Q1 2024 Co-Diagnostics Inc Earnings Call

Operator: Good day, and welcome to the Co-Diagnostic First Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode.

Good day and welcome to the co diagnostic first quarter 'twenty 'twenty four earnings conference call.

Operator: All participants will be in a listen only mode.

Operator: Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touch-tone phone. To withdraw your question, please press star, then 2. Please note, this event is being recorded. I would now like to turn the conference over to Andrew Benson, Investor Relations. Please go ahead.

Operator: Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.

Andrew Benson: After todays presentation, there will be an opportunity to ask questions.

Andrew Benson: To ask a question you May press Star then one on a touchtone phone.

Andrew Benson: To withdraw your question. Please press Star then two.

Andrew Benson: Please note this event is being recorded.

Operator: I would now like to turn the conference over to Andrew Benson Investor Relations. Please go ahead.

Andrew Benson: Good afternoon, everyone. Thank you all for participating in today's conference call. On the line today from Co-Diagnostics are Dwight Egan, Chief Executive Officer, and Brian Brown, Chief Financial Officer. Earlier today, Co-Diagnostics released financial results for the first quarter and for March 31, 2024. A copy of the press release is available on the company's website.

Andrew Benson: Good afternoon, everyone. Thank you all for participating in today's conference call on the line today from co diagnostics, we have Dwight Egan, Chief Executive Officer, and Brian Brown, Chief Financial Officer earlier today Co diagnostics released financial results from the first quarter ended March 31, 'twenty 'twenty four.

Andrew Benson: A copy of the press release is available on the company's website.

Andrew Benson: We will begin the call with management's prepared remarks and then open up the call to analyst Q&A. Before we begin, we would like to inform the listeners that certain statements made by Co-Diagnostics during this call are not historical facts but are forward-looking statements. This includes statements concerning the company's forthcoming CODX-PCR testing platform, which requires regulatory approval and marketing authorization for diagnostic use, is currently being reviewed by the U.S. FDA, and is not currently for sale.

Andrew Benson: We will begin the call with management's prepared remarks, and then open up the call to analyst Q&A before we begin we would like to inform the listeners that certain statements made by co diagnostics. During this call are not historical facts and are forward. Looking statements include statements concerning the company's forthcoming Kodiak PCR testing platform.

Andrew Benson: Actual outcomes and results may differ materially from what is expressed or implied in any statement. Important factors which could cause actual results to differ materially from those in these forward-looking statements are detailed in Co-Diagnostics' filings with the SEC. Co-Diagnostics assumes no obligation and expressly disclaims any duty to update any forward-looking statements to reflect events or circumstances occurring after this call or to reflect the occurrence of unanticipated events. In addition, the company may discuss certain non-GAAP financial measures during today's call.

Andrew Benson: Which requires regulatory approval and marketing authorization for diagnostic use is currently being reviewed by the U S. F. D. A N does not currently for sale.

Andrew Benson: Actual outcomes and results may differ materially from what is expressed or implied in any statement.

Andrew Benson: Important factors, which could cause actual results to differ materially from those in these forward looking statements are detailed in co diagnostics filings with the SEC co diagnostics assumes no obligation and expressly disclaims any duty to update any forward looking statements to reflect events or circumstances occurring after this call.

Andrew Benson: To reflect the occurrence of unanticipated events.

Andrew Benson: In addition, the company may discuss certain non-GAAP financial measures during today's call. These non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results. We refer you to the company's earnings release out shortly before this call which contains reconciliations of the non-GAAP financial measures presented should there mostly.

Andrew Benson: These non-GAAP financial measures should not be considered a replacement for and should be read together with GAAP results. We refer you to the company's earnings release issued shortly before this call, which contains reconciliations of the non-GAAP financial measures presented to their most comparable GAAP results. At this time, I would like to turn the call over to Co-Diagnostics Chief Executive Officer Dwight Egan.

Dwight H. Egan: Comparable GAAP results.

Dwight H. Egan: I would like to turn the call over to co diagnostics, Chief Executive Officer White Eagle White.

Dwight H. Egan: Thank you, Andrew, and good afternoon, everyone. Thank you all for joining Co-Diagnostics' first quarter 2024 earnings call. We are pleased with the progress we have made across several key initiatives in the first quarter that will bring us closer to the commercialization of our CODIACS PCR platform. In recent months, we have added additional manufacturing capacity, implemented strategic changes to our organizational structure, and nearly completed our 510K submission to the FDA for our CODIACS PCR Pro and CODIACS PCR COVID-19 test.

Dwight H. Egan: Thank you Andrew and good afternoon, everyone. Thank you all for joining co diagnostics first quarter 'twenty 'twenty four earnings call.

Dwight H. Egan: We are pleased with the progress we have made across several key initiatives in the first quarter that will bring us closer to the commercialization of our Kodiak Pcr platform.

Dwight H. Egan: In recent months, we have added additional manufacturing capacity implemented strategic changes to our organizational structure.

Dwight H. Egan: And nearly completed our five 10-K submission to the F D. A.

Dwight H. Egan: Our our Kodiak, PCR pro and Kodiak, PCR COVID-19 test kit.

Dwight H. Egan: We believe that these recent and upcoming developments serve to advance Co-Diagnostics' mission to establish itself as a disruptive point-of-care PCR diagnostics company. As mentioned, we are excited that our 510k submission to the FDA for our CODX-PCR-PRO and CODX-PCR-COVID-19 test kits is nearly complete. This will represent another major accomplishment for our platform as we approach a commercial launch and will serve as a benchmark for future regulatory submissions for additional tests in our pipeline.

Dwight H. Egan: We believe that these recent and upcoming developments serve to advance co diagnostics mission to establish ourselves as a disruptive point of care PCR Diagnostics company.

Dwight H. Egan: As mentioned we are excited that our five 10-K submission to the FDA for our Cody X P C. Our pro and Kodiak PCR COVID-19 test kit is nearly complete this will represent another major accomplishment for our platform as we approach a commercial launch and will serve as a <unk>.

Dwight H. Egan: <unk> for future regulatory submissions for additional tests in our pipeline.

Dwight H. Egan: I'm extremely proud of the work our team has done over the past several months and look forward to building out our pipeline in 2024. In March, we made four leadership changes that we anticipate will be instrumental to our company's success in the coming months and years. We appointed Richard Abbott as President, alongside the promotions of David Nielsen as Chief Operating Officer, Christopher Thurston as Chief Technology Officer, and Seth Egan as Chief Commercialization Officer.

Dwight H. Egan: I'm extremely proud of the work our team has done over the past several months and look forward to building out our pipeline in 2024.

Dwight H. Egan: In March we made for leadership changes that we anticipate will be instrumental to our company's success in the coming months and years, we appointed Richard Abbott as President alongside the promotions of David Nielsen as Chief Operating Officer, Christopher Thurston as Chief Technology Officer and.

Dwight H. Egan: Seth Egan as Chief commercialization officer.

Dwight H. Egan: I am very confident that the team now in place is well equipped to lead Co-Diagnostics into the next stage of growth and development. Last month, we held the grand opening of our new manufacturing facility located just minutes from our headquarters in Salt Lake City. We now have dedicated space close to home with the ability to manufacture our own Co-Primers oligonucleotides in-house, to supplement our existing third-party capacity and to help reduce research costs.

Dwight H. Egan: I am very confident that the team now in place is well equipped to lead code diagnostics into the next stage of growth and development.

Dwight H. Egan: Last month, we held the Grand opening of our new manufacturing facility located just minutes from our headquarters in Salt Lake City.

Dwight H. Egan: We now have dedicated space close to home with the ability to manufacture our own co primaries oligonucleotides in house to supplement our existing third party capacity and to help reduce research costs. The.

Dwight H. Egan: The new facility in South Salt Lake will also allow for in-house manufacturing of our new CODI-X PCR platform for the U.S. and certain international markets. In addition to growing capacity in Salt Lake, we have also been working to expand our manufacturing facility in India at Kosara Diagnostics, our joint venture. CoSERA will assist in manufacturing and distribution to support the upcoming launch of our platform in India and other areas of the world.

Dwight H. Egan: The new facility in South Salt Lake will also allow for in house manufacturing of our new Kodiak PCR platform for the U S and certain international markets.

Dwight H. Egan: In addition to growing capacity in Salt Lake. We have also been working to expand our manufacturing facility in India at post Sarah diagnostics, our joint venture.

Dwight H. Egan: Oh, Sarah will assist in manufacturing and distribution to support the upcoming launch of our platform in India and in other areas of the world as we continue development throughout the year on our T. B multiplex and HPV tests, we are confident that expanded capacity in salt Lake City, and India will support.

Dwight H. Egan: As we continue development throughout the year on our TB, multiplex, and HPV tests, we are confident that expanded capacity in Salt Lake City and India will support future operational efficiency. Moving to our pipeline, we remain focused on the development of several tests that will serve as the cornerstones of our new platform. During the first quarter, we continued the grant-funded development of our tuberculosis test, which will play an important role in our commercial efforts and growth outside of the United States, where TB has a disproportionate impact on developing countries around the world.

Dwight H. Egan: Future operational efficiency.

Dwight H. Egan: Moving to our pipeline, we remain focused on the development of several tests that will serve as the cornerstones for our new platform.

Dwight H. Egan: During the first quarter. We continued the grant funded development of our tuberculosis test, which will play an important role in our commercial efforts and growth outside the United States, where T. V has a disproportionate impact on developing countries around the world.

Dwight H. Egan: We remain on track to begin clinical evaluations for our TB test on the new platform this summer in preparation for pursuing regulatory clearance and submission of the test to the World Health Organization, or WHO, whose pre-qualification assessment would make the test eligible for use and commercialization in priority markets across Africa. The opportunity for tuberculosis testing is large and growing, especially for point-of-care diagnostic platforms. And we believe we have the manufacturing and distribution capacity to deliver tests to underserved markets like India, where there will be 2.8 million cases of tuberculosis in 2022, representing 27% of the global burden, according to the WHO's 2023 Global TV Report.

Dwight H. Egan: We remain on track to begin clinical evaluations for our T. B test on the new platform. This summer in preparation for pursuing regulatory clearance and submission of the test to the World Health organization or W. H O, whose prequalification assessment would make the test eligible for use in commercialization in priority markets.

Dwight H. Egan: That's across Africa.

Dwight H. Egan: The opportunity for tuberculosis testing is large and growing especially for point of care diagnostic platforms, and we believe we have the manufacturing and distribution capacity to deliver tests to underserved markets like India, where there are 2.8 million cases of tuberculosis in 'twenty to 'twenty two.

Dwight H. Egan: Representing 27% of the global burden according to the W. H O 2023 Global TV report.

Dwight H. Egan: Additionally, we are pleased with the continued progress we are making in the development of our Upper Respiratory Multiplex Test, driven by support from the NIH RADx-Tech Initiative. Co-Diagnostics believes this test has the potential to play an important role in respiratory infection testing at home and at the point of care, given that it would provide gold-standard diagnostic evaluation for multiple indications with one sample at a low unit cost and at a very low cost for diagnosis.

Dwight H. Egan: Additionally, we are pleased with the continued progress we are making in the development of our upper respiratory multiplex test driven by support from the NIH Radical Tech initiative.

Dwight H. Egan: So diagnostics believes this test has the potential to play an important role in respiratory infection testing at home and at the point of care.

Dwight H. Egan: Given that it would provide gold standard diagnostic evaluation for multiple indications with one sample at a low unit cost and at a very low cost per diagnosis.

Dwight H. Egan: Being run on the new CODIACS PCR Pro instrument, the multiplex test will detect COVID-19, flu A, flu B, and RSV all at once, which would increase efficiency and accessibility of respiratory testing in remote locations around the globe. We plan to begin clinical evaluations during the upcoming North American flu season and will continue to provide you with updates as we progress throughout 2024. Turning to HPV, our development plans have been progressing with the support of a grant from the Bill and Melinda Gates Foundation, and we continue to focus our efforts in India, where there is a significant underserved population.

Dwight H. Egan: Being run on the new Coty X P C. Our pro instrument the multiplex test will detect COVID-19 flu a flu b and RSV all at once which would increase efficiency and accessibility of respiratory testing and remote locations around the globe.

Dwight H. Egan: We plan to begin clinical evaluations during the upcoming North American flu season, and we will continue to provide you with updates as we progress throughout 2024.

Dwight H. Egan: Turning to H P V. Our development plans have been progressing with the support of a grant from the Bill and Melinda Gates Foundation, and we continue to focus our efforts in India, where there is a significant underserved population.

Dwight H. Egan: Like tuberculosis, HPV is a high area of focus for the WHO, and we continue to work hard to move our test development efforts forward. As mentioned in previous communications, we are currently in the development of a Strep A test, which we believe could bring additional value to our test menu, especially in pediatric and family practice settings. Lastly, we are pleased that the CODIACS vector control footprint continues to expand in the U.S., including two mosquito abatement equipment installations in the first quarter. Our present VectorSmart testing products primarily include those for mosquito abatement.

Dwight H. Egan: Like tuberculosis H P. V is a high area of focus for the W. H O and we continue to work hard to move our test development efforts forward.

Dwight H. Egan: As mentioned in previous communications. We are currently in development of a strep a test, which we believe could bring additional value to our test menu, especially in pediatric and family practice settings.

Dwight H. Egan: Lastly, we are pleased that the Kodiak vector control footprint continues to expand in the U S, including two mosquito abatement equipment installations in the first quarter.

Dwight H. Egan: Our present Vectra smart testing products primarily include those for mosquito abatement.

Dwight H. Egan: But an internal analysis of the flu marker in our existing LogicSmart flu AB and COVID-19 or ABC test shows that it would be capable of detecting the H5N1 virus or avian flu that has recently been found circulating in livestock populations. We are exploring the potential for a modified version of this test to meet certain needs of this market if necessary, and we have also proactively completed the principal design work for a co-primers test specific to H5N1 in the event the need to develop such a product arises in the future.

Dwight H. Egan: But an internal analysis of the flu marker in our existing logic smart flu a b in COVID-19, or a b C test.

Dwight H. Egan: Was that it would be capable of detecting the H five N one virus or avian flu that has been recently found circulating in livestock populations.

Dwight H. Egan: We are exploring the potential for a modified version of this test to meet certain needs for this market if necessary.

Dwight H. Egan: And if also proactively completed the principal design work for our co primaries test specific to H five N. One in the event they need to develop such a product arises in the future.

Dwight H. Egan: In summary, I would like to share why I believe that Co-Diagnostics is uniquely positioned to become a leading global point-of-care molecular diagnostics company. First, the technology of our platform is truly differentiated and unlike any current instrument or test on the market, beginning with our patented Co-Primers technology, which produces enhanced test quality via significant primer-dimer reduction, in turn, leading to fewer false positives. The platform returns test results to a mobile app in just 30 minutes, delivered via our platform's cloud-based technology, which can allow for HIPAA-compliant integration into electronic medical records for health and government official monitoring and tracking.

Dwight H. Egan: In summary, I would like to share why I believe that coda agnostics is uniquely positioned to become a leading global point of care molecular diagnostics company.

Dwight H. Egan: First the technology of our platform is truly differentiated and unlike any current instrument or test on the market.

Dwight H. Egan: Beginning with our patented co primary technology, which produces enhanced test quality via significant primary diamond reduction in turn leading to fewer false positives.

Dwight H. Egan: Platform returns test results to a mobile app and just 30 minutes delivered via our platforms cloud based technology, which can allow for HIPAA compliant integration into electronic medical records for health and government officials monitoring and tracking.

Dwight H. Egan: Additionally, we continue to be deliberate with our spending and have invested appropriately in our CODIX-PCR platform development and manufacturing capacity to support a commercial launch. We have received support from multiple renowned organizations, including grants to further the research, development, and manufacturing capacity of our test pipeline. Through the investments made in our facilities, we are now able to begin producing our own co-primer molecules in-house, enabling greater cost efficiencies for R&D and ultimately for product manufacturing as well.

Dwight H. Egan: Additionally, we continue to be deliberate with our spending and have invested appropriately in our Kodiak PCR platform development and manufacturing capacity to support our commercial launch.

Dwight H. Egan: We have received support from multiple renowned organizations, including grants to further the research development and manufacturing capacity of our test pipeline in instruments.

Dwight H. Egan: Due to the investments made in our facilities. We are now able to begin producing our own co primary molecules in house, enabling greater cost efficiencies for R&D and ultimately for product manufacturing as well.

Dwight H. Egan: The new platform's features and our joint venture relationship provide Co-Diagnostics with the opportunity to address some of the most vulnerable and underserved populations around the world, who may not have access to infrastructure such as a hospital, doctor's office, or clinical laboratory facility in India, where diseases like TB and HPV are most prevalent. CoSERA will play a vital role in distributing the new platform to places that are harder to reach than more accessible point-of-care target locations for the CODIACS PCR-PRO and have a large unmet need for high-quality diagnostics, which is in keeping with our mission of improving the quality of health care on a global scale through increasing the availability of the highest quality of diagnostics to communities and patients everywhere.

Dwight H. Egan: The new platform features and our joint venture relationship provide co diagnostics with the opportunity to address some of the most vulnerable in underserved populations around the world.

Dwight H. Egan: Who may not have access to infrastructure, such as a hospital doctors office or clinical laboratory facilities.

Dwight H. Egan: In India, where diseases like T V in HBV or most prevalent co Sarah will play a vital role in distributing the new platform to places that are harder to reach than more accessible point of care target locations for the coding X P. C. Our pro and have a large unmet need for high quality diagnostics.

Dwight H. Egan: Which is all keeping with our mission of improving the quality of health care on a global scale through increasing the availability of the highest quality of diagnostics to communities and patients everywhere.

Dwight H. Egan: I am very proud of our team at Co-Diagnostics and our accomplishments so far in 2024. I believe we are now closer to achieving our long-term goals, and I look forward to updating you on our progress throughout the remainder of the year. I will now turn the call over to Brian to discuss our first quarter financial results.

Dwight H. Egan: I'm very proud of our team of co diagnostics and our accomplishments. So far in 2024 I believe we are now closer to achieving our long term goals and I look forward to updating you on our progress throughout the remainder of the year.

Dwight H. Egan: I will now turn the call over to Brian to discuss our first quarter financial results.

Brian: Thanks right.

Brian L. Brown: And thanks to everyone who joined today's call. For the first quarter of 2024, total revenue decreased to $0.5 million, as compared to $0.6 million in the prior year's same period; grant revenue in Q1 2024 was $0.2 million, and product revenue was $0.3 million. Gross profit for the first quarter increased to $0.2 million compared to $0.1 million in the prior year comparable period. Total operating expenses for the quarter ended March 31st, 2024, increased to $10.5 million, compared to $10.1 million in Q1 2023.

Brian: And thanks to everyone, who joined today's call for.

Brian L. Brown: For the first quarter of 'twenty 'twenty four total revenue decreased to zero point $5 million as compared to zero point $6 million in the prior year same period.

Brian L. Brown: Grant revenue in Q1, 2024, with zero point $2 million and product revenue was zero point $3 million.

Brian L. Brown: Gross profit for the first quarter increased to zero point $2 million compared to zero point $1 million in the prior year comparable period.

Brian L. Brown: Total operating expenses for the quarter ended March 31, 2024 increased to $10 $5 million compared to $10 $1 million in Q1 2023.

Brian L. Brown: The increase from the prior year is primarily due to strategic investments in research and development to support our development and commercialization initiatives for our CODX PCR platform. Research and development expenses in the first quarter were $5.7 million, compared to $5.0 million in the comparable prior year period. The year-over-year increase was driven by investments in our CODX-PCR platform and the ongoing development of our diagnostic pipeline. For the first quarter, income before taxes decreased to a loss of $9.3 million as compared to a loss of $8.0 million reported in the prior year.

Brian L. Brown: The increase from the prior year is primarily due to strategic investments in research and development to support our development and commercialization initiatives for codecs Pcr platform.

Brian L. Brown: Research and development expenses in the first quarter were $5 $7 million compared to $5.0 million in the comparable prior year period.

Brian L. Brown: The year over year increase was driven by investments in our Kodiak PCR platform and the ongoing development of our diagnostic pipeline.

Brian L. Brown: Income tax expense in the first quarter was $0.02 million, representing an effective tax rate of 0.2%. We have previously discussed that our effective tax rate will differ from the U.S. federal statutory rate of 21.0% due to state taxes, permanent items, and discrete items, including changes in valuation allowance. The net loss for the first quarter of 2024 was $9.3 million, or a loss of $0.31 per fully diluted share, compared to a net loss of $5.8 million, or a loss of $0.20 per fully diluted share in the prior year. Adjusted EBITDA was a loss of $8.4 million, compared to an adjusted EBITDA loss of $7.2 million in the prior year.

Brian L. Brown: For the first quarter income before taxes decreased to a loss of $9 $3 million as compared to a loss of $8.0 million reported in the prior year.

Brian L. Brown: Income tax expense in the first quarter was 0.0 $2 million, representing an effective tax rate of 0.2% we.

Brian L. Brown: We have previously discussed our effective tax rate will differ from the U S federal statutory rate of 21.0% due to state taxes.

Brian L. Brown: <unk> items and discrete items, including changes in valuation allowances.

Brian L. Brown: Net loss for the first quarter of 'twenty 'twenty, four was $9 $3 million or a loss of 31 cents per fully diluted share.

Brian L. Brown: Compared to a net loss of $5 $8 million or a loss of <unk> 20 per fully diluted share in the prior year.

Brian L. Brown: Adjusted EBITDA was a loss of $8 $4 million compared to an adjusted EBITDA loss of $7 $2 million in the prior year.

Brian L. Brown: We ended the quarter with $50.0 million in cash, cash equivalents, and marketable securities and continue to manage our spend as we look to maintain a healthy balance sheet to position ourselves for long-term growth. Co-Diagnostics remains focused on maintaining our cash position through appropriate and diligent spend to position the company for success upon a future commercial launch of our platform. We believe that we are operating from a strong cash position and will continue to focus on driving operational efficiency.

Brian L. Brown: We ended the quarter with $50.0 million in cash cash equivalents and marketable securities and continue to manage our spend as we look to maintain a healthy balance sheet to position ourselves for long term growth.

Brian L. Brown: Co diagnostics remains focused on maintaining our cash position through appropriate intelligent spend to position the company for success upon a future commercial launch of our platform.

Brian L. Brown: We believe that we are operating from a strong cash position and will continue to focus on driving operational efficiencies.

Brian L. Brown: We remain excited about our 2024 plan and are very optimistic about our test pipeline and the CODX PCR platform. I look forward to updating you on our next earnings call. With that, I will now turn the presentation back over to Dwight. Thank you, Brian.

Brian L. Brown: We remain excited about our 'twenty 'twenty four plan and are very optimistic about our test pipeline and the codex Pcr platform.

Dwight: I look forward to updating you on our next earnings call.

Brian L. Brown: With that I will now turn the presentation back over to Dwight.

Dwight: Thank you Brian.

Dwight H. Egan: Before opening for Q&A, I want to take this time to extend a warm thank you to our Kodiak shareholders in addition to our employees, distributors, and consultants, whose hard work, support, and belief in the value of our platform helps us execute on our goals every day. We will now take questions from our analysts. Operator?

Dwight: Before opening for Q&A I want to take this time to extend a warm thank you.

Dwight H. Egan: Our Kodiak shareholders. In addition to our employees distributors and consultants, whose hard work support and belief in the value of our platform helps us execute on our goals every day.

Dwight H. Egan: We will now take questions from our analysts operator.

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Operator: Yeah.

Operator: [music].