Chembio Reports Third Quarter 2009 Results MEDFORD, NY--(Marketwire - 11/04/09) - Chembio Diagnostics, Inc. (OTC.BB:CEMI - News), which
develops, manufactures, markets and licenses point-of-care diagnostic
tests, continued its profitability into the third quarter of 2009. Total
revenues were $4.36 million for the quarter ended September 30, 2009, which
compares to total revenues of $3.52 million for the quarter ended September
30, 2008, a 24% increase. The Company recorded net income of approximately
$307,000, or under $0.01 per share, for the quarter ended September 30,
2009, compared to a net loss of approximately $237,000, or under $0.01 per
share, for the quarter ended September 30, 2008. Total revenues and net
income for the quarter ended September 30, 2009 also represented a
significant increase over the previous quarter ended June 30, 2009 which
was the Company's first profitable quarter since its merger in May 2004,
with total revenues and net income increased over last quarter by 29% and
279%, respectively. The operating results in the third quarter of 2009 include $1,403,000 of revenues from the sale of rapid HIV tests to Inverness Medical Innovations, Inc., the Company's exclusive U.S. marketing partner for its FDA approved rapid HIV tests. This represents an increase of $798,000, or 132%, compared to $605,000 for the quarter ended September 30, 2008. The Company also realized a record amount of revenues related to research & development contracts and grants, which increased 273% to $408,060 in the quarter ended September 30, 2009 from $109,361 in the quarter ended September 30 2008. The quarterly results also reflect significant overhead reductions as compared with the third quarter of 2008 when the Company initiated a series of cost reductions that were completed earlier this year. The Company has over the same period increased its research & development expenses, as more products based on the Company's patented DPP® technology move into the clinical evaluation and regulatory approval process. Commenting on the results, Chembio's President, Lawrence A. Siebert stated, "We are very pleased with the third quarter results, which are a significant step forward from our previous results. I am equally pleased with the progress that we are making in developing and commercializing a strong pipeline of products based on our patented DPP® point of care technology." Financial Highlights for the Third Quarter of 2009
-- Product sales for the three months ended September 30, 2009 increased
15.2% from $3.41 million to $3.92 million as compared to the third quarter
in 2008, which was the Company's previous record quarter for revenues. Net
product sales to Inverness for the third quarter increased more than
$798,000, or approximately 132%, as compared to the third quarter of 2008,
indicating that our sales to Inverness are continuing their strong upward
trajectory in 2009 as compared to 2008.
-- Product sales also included the shipment of HIV and other tests and
components to customers in Africa ($963K), South America ($935K), and Asia,
Europe, and the Middle East ($108K).
-- The increased product and R&D revenues combined to produce gross
margin dollars that were $148,000 or 11.5% greater ($1,430,000 vs.
$1,282,000) than the gross margin dollars in the comparable period in 2008.
-- Selling General & Administrative Expenses decreased by $84,000 or 10%
in the 2009 period as compared to the third quarter of 2008.
-- Operating profit was approximately $308,000, in the 2009 period as
compared to an operating loss in the third quarter of 2008 of $236,000, a
swing of $543,000. In addition, net income was approximately $307,000 in
the 2009 period as compared to a net loss in the third quarter of 2008 of
$237,000, a swing of $544,000.
-- The Company increased its cash position during the quarter by
approximately $18,000 to $1.88 million. This is primarily attributable to
the operating cash flows. The increase in operating cash flows included the
net income of $307,000 increased by non-cash expenses of $86,000 for
depreciation and $49,000 for stock option compensation. Also adding to the
increased cash flow was a decrease in inventories by $279,000. Partially
offsetting the increase in cash during the quarter was an increase in
accounts receivable of $533,000 and a decrease in deferred revenue of
$136,000. $50,000 in progress payments for the design and development of
an automated system related to assembly of the Company's products also
contributed to offsetting the cash increases from operations.
Financial Highlights for the first nine months of 2009
-- Product sales for the nine months ended September 30, 2009 increased
$1,134,000, or 14%, from $8.11 million to $9.25 million. Net product sales
to Inverness for the first nine months increased more than $1,880,000 from
$1,570,000 to $3,450,000, or approximately 120%, as compared to the first
nine months of 2008.
-- Research and Development Revenues increased 96% to $954,000. Net R&D
Expense (R&D Expense net of R&D Income) decreased 20% from $1,465,000 in
the 2008 period to $1,174,000 in the 2009 period.
-- The increased product and R&D revenues combined to produce gross
margin dollars that were $993,000 or 31% greater than the gross margin
dollars in the comparable period in 2008.
-- Selling General & Administrative Expenses decreased by $694,000 or 26%
in the 2009 period as compared to the first nine months of 2008
-- Operating profit was approximately $100,000 in the 2009 nine month
period as compared to an operating loss for the nine months ended September
30 of 2008 of $1,412,000, a swing of $1,512,000. In addition, net income
was approximately $92,000 in the 2009 period as compared to a net loss in
the nine months of 2008 of $1,398,000, a swing of $1,490,000.
-- The Company increased its cash position during the first nine months
of 2009 by approximately $665,000 to $1.88 million. This is primarily
attributable to the operating cash flows. The increase in operating cash
flows included the net income of $92,000 increased by adjustments to cash
flow attributable to non-cash expenses for depreciation of $279,000 and for
stock option compensation of $140,000. Also adding to the increased cash
flow was a decrease in inventories of $445,000 and an increase in deferred
revenue of $359,000, which includes receiving a $340,000 payment from Bio-
Rad Laboratories, Inc. with respect to a license agreement as previously
reported. Partially offsetting these increases during the first nine
months of 2009 were increases in accounts receivable of $335,000 and
decreases in accounts payable and accrued liabilities by a combined
$176,000. $250,000 in progress payments for the design and development of
an automated system related to assembly of the Company's products also
contributed to offsetting the cash increases from operations.
Update On DPP® Product Commercialization and Research & Development Regulatory Activities
-- CE Mark for FDA approved HIV tests - All testing and related
documentation that was requested by our Notified Body during the second
quarter has been completed and, based on the results of the testing we
believe that our CE Mark filing is now complete for our HIV 1/2 STAT PAK®
and it has been submitted. We now expect to receive the CE Mark for this
product in the beginning of 2010.
-- Regulatory Approvals in Brazil through the Oswaldo Cruz Foundation
(FIOCRUZ) - We anticipate that FIOCRUZ will receive required approvals from
its regulatory agencies during 2009 or early 2010 for the DPP®
Leishmaniasis, HIV Confirmatory, and the DPP® HIV screening tests. We
initially believed that these approvals would be granted during 2009. Due
to a variety of factors, there have been some delays, but we remain
confident that these products will be approved either during the remainder
of 2009 or during the first quarter of 2010.
-- DPP® HIV 1/2 Screening Assay for Oral Fluid - During the third
quarter we were notified that this product met the performance and other
criteria established by the United States President's Emergency Plan for
AIDS Relief (PEPFAR) for inclusion on the USAID waiver list, enabling
procurement by countries and other beneficiaries of this US taxpayer-funded
program. This evaluation was based on, among other criteria, sensitivity
and specificity studies using serum panels and FDA approved reference tests
that are approved for serum. We will be supplementing these studies with
studies that are ongoing in Africa, one of which we expect to be completed
during the fourth quarter, as well as with our clinical studies in the US
as they are completed. During the third quarter, and continuing during
the fourth quarter, we have made significant progress toward commencing the
regulatory approval process for this product in the United States. We have
identified and have completed one agreement with a clinical testing site,
and we are working on other agreements which are pending. We anticipate
completing a portion of the clinical trials in support of a Pre-Marketing
Approval (PMA) application for this product during the fourth quarter of
fiscal 2009. We also anticipate the remainder of the testing to be
completed during the first half of 2010, and a PMA approval during early
2011. This product will enable Chembio to participate in the oral fluid
testing market segments in the United States and globally, where we believe
there is a significant opportunity not available to blood tests. In
addition, upon satisfactory completion of the PMA, we would consider moving
forward for over-the-counter approval of this product.
-- DPP® Syphilis Screen & Confirm - The first phase of a multi-center
evaluation sponsored by the World Health Organization commenced during the
third quarter and we expect to have the first phase results before the end
of the fourth quarter. During the third quarter, we submitted a proposed
clinical plan to the FDA (Pre-IDE "Investigational Device Exemption") and
we are currently reviewing the FDA response. We have also begun to
identify clinical testing sites, have performed additional validation,
interfering substance, and cross-reactivity studies on the product at
Chembio and at external laboratories There is no point-of-care test for
syphilis cleared for marketing in the United States, and we believe that
our product, with its multiplexed capacity to identify both treponemal and
non-treponemal markers, provides a reliable indication of an active,
untreated case of syphilis at the point of care.
-- DPP® Hepatitis C and DPP® Hepatitis C/HIV Oral Fluid Antibody
Tests - Prototypes of these products have been developed and are being
evaluated in a study that has been organized by the National Center for
HIV/AIDS, Viral Hepatitis, STD, and TB Prevention (NCHHSTP) at the Centers
for Disease Control and Prevention (CDC) of the Department Of Health and
Human Services. The evaluation will be completed during 2009 and the
results should be useful in helping to ascertain the performance
characteristics of these products in comparison to other products that will
also be in this evaluation.
-- DPP® Influenza - Research & development efforts are ongoing with
respect to the development of antigen (Flu A & B) detection and antibody
detection (multiplexed strains to ascertain specific immune status in
connection with vaccine programs) assays. We have developed a prototype of
a Flu A & B antigen detection test that we believe performs substantially
equivalently to seasonal Flu A & B detection tests that are cleared for
marketing in the United States. We are now assessing additional features
for such a product in light of the H1NI pandemic and which would employ our
unique multiplexing capability. During the third quarter, Chembio provided
a 3-band prototype multiplex antibody test (that included various Flu
antigens other than H1N1) pursuant to a $50,000 funded pilot program with
the Influenza division of the CDC. Based on the results of this work,
which we believe were satisfactory, additional contract development
opportunities may become available for a larger multiplex test that would
be used for surveillance and other purposes to assess exposure to various
additional strains of influenza, including H1N1.
-- DPP® Leptospirosis - In June, as we previously reported, we were
awarded a three-year $3 million Small Business Innovative Research (SBIR)
Phase II grant from the United States National Institutes of Health (NIH)
to fully develop, validate, and commercialize a rapid diagnostic test for
leptospirosis for general use worldwide, and our work is progressing on
schedule.
-- Multiplex Test for Bio-Rad Laboratories, Inc. - In January of this
year, based on our achievement of the initial milestones in 2008 that
established product feasibility, we entered into a license agreement with
Bio-Rad related to this specific application and we received a $340,000
refundable license fee which will become non-refundable only when the
product development phase is completed. We believe that the product
development phase of this project is likely to be completed during the
fourth quarter, enabling us to recognize the license fee and to begin the
process of transferring the product to manufacturing and to enable
regulatory submissions to be made by Bio Rad for this product.
-- Infectious Disease Research Institute - In April 2009 we entered into
a Services Agreement with the Infectious Disease Research Institute to
develop DPP® products for Leishmaniasis and Leprosy for which we have
received $125,000 and which, subject to attainment of development
milestones, will additionally provide us with up to approximately $275,000
over the next 18 months subject to the attainment of development
milestones.
-- Foundation for Innovative and Novel Diagnostics (FIND) - FIND, a non-
profit organization funded by the Gates Foundation, is currently evaluating
our initial work that they have funded related to development of
serological tests for Tuberculosis and Malaria using our DPP®.
Conference Call Chembio has scheduled a conference call and webcast for 4:15 p.m. Eastern time on Wednesday, November 4, 2009. To participate on the conference call, please dial (877) 407-8031 from the U.S. or (201) 689-8031 from outside the U.S. In addition, following the completion of the call, a telephone replay will be accessible until November 11, 2009 at 11:59 p.m. Eastern Time by dialing (877) 660-6853 from the U.S. or (201) 612-7415 from outside the U.S. and entering reservation account number 286 and conference ID #: 336231. The conference call may also be accessed via the internet at http://www.investorcalendar.com/IC/CEPage.asp?ID=151441. An archive of the webcast will be available for 90 days on the Company's website at www.chembio.com. About Chembio Diagnostics Chembio Diagnostics, Inc. develops, manufactures, licenses and markets proprietary rapid diagnostic tests in the growing $5 billion point-of-care testing market. Chembio's two FDA PMA-approved, CLIA-waived, rapid HIV tests are marketed in the U.S. by Inverness Medical Innovations, Inc. Chembio markets its HIV STAT-PAK® line of rapid HIV tests internationally to government and donor-funded programs directly and through distributors. Chembio has developed a patented point-of-care 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 based on DPP®. Headquartered in Medford, NY, with approximately 100 employees, 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 13.485. Forward-Looking Statements Statements 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 are estimates only, as the Company has not completed the preparation of its financial statements for those periods, nor has its auditor completed a review or audit of those results. Actual revenue may differ materially from those anticipated in this press release. Such statements 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, to obtain regulatory approvals in a timely manner and 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.
Summary of Results of Operations
(UNAUDITED)
For the three months ended For the nine months ended
--------------------------- ---------------------------
September 30, September 30, September 30, September 30,
2009 2008 2009 2008
------------- ------------ ------------- ------------
Net product sales $ 3,924,237 $ 3,406,803 $ 9,245,039 $ 8,111,015
License and royalty
income 31,388 - 83,710 -
Research grant
income 408,060 109,361 954,058 487,661
------------- ------------ ------------- ------------
Total Revenues $ 4,363,685 $ 3,516,164 $ 10,282,807 $ 8,598,676
Gross Profit $ 1,868,966 $ 1,391,442 $ 4,229,600 $ 3,236,430
Research and
development
expenses $ 777,502 $ 758,851 $ 2,127,859 $ 1,952,436
Selling, general
and administrative
expenses $ 783,810 $ 868,120 $ 2,002,073 $ 2,696,351
Income (loss) from
operations $ 307,654 $ (235,529) $ 99,668 $ (1,412,357)
Net income (loss) $ 307,140 $ (237,054) $ 91,845 $ (1,398,365)
Basic earnings
(loss) per share $ 0.00 $ (0.00) $ 0.00 $ (0.02)
Diluted earnings
(loss) per share $ 0.00 $ (0.00) $ 0.00 $ (0.02)
Weighted average
number of shares
outstanding, basic 61,944,901 61,944,901 61,944,901 61,036,181
Weighted average
number of shares
outstanding,
diluted 75,365,577 61,944,901 74,937,831 61,036,181
Chembio Diagnostics, Inc.
Summary of Balance Sheets
September 30, 2009 December 31, 2008
------------------ ------------------
CURRENT ASSETS: (UNAUDITED)
Cash $ 1,876,809 $ 1,212,222
Accounts receivable, net of
allowances 1,134,638 809,303
Inventories 1,373,984 1,819,037
Other current assets 309,627 225,153
------------------ ------------------
TOTAL CURRENT ASSETS 4,695,058 4,065,715
NET FIXED ASSETS 642,427 881,406
OTHER ASSETS 1,004,560 967,820
------------------ ------------------
$ 6,342,045 $ 5,914,941
================== ==================
TOTAL CURRENT LIABILITIES $ 2,596,959 $ 2,401,801
TOTAL OTHER LIABILITIES 936,640 935,808
------------------ ------------------
TOTAL LIABILITIES 3,533,599 3,337,609
TOTAL STOCKHOLDERS' EQUITY 2,808,446 2,577,332
------------------ ------------------
$ 6,342,045 $ 5,914,941
================== ==================
Chembio Diagnostics, Inc.
Summary of Cash Flow
(UNAUDITED)
For the nine months ended
--------------------------
September 30, September 30,
2009 2008
------------ ------------
Net cash provided by (used in) operating
activities $ 947,825 $ (1,445,137)
Net cash used in investing activities (296,285) (363,652)
Net cash provided by (used in) financing
activities 13,047 (19,151)
------------ ------------
Net increase (decrease) in cash and cash
equivalents $ 664,587 $ (1,827,940)
============ ============
Contact:
Source: Chembio Diagnostics, Inc.
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