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Chembio Diagnostics Q2 Revenues Drop 48 Percent on COVID-19 Antibody Test Recall

NEW YORK – Chembio Diagnostics reported after the close of the market on Thursday that its second-quarter revenues dropped 48 percent year over year following the revocation of the Emergency Use Authorization by the US Food and Drug Administration for the company's SARS-CoV-2 antibody test.

For the three months ended June 30, the Hauppauge, New York-based point-of-care diagnostics firm posted $5.1 million in revenues compared to $9.9 million a year ago, missing analysts' consensus estimate of $6.9 million but exceeding the company's preliminary revenue estimates reported in July.

Total revenues consisted of $3.8 million in net product sales, down 57 percent from $8.8 million a year ago; $1.2 million in R&D and grant revenue, up 40 percent year over year from $854,264; and $125,625 in license and royalty revenue, down 50 percent year over year from $248,831.

The firm said that its financial results for the second quarter of 2020 reflected the impact of the FDA's revocation of the EUA for its DPP COVID-19 IgM/IgG System, a subsequent product recall in the US, and the potential response by other regulators following the FDA decision. A National Cancer Institute validation found problems with Chembio Diagnostics' coronavirus antibody test, setting the stage for the FDA to revoke the EUA it initially issued in April.

"Despite challenging circumstances in the quarter, we are optimistic that our scientific expertise and platform flexibility will allow us to develop additional high quality, easy-to-use point-of-care COVID-19 tests that will contribute to the decentralization of testing," Richard Eberly, Chembio’s president and CEO, said in a statement. "Central laboratories are currently facing extreme testing volumes that are creating delays in returning results to patients, and our technology can contribute to improving the current situation."

The firm noted that among the highlights of its quarter, it had announced plans to seek FDA EUA for a revised DPP COVID-19 IgM/IgG System and subsequently for a DPP COVID-19 Antigen System. The company was further awarded a contract by the US Department of Health and Human Services' Biomedical Advanced Research and Development Authority for $628,071 to support the development of the DPP COVID-19 Antigen System and FDA submission.

Chembio noted it recently received FDA 510(k) clearance for its DPP Zika IgM System, and it received a $1.5 million order from UNICEF for additional multiplex DPP Zika, chikungunya and dengue systems.

Chembio's Q2 net loss swelled to $7.8 million, or $.42 per share, from $3.2 million, or $.19 per share a year ago, missing analysts' expectations of a loss per share of $.39.

The company's Q2 R&D expenses dropped 10 percent to $1.9 million from $2.1 million in the prior-year quarter, while its SG&A expenses rose 7 percent to $4.4 million from $4.1 million a year ago.

Chembio finished the quarter with cash and cash equivalents totaling $36.4 million.