIV is not going away the problems that they have day to day are not going away just because this is interjected itself. Of course we will be monitoring everything very closely that to-date that has not been an indication. The indication is every day somebody calls me wanting to know do we have this and finally we were able to talk about what we had been fighting and we're very pleased with the progress that we've made with LumiraDX.

[Per Ostlund:]

Excellent. All right. Last question for me then. As far as Brazilian fever goes I know there's been conversation in recent quarters with competitors being literally sidelined because of manufacturing issues. Has Brazil circled around and made any awards and done anything in the Roma fever as far as 2020 is concerned or is that still kind of sitting out there as an opportunity for you?

[Neil Goldman:]

So the [sale] is progressing and obviously this new situations may delay little process but they are still. We have launched a product in Brazil of our triple assay for Zika, Dengue, Chikungunya and we also mentioned here that we have been a boarded with the UNICEF. They selected our program for screen of the pregnant women for Zika. So we are still in the discussion in Brazil.

[Per Ostlund:]

Okay. Very good.

[Javan Esfandiari:]

The only other thing perhaps I would add Per is as we described on our last call when we announced the acquisition of Orangelife, this is one of the benefits of having our facility, our own legal entity within Brazil gives us I would say a closer seat at the table than we were previously able to have through our longtime partner Bio-Manguinhos which of course is still a very valuable partnership but that closer seat at the table is something that we are excited about being able to produce benefits as we go down the process of getting our own direct registrations of the products which is of course ongoing everyday here now.

[Per Ostlund:]

Okay. All right. Excellent. I appreciate all the answers and I'd be remiss if I didn't add my welcome to Chembio to you to Rick as well. So welcome and have a great day everyone. Thanks.

[Richard Eberly:]

Thank you very much.

[Operator:]

Thank you. There are no further questions at this time. I would now like to hand the conference back to Gail Page for closing remarks.

[Gail Page:]

We just want to say again thank you everybody for joining us today for your support during the transition and we look forward to updating you on the next call. Have a good day.