Chembio Diagnostics, Inc.
Q1 2017 Earnings Call Transcript

Published: 10 May 2017

[Operator:]

Good day, ladies and gentlemen. And welcome to the Chembio 2017 First Financial Results Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for your questions and comments following the presentation [Operator Instructions]. At this time, it is my pleasure to turn the floor over to your, John Sperzel. Sir, the floor is yours.

[John Sperzel:]

Hello and thank you for participating in today's call. Joining me is Rich Larkin, our Chief Financial Officer. Before we begin, I'd like to caution that comments made during this conference call today, May 09, 2017, will contain forward-looking statements within the meaning of the Securities Act of 1933 concerning the current beliefs of the Company, which involve a number of assumptions, risks and uncertainties. Actual results could differ from these statements and the Company undertakes no obligation to revise or update any statement made today. I encourage you to review all of the Company's filings with the Securities and Exchange Commission concerning these and other matters. During the first quarter of 2017, the Company continued to execute its plan to expand our product portfolio and build our global commercial organization. The combination of high-quality innovative point-of-care products and global commercial distribution channels are key elements of our growth strategy. On the product front, we continue to leverage our pattern to DPP technology platform to strengthen our core sexually transmitted disease business, while rapidly building a broad fever and tropical disease product portfolio. We expect to be given commercializing a number of these new fever and tropical disease assays during 2017, thanks to significant grant based product development funding. Longer term, the Company continues to advance toward developing other products, including current work on DPP assays for mild traumatic brain injury or concussion, and a specific type of cancer. On the commercial front, we continue to strengthen and expand our global sales and marketing capabilities. During the fourth quarter of 2016, we made key deployments to strengthen our commercial leadership team. And during the first quarter of 2017, we expanded our global presence by adding experienced sales executives in Latin America, Africa and Asia Pacific, representing the first time the Company has had dedicated sales and marketing employees in these regions. Turning to our financial performance, during the first quarter of 2017, we achieved total revenue of $6.3 million, which included product revenue of $5.4 million. While total revenue represented 4.2% decrease as compared to the first quarter of 2016, it represented significant quarter-on-quarter sales growth as compared to the second, third and fourth quarters of 2016. It's also important to note that the first quarter of 2016 included approximately $1.8 million in product purchases by our previous U.S. distributor. Gross margin percentage for the first quarter of 2017 was 49.1% compared to 48% for the first quarter of 2016, representing a 1.8% increase. Within our target regions, our geographic mix of product sales during the first quarter of 2017 consisted of 39% of sales in Latin America, 26% in Asia Pacific, 20% in the United States, 8% in Europe and 7% in Africa. In Asia Pacific, we achieved $1.4 million in product sales, driven by key tender wins in Malaysia, representing the first time the Company has achieved meaningful sales in Asia Pacific. In the United States, we achieved $1.1 million in product sales, driven by a number of HIV tenders which we won during the last two quarter, much of which we expect to realize over the next 18 months. In Latin America, we achieved product sales of $2.1 million, driven by sales to Brazil. And just last week, we announced the receipt of a new $5.8 million order from Manguinhos Fiocruz in Brazil, and we believe that substantially all of this order will be shipped prior to year end. Lastly, in Europe and Africa, we achieved the total $0.8 million in product sales during the quarter, largely driven by HIV sales in the HIV self testing and professional HIV testing business. I'll provide a more detailed overview of the business following a review of that first quarter financial results. Rich?

[Rich Larkin:]

Thanks John. In conjunction with my comments, I'd like to recommend that participant review Chembio's 10-Q filing for additional details. Our total revenues for the first quarter of 2017 of $6.03 million were down 12.2% compared with $6.6 million in the prior year period. Product sales for the first quarter of 2017 of $5.4 million were down 8.3% compared with $5.9 million in the prior year period. This was largely due to the first quarter of 2016 purchases of $1.8 million by our former U.S. SURE CHECK distributor, which did not make any material purchases after March 31, 2016. R&D milestone grants and royalty revenues for the first quarter of 2017 of $0.09 million were up 31.2% compared to $0.7 million in the prior year period. Gross margin dollars for the first quarter of 2017 of $3.1 million were down 1.9% compared with $3.2 million for the prior year period; primarily again due to decrease in product sales. And the amount of gross product margin for the first quarter of 2017 of $2.2 million decreased 11% compared with $2.5 million in the prior year period. Again, this was largely due to the amount of the -- large amount of the first quarter 2016 purchases by for former U.S. SURE CHECK distributor. Research and development expenses for the first quarter of 2017 of $2.2 million increased 37.5% compared with $1.6 million in the prior year period. This decrease is due primarily to increased clinical product expenses, as well as R&D activities for projects and grants. Selling, general and administrative expenses for the first quarter of 2017 of $2.5 million increased 24.5% compared with $2 million in the prior year period, largely due to increased wages and related costs, marketing materials, stock-based compensation, travel and entertainment and trade shows, which were partially offset by decreased commissions on sales, decreased consulting and decreases in investor relation and professional fees. Operating loss for the first quarter of 2017 was $1.6 million compared with an operating loss of $0.5 million for the prior year period. Net loss for the first quarter of 2017 was $1.6 million or $0.13 per diluted share compared with a net loss of $0.3 million or $0.03 per diluted share in the prior year period. Lastly, the Company had cash and cash equivalents of $5.6 million as of March 31, 2017 compared with $10.6 million as of December 31, 2016. The decrease was primarily due to cash used in operating activities for the first quarter of 2017. Our working capital decreased by $2.3 million from $14.7 million as of December 31, 2016 to $12.4 million. The Company had accounts receivable, net of allowance for doubtful accounts of $5.7 million as of March 31, 2017 compared with $3.4 million as of December 31, 2016. Cash and accounts receivable combined as of March 31, 2017 was $11.3 million as compared to $13.9 million at December 31, 2016. During the months of April and May of 2017, we collected approximately $2.8 million of the March 31, 2017 accounts receivable balance. That concludes the financial review. I will now turn the call over back to John.

[John Sperzel:]

Thanks, Rich. I'll now give an overview of the progress made in Chembio's business during the first quarter of 2017. I'll first speak about our sexually transmitted disease business. To strengthen the Company's core sexually transmitted disease business, Chembio continues to focus on its DPP HIV-Syphilis Assay in response to global concerns related to co-infection an mother-to-child transmission of both HIV and Syphilis. During the first quarter of 2017, Chembio received a CE mark for the DPP HIV-Syphilis Assay, which allows us to market and sell the products within the member states of the European Unions and the nations of the Caribbean region, except Puerto Rico. The U.S. clinical trial to support our FDA application for the DPP HIV-Syphilis Assay was initiated during the first quarter of 2016, and has been completed. In March 2017, the food and drug administration requested further clinical studies in addition to those recently completed. As a result, we're in discussions with the FDA regarding the scope of these new trails and the timing for filing the PMA. We remain optimistic about the FDA process, the HIV Syphilis U.S. market opportunity and continue to believe we fill we be first in market with a point-of-care HIV Syphilis combination test in the United States. As mentioned earlier, the Company received $5.8 million order from Bio-Manguinhos to supply test components and intermediate product for the production of DPP HIV Assays, both oral fluid and blood, in Brazil and subsequent supply to Brazil's Ministry of Health. We believe substantially all of this $5.8 million order will be shift prior to year-end. In the U.S. market, the Company was awarded a number of HIV tenders, which were won during the last two quarters, much of which we expect to realize over the next 18 months. I'll now discuss our fever and tropical disease business. To build a strong position in the tropical and fever disease business, we continue to make significant progress toward our goal of commercializing multiple products during 2017. During the first quarter of 2017, the Company initiated sales of the DPP Zika Assay and DPP Zika/Dengue/Chikungunya combination Assay to the CDC for use in a pilot surveillance program in Peru, India, Guatemala and Haiti. We also initiated sales of our DPP Dengue Assay in Asia Pacific and continue to pursue important regulatory approvals for the DPP Zika system, including the United States Food and Drug Administration, Emergency Use Authorization, World Health Organization Emergency Use Assessment and Listing, and Brazil ANVISA. Subsequent to the first quarter of 2017, we had another important development in the fever disease business as we entered into a new collaboration with FIND, a world leading organization dedicated to delivery of high quality, affordable diagnostics to communities in need around the world. Over the next 12-months, Chembio and FIND will endeavor to develop a simple rapid and cost effective test based on Chembio's proprietary DPP technology platform to simultaneously detect nine life-threatening acute febrile illnesses common in Asia Pacific region. Developing such a test is aligned with the Company's growth strategy and affirms the Company's commitment to the development of new and innovative point-of-care diagnostic test for life threatening febrile illnesses. It's important to reiterate that nearly all of the Company's fever and tropical disease products have been or are being developed through collaborations and/or funding from world leading of health organizations, including the Bill & Melinda Gates Foundation, the Paul G. Allen Family Foundation, the Centers for Disease Control and Prevention, FIND and the U.S. Department of Health and Human Services, i.e. BARDA. Lastly, I'll give an overview of two important operational advances during the first quarter of 2017. As part of Chembio's global commercialization strategy, the Company appointed three highly experienced international sales executives during the period; Javier Gutman, previously of [BLMRU] joined the Company as Regional Director, Latin America; Kenneth Burns, previously of Trinity Biotech joined the Company as Regional Director, Africa; and Mohan Anasalam, previously of HemoCue joined the Company as Reginald Director, Asia Pacific. These newly appointed sales executives reside in their respective regions and will focus on increasing product sales, strengthening and expanding the Company's distribution channels, and providing local support to customers and commercial partners. In January of 2017, the Company completed the acquisition of RVR Diagnostics a Malaysia based held manufacturer and distributor of point of care diagnostic test for infectious diseases. During the first quarter of 2017, we took action to integrate RVR Diagnostics into our operations and quality systems. We're in the process of changing the name of RVR Diagnostics to Chembio Diagnostics, Malaysia, which is a wholly owned subsidiary of Chembio Diagnostics Inc. This new subsidiary in Malaysia provides a strategically located operation, a base of product revenue, a cost effective ISO13485 certified manufacturing facility and a path for smooth regulatory compliance in the region. In conclusion, we believe the events and achievements of the first quarter of 2017 demonstrate Chembios commitment to strengthening its core business in the sexually transmitted disease market, building a strong position in the high growth fever and tropical disease market and expanding its global commercial channels by appointing seasoned and successful sales executives in Latin America, Africa and Asia Pacific. During the first quarter of 2017, the Company achieved a more balanced geographic product mix and won a number of new tenders that we believe will contribute significantly to the balance of 2017 revenues. This concludes our prepared statements for today. I would now like to open the call for any questions.

[Operator:]

Thank you. The floor is now open for questions [Operator Instructions]. And our first question comes from Kevin Aldrich. Please state your question.

[Unidentified Analyst:]

John, I guess starting off with the $5.8 million order that you guys announced last week in Brazil. You said that you expect that to be shipped by year end. Could you help us may be with the timing on how that $5.8 million should come into your -- flow into your revenue over the next few quarters? And then also what drove the decision for Brazil to come back to Chembio? Did you have to give up price or anything like that?

[John Sperzel:]

We’ll take those in reverse order, Kevin, if that’s okay. What drove decision by the Ministry of Health in Brazil and quality; and we're fortunate that our DPP HIV Assay has a long history in Brazil and they are very familiar with the quality of the product. So that’s the first point. The second is in terms of how we think about supplying that product for the balance of 2017, you can think about it reasonably even between Q2, Q3 and Q4.

[Unidentified Analyst:]

So just to be clear, there was no concession on price. And maybe could you help us a little bit on what type of margin contribution you would expect on that revenue?

[John Sperzel:]

We generally wouldn’t do that Kevin for competitive reasons.

[Unidentified Analyst:]

And then I guess could be may be talk about the significance of having achieved GMP certification. Does that help with the DPP HIV order? Does it -- are they losing down the potential regulatory action on Zika or the other indicator products?

[John Sperzel:]

So, first thing is I would not connect the GMP Certification to any activity that we have ongoing with ANVISA regarding our DPP Zika Assay because they are somewhat unrelated. What the GMP certification allows us to do is potentially expand our distribution channels in Brazil. Today, the only channel that we had established and sold product through is the channel to Bio-Manguinhos/Fiocruz which then they supply to Brazil's Ministry of Health. As you know, it’s a social healthcare system, so the Ministry of Health in Brazil is generally responsible for the demand within the both healthcare system.

[Operator:]

And our next question comes from Raymond Myers. Please state your question.

[Raymond Myers:]

I want to clarify something in the press release where you said during the first quarter of 2017, we continue to see important quarter-on-quarter sales growth. Does that imply quarter-on-quarter growth even beyond the strong first quarter here in Q2?

[John Sperzel:]

Well, we were comparing against Q2, Q3 and Q4 of 2016. We mentioned the reference point of Q1 of 2016 including $1.8 million of purchases from our prior U.S. SURE CHECK distributor. So that reference is against Q2, Q3, Q4, and if you recall in Q2 of 2016, we stated that we believe that was a low watermark in terms of product sales, and we are really just reinforcing the fact that that has proven out to be exactly true based on Q2 to Q3 of '16, Q3 to Q4 of '16 and Q4 of '16 to Q1 of '17, and significant quarter-on-quarter growth, in some cases triple digit.

[Raymond Myers:]

I am trying to get a sense as to whether we can expect sequential upticks from here or was there so much of these positive tender wins in the first quarter that maybe that subset temporary high watermark?

[John Sperzel:]

Well, I think if we want to go into some pieces obviously we achieved $1.4 million in sales in Malaysia which is also not igniting prior year period reporting because that's following the acquisition of our subsidiary in Malaysia. That’s important to recognize. The second is some of the business that we have already won through combined Malaysia is frontend loaded tenders. So, it would not be appropriate to take that 1.4 million time score and say that’s the expectation for the year based on where we are today. I think we have said about the business in Brazil we expect to ship all of that in the next three quarters. And you should probably think about that Ray as these tender wins are strong indicators of commercial success, whether it's Asia pacific, whether it's Latin America or whether it's some of the tender wins that we mentioned in the last quarter of the call in United States. They are very strong indicators of our ability to start to commercialize these products ourselves.

[Operator:]

And our next question comes from Brian Marckx. Please state your question.

[Brian Marckx:]

Relative to Fiocruz and the 5.8 million order and how that may potentially translate into other products as Fiocruz has bought from you specifically into the technology transfer agreements? Is there insight into potential that they would be interested in other of these DPP products?

[John Sperzel:]

They absolutely are. We have a strong history with Bio-Manguinhos/Fiocruz. They expect more than a decade and it started with our STAT-PAK Assay and a technology transfer agreement. It has included over the years a DPP HIV Assay, a DPP Syphilis Assay, a DPP Leishmania Assay and the DPP assay is also including oral fluid. We have signed a collaboration with Bio-Manguinhos related to Zika or Dengue or Chikungunya and our Zika, Dengue, Chikungunya combination test. And so, the demand from Bio-Manguinhos originates from the Ministry of Health as I was saying before. And so any demand for other products will come from the Ministry of Health, but to us via Bio-Manguinhos. So there is a long history there, there is ongoing business that we have in Brazil. I think I mentioned in the prepared remarks that Latin America or specifically Brazil represented something like 39% of our product sales during the first quarter. So continues to a very important market, we continue to have a very unique channel in the collaboration with Bio-Manguinhos to the Ministry of Health and we hope that that continues.

[Brian Marckx:]

John, anything up on the DPP HIV Syphilis U.S. Program that you can talk about relative to FDA's response and what they may be looking for in terms of additional studies?

[John Sperzel:]

That dialogue is ongoing, Brian, so it's probably a little bit our boarder and inappropriate for me to discuss that because we don't have a complete agreement on exactly what needs to be done. The thing that I would say is this is not unusual. It's very typical that the FDA comes back and ask for additional information, we defined it pretty specifically in the press release and in our prepared remarks. We are really enthusiastic about the product. we're enthusiastic about the data so far and we're confident that we're going to be the first in the market with the combo test. And we think that that's going to be meaningful for customers and for our business.

[Operator:]

And our next question comes from Larry Heinrich [ph].

[Unidentified Analyst:]

So, the next quarter congrats. You actually answered one of my questions [Indiscernible] which was RVR or EUA did very-very well. But you clarify that we shouldn't really annualize that. But nonetheless, it seems like at that part of business even if you take out the lumpiness is still doing very very well. Do you have any more color on Asia as far as the performance they had and what you're look for, for the rest of the year?

[John Sperzel:]

We're very pleased with the start. Keep in mind, when we acquire the Company we obviously had a line of sight to what they were doing on the commercial side and obviously that's why we made the decision to act when we did. What we're doing at the moment is we're going through what I would describe as a very structured, very disciplined, very aggressive process to register multiple products throughout Southeast Asia. It doesn't happen overnight, but because we have approval in country of origin which is now Malaysia for us, we can actually have a more expedited smoother regulatory path. So, we expect to get additional regulatory approvals in many countries throughout Southeast Asia and continue to build on the $1.4 million that we put in the book for Q1

[Unidentified Analyst:]

And which diseases do you expect in Asia will be the most successful for you as you win business there?

[John Sperzel:]

Well, we start with Dengue and I think we continue to build on the fever and tropical disease portfolio, adding Zika behind that once we get the appropriate the regulatory approvals and HIV and HIV Syphilis combo. I think those are the ones we would expect to focus on.

[Operator:]

And our next question comes from Ross Taylor. Please state your question.

[Ross Taylor:]

First great quarter and the outlooks exceptionally strong, John, so congratulations. I want to talk about couple of things. First, with winning these tenders both in Brazil and else on the U.S. Is that getting you back into the business where we should see ongoing future revenues beyond the 2017 year from those forces?

[John Sperzel:]

We believe so, if you take a one at a time Brazil in a way we are back in the HIV testing programs in Brazil, and we've been there for a long time. Of course, we launched acquisition due to a competitor who is no longer in that position end of 2015 and throughout 2016 and we've talked about that quarter-after-quarter. So we're pleased to be back there, it strengthens our position in Brazil and again we were very pleased with that. In terms of the U.S., I mean, we absolutely [Indiscernible] into the United States. We put that sales team in place on public health, and we continue to boost and strengthen our partnerships with key medical surgical in the U.S. and we're starting to show signs of progress. We've completely transitioned the STAT-PAK business from our former U.S. distributor and we are at the tailwind of transitioning the SURE CHECK business from our U.S. distributor, a former U.S. distributor. And some of these key wins in the United States, these large tender wins that we've previously announced, we went head-to-head against our former U.S. distribution partner with a product that is OEM the same product. So, again it's an indicator of our ability to be successful on the commercial side in U.S., in Brazil, and I think we will see that expanded now that we have ER tenant in Mohan in the respective regions.

[Ross Taylor:]

Okay, now looking at HIV Syphilis with the FDA timing wise, what kind of timing do you expect? And it sounds like you might need to run additional test so called prior tests for additional data? What does that do on a timing horizon for bringing something through the FDA this year?

[John Sperzel:]

So, it shouldn’t be doesn’t stick with the original timing that we had. I could see some deviation of the schedule that we have, but I will say this data that we've seen so far is solid and I think by next quarter, I'll be able to give an update specifically on what the FDA has asked for and specifically when we believe that we will submit.

[Operator:]

And our next question comes from David Morgan. Please state you question.

[Unidentified Analyst:]

Yes, I wanted an update on some of the development programs on the concussion and the cancer? Has there been any additional progress made this quarter?

[John Sperzel:]

Yes, there is the only thing that I would say as those are in what we would call the early phase of development, which is the long yardstick in the process of feasibility to commercialization. So, there is nothing specific that I can update other than we continue to see progress, and we are working with two different partners obviously on the cancer assay, I'm not able to disclose the partner. On the concussion assay, I can obviously say that it's Perseus Science and they continue to fund the projects. We continue to make progress, but our quarter-to-quarter basis there is not a lot that I can report when we're in that development phase.

[Unidentified Analyst:]

So at this point it's all preclinical at this point?

[John Sperzel:]

Well, I will describe the brain injury assay as preclinical, and I would describe the cancer assay as development. We move pass feasibility in both cases.

[Operator:]

Our next question comes from Raymond Myers. Please take your question.

[Raymond Myers:]

John, a follow-up, on your Zika development. Can you give us an update as to where the FDA emergency use authorization process is? Where are you? And what progress are you making.

[John Sperzel:]

So, first of all we're very pleased with the data on our Zika Assay. As you know, Ray, we've a CE mark, so we're selling a version of our Zika Assay in the Caribbean region, which is suffering a lot from Zika. And I know that Zika is not front page of the newspaper and headline of the television, but I think at the recent count Zika is in more than 80 countries. So, it continues to be a significant problem, and if you pay attention to what Tom Frieden, the Director of CDC says and I quote, Zika is likely to be with us for years to come, end quote. So, it's not going anywhere, it continues to entrench itself. He said that we expected to be back in parts of the United States, where we all with FDA, I can only characterize as actively engaged. It's an iterative process like we see with HIV Syphilis, and we’re well into that process because when we made the initial Emergency Use Authorization submission.

[Raymond Myers:]

And so, a related question is, I read that you started shipping under the CDC Zika/Chikungunya/Dengue pilot program? And I was curious of what the progresses of that? And what are the results or your outcome of that process that would be determinants of success.

[John Sperzel:]

So, that is a pilot surveillance program, which the CDC initiated for Peru/India/Guatemala and Haiti. We have supplied CDC with DPP Zika Assay as well as the combination of DPP Zika/Dengue/Chikungunya Assay. And I don’t think that we will get the results from that pilot program that pilot testing until sometime in the back half of 2017, and we will be happy to share that when we get it.

[Operator:]

And our next question comes from Larry Heinrich [ph]. Please take your question.

[Operator:]

Okay and we have one more question from Ross Taylor.

[Ross Taylor:]

John, first the operator did something, even my teenage daughter came to, which was to cut me off, but I wanted to get better picture on how the several disease of you continue to say you expect to see commercialization, this year you talked in the last call about the fact you had product out for testing with some of your funding organization. Can you give us an idea I mean to me those are huge potential market, which can really quite simply change the Company and the swipe of the plan news release such a huge opportunity in those. Can you give us an idea where you stand with review process to testing process and also what you see the market potential in those spaces being?

[John Sperzel:]

Sure, that’s quite a question Ross. Let me try to take it piece by piece. First, talk about which test we think we are going to get over to get over the go line in 2017. And part of that is easy because we have already pushed some of them over the go line. Our Zika Assay, our Dengue Assay and our Zika/Dengue/Chikungunya Assay, we have all -- we started the commercialization process with all of those. I think you could add a standalone Chikungunya Assay to that mix and those of the products that we are likely to see commercialize in various places around the world during 2017, which I think you characterized as upside potential. So, it's not a simple answer to say commercialize those everywhere around the world because we have to get certain regulatory approvals, the major one is obviously U.S. FDA which covers the U.S. in certain pass of the Caribbean, U.S. Virgin Islands and Puerto Rico. WHO either emergency use for prequalification will cover Africa. The CE mark we will cover the Caribbean and Europe and then we will have to go sort of country by country, right. ANVISA in Brazil, Copa Pirelli in Mexico, and we go country by country and in Asia Pacific as well. We are going through that process at the moment. And I can't say for competitive reasons say where we are with every one of those processes, but it’s a really important part of our growth strategy for 2017 to check many boxes on the regulatory front and start to commercialize those assays. You mentioned the size of the markets, putting malaria aside because that’s a separate initiative that we haven’t -- key market, I mean estimates are for dengue 390 million cases of dengue is probably while we under reported what the experts say. So, there is significant potential for dengue. There are obviously more sporadic upgrades of viruses like Chikungunya and Dengue. Combination Assay is going to have serious global utility because where do you start in an algorithm, if you are concerned about you can pull out a standalone Dengue test. If you get it negative then you have to pull out another test. And so that’s the cumbersome process for the customer. If you start with the Dengue test and you get -- do you stop? Or do you keep testing the infected patients? So, the real value of our combinations Zika/Dengue/Chikunguneya test is with one finger stick with a 10 micro liter drop of blood, identify each of these viruses and we can also identify co-infected patients which is becoming a bigger and bigger problem.

[Ross Taylor:]

So, it fairs if you are looking at the market where you have Dengue for example 390 million cases, and if you feel might under reported. There is a test out there which I understand is rather ineffective, might not be quite as good as flipping the coin. But are you looking then, I intend to use to 2

[John Sperzel:]

So, that’s a ratio that is the ratio that we see in malaria roughly little over 200 million cases of malaria annually and approximately 400 million rapid diagnosis is used. So, if you want to apply that same ratio in the ballpark that not what we see today. So certainly that degree of testing isn't there. There are some decent Dengue tests in the market. Chikungunya on the other hand, there are only two. CDC evaluated both of them because the sensitivity and specificity was below 40%, they literally stop the evaluation. So, we see varying degrees of quality of all rapid diagnostic tests around the world. Certainly, the bar is set extremely high in United States and we're proud of the fact example that we have three of the seven PMA approved CLIA-waived HIV Assays. I think that's good corporate DNA to continue to make high quality fever and tropical disease assays and go after some of these large markets.

[Ross Taylor:]

So getting back to at your size of market, if how big do you think these markets are going to be? If you look at the Company today and the industry space, you're basically trading at roughly three times your EBITDA is about three times sales little over three times sales. UNICEF, if I think is looking for what doing $30 million to $40 million plus in malaria test alone and you've got other markets. It seems that each of these diseases literally could more than double the size and perhaps meaningfully more than double the size of the Company?

[John Sperzel:]

Well, UNICEF has an RFP out for Zika and it's in the range of millions of test. We understand that one of the requirements is to be involved in the WHO process for emergency use. There are only two companies involved in that process, Chembio is one of them. UNICEF has RFPs out for HIV self test. We are absolutely going after some of these large RFPs. There no guarantee that we have success, but we're putting ourselves in a position to have success. So, as you asked about the Malaria market and the Dengue market, we understand today that the market leader in Malaria has approximately $100 million it's in the annual revenue and roughly 50% market share. We understand that the market leader in rapid Dengue testing has approximately $50 million business and has approximately 50% market share. So, you can see what the potential is on two of the large fever and tropical disease assays.

[Ross Taylor:]

And when you were asked develop the malaria test, you were asked specifically I believe to develop the test that significantly superior to the tests that's in the market, is that correct?

[John Sperzel:]

Yes, in terms of sensitivity, we're as to make a 10x improvement on the sensitivity of that test.

[Ross Taylor:]

And so you're comfortable that your test that you have in the field being tested now is an order of magnitude better than what's the market today?

[John Sperzel:]

That's correct.

[Ross Taylor:]

And that's $200 million market. Okay, good luck.

[John Sperzel:]

Thank you, Ross.

[Operator:]

Okay. Thank you. And with that, I'd like turn it back to John.

[John Sperzel:]

Well, just to wrap up, thank you again for your participation and your continued support of Chembio Diagnostics. We look forward to updating you again next quarter.

[Operator:]

Thank you. That does conclude today's call. We thank you for your participation. You may disconnect at this time. And have a great day.