NEW YORK (360Dx) – Chembio Diagnostics reported on Tuesday a 5 percent year-over-year drop in total revenues, dragged down by an 8 percent drop in product revenues.
For the three months ended March 31, the firm reported $6.3 million in total revenues, down from $6.6 million in the first quarter of 2016, but beating analysts' average estimate of $4.6 million.
Net product sales fell to $5.4 million from $5.9 million year over year, while license and royalty revenues rose 350 percent to $100,000 from $22,201. R&D, milestone, and grant revenues were up 21 percent to $797,740 from $661,879.
In a statement, Chembio CEO John Sperzel said that "it is important to note that the first quarter of 2016 included approximately $1.8 million in product purchases by our previous US distributor," which has made no material purchases since then. However, the revenue shortfall was partly offset in Q1 2017 by about $1.4 million in sales from a recently acquired Malaysia subsidiary.
Sperzel noted that during Q1 2017, Chembio continued to expand its product portfolio by leveraging its DPP (Dual Path Platform) technology, a chromographic immunoassay. The firm's product development strategy includes two primary objectives, he said — to strengthen its core business in the sexually transmitted disease market, and to build a strong position in the fever and tropical disease market.
In the sexually transmitted disease market, "the company continues to focus on our DPP HIV-Syphilis Assay in response to the global concerns related to co-infection and mother-to-child transmission of both HIV and syphilis," Sperzel said. He added that in Q1 2017, Chembio received CE marking for its DPP HIV-Syphilis Assay, allowing the company to market and sell the test in the EU and in the Caribbean, excluding Puerto Rico.
Also, the company's clinical trial to support its US Food and Drug Administration application for the assay, which was initiated during the first quarter of 2016, has been completed, he said.
In March 2017, the FDA requested further clinical studies in addition to those recently completed, the firm said. As a result, Chembio is in discussion with the FDA regarding the timing of filing the premarket approval application, Sperzel said, adding that, "Another important development subsequent to the end of the first quarter of 2017 is that Chembio received a $5.8 million order from Bio-Manguinhos/Fiocruz to supply test components and intermediate product for the production of DPP HIV 1/2 Assays in Brazil and subsequent supply to Brazil's Ministry of Health. We believe that substantially all of this order will be shipped prior to year-end 2017."
Chembio noted that to build a strong position in the fever and tropical disease market, it continues "to make significant progress toward the goal of commercializing multiple products during 2017."
During the first quarter of 2017, it initiated sales of its DPP Zika Assay and DPP Zika/Dengue/Chikungunya Assay to the Centers for Disease Control and Prevention, for use in a pilot surveillance program in Peru, India, Guatemala, and Haiti.
In the recently completed quarter, the firm also initiated sales of its DPP Dengue Assay in Asia-Pacific, and it continues "to pursue important regulatory approvals" for its DPP Zika System to obtain Emergency Use Authorization from the FDA, World Health Organization Emergency Use Assessment And Listing, and Brazil Agência Nacional de Vigilância Sanitária, Chembio said.
The firm's net loss for Q1 2017 widened to $1.6 million, or a loss of $.13 per share, from $303,590, or a loss of $.03 per share, in the prior-year period. Analysts on average expected a loss of $.20 per share.
ChemBio's R&D expenses grew 38 percent to $2.2 million from $1.6 million in the prior-year period, due primarily to increased clinical trial expenses, as well as R&D activities for projects and grants, the firm said. Its SG&A expenses rose 25 percent year over year to $2.5 million from $2.0 million.
The company said that it ended Q1 with $5.6 million in cash and cash equivalents.
ChemBio shares were flat at $6.69 in early morning trading on the Nasdaq.