Chembio Diagnostics, Inc.
Q4 2016 Earnings Call Transcript
Published:
- Operator:
- Greetings, and welcome to the Chembio Diagnostics 2016 Year-End Financial Results Conference Call. At this time, all participants are in a listen-only mode, a question-and-answer session will follow the formal presentation. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to turn the conference over to your host Mr. John Sperzel, Chief Executive Officer of Chembio Diagnostics. Thank you, Mr. Sperzel, you may begin.
- 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, March 7, 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 2016, Chembio took important strategic steps that we believe positioned the company for growth. First, the company made significant advances to expand and diversify its product portfolio with emphasis on leveraging its patented DPP technology platform. Second, the company continued to build its global sales and marketing infrastructure, strengthening its U.S. sales leadership and recruiting its first ever international sales team. And third, the company expanded its operational capabilities, contracting to acquire Malaysia-based RVR Diagnostics, which was acquired in January 2017. I'll first discuss the expansion and diversification of our product portfolio. For nearly 15 years, Chembio was primarily focused on point-of-care HIV testing and succeeded in commercializing multiple FDA approved and CLIA-waived point-of-care HIV tests. In 2014, the company made a strategic decision to expand and diversify its product portfolio, leveraging its patented DPP technology platform and focusing on three key objectives. One, strengthening its core sexually transmitted disease business. Two, building a new highly differentiated fever and tropical disease business. And three, establishing select technology collaborations to further leverage its patented DPP platform and develop novel point-of-care test. I'm going to touch on each of these three. The first objective, strengthening our core sexually transmitted disease business began with the decision to terminate Chembio's prior U.S. distribution agreements and build its own U.S. sales and marketing infrastructure. The company terminated the HIV STAT-PAK Assay agreement in 2014 and terminated the SURE CHECK HIV Assay agreement in 2016, which gave the company control of its legacy HIV Assays. The point-of-care HIV product line was further strengthened by the launch of the DPP HIV Assay, which is capable of using both blood or oral fluid and continued regulatory approvals. Today all three of our HIV tests are FDA approved, CLIA-waived, WHO pre-qualified and CE-marked. And finally to address the rise in HIV and Syphilis co infection in the United States, the company prioritized the development and commercialization of a DPP HIV-Syphilis Assay for the U.S. market. The second objective, building a highly differentiated fever and tropical disease business began as a response to the 2014-2015 Ebola outbreak in West Africa. Today through collaboration and or funding from the Paul G. Allen family foundation, the Bill & Melinda Gates foundation, and the U.S. Government that is Health and Human Services or Barda and CDC. The company is developing eight point-of-care fever and tropical disease products, including the following individual tests. DPP Malaria, DPP Zika, DPP Dengue, DPP Chikungunya and DPP Ebola. And the following combination or multiplex tests, DPP ZIKA/Dengue/Chikungunya, DPP Malaria/Ebola and DPP Fever Panel. The latter which simultaneously detects Malaria, Zika, Dengue, Chikungunya, Ebola Lassa and Marburg. And the third objective, establishing technology collaborations to further leverage Chembio's patented DPP technology platform is focused on advancing the development of novel point-of-care test in areas with unmet medical needs, such as traumatic brain injury or concussion, a specific form of cancer and bovine tuberculosis in cattle. These collaborations are funded by our partners and seek to exploit the unique advantages of the company's DPP technology platform as compared to traditional lateral flow technology, such as enhanced sensitivity and specificity, the ability of multiplex, and the ability to provide a semi-quantitative result when combined with Chembio's easy-to-use battery operated and cost effective DPP Micro Reader. I'll now discuss Chembio's global sales and marketing infrastructure. Prior 2014, Chembio's HIV products were sold through a single exclusive distribution partner in the U.S. market and they were also branded by their partner. The majority of the company's international sales were limited to a few countries and the company had no internal commercial infrastructure. Between 2014 and 2016, as Chembio took important steps to gain control of its HIV products in the United States market ending the long standing relationship with its previous distribution partner. The company built its own sales and marketing team in the United States to sell its branded DPP HIV, STAT-PAK HIV, and SURE CHECK HIV products in the U.S. The company also established agreements with major U.S. distributors such as McKesson, Henry Schein, Fisher, and Medline to create a geographic coverage model in the U.S. market allowing access to public health hospital and doctor office market segments. In our effort to build a world-class commercial organization, with focus on the U.S., Latin America, Europe, Africa and Asia Pacific, Chembio recently appointed to experienced senior executives to lead the company's goal commercial operations. Robert Passas PhD as President, EMEA and APAC regions and Sharon Klugewicz as President of the Americas Region. In addition Chembio recently hired three International sales executives, each with significant point-of-care diagnostics experience to lead commercial expansion in specific regions. Javier Gutman, formerly of Biomerieux was named Regional Director Latin America. Kenneth Burns formerly of Trinity Biotech was named Regional Director Africa, and Mohan Anasalam, formerly of Hemocue was named Regional Director Asia Pacific. Each of these sales executives brings considerable in the region experience to Chembio and each will focus on increasing product sales, strengthening expanding the company's distribution channels, and providing local support to customers and commercial partners in their respective areas of Latin America, Africa and Asia Pacific. At lastly, I'll discuss Chembio's expanding operational capabilities. In November 2016, Chembio contracted to acquire Malaysia based RVR Diagnostics. A strategic decision to expand the company's operational capabilities, increasing manufacturing capacity, and establishing a physical presence in Southeast Asia. Since 2014, Chembio and RVR Diagnostics collaborated under two agreements, which granted RVR rights to license, manufacture and distribute certain Chembio products within Southeast Asia. In light of the progress made by RVR over the last two years and to further support our global product and commercialization strategies, Chembio acquired RVR in January 2017. As a subsidiary of Chembio, RVR is an important base of operations providing additional revenue, a strategically located and cost effective manufacturing facility, and a path to regulatory access in Southeast Asia. In 2016 we made great strides to expand and diversify our product portfolio, continue to build a global sales and marketing infrastructure and expand our operational base all of which we believe are growth drivers. I'll provide an overview of each of our businesses, following a review of the fourth quarter and year-end financial results. Rich?
- Richard Larkin:
- Thanks John. In conjunction with my comments, I'd recommend that participant review the Chembio's 10-K filing for additional details. I'll first address the results for the quarter. Our total revenues of $4.25 million were down 3.8% compared with total revenues of $4.42 million in the prior year period. Product sales in the quarter of $3.23 million were down 13.7% compared with product sales of $3.74 million in the prior year period. Research and development milestone grant and royalty revenues for the three months ended December 31, 2016 of $1.03 million increased 51% from $0.68 million in the prior year period. Our gross margin dollars decreased 6.3% to $1.75 million compared with $1.87 million for the prior year period. This is due primarily to decreased product revenues. The amount of product gross margin dollars for the quarter decreased 39.1% to $0.73 million from $1.19 million in the prior year period. Research and development expenses up $2.16 million increased 47.5% compared with $1.47 million in the prior year period. This increase is due primarily to clinical trial expenses, as well as R&D activities for projects and grants. Selling general and administrative expenses up $2.16 million increased 34.8%, compared with $1.61 million in the prior year period. This is largely due to increases in wages and related costs, increased commissions, which were due to increased sales in Brazil, as well as increases in professional fees, which were partially offset by a decrease in stock-based compensation. Operating loss for the quarter was $2.57 million compared with an operating loss of $1.2 million in the prior year period. Net loss in the quarter was $2.56 million or $0.21 per diluted share compared with a net loss of $0.65 million or $0.07 per diluted share in the prior year period. Now I'll address the results for the full year period. Our total revenues for 2016 of $17.87 million decreased 26.3% compared with $24.26 million in the prior year period. And product sales for the year of $13.68 million decreased 37.5% compared with $21.89 million in the prior year period. Research and development milestone, grant and royalty revenues, at $4.19 million increased 76.8%, compared with $2.37 million in the prior year period. Our gross margin dollars for the year of $8.45 decreased 19.4% compared with $10.49 million in the prior year period. Again, due primarily to the decrease in product sales. The product gross margin for 2016 of $4.26 million decreased 47.5% compared with $8.12 million in the prior year period. Research and development expenses of $8.43 million increased 32.1% compared with $6.38 million in the prior year period. This increase is due primarily to the increased activities for projects and grants. Selling general and administrative expenses of $7.6 million decreased 0.9% compared with $7.66 million in the prior year period, largely due to decreased commissions on sales in Brazil, decreased stock-based compensation and consulting, which were partially offset by increases in wages and related costs, marketing materials, investor relations expenses and professional fees. Our operating loss for 2016 was $7.57 million compared with an operating loss of $3.55 million in the prior year period. Net loss for the year was $13.35 million or $1.26 per diluted compared with a net loss of $2.4 million or $0.25 per diluted share in the prior year period. The 2016 net loss includes a $5.8 million non-cash income tax provision, as a result of the company decreasing its deferred tax assets and taking a full valuation allowance against its carry forward loss. The company had cash and cash equivalents of $10.55 million as of December 31, 2016 compared with $5.38 million as of December 31, 2015. The increase was primarily due to net cash raised in sale of common stock, partially offset by cash used in operating activities for the year of 2016. Our working capital increased by $5.23 million from $9.48 million as of December 31, 2015 to $14.71 million. In August 2016, company sold 2.3 million shares for a total of $13.8 million, which after expenses resulted in approximately $12.5 million in net funds to the company. That concludes the financial review. I will turn the call back over to John. John?
- John Sperzel:
- Thanks Rich. I'd now like to give an overview of the progress made in each of our business areas during 2016. The sexually transmitted disease, fever and tropical disease and technology collaborations. I'll first speak about sexually transmitted disease business. The 2016 decrease in product sales was primarily due to the previously disclosed loss of the DPP HIV and DPP Syphilis product sales, as a result of the tender offer in Brazil having been awarded to a competitor at an extremely low price point, as well as the impact of the company's decision to separate from its previous SURE CHECK HIV Assay distributor in the U.S. market. Despite this decline, quarter-over-quarter analysis show sales growth with total revenues for the fourth quarter of 2016 up 13.3% and product sales for the fourth quarter of 2016, up 29.2% as compared to the third quarter of 2016. In addition total revenues for the fourth quarter of 2016 were up 30%, and product sales for the fourth quarter of 2016 were up 59.1% as compared to the second quarter of 2016. In the United States, sales of the company's point-of-care HIV Assays also showed positive trends. During 2016 U.S. sales of HIV STAT-PAK Assay increased 34.7% as compared to 2015. We're also seeing very encouraging U.S. sales of the SURE CHECK HIV Assay. During the fourth quarter of 2016, U.S. sales of the SURE CHECK HIV Assay increased by approximately $516,000 or 230% as compared to the prior quarter that is Q3 of 2016. Our U.S. HIV sales are bolstered by a two year HIV tender for the state of Florida, which the company was awarded during the fourth quarter of 2016 expected to contribute revenue of approximately $1.5 million between 2017 and 2018, and a two year HIV tender for another state, which the company was awarded subsequent to the end of 2016, expected to contribute revenue of approximately $1.5 million between 2017 and 2018. This growth provides evidence that we're effectively rebuilding the U.S. HIV STAT-PAK and SURE CHECK HIV business since we took back the U.S. distribution rights to these products, in June 2014 and June 2016 respectively. The company continued to advance the clinical trial for its DPP HIV Syphilis Assay for the U.S. market during 2016, which is expected to be completed as planned in the first quarter of 2017. The preliminary results from the DPP HIV Syphilis clinical trial are highly encouraging. Following the completion of the clinical trial, we will file a premarket approval application with the U.S. Food and Drug Administration. As we've stated previously, it is an important corporate priority to be first to market in the United States with an HIV Syphilis combination test. The company also recently received CE-mark for the DPP HIV Syphilis Assay clearing the product to be marketed and sold within the member states of the European region and the Caribbean region, except Puerto Rico and the U.S. Virgin Islands. I'll now address our fever and tropical disease business. During 2016. Chembio significantly advanced the development of products within its fever and tropical disease portfolio, which as I mentioned earlier includes eight different fever and tropical disease test, which are all performed with a tiny 10 microliter drop of blood from the fingertip and provides results in 15 minutes. I'd like to highlight a few of our notable accomplishments. During 2016, we completed the development of the DPP Fever Panel, a world's first, which was funded by the Paul G. Allen family foundation. The DPP Fever Panel has now entered full testing in Africa and South America. In collaboration with the foundation for innovative new diagnostics or FIND. And the field testing is also funded by the Paul G. Allen family foundation via FIND. We produced 10,000 tests for the field evaluation, and we'll update on our progress in future calls. During 2016, we also completed the DPP Malaria feasibility, which was funded by the Bill & Melinda Gates foundation. The data looks very encouraging in both blood and saliva. As compared to the worlds leading point-of-care malaria test. The DPP Malaria Assay is entering the laboratory evaluation, with a partner of the Bill & Melinda Gates foundation. We'll update our progress with the DPP Malaria Assay on future calls, including our commercial plans for the Assay. During 2016, we made significant progress on the DPP Zika Assay. The project was initiated in February 2016, and in approximately 12 months we accomplished the following highlights. We received initial funding from the Paul G. Allen family foundation. We announced Zika collaboration with Bio-Manguinhos or Fiocruz in Brazil. We announced regulatory filings with the Food and Drug Administration under EUA. World Health Organization under EUA, ANVISA in Brazil, CE-mark in Copa Pirelli in Mexico. We received the CE mark and launch the test in the Caribbean via our partner Isla Lab. We announced funding from Health and Human Services or BARDA of up to $13.2 million and we were awarded a CDC contract worth $300,000 for a Zika/Dengue/Chikungunya pilot in Peru/India/Guatemala and Haiti. And we have started to ship that product to CDC during the first quarter of 2017. We received ANVISA approval for the Assay and we recently successfully completed the INCQS evaluation, which is Brazil's independent evaluation agency. With respect to our DPP Zika Assay, we're actively engaged with multiple regulatory agencies, including the U.S. Food and Drug Administration and ANVISA. And we're hopeful that additional regulatory approvals are on the horizon. While we're disappointed that we did not receive significant Zika orders in 2016, we believe we are well positioned to address the global Zika crisis. Considering we're one of two rapid test companies, submitted to the World Health Organization and that window is now closed under EUA. And we are currently the only rapid test submitted to the FDA, under EUA to our knowledge. We have already obtained the CE mark. And we are making progress in Brazil. We're also working to get approvals in Southeast Asia. Lastly, I'll give an overview of our technology collaborations. Chembio currently has ongoing technology collaborations for the development of the DPP Cancer Assay for a specific form of cancer. The DPP Traumatic Brain Injury or Concussion Assay and the DPP Bovine TB Assay. We're pleased to report that we made progress with each of these programs in 2016. The DPP Cancer Assay, which is funded by an undisclosed entity targets a specific form of cancer. We successfully completed the feasibility phase of the program and moved into the product development stage which is also funded by our undisclosed partner. The results to-date with this program have been highly encouraging. And with success, we're hopeful that we were able to find additional applications for our DPP technology in the broader oncology market. We also made important advances with the DPP Traumatic Brain Injury Assay during 2016. The project which is funded by Perseus Science Group is in the feasibility and pre-clinical testing phase. We recently completed institutional review board agreements with several hospitals and began conducting initial studies of the DPP Traumatic Brain Injury Assay using patient samples. And finally the DPP Bovine TB Assay is a rapid point-of-care test for the detection of bovine tuberculosis in cattle. In September 2016, the company was awarded a $600,000 grant from the United States Department of Agriculture to develop the DPP Bovine TB Assay. Under the two year agreement, Chembio will use its patented DPP technology in an effort to develop a simple, rapid, accurate, and cost effective test for Bovine Tuberculosis in cattle. The test will be designed to provide results within 20 minutes, thereby significantly improving on the time consuming, tedious and inadequate diagnostic methods currently in use. In closing, I'd like to reiterate that our disappointment about the sales performance during 2016. However, the company made significant advances to strengthen and diversify its product portfolio, build its global sales and marketing infrastructure and expand its operational capabilities, which we believe will be future growth drivers. We're particularly pleased with the following advancements. The advancement of the DPP HIV Syphilis clinical trial in the U.S. The advancement of multiple fever and tropical disease assays including DPP Malaria, DPP Fever Panel, DPP Zika and our multiplex DPP Zika/Dengue/Chikungunya Assay. U.S. sales progress with STAT-PAK year-over-year and SURE CHECK quarter-over-quarter. The expansion of our global sales and marketing infrastructure, and the expansion of manufacturing operations following the RVR acquisition. This concludes our prepared remarks were today. I'd now like to open the call for any questions.
- Operator:
- [Operator Instructions] Our first question comes from Bill Bonello of Craig-Hallum. Please proceed with your question. Mr. Bonello, please proceed with your question.
- Bill Bonello:
- Sorry about that. Little glitch with the phone. Hi, I was hoping John if you could elaborate a little bit more on some of the pipeline progress that you highlighted in the latter part of that of the call. And maybe I'll take one at the time allowing you to answer each one first. So you talked about the fever panel development being completed, field testing in Africa and South America in collaboration with FIND 10,000 tests out in the field. Walk us through sort of what's happening there in the field testing and then what the many steps following the field testing would be, if you would?
- John Sperzel:
- Sure, Bill. Thank you and good afternoon. So we delivered 10,000 test. Remember this is antigen assay, which detects all of those diseases simultaneously with a single drop of blood from the fingertip. So when the original grant was issued by the Paul G. Allen family foundation there were three grants given; one to Chembio, one to FIND and one to another diagnostic company. FIND's role in the in the grant process was to collect clinical specimens and also help in the field evaluation process. So having completed the development of the assay, having done some internal testing. We're now in the phase of handing the test off to FIND to do the field evaluations. Imagine it like a clinical trial, although it's somewhat more complicated because you don't find single patients that are affected with all of those diseases or viruses. So we have to sort of test the assay in groups. You might find a group of patients for example that have Zika, Dengue or Chikungunya. You might find a group of patients that are exposed to Malaria and Ebola, they have to be tested in groups and that's the process that's going on at the moment. I don't anticipate getting the results of that trial until sometime toward the end of second quarter or the beginning of second half of 2017.
- Bill Bonello:
- Okay. And then, what's the next step after that. Does it have to go into some formal regulatory trial beyond that or how do you move from that evaluation towards commercialization?
- John Sperzel:
- Well, each regulatory agency has different requirements in terms of what it takes to be granted regulatory approval. So we would follow the standard process. If the test were going to be sold in Africa, we need to get a WHO pre-qualification. If the test were going to be sold in Brazil, obviously ANVISA, in United States obviously FDA. You can imagine that particular fever panel antigen assay is really dedicated toward the market in Africa. So really focused on WHO pre-qualification that'll be a step in the process.
- Bill Bonello:
- I guess what I'm wondering is would you imagine that the results you get out of this field testing could be sufficient for submission to WHO or would you need to do additional testing or trials beyond that?
- John Sperzel:
- Goal is to collect data that's sufficient for the application.
- Bill Bonello:
- Okay. Perfect. And then on the DPP Malaria feasibility, you said you completed that. A couple of questions to you. Did you complete that was that in the fourth quarter and then you said you're entering into, I thought you said a laboratory testing phase and that's where I understood that.
- Richard Larkin:
- Sure. So let me clarify that for folks on the phone. Remember we've had two separate grants from the Bill & Melinda Gates foundation with respect to Malaria. The first grant was a highly sensitive or ultra-sensitive malaria assay using blood and the objective was to get a 10-X improvement over the market leading malaria test which is Standard Diagnostics, it's an Alere company. They sell somewhere in the neighborhood of 200 million tests a year. So we completed that feasibility successfully, meaning we demonstrated a 10-X improvement in sensitivity compared to that standard reference method. However, one of the roadblocks that we hit was we could not manufacture the product at a low enough cost to be able to effectively enter the market and get a sufficient return on that investment. We got a subsequent grant from the Gates Foundation to further enhance the sensitivity of the Assay and also apply that ultra-sensitive DPP capability to saliva. That's the grant that we just completed at the end of 2016. And that product both for blood and for oral fluid, imagine two separate applications is being turned over to the Gates Foundation who uses a partner kind of similar to FIND that we're using on the Fever Panel, albeit a different company who will begin evaluating the performance of our DPP malaria Assay both in blood and using saliva.
- Bill Bonello:
- Okay. And is that a similar situation as with the fever panel? Could this evaluation be sufficient for what you need to submit for regulatory purposes or what's the next step for malaria specifically?
- John Sperzel:
- I don't anticipate that with malaria.
- Bill Bonello:
- Okay. So there would be more testing that needs to be done beforeβ¦
- John Sperzel:
- We will either fund that ourselves or we will try to get grant based funding to fulfill the requirement for regulatory approval.
- Bill Bonello:
- Okay.
- John Sperzel:
- I mean keep in mind, a saliva based malaria test would be a world's first.
- Bill Bonello:
- Okay.
- John Sperzel:
- And in particular an ultra-sensitive saliva based malaria test, we think is highly differentiated.
- Bill Bonello:
- Yes. And thank you. The last words on the DPP Zika, I think you said something about shipping to CDC in Q1 of 2017. Can you just again elaborate on what that's about?
- John Sperzel:
- That's correct. So if you recall, towards the latter part of 2016, we received a contract award from CDC for $300,000 to supply Zika as well as the combination Zika/Dengue/Chikungunya Assay for our pilot surveillance program in Peru, Guatemala, India, and Haiti. And we have begun to supply that product and we should supply all of that in the first quarter of 2017. Interestingly CDC initially requested about half of that product as Zika standalone and the balance as Zika/Dengue/Chikungunya combination and they've shifted their requirements to the latter, which is the combination assay Zika/Dengue/Chikungunya because in many of these endemic areas the three viruses are co-circulating, this has been our promise about multiplexing from the beginning. That one of the unique values is that we can discriminate between the viruses by detecting both IgG and IgG antibodies and we can also identify co-infected patients, which just like HIV's and Syphilis is becoming a big problem, it's also becoming a problem with these fever and tropical disease assays. Where for example, in Brazil they are expecting to have the largest Chikungunya outbreak on top of widespread Dengue and the looming Zika outbreak.
- Bill Bonello:
- Got it. Okay. That's pretty helpful. Can you tell us are you in active dialogue with regulators in Brazil, the U.S., or from the WHO? It seems like this is taking an awfully long time and I'm just curious if there is any red flag, anything that you are hearing, any additional data you've been requested to supply to them, so what's happening on that front?
- John Sperzel:
- I would characterize our engagement with regulatory agencies as highly engaged or actively engaged that includes specifically the Food and Drug Administration and ANVISA, which is Brazil's regulatory agency. Those processes as you know, almost in all cases are iterative, and I would characterize them as such. The only thing that I would contest a little bit is that it's taking a very long time. Keep in mind, we began our Zika initiative that means the first time we started working on this in our laboratory was February 2016. So while I'm as impatient as anyone else, I think we have to be fair and recognize that the regulatory agencies are going to be completely data-driven and they are and we respect that. And that will create larger barriers to entry for other potential entrants. Another thing to keep in mind is with respect to WHO emergency use, there are only two companies that have submitted. Chembio and Standard Diagnostics, which is the Alere company, that window is now closed. And there is currently no process defined for WHO pre-qual. With respect to the FDA to our knowledge, we're the only company that has submitted a rapid Zika test. And as of today, no rapid Zika test have been approved. A handful of PCR tests have been approved and I believe two antibody based Elisa Assay CDC, MAC-ELISA and INBIO ELISA that's it.
- Bill Bonello:
- Sure.
- John Sperzel:
- So we're pressing, but we respect the agency's position on it so far.
- Bill Bonello:
- Understood. And then just in terms of sales where you do have regulatory approval, it looks like there probably weren't any note in the Caribbean or other markets. What you are thinking now on potential sales under CE-mark?
- John Sperzel:
- Well, we started to sell the Zika Assay under CE-mark in the Caribbean region through Isla Lab. I would characterize that as a rollout country-by-country.
- Bill Bonello:
- Okay. Were the revenue sort of insignificant in Q4 or?
- John Sperzel:
- I think you can characterize them as insignificant, if you're thinking about $1 million being significant. Yes, it was well below that.
- Bill Bonello:
- Is there potential for more than that?
- John Sperzel:
- Of course. Zika is in 60 countries, absolutely.
- Bill Bonello:
- Yes, okay. And then just - thank you for bearing with me but yes, great progress on the lateral flow in product revenue in Q4 relative to Q3. But the product gross margin as a percent of revenue was exceptionally low, and I might have actually expected a bit of an uptick given the fact that you're taking the products back from Alere. Can you elaborate on what's happening with gross margin and the outlook for that going forward?
- John Sperzel:
- Well, I can give some color to it. We don't necessarily break down gross margin by product or by country. So I think that it's hard to just put a blanket over it and say this is precisely what's going on, you have to go by product and by country. If you want to talk about the United States and the transition from our former partner, what I would say is we took one sort of mouth away from the table by streamlining our distribution channels and we gave a piece of that back to the customer, particularly in the government funded public health sector when we set a new price to the public health of $5 and that $5 is for Stat-Pak, for SURE CHECK or for DPP HIV Assays. So, if you look at the U.S. margin at a $5 price point, that's higher than what was the transfer price in the arrangement that we had with our former partners. And I use that plural, because in SURE CHECK there were two partners.
- Bill Bonello:
- Okay.
- John Sperzel:
- We now have some additional selling cost. We also have to pay a margin to the U.S. distributors, i.e. McKesson, Fisher, Schein and Medline.
- Richard Larkin:
- Bill, I'll just also add that. Keep in mind that with for the year especially with the lower volume of sales, we weren't able to obviously absorb as much overhead as we would have liked and that has an impact on the gross profit margin.
- Bill Bonello:
- Okay.
- John Sperzel:
- The key to margin improvement is driving down the cost of goods and that's where Malaysia will come into play in addressing certain markets like Southeast Asia, potentially in Africa or potentially certain parts of Latin America need to be clear. We don't intend to manufacture product in Malaysia and import it into the United States. That's part of it. The other part of margin improvement is driving growth in areas where we can command a higher selling price and we believe that multiplexing provides that opportunity. To add Dengue and Chikungunya to a Zika Assay from a cost of goods perspective is pretty minimal.
- Bill Bonello:
- Okay. Thank you. That's very helpful. Then just one last question and I'll get back in the queue. What's your outlook for the cash going forward?
- Richard Larkin:
- Well, as John had mentioned the outlook is that we should see improved both revenue numbers and improved gross margin numbers. So certainly looking forward to a lower cash burn then we saw in 2016.
- Bill Bonello:
- Okay. Thank you.
- John Sperzel:
- Great. Thank you, Bill.
- Operator:
- Our next question comes from Brian Marckx of Zacks Investment Research. Please proceed with your question.
- Brian Marckx:
- Hi, guys. Congrats on all the progress. Sounds like the R&D programs for the most part are on track with prior expectations. So most my questions had to do with kind of the financials. Rich, lateral flow if my math is right is in Q4 about $2.1 million in revenue in U.S. and then $111,000 in the U.S. is that right?
- Richard Larkin:
- In the fourth quarter?
- Brian Marckx:
- Right, right Q4.
- Richard Larkin:
- Well, Yes. I know we don't usually break that down. I would think -- then I would say that I think that the lateral flow in the U.S. was higher than that.
- Brian Marckx:
- Okay. Was there anything internationally I guess in Q4 that was more of an anomaly in Q4 than it was in Q2 and Q3 was there any big tenders or anything else?
- Richard Larkin:
- Well, other than the fact that we mentioned we won the state of Florida contract and some of that shipped in Q4 of 2016.
- Brian Marckx:
- Okay. So it shipped in Q4 and it booked revenue in Q4?
- Richard Larkin:
- Some of it, yes.
- Brian Marckx:
- Okay. So that leads me into another question relative to that, to the contract in Florida. John does that cover both lateral flow and DPP technology or is it one or the other? And then relative to margins is that, anything significantly different in terms of margins relative to that contract as compared to typical U.S. sales?
- John Sperzel:
- Well, I think first of all its public information so the state of Florida is buying our SURE CHECK Assay. They were previously Clearview Complete from Alere. So we were effectively able to move that to Chembio which is great. From a margin perspective, I think it's fair to say that if you were setting a price strategy you would probably price your largest customers lower than your sort of average and small customers and that's the case with the state of Florida tender, it was a very big state tender, in fact I believe it's the largest of all the states.
- Brian Marckx:
- Okay.
- John Sperzel:
- Not a margin drag on our business.
- Brian Marckx:
- Okay, good. Let me shift to DPP Syphilis HIV relative to the U. S. John, if you could just kind of talk about you've got DPP HIV here now, presumably you're going to have HIV Syphilis in the near future. You can kind of talk about what is the incremental benefit to Chembio to have that HIV Syphilis and why isn't this just a replacement for the HIV test? Why is this market expansion, is that incremental pricing kind of just so some color around that, if you would?
- John Sperzel:
- Sure. Great questions, Brian. So, I obviously have to be a little careful because I don't want to give away our strategy or our commercial strategy. What I can say is that rather than look at it from a Chembio standpoint, perhaps we just think about it from a customer standpoint. And there is a growing concern not just in United States, but globally, about co-infection rates for HIV and Syphilis. There's a global initiative to reduce mother to child transmission of both HIV and Syphilis, that's much easier administered with a combination test and we're seeing that demand around the world. For men who have sex with men, according to CDC their co-infection rates can be as high as 70%. So in Syphilis, partly because it's a relatively low number but it's also the fastest growing sexually transmitted infectious disease. And it can be addressed with antibiotic. So from a customer perspective having a combination test so that when they're testing patients for HIV, they are also testing for Syphilis appears to be an unmet need in the market particularly in the United States. Moreover, I mean if you pay attention to what's happening with one company who has a point-of-care Syphilis Assay that's Clearwave, one of the struggles that they have in building that market is that the budget sits in HIV. So our approach from a market standpoint is not to try to shift where the budgets are which at a state level can be virtually impossible to do or rather bring the test to them where it's needed and not monkey around with where the budget sits. From a pricing standpoint, I think I'd stay away from that for the moment. But if HIV Syphilis combination testing replaces all of the HIV testing in the U.S. market, we would applaud that effort and in fact we're going to try to foster it.
- Brian Marckx:
- Okay. John do you have insight into how much of the Syphilis testing in the U.S. today is done with the point-of-care test that you referenced verses clinical lab testing?
- John Sperzel:
- Very little. I think its a few hundred thousand dollars according to the last earnings report that I saw from them.
- Brian Marckx:
- Okay. So that's the only point-of-care test that's on the market today right for Syphilis?
- John Sperzel:
- Right.
- Brian Marckx:
- Yes. Okay. Alright.
- John Sperzel:
- And I think it is important say, the performance of our Syphilis Assay and our HIV Syphilis Assay, we're very encouraged by. So it's not just about having a combination test, it's about having a test that performs incredibly well. And that's what we're seeing in the preliminary clinical trial data.
- Brian Marckx:
- Okay. And in the context of referring to the competitor to us, I'll take that as a significant positive. Yes, okay. Thanks John.
- John Sperzel:
- You're welcome.
- Operator:
- Your next question comes from Raymond Myers of The Benchmark Group. Please proceed with your question.
- Raymond Myers:
- John, let me ask you about the U.S. STAT-PAK and SURE CHECK revenue. That expanded as you were going into Q4 and really for the whole year. The trend has been nice while continuing in the Q4. And I realize that some of that is a rebound from recovering distribution rights, but some of it might be organic traction from your still relatively new direct sales force. So can you help us think about what the sustainable growth trend of that business is going into 2017?
- John Sperzel:
- Well, I think you're right. That first of all, it is a combination of those two factors. One, we've discussed this very transparently that the STAT-PAK business that kind of came over the wall in the transition from our partner to our direct sales team, because it took so long for the company to make that decision in the beginning was relatively small. So that rebuilding effort has been a little slow in the beginning and it's starting to build some momentum. We weren't able to adjust our pricing strategy as you know until we were able to take back SURE CHECK, which only happened on May 31, 2016. So with the following day June 1, that we re-priced all the products in the U.S. market. If we did that before we got them all back, our competitor or our former partner might have been able to use our own products against us so we had to wait. And so we have continued to enhance our sales team, we put a new leader in place at the end of 2016. We have raised the bar on a couple of low performing sales reps and replaced them. So I think our relatively young sales force continues to improve their own performance. We're starting to win some important tenders. State of Florida was a landmark tender for us to win and we worked hard to win that. So I think that we will continue to see growth in the U.S. HIV business because we're putting a lot of emphasis there.
- Raymond Myers:
- The two state tenders that you won, they are over two years. Is it relatively evenly spread sales over those 2 years or might they be front loaded?
- John Sperzel:
- They're pretty evenly spread with the exception that the Florida state tender, some of that was purchased at the end of 2006.
- Raymond Myers:
- And was that part that was in the end of 2016 was at a, if you think eight quarters was it one-eighth or was it front loaded?
- John Sperzel:
- I think the way to think about it is one-eighth.
- Raymond Myers:
- Okay. So it's normalized. Let's talk about the Micro-Reader for a moment. You answered some about the Zika submissions in general. I wanted to drill into specifically the Micro Reader submission in Brazil, because it seemed like we got approval for the Zika test fairly quickly in Brazil, and then it's I believe taking longer to get approval for the Micro Reader component of the test and as we understand that you need both to have a commercially sellable test there. Can you give a little more detail on to why is it taking longer for the Micro Reader? And any insight into when that might be complete?
- John Sperzel:
- Well, I can give some color and I can really just talk about what we're doing to try to address it. The color that I can give is obviously, we sell the product as a system. So the Assay cannot be used without the Reader. So in order for ANVISA to evaluate the test they had to use the reader and obviously we got the approval from ANVISA for the test. In order for INCQS, the independent laboratory evaluator in Brazil to evaluate the system they had to use the test and the reader and we recently up past the INCQS evaluation. So there is no issue with the Reader, it's administratively Readers are approved by ANVISA which is a separate group then approve the test. I mean think about a large amino assay system, there is an instrument component that might cost several hundred thousand dollars and there are assay components that may cost $0.10, $0.15, $0.20, and $0.50. That's what they're used to dealing with. So bringing in a Micro Reader, this simple battery operated basically sophisticated digital camera with algorithms is something very unique and we believe that we will get ANVISA approval for the Reader. We just don't have it yet. I'll be on a plane tonight to Brazil, when I come back, I might be able to tell you more about where things stand. And what the next steps are.
- Raymond Myers:
- Alright. Well, that sounds good. Thanks. Good luck.
- John Sperzel:
- Thank you.
- Raymond Myers:
- Let's talk about the HIV Syphilis market opportunity, specifically under CE mark before we move on to talking about the larger U.S. opportunity. You did recently get CE mark for that. Is there a large opportunity now for that or is that a developmental?
- John Sperzel:
- Well, I mean think about marketing and sales and you know the 4 P's of marketing, product, price, place, and promotion. I think a lot of times we hover around product way too much, and we don't think about the other levers that are involved in how we distribute it, how we promote it, and how we price it. So if we just think about what options customers have today. If customers want to buy a very inexpensive HIV test, you can buy them from 50 different companies around the world, most would never be sold in the United States because they might not meet the performance requirements of FDA or they may not have the funds to fund a PMA, a huge clinical trial and get CLIA-waiver. So most of these are sold outside the United States; many of them have CE mark. You probably could buy an HIV test for $0.30 or $0.40, same Syphilis. So a customer could use a standalone HIV test and a standalone Syphilis test. I'm putting performance aside for the moment because many of these tests are sold all around the world that are used in the first position of an algorithm, a broad screening test and then they would generally use a test that has higher performance for a confirmatory assay. So that happens today. So just because we have an HIV Syphilis test with a CE mark doesn't automatically mean, we can just go out and start selling it. We have to think about how it's positioned, how it's priced and how it's promoted. And we're going through that process with our partner Isla Lab. They're starting to promote our HIV Syphilis Assay in the Caribbean. Keep in mind, up until the first quarter of this year Chembio had 0 infrastructure, and I emphasize 0 outside the United States to market and sell our products. We didn't have a single sales rep in this company's history outside the United States, until the first quarter of this year.
- Raymond Myers:
- So that nice. My next question which was going to be about the experience and background of the recent international sale hires, and really I think what we want to -- we are all impressed with your experience. But can you elaborate to what extent they might be able to contribute to revenue either in 2017 or in the next couple of years or however you view it?
- John Sperzel:
- So let me just pick one region and just use that as an example of kind of a step-wise approach to commercialization. So let's just take Latin America. We have an exclusive partner in the Caribbean region. We have some partner in in Brazil, which is the government, which is really to the Ministry of Health, the public health sector and then we have a partner in Mexico. The rest of Central and South America is wide open. So Javier Gutman is looking at all of the countries. He's prioritizing which countries have a very fast path to regulatory approval. He's looking at which countries have big market opportunities both for our legacy HIV products, our HIV Syphilis Assay, our DPP HIV Assay, and fever and tropical disease assays which are coming. And he's going to start identifying distribution partners, calling those distribution partners, selecting them, filing regulatory approvals, and commercializing products. So in the past, we had no ability to do that. Remember, we historically sold in the United States through a partner. Brazil effectively through a partner, the government and we won some occasional NGO tenders in Africa. So, I think this is very, very important relying on one of the 3 countries to define success is in our past. But it absolutely will not define our future. And that's what we needed to make this investment in commercial infrastructure in the regions where our products have great potential which is U.S., Latin America, Africa, Asia-Pac. Obviously, we have an emerging business in self-test in Europe.
- Raymond Myers:
- Great. Here's another question. Regarding the Malaysia manufacturing facility formerly the RVR business. When will product be available from that facility that would be the lower cost of goods product that you might be able to sell at more competitive international pricing, internationally?
- John Sperzel:
- It's already happening. We'll have over $1 million in sales in RVR in the first quarter.
- Raymond Myers:
- Great. And that product can be sold for example into the Caribbean if there's a demand for it?
- John Sperzel:
- No, because we have to go through the process with the regulators in order to do that. We're focused at the moment on selling into Southeast Asia.
- Raymond Myers:
- Okay. Makes sense.
- John Sperzel:
- What we have - we closed the transaction in January, so part of the integration process is to prioritize regulatory approvals. When RVR was operating on its own, it had a different set of priorities than when RVR is essentially now a subsidiary of combined when we think about it as our business in Asia-Pacific, we don't think about it as RVR anymore.
- Raymond Myers:
- Great. And are they selling the dengue fever test now?
- John Sperzel:
- Yes.
- Raymond Myers:
- Excellent. Okay, good, that's all. Thank you and good luck on your trip to Brazil.
- John Sperzel:
- Thank you.
- Operator:
- Our next question comes from Yi Chen [ph] of Rodman & Renshaw.
- Unidentified Analyst:
- Thank you for taking my questions. My first question is, could you give us additional color on what exactly need to be done after you finish the clinical trials for DPP HIV Syphilis assay before it can be marketed in the U.S.?
- John Sperzel:
- So we will file the -- we will essentially put together the pre-market application for the Food & Drug Administration and we will file that. And we expect to do that in the second quarter of this year. Then obviously we have a time clock that starts with the Food & Drug Administration, subsequent to getting the FDA approval which we're hopeful we have to file the CLIA waiver application. It's not necessary to wait until we have the CLIA waiver in order to sell the product, obviously we can see it to moderately complex sites while we're waiting for the CLIA waiver and we intend to do that.
- Unidentified Analyst:
- Okay. So for 2017 should we expect the 2017 revenue to come from existing product or some of it should come from some new products that's to be launched in 2017?
- John Sperzel:
- Well, if we're talking about HIV Syphilis in the United States, if we assume that we're going to file the DMA in the second quarter, I think it would be aggressive to assume that we would have any material sales in 2017. I think it's more likely that that starts to occur in 2018 and if we're lucky and we get the CLIA waiver early, it could be meaningful. As far as new test, I think you could see from the discussion that we've had before that there are number of new fever and tropical disease assays that are expected to be rolling into the market during 2017. Our DPP Dengue Assay, our DPP Zika Assay, our DPP Zika, Dengue, Chikungunya combination assay are among those that I would expect to start see revenue in 2017.
- Unidentified Analyst:
- Okay, got it. Final question, can you provide any expectation regarding the total revenue for 2017 and also the total sales and marketing expenses for 2017?
- John Sperzel:
- I cannot.
- Unidentified Analyst:
- Not even sales and marketing expenses?
- John Sperzel:
- No.
- Unidentified Analyst:
- Okay. Alright, that's all my question. Thank you.
- John Sperzel:
- Thank you.
- Operator:
- Our next question comes from Ross Taylor of ARS Investment Partners.
- Ross Taylor:
- Thank you and congratulations gentlemen on the significant technological advances you guys have made in the last year. I'm going to ask you about the pathway to commercialization, particularly in the favorable disease area, both the panels and the standalone. It seems that these are markets that globally offer nine figure potential overall and in some cases are either grossly under-served or not served at all. And so how do you see this rolling out? Being a public company, unfortunately, you have shareholders and obviously one other things people seem to be focused on is your ability to convert your technology into revenues?
- John Sperzel:
- Yes, so let me take the very tail-end of that comment first Ross, and then I'll come back to the markets and the pathway. Your absolutely right, I mean there is, it's fair criticism to say that in Chembio's history, it has done a poor job moving from product development to commercialization and I think part of that is because the company had no commercial infrastructure, we effectively relied on others to determine our success and that's absolutely not going to be the path of the future. So we cannot bet the company's future on whether or not we're successful with one test in one country or a couple of tests in a couple of countries. We have to develop products that have global market potential and we have to be able to commercial them globally and so that's why we're investing in these kind of products and that's why we've made the investment, thanks to our shareholders in the commercial infrastructure that we've put in place in the fourth quarter and the very early part of the first quarter of 2017 and it had to be in that order. You know, we had to get the money from partners and philanthropic organizations to develop the test, we had to be able to afford the commercial infrastructure and the timing of it was important; hiring a bunch of people that go out and sell and not having any new products, that's going to last about three months and they're going to quit. So we sequenced it this way for a reason, we're going after these products because we think they are big market potentials. For example, malaria and dengue are huge markets, not just huge markets in terms of incidence of the disease but also huge existing markets in terms of rapid testing. There are somewhere around 200 million rapid test used for malaria, their numbers are little more difficult to pinpoint with respect to dengue but the main company who is leading the market, who I believe has about 50% market share has a $50 million rapid dengue business and has a $100 million rapid malaria business. So these are big markets with big potential and we're trying to command [ph] them with a differentiated product; whether it's a combo test like Zika, Dengue, Chikungunya or whether it's a malaria test that's ultra-sensitive, can help to eradicate and detect these at a very low parasite level or using saliva for example. So had to commercialization, you know, this was your original question Ross. I think frankly, it's a -- we're going to have to plough virgin soil with respect to the full fever panel that was funded by Paul Allen Foundation. There is no product like this in the world, it can be a very unique product for the market in Africa, but we're not going to do it alone. I mean that's why we have the partnership with Paul Allen Foundation, that's why we're partnering with FIND, I mean FIND is also a malaria expert; and so we're going to use these collaborations and we're going to leverage these field evaluations that are happening in Africa and in South America, now that we actually have people to go follow them up as well. I mean imagine the Zika, Dengue, Chikungunya pilot survelliance program that CDC is running in India, Peru, Guatemala and Haiti. Six months ago, we didn't have a single person to go follow that up, it would have been somebody from New York getting on a plane, going to Peru, coming back, going to India; I mean that's not the way to run a global company. So now we have the people in place that can actually go follow these locally, work with the Ministries of Health, start to get these products on the map locally and commercialize them through selected distributors, country-by-country in these regions.
- Ross Taylor:
- Is there a sense of urgency among people like World Health Organization and others to push these things through quickly? I think that some of the frustration I think investors have had is they watch Brazil where you thought you had a Zika crisis and now you've spent -- you know, there is a four-five month lag between the approval of the actual test and we're still waiting on the approval of the Reader. When you look at things in Africa, you seem -- a lot of what you're doing seems to be very unique and how it addresses a problem bringing significant new capabilities; is there that sense among those people who will be the buyers or the distributors or the pushers of the new technology and the services you bring that this needs to be done post taste [ph] or is it more like what we get used to in some of the more developed economies of daunting all the ice crossing the tees is singularly the most important thing to do?
- John Sperzel:
- Well, I don't know if their sense of urgency will always be the same as ours. I mean I can tell you that if you -- as you mentioned Brazil, I mean I was in Brazil two days before Christmas. I'm spending an inordinate amount of time in Brazil trying to push as much as we are trying to present. So I don't know if there ever will be perfect alignment between our sense of urgency and a particular country that's struggling with a problem, it might have economic struggles and political struggles and currency struggles and things like that but I believe that the majority of these 60 countries that are affected with Zika want to do something that will help its population. In Brazil, helping pregnant women deal with the potential of microcephaly, I believe that they want to do that. I believe that they are being careful, I believe that today there are some test options, albeit not very good because of the -- either the cost of a PCR test, limitation of the technology or the lack of reasonable turnaround time on an ELISA assay. So do I think that rapid test for Zika virus will proliferate these markets overtime? Absolutely. Will it be as fast as I want, I don't think so.
- Ross Taylor:
- Okay. And as you work your way through this -- towards the -- as we work through the end of this year, would you envision having these tests, particularly some of the multi-disease panels in the field being used?
- John Sperzel:
- Yes. In particular, Ross I mentioned I would expect broader commercialization of our Zika assay, I would expect broader commercialization of our Dengue assay, and I would expect commercialization of our Zika, Dengue, Chikungunya combination assay to name a few. Now I'm just talking about fever.
- Ross Taylor:
- Okay. And stepping away from this, obviously you've got a couple of areas that are outside the box, most particularly the cancer detection. Can you give us any -- I know that basically you have a lot of non-disclosure around that, can you give us any idea of how the technology works and would it be applicable to other cancers and what type of market potential does that open up down the road?
- John Sperzel:
- Well, as you know Ross, we don't spend a lot of time talking about the cancer assay, we haven't spent a lot of time talking about the concussion or the brain injury because they -- we're still in the early stage of development in the case of the cancer assay and kind of towards the tail-end of feasibility in the case of the brain injury assay, so we have a lot of work to do. And so we don't want to get ahead of our ourselves on those. But in fact, the same as with our fever and tropical disease assays and HIV Syphilis, we're making good progress. I mean the standard that our partner is holding us to on the cancer assay is incredibly high which is why they threw out all the options that they had to use a traditional lateral flow test because it wasn't nearly as sensitive, they couldn't multiplex, and they couldn't get a semi-quantitative result which are all absolute minimal requirements. So to your -- to kind of endpoint question, we're very encouraged by the results that we're seeing compared to their laboratory method for the same type of cancer and we're equally optimistic that that's going to open up other doors for us down the road, either with that particular cancer partner or with others. And we made it very clear that we'd open those doors together or we're going to go down the separate path and look for alternatives. I said this -- I don't know many quarters ago that Chembio was a technology company and we have a proprietary platform technology that can be leveraged. And I think what you're seeing is, that's exactly what we're doing; we're leveraging it in STD, we're leveraging in fever and tropical disease, and we're leveraging in some of these what we call longer term areas. And there are additional opportunities that we haven't pursued yet just because of bandwidth.
- Ross Taylor:
- Okay. So it sounds basically at this point in time, and I appreciate the way you laid out the data or the information, because it seem to you have a lot of shots on goals that have really meaningful change opportunities for this company. I mean you and I have talked about this in the past that this is really effectively a collection of call options and you have a dozen or more call options, each of which can be worth with the company is worth today would you say?
- John Sperzel:
- I think that's a fair assessment.
- Ross Taylor:
- Okay, great. Thank you very much and keep up the good work.
- Operator:
- Our final question comes from Bob Grant [ph], a private investor. Please proceed with your question.
- Unidentified Analyst:
- Thank you. While I listening into you speak, very nice. I'm a private investor, I have been around John long before you were and I'll start with [indiscernible]. You seemed a little anxious about how things are taking time. And that's exactly where I'm standing right now. I've had very nice recurrence on Chembio but things are taking lot longer time and I'm sure some of that is due to the multiplex things you have going on because I just assume that makes permutations on the testing that has to be done. And we seem to have missed some timelines recently as things get keeping -- getting pushed forward and starting to become a dejavu moment for me every quarter.
- John Sperzel:
- Which timelines did we miss?
- Unidentified Analyst:
- I thought something big was supposed to happen in the fourth quarter with the HIV Syphilis?
- John Sperzel:
- No.
- Unidentified Analyst:
- No, okay.
- John Sperzel:
- HIV Syphilis is right on-track, exactly as --
- Unidentified Analyst:
- Very good. Yes, because it's just been so quiet and for some reason I was waiting for something to happen in the fourth quarter. And my apologies, what my comments are I'd loved your comment of you recognize your technology company. My frustration is, you keep looking to be a product company, and there is a resilient example of there that I ended up making nice money on and which they are in the medical industry, didn't have the posture to become a product company but they created great shareholder value. I'm just commenting and saying please look into the case study or Rochester Medical because they are in the same boat. No posture in the industry, great technology, couldn't sell the product; that's all I'm saying John.
- John Sperzel:
- So Bob I appreciate that. I would say this; if you look at the regulatory approvals that we've garnered in the last couple of years and you look at the funding that we've garnered in the last couple of years, I believe with my leadership, we absolutely have what it takes to move from technology company to product company given my 30 years' experience in diagnostics with some of the world's largest companies.
- Unidentified Analyst:
- I know John. I am excited too, you have some great things -- by the way, I forgot, Florida is huge. Your win at Florida is absolutely huge. I hope that New York or California can follow because they seem to be the proxy boat for anyone else to follow. So congratulations on the Florida win, that was big. I loved that.
- John Sperzel:
- Thanks, I appreciate that.
- Unidentified Analyst:
- So that's all I had to say John. Thank you very much. Love what you're doing.
- John Sperzel:
- Thank you for your investment, really appreciate your support.
- Unidentified Analyst:
- You bet.
- John Sperzel:
- Have a great night.
- Operator:
- Ladies and gentlemen, we've reached the end of our question-and-answer session. I would like to turn the call back over to Mr. John Sperzel for closing remarks.
- John Sperzel:
- I'd like to say thank you all for participating in today's call and we look forward to updating you in future quarter. Thank you very much and have a great night.
- Operator:
- This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.
Other Chembio Diagnostics, Inc. earnings call transcripts:
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- Q2 (2022) CEMI earnings call transcript
- Q1 (2022) CEMI earnings call transcript
- Q4 (2021) CEMI earnings call transcript
- Q2 (2021) CEMI earnings call transcript
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- Q4 (2020) CEMI earnings call transcript
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