Chembio Diagnostics, Inc. (Nasdaq:CEMI), a leader in point-of-care
(“POC”) diagnostic tests for infectious diseases, today reported
financial results for the three and nine months ended September 30,
2016.
John J. Sperzel III, Chief Executive Officer,
stated, “The Company made important advances in multiple areas
during the third quarter of 2016, intended to prepare the Company
for growth: commercialization, regulatory approvals, product
development grants, and equity financing. With respect to
Chembio's commercial infrastructure, the Company appointed two
seasoned executives to build our worldwide sales and marketing
capabilities, with immediate focus on the United States, Latin
America, Asia Pacific and Africa. The Company expanded its
distribution network by appointing Isla Lab, the largest
distributor of diagnostic products in the Caribbean, as its
exclusive distributor in that region.
“Chembio recently secured two important regulatory
approvals. In July 2016, the Company obtained a CE mark for the
DPP® Zika IgM/IgG Assay and DPP® Micro Reader, allowing the
products to be marketed and sold in 17 European countries,
including the United Kingdom, Germany, and France, as well as a
majority of the Caribbean nations. In late October 2016, the
Company received approval by Brazil’s health regulatory agency,
Agência Nacional de Vigilância Sanitária (ANVISA) for DPP® Zika
IgM/IgG Assay. These regulatory achievements follow the milestone
which occurred at the end of the second quarter of 2016, when
Chembio’s DPP® HIV 1/2 Assay was accepted for the World Health
Organization (WHO) list of prequalified in vitro diagnostics.
“In August 2016, Chembio completed an equity
financing which provided gross proceeds of approximately $13.8
million, which provides the Company with capital needed to advance
its product development programs and invest in the sales and
operational infrastructure needed to support sustained growth. Also
in August 2016, Chembio was awarded a contract for up to $13.2
million in total funding from the U.S. Department of Health and
Human Services (HHS); Office of the Assistant Secretary for
Preparedness and Response (ASPR); Biomedical Advanced Research and
Development Authority (BARDA) to develop and commercialize the
Company’s DPP® Zika IgM/IgG Assay and Zika-related products.
“Subsequent to the 2016 third–quarter end, Chembio
entered into an agreement to acquire RVR Diagnostics Sdn Bhd (RVR),
a Malaysian, privately-held manufacturer and distributor of POC
diagnostic tests for infectious diseases. Subject to satisfaction
of conditions to closing, completion of the RVR acquisition will
provide the Company with a strategically located and cost-effective
manufacturing facility, an additional revenue source, and the
potential to accelerate important product registrations in
Southeast Asia, which we believe will be important in serving a
number of global markets.”
Addressing the company’s financial results, Mr.
Sperzel commented, “Despite reporting a decrease in product sales
for both the second and third quarters of 2016, a
quarter-over-quarter analysis shows sales growth with total
revenues for the third quarter of 2016 up 15% and product sales for
the third quarter of 2016 up 23%, as compared to the second quarter
of 2016. In the United States, sales of the HIV 1/2 STAT-PAK®
Assay increased 44% as compared to the third quarter of 2015, and
increased 21% as compared to the second quarter of 2016. This
growth provides strong evidence that we are effectively rebuilding
the U.S. HIV STAT-PAK® business, since we took back the U.S.
distribution rights to this product in June 2014. We are also
seeing encouraging U.S. sales of the HIV 1/2 SURE CHECK® Assay
since we took back distribution rights to this product at the end
of May 2016. Through the Company’s achievements in strengthening
commercial infrastructure, securing regulatory approvals, improving
its balance sheet, obtaining a multi-million dollar grant from the
U.S. Government, and establishing operations in the growing Asian
market, we believe Chembio is on a path to establish a global
operation with potential for growth in several important
markets.”
Selected Summary Financial Information
comparing the 2016 third quarter to the 2015 third
quarter:
- Total revenues of $3.75 million, compared with $6.89
million.
- Product sales of $2.50 million, compared with $6.21
million.
- Operating loss of $2.14 million, compared with operating loss
of $579,000.
- Net loss of $2.14 million, or $0.19 per diluted share, compared
with net loss of $437,000, or $0.05 per diluted share.
Selected Summary Financial Information
comparing the first nine months of 2016 to the first nine months of
2015:
- Total revenues of $13.61 million, compared with $19.83
million.
- Product sales of $10.45 million, compared with $18.15
million.
- Operating loss of $5.00 million, compared with operating loss
of $2.35 million.
- Net loss of $10.79 million, or $1.06 per diluted share,
compared with net loss of $1.75 million, or $0.18 per diluted
share.
Additional Financial
Information
Third Quarter:Total revenues in the 2016 third
quarter of $3.75 million decreased 45.6% compared with $6.89
million in the prior-year period. Product sales in the 2016 third
quarter of $2.50 million decreased 59.7% compared with $6.21
million in the prior-year period. R&D milestone, and
grant and royalty revenues in the 2016 third quarter of $1,244,000
increased 83.4% compared with $678,000 in the prior-year
period.
Gross margin dollars in the 2016 third quarter of
$1.95 million decreased 32.9% compared with $2.91 million in the
prior-year period, due primarily to decreased product revenues.
Product gross margin dollars in the 2016 third quarter of $0.71
million decreased 68.3% compared with $2.23 million in the
prior-year period, which also was primarily due to the decreased
product revenues.
R&D expenses in the 2016 third quarter of $2.26
million increased 44.2%, compared with $1.57 million in the
prior-year period. This increase is due primarily to increased
clinical trial expenses as well as R&D activities for projects
and grants.
Selling, general and administrative expenses in the
2016 third quarter of $1.83 million decreased 4.5% compared with
$1.92 million in the prior-year period, largely due to decreased
commissions, which were due to decreased sales in Brazil, as well
as decreases in stock-based compensation, travel, entertainment and
trade shows, consulting, and other expenses, which were partially
offset by increases in wages and related costs, marketing
materials, professional fees and investor relations expenses.
Operating loss in the 2016 third quarter was
$2,144,000, compared with an operating loss of $579,000 in the
prior-year period.
Net loss in the 2016 third quarter was $2,138,000,
or $0.19 per diluted share, compared with net loss of $437,000, or
$0.05 per diluted share, in the prior-year period.
First Nine Months:Total revenues in the 2016 first
nine months of $13.61 million decreased 31.4% compared with $19.83
million in the prior-year period. Product sales in the 2016 first
nine months of $10.45 million decreased 42.4% compared with $18.15
million in the prior-year period. R&D milestone, and
grant and royalty revenues in the 2016 first nine months of
$3,161,000 increased 87.2% compared with $1,689,000 in the
prior-year period.
Gross margin dollars in the 2016 first nine months
of $6.70 million decreased 22.3% compared with $8.62 million in the
prior-year period, due primarily to the decrease in product sales.
The amount of product gross margin in the 2016 first nine months of
$3.54 million decreased 48.9% compared with $6.93 million in the
prior-year period.
R&D expenses in the 2016 first nine months of
$6.27 million increased 27.6%, compared with $4.91 million in the
prior-year period. This increase is due primarily to increased
R&D activities for projects and grants.
Selling, general and administrative expenses in the
2016 first nine months of $5.43 million decreased 10.3%, compared
with $6.06 million in the prior-year period, largely due to
decreased commissions on sales in Brazil, decreased wages and
related costs, stock-based compensation, consulting and travel,
entertainment and trade shows, which were partially offset by
increases in marketing materials, investor relations expenses and
professional fees.
Operating loss in the 2016 first nine months was
$4,998,000, compared with an operating loss of $2,352,000 in the
prior-year period.
Net loss in the 2016 first nine months was
$10,789,000, or $1.06 per diluted share, compared with net loss of
$1,748,000, or $0.18 per diluted share, in the prior-year
period. The net loss in the 2016 period includes a tax
provision for the recording of a valuation allowance on the
Company's deferred tax asset of $5,801,000.
Valuation AllowanceThe Company elected, based on
accounting guidance, to record a full Valuation Allowance ("VA") on
its Deferred Tax Asset ("DTA"). Chembio's DTA was primarily
based on the Company's Net Operating Loss (NOL)
carryforwards. Based primarily on the fact that the Company
believes, given information available to it at this time, that it
is more likely than not that the deferred tax asset will not be
realized in the foreseeable future, the Company concluded that it
was appropriate to record a full VA against its DTA. This
resulted in a tax provision in the second quarter of 2016 of $5.96
million and for the nine months ended September 30, 2016 of $5.80
million. This VA does not affect the Company's ability to use
its NOLs in the future.
Balance Sheet Highlights:The Company had cash and
cash equivalents of $12.17 million as of September 30, 2016,
compared with $5.38 million as of December 31, 2015. The increase
was primarily due to net cash raised in the sale of common stock,
partially offset by cash used in operating activities for the nine
months of 2016. Our working capital increased by $8.06 million from
$9.48 million as of December 31, 2015 to $17.54 million.
In early August 2016, the Company sold 2,300,000
common shares for a total of $13.8 million, which after expenses
resulted in approximately $12.5 million in net funds to the
Company.
Conference CallTo participate on
the conference call, please dial (877) 407-0778 from the U.S. or
(201) 689-8565 from outside the U.S. In addition, following the
completion of the call, a telephone replay will be accessible until
November 17, 2016 at 11:59 p.m. ET by dialing (877) 481-4010 from
the U.S. or (919) 882-2331 from outside the U.S. and entering
conference ID: 10129. The conference call may also be
accessed via the internet at
http://www.investorcalendar.com/IC/CEPage.asp?ID=175428. An
archive of the webcast will be available for 90 days on the
Company's website at www.chembio.com.
Those interested in listening to the conference
call live via the internet may do so by visiting the Investor
Relations section of Chembio's website at www.chembio.com. To
listen to the live call, please go to the website 15 minutes prior
to its start to register, download, and install the necessary audio
software. A replay will be available on the website for a limited
time.
About Chembio DiagnosticsChembio
Diagnostics, Inc. develops, manufactures, licenses and markets
proprietary rapid diagnostic tests in the growing $8.0 billion
point-of-care testing market. Chembio markets each of its DPP®
HIV 1/2 Assay, HIV 1/2 STAT-PAK® Assay, and SURE CHECK® HIV 1/2
Assay, with these Chembio brand names, in the U.S. and
internationally both directly and through third-party
distributors. The Company's SURE CHECK® HIV 1/2 Assay
previously has been exclusively sold in the U.S. as Clearview®
Complete HIV 1/2 Assay.
Chembio has developed a patented point-of-care
(POC) test platform technology, the Dual Path Platform (DPP®)
technology, which has significant advantages over lateral-flow
technologies. This technology is providing Chembio with a
significant pipeline of business opportunities for the development
and manufacture of new products.
Headquartered in Medford, NY, Chembio is licensed
by the U.S. Food and Drug Administration (FDA) as well as the U.S.
Department of Agriculture (USDA), and is certified for the global
market under the International Standards Organization (ISO)
directive 13485. Chembio Diagnostic Systems, Inc. is a wholly-owned
subsidiary of Chembio Diagnostics, Inc. For more information,
please visit: www.chembio.com.
Forward-Looking
StatementsStatements contained herein that are not
historical facts may be forward-looking statements within the
meaning of the Securities Act of 1933, as amended. Forward-looking
statements include statements regarding the intent, belief or
current expectations of the Company and its management. Such
statements, which are estimates only, reflect management's current
views, are based on certain assumptions, and involve risks and
uncertainties. Actual results, events, or performance may differ
materially from the above forward-looking statements due to a
number of important factors, and will be dependent upon a variety
of factors, including, but not limited to Chembio's ability to
obtain additional financing and to obtain regulatory approvals in a
timely manner, as well as the demand for Chembio's products.
Chembio undertakes no obligation to publicly update these
forward-looking statements to reflect events or circumstances that
occur after the date hereof or to reflect any change in Chembio's
expectations with regard to these forward-looking statements or the
occurrence of unanticipated events. Factors that may impact
Chembio's success are more fully disclosed in Chembio's most recent
public filings with the U.S. Securities and Exchange
Commission.
(Tables to follow)
|
|
|
|
|
|
|
|
|
|
|
|
|
Chembio Diagnostics, Inc. &
Subsidiary |
|
|
Summary of Consolidated Results of
Operations |
|
|
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended |
|
|
For the nine months ended |
|
|
|
|
September 30, 2016 |
|
September 30, 2015 |
|
|
September 30, 2016 |
|
September 30, 2015 |
|
|
Net product
sales |
|
$ |
2,502,097 |
|
|
$ |
6,209,625 |
|
|
|
$ |
10,453,188 |
|
|
$ |
18,145,864 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
License and royalty
revenue |
|
|
77,754 |
|
|
|
19,084 |
|
|
|
|
133,850 |
|
|
|
34,017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
R&D, milestone and grant
revenue |
|
|
1,166,610 |
|
|
|
658,665 |
|
|
|
|
3,026,927 |
|
|
|
1,654,788 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
TOTAL
REVENUES |
|
$ |
3,746,461 |
|
|
$ |
6,887,374 |
|
|
|
$ |
13,613,965 |
|
|
$ |
19,834,669 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GROSS
MARGIN |
|
$ |
1,952,097 |
|
|
$ |
2,910,534 |
|
|
|
$ |
6,697,950 |
|
|
$ |
8,616,284 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development
expenses |
|
$ |
2,263,719 |
|
|
$ |
1,570,044 |
|
|
|
$ |
6,265,483 |
|
|
$ |
4,911,587 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and administrative
expenses |
|
$ |
1,832,451 |
|
|
$ |
1,919,551 |
|
|
|
$ |
5,430,668 |
|
|
$ |
6,057,221 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
LOSS FROM
OPERATIONS |
|
$ |
(2,144,073 |
) |
|
$ |
(579,061 |
) |
|
|
$ |
(4,998,201 |
) |
|
$ |
(2,352,524 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER
INCOME: |
|
$ |
5,855 |
|
|
$ |
(396 |
) |
|
|
$ |
9,729 |
|
|
$ |
1,095 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
(benefit) |
|
$ |
- |
|
|
$ |
(142,300 |
) |
|
|
$ |
5,800,818 |
|
|
$ |
(603,370 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NET
LOSS |
|
$ |
(2,138,218 |
) |
|
$ |
(437,157 |
) |
|
|
$ |
(10,789,290 |
) |
|
$ |
(1,748,059 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic loss per
share |
|
$ |
(0.19 |
) |
|
$ |
(0.05 |
) |
|
|
$ |
(1.06 |
) |
|
$ |
(0.18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted loss per
share |
|
$ |
(0.19 |
) |
|
$ |
(0.05 |
) |
|
|
$ |
(1.06 |
) |
|
$ |
(0.18 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding, basic |
|
|
11,142,090 |
|
|
|
9,628,248 |
|
|
|
|
10,150,737 |
|
|
|
9,625,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares
outstanding, diluted |
|
|
11,142,090 |
|
|
|
9,628,248 |
|
|
|
|
10,150,737 |
|
|
|
9,625,282 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chembio Diagnostics, Inc. &
Subsidiary |
|
|
Summary of Consolidated Balance
Sheets |
|
|
(UNAUDITED) |
|
|
|
|
|
|
|
|
|
|
|
September 30, 2016 |
|
December 31, 2015 |
|
|
|
|
|
|
|
|
|
CURRENT
ASSETS: |
|
|
|
|
|
|
Cash and cash
equivalents |
|
$ |
12,171,954 |
|
|
$ |
5,376,931 |
|
|
|
Accounts receivable,
net of allowance for doubtful accounts of $52,000 at September 30,
2016 and December 31, 2015, respectively |
|
|
4,208,232 |
|
|
|
2,422,971 |
|
|
|
Inventories |
|
|
3,427,158 |
|
|
|
3,578,025 |
|
|
|
Prepaid expenses and
other current assets |
|
|
778,445 |
|
|
|
1,256,879 |
|
|
|
TOTAL CURRENT
ASSETS |
|
|
20,585,789 |
|
|
|
12,634,806 |
|
|
|
|
|
|
|
|
|
|
FIXED ASSETS, net of accumulated
depreciation |
|
|
1,847,317 |
|
|
|
2,374,308 |
|
|
|
|
|
|
|
|
|
|
OTHER
ASSETS |
|
|
251,756 |
|
|
|
5,807,230 |
|
|
|
|
|
|
|
|
|
|
TOTAL ASSETS |
|
$ |
22,684,862 |
|
|
$ |
20,816,344 |
|
|
|
|
|
|
|
|
|
|
CURRENT
LIABILITIES: |
|
|
|
|
|
|
Accounts payable and
accrued liabilities |
|
$ |
2,588,393 |
|
|
$ |
2,801,432 |
|
|
|
Deferred revenue |
|
|
453,006 |
|
|
|
353,406 |
|
|
|
TOTAL CURRENT
LIABILITIES |
|
|
3,041,399 |
|
|
|
3,154,838 |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES |
|
|
3,041,399 |
|
|
|
3,154,838 |
|
|
|
|
|
|
|
|
|
|
STOCKHOLDERS’
EQUITY: |
|
|
|
|
|
|
Common stock - $.01 par
value; 100,000,000 shares authorized; 12,026,847 and 9,628,248
shares issued and outstanding for September 30, 2016 and December
31, 2015, respectively |
|
|
120,268 |
|
|
|
96,282 |
|
|
|
Additional paid-in
capital |
|
|
60,637,903 |
|
|
|
47,890,642 |
|
|
|
Accumulated
deficit |
|
|
(41,114,708 |
) |
|
|
(30,325,418 |
) |
|
|
TOTAL
STOCKHOLDERS’ EQUITY |
|
|
19,643,463 |
|
|
|
17,661,506 |
|
|
|
|
|
|
|
|
|
|
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
$ |
22,684,862 |
|
|
$ |
20,816,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Chembio Diagnostics, Inc. &
Subsidiary |
|
|
Summary of Consolidated Cash Flow |
|
|
For the nine months ended |
|
|
(UNAUDITED) |
|
|
|
|
September 30, 2016 |
|
September 30, 2015 |
|
|
|
|
|
|
|
|
|
Net cash used
in operating activities |
|
$ |
(5,676,073 |
) |
|
$ |
(2,584,508 |
) |
|
|
Net cash used
in investing activities |
|
|
(79,877 |
) |
|
|
(927,553 |
) |
|
|
Net cash
provided by financing activities |
|
|
12,550,973 |
|
|
|
- |
|
|
|
INCREASE
(DECREASE) IN CASH AND CASH EQUIVALENTS |
|
$ |
6,795,023 |
|
|
$ |
(3,512,061 |
) |
|
|
|
|
|
|
|
|
Contacts:
Chembio Diagnostics
Susan Norcott
(631) 924-1135, ext. 125
snorcott@chembio.com
Vida Strategic Partners (investor relations)
Stephanie C. Diaz
(415) 675-7401
sdiaz@vidasp.com
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