Chembio Diagnostics Inc (CEMI) 2017 Q1 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Chembio 2017 First Quarter Financial Results Conference Call.

(Operator Instructions)

At this time it is my pleasure to turn the floor over to your host, John Sperzel. Sir, the floor is yours.

Hello, and thank you for participating in today's call. Joining me is Rich Larkin, our Chief Financial Officer.

Before we begin, I'd like to caution that comments made during this conference call today, May 9, 2017, will contain forward-looking statements within the meaning of the Securities Act of 1933 concerning the current beliefs of the company which involve a number of assumptions, risks and uncertainties. Actual results could differ from these statements, and the company undertakes no obligation to revise or update any statement made today. I encourage you to review all of the company's filings with the Securities and Exchange Commission concerning these and other matters.

During the first quarter of 2017 the company continued to execute its plan to expand our product portfolio and build our global commercial organization. The combination of high-quality, innovative point-of-care products and global commercial distribution channels are key elements of our growth strategy.

On the product front, we continue to leverage our patented DPP technology platform to strengthen our core sexually transmitted disease business, while rapidly building a broad fever and tropical disease product portfolio. We expect to begin commercializing a number of these new fever and tropical disease assays during 2017, thanks to significant grant-based product development funding.

Longer term, the company continues to advance toward developing other products, including current work on DPP assays for mild traumatic brain injury, or concussion, and a specific type of cancer.

On the commercial front, we continue to strengthen and expand our global sales and marketing capabilities. During the fourth quarter of 2016 we made key appointments to strengthen our commercial leadership team, and during the first quarter of 2017 we expanded our global presence by adding experienced sales executives in Latin America, Africa and Asia Pacific, representing the first time the company has had dedicated sales and marketing employees in these regions.

Turning to our financial performance during the first quarter of 2017, we achieved total revenue of $6.3 million, which included product revenue of $5.4 million. While total revenue represented a 4.2% decrease as compared to the first quarter of 2016, it represented significant quarter-on-quarter sales growth as compared to the second, third and fourth quarters of 2016. It's also important to note that the first quarter of 2016 included approximately $1.8 million in product purchases by our previous U.S. distributor.

Gross margin percentage for the first quarter of 2017 was 49.1%, compared to 48% for the first quarter of 2016, representing a 1.8% increase.

Within our target regions our geographic mix of product sales during the first quarter of 2017 consisted of 39% of sales in Latin America, 26% in Asia Pacific, 20% in the United States, 8% in Europe, and 7% in Africa. In Asia Pacific we achieved $1.4 million in product sales, driven by key tender wins in Malaysia, representing the first time the company has achieved meaningful sales in Asia Pacific.

In the United States we achieved $1.1 million in product sales, driven by a number of HIV tenders which were won during the last two quarters, much of which we expect to realize over the next 18 months. In Latin America we achieved product sales of $2.1 million, driven by sales to Brazil. And just last week we announced the receipt of a new $5.8 million order from Bio-Manguinhos/Fiocruz in Brazil, and we believe that substantially all of this order will be shipped prior to year-end.

Lastly, in Europe and Africa we achieved a total of $0.8 million in product sales during the quarter, largely driven by HIV sales in the HIV self-testing and professional HIV testing business. I'll provide a more detailed overview of the business following a review of the first quarter financial results. Rich?

Thanks, John.

In conjunction with my comments I'd like to recommend that participants review Chembio's 10-Q filing for additional details.

Our total revenues for the first quarter of 2017 of $6.3 million were down 4.2% compared with $6.6 million in the prior year period. Product sales for the first quarter of 2017 of $5.4 million were down 8.3% compared with $5.9 million in the prior year period. This was largely due to the first quarter of 2016 purchases of $1.8 million by our former U.S. SURE CHECK distributor, which did not make any material purchases after March 31, 2016.

R&D milestone, grant and royalty revenues for the first quarter of 2017 of $0.9 million were up 31.2% compared to $0.7 million in the prior year period.

Gross margin dollars for the first quarter of 2017 of $3.1 million were down 1.9% compared with $3.2 million in the prior year period, primarily, again, due to decrease in product sales. And the amount of gross product margin for the first quarter of 2017 of $2.2 million decreased 11% compared with $2.5 million in the prior year period. Again, this was largely due to the amount of the -- large amount of the first quarter 2016 purchases by our former U.S. SURE CHECK distributor.

Research and development expenses for the first quarter of 2017 of $2.2 million increased 37.5% compared with $1.6 million in the prior year period. This decrease (sic) [increase] is due primarily to increased clinical trial expenses as well as R&D activities for projects and grants.

Selling, general and administrative expenses for the first quarter of 2017 of $2.5 million increased 24.5% compared with $2 million in the prior year period, largely due to increased wages and related costs, marketing materials, stock-based compensation, travel, entertainment and trade shows, which were partially offset by decreased commissions on sales, decreased consulting, and decreases in investor relation and professional fees.

Operating loss for the first quarter of 2017 was $1.6 million, compared with an operating loss of $0.5 million for the prior year period.

Net loss for the first quarter of 2017 was $1.6 million, or $0.13 per diluted share, compared with a net loss of $0.3 million, or $0.03 per diluted share, in the prior year period.

Lastly, the company had cash and cash equivalents of $5.6 million as of March 31, 2017, compared with $10.6 million as of December 31, 2016. The decrease was primarily due to cash used in operating activities for the first quarter of 2017. Our working capital decreased by $2.3 million from $14.7 million as of December 31, 2016 -- as of -- our working capital, excuse me, decreased by $2.3 million, from $14.7 million as of December 31, 2016, to $12.4 million.

The company had accounts receivable net of allowance for doubtful accounts of $5.7 million as of March 31, 2017, compared with $3.4 million as of December 31, 2016. Cash and accounts receivable combined as of March 31, 2017, was $11.3 million as compared to $13.9 million at December 31, 2016. During the months of April and May of 2017 we collected approximately $2.8 million of the March 31, 2017, accounts receivable balance.

That concludes the financial review. I will now turn the call back over to John. John?

Thanks, Rich. I'll now give an overview of the progress made in Chembio's businesses during the first quarter of 2017.

I'll first speak about our sexually transmitted disease business. To strengthen the company's core sexually transmitted disease business Chembio continues to focus on its DPP HIV-Syphilis Assay in response to the global concerns related to co-infection and mother-to-child transmission of both HIV and syphilis. During the first quarter of 2017 Chembio received a CE mark for the DPP HIV-Syphilis Assay, which allows us to market and sell the product within the member states of the European Union and the nations of the Caribbean region, except Puerto Rico.

The U.S. clinical trial to support our FDA application for the DPP HIV-Syphilis Assay was initiated during the first quarter of 2016 and has been completed. In March 2017 the Food and Drug Administration requested further clinical studies in addition to those recently completed. As a result, we are in discussions with the FDA regarding the scope of these new trials and the timing for filing the PMA. We remain optimistic about the FDA process, the HIV-syphilis U.S. market opportunity, and continue to believe we will be first to market with a point-of-care HIV-syphilis combination test in the United States.

As mentioned earlier, the company received a $5.8 million order from Bio-Manguinhos to supply test components and intermediate product for the production of DPP HIV Assays, both oral fluid and blood, in Brazil, and subsequent supply to Brazil's Ministry of Health. We believe substantially all of this $5.8 million order will be shipped prior to year-end.

In the U.S. market, the company was awarded a number of HIV tenders which were won during the last 2 quarters, much of which we expect to realize over the next 18 months.

I'll now address our fever and tropical disease business. To build a strong position in the tropical and fever disease business we continue to make significant progress toward our goal of commercializing multiple products during 2017. During the first quarter of 2017 the company initiated sales of the DPP Zika Assay and DPP Zika/Dengue/Chikungunya Combination Assay to the CDC for use in a pilot surveillance program in Peru, India, Guatemala and Haiti.

We also initiated sales of our DPP Dengue Assay in Asia Pacific and continue to pursue important regulatory approvals for the DPP Zika system, including the United States Food and Drug Administration Emergency Use Authorization, World Health Organization Emergency Use Assessment and Listing, and Brazil ANVISA.

Subsequent to the first quarter of 2017 we had another important development in the fever disease business as we entered into a new collaboration with FIND, a world-leading organization dedicated to the delivery of high-quality affordable diagnostics to communities in need around the world. Over the next 12 months Chembio and FIND will endeavor to develop a simple, rapid and cost-effective test based on Chembio's proprietary DPP technology platform to simultaneously detect 9 life-threatening acute febrile illnesses common in the Asia Pacific region.

Developing such a test is aligned with the company's growth strategy and affirms the company's commitment to the development of new and innovative point-of-care diagnostic tests for life-threatening febrile illnesses. It's important to reiterate that nearly all of the company's fever and tropical disease products have been or are being developed through collaborations and/or funding from world-leading health organizations, including the Bill and Melinda Gates Foundation, the Paul G. Allen Family Foundation, the Centers for Disease Control and Prevention, FIND, and the U.S. Department of Health and Human Services, i.e., BARDA.

Lastly I'll give an overview of two important operational advances during the first quarter of 2017. As part of Chembio's global commercialization strategy the company appointed 3 highly experienced international sales executives during the period.

Javier Gutman, previously of Biomerieux, joined the company as Regional Director, Latin America. Kenneth Burns, previously of Trinity Biotech, joined the company as Regional Director, Africa. And Mohan Anasalam, previously of Hemocue, joined the company as Regional Director, Asia Pacific. These newly appointed sales executives reside in their respective regions and will focus on increasing product sales, strengthening and expanding the company's distribution channels, and providing local support to customers and commercial partners.

In January 2017 the company completed the acquisition of RVR Diagnostics, a Malaysia-based privately held manufacturer and distributor of point-of-care diagnostic tests for infectious diseases. During the first quarter of 2017 we took action to integrate RVR Diagnostics into our operations and quality systems.

We're in the process of changing the name of RVR Diagnostics to Chembio Diagnostics Malaysia, which is a wholly owned subsidiary of Chembio Diagnostics, Inc. This new subsidiary in Malaysia provides a strategically located operation, a base of product revenue, a cost-effective ISO 13485-certified manufacturing facility, and a path for smooth regulatory compliance in the region.

In conclusion, we believe the events and achievements of the first quarter of 2017 demonstrate Chembio's commitment to strengthening its core business in the sexually transmitted disease market, building a strong position in the high-growth fever and tropical disease market, and expanding its global commercial channels by appointing seasoned and successful sales executives in Latin America, Africa and Asia Pacific.

During the first quarter of 2017 the company achieved a more balanced geographic product mix and won a number of new tenders that we believe will contribute significantly to the balance of 2017 revenues.

This concludes our prepared statements for today. I'd now like to open the call for any questions.

(Operator Instructions)

Our first question comes from Kevin Ellich.

John, I guess starting off with the $5.8 million order that you guys announced last week in Brazil, you said that you expect that to be shipped by year-end. Could you help us maybe with the timing on how that $5.8 million should come into -- flow into your revenue over the next few quarters? And then also what drove the decision for Brazil to come back to Chembio? Did you guys have to give up price or anything like that?

Let me take those in reverse order, Kevin, if that's okay. What drove the decision by the Administrative Health in Brazil was quality. And we're fortunate that our DPP HIV Assay has a long history in Brazil and they're very familiar with the quality of the product. So that's the first point. The second is in terms of how we think about supplying that product for the balance of 2017. You can think about it reasonably even between Q2, Q3 and Q4.

Great. So just to be clear, there was no concession on price. And maybe could you help us a little bit on what type of margin contribution you'd expect out of that revenue?

We generally wouldn't do that, Kevin, for competitive reasons.

Got you. Okay. And then I guess could you maybe talk about the significance of having achieved GMP certification? Does that help with the DPP HIV order? Does it -- any loosening around the potential regulatory action on Zika or the other fever products?

So first thing is I would not connect the GMP certification to any activity that we have ongoing with ANVISA regarding our DPP Zika Assay, because they're somewhat unrelated. What the GMP certification allows us to do is potentially expand our distribution channels in Brazil.

To date, the only channel that we have established and sold product through is the channel to Bio-Manguinhos/Fiocruz, which then they supply to Brazil's Ministry of Health. And, as you know, it's a social health care system, so the Ministry of Health in Brazil is generally responsible for the demand within the public health care system.

Our next question comes from Raymond Myers.

Congratulations on the strong first quarter revenue. I want to clarify something in the press release where you say during the first quarter of 2017 we continue to see important quarter-on-quarter sales growth. Does that imply quarter-on-quarter growth even beyond the strong first quarter here in Q2?

Well, we were comparing against Q2, Q3 and Q4 of 2016. We mentioned the reference point of Q1 of 2016, including $1.8 million of purchases from our prior U.S. SURE CHECK distributor. So that reference is against Q2, Q3, Q4. And, if you recall, in Q2 of 2016 we stated that we believed that was a low-water mark in terms of product sales, and we're really just reinforcing the fact that that has proven out to be exactly true based on Q2 to Q3 of '16, Q3 to Q4 of '16, and Q4 of '16 to Q1 of '17. And it's significant quarter-on-quarter growth, in some cases triple digit.

Yes, sure is. I'm trying to get a sense as to whether we can expect sequential upticks from here, or was there so much of these positive tender wins in the first quarter that maybe that sets a temporary high water mark.

Well, I think if we want to go into some pieces, obviously we achieved $1.4 million in sales in Malaysia, which is also not in any prior year period reporting, because that's following the acquisition of our subsidiary in Malaysia. So that's important to recognize. The second is some of the business that we have already won through Chembio Malaysia is front-end loaded tenders. So it would not be appropriate to take that $1.4 million x 4 and say that's the expectation for the year, based on where we are today.

I think we've said about the business in Brazil we expect to ship all of that in the next 3 quarters, and you should probably think about that, Ray, as these tender wins are strong indicators of commercial success, whether it's Asia Pacific, whether it's Latin America, or whether it's some of the tender wins that we mentioned in the last quarterly call in the United States. They are very strong indicators of our ability to start to commercialize these products ourselves.

Our next question comes from Brian Marckx.

Relative to Fiocruz and the $5.8 million order and how that may potentially translate into other products that Fiocruz has bought from you specifically under the technology transfer agreements, is there insight into potential that they would be interested in other of the DPP products?

They absolutely are. We have a strong history with Bio-Manguinhos/Fiocruz. It dates back more than a decade, and it started with our STAT-PAK Assay and a technology transfer agreement. It has included over the years a DPP HIV Assay, a DPP Syphilis Assay, a DPP Leishmania Assay. And the DPP assay is also including oral fluid. We have signed a collaboration agreement with Bio-Manguinhos related to our Zika, our Dengue, our Chikungunya and our Zika/Dengue/Chikungunya combination test. And so the demand from Bio-Manguinhos originates from the Ministry of Health, as I was saying before. And so any demand for other products, it will come from Ministry of Health but to us via Bio-Manguinhos.

So there's a long history there. There is ongoing business that we have in Brazil. I think I mentioned in the prepared remarks that Latin America or specifically Brazil represented something like 39% of our product sales during the first quarter. So continues to be a very important market. We continue to have a very unique channel in the collaboration with Bio-Manguinhos to the Ministry of Health, and we hope that that continues.

Okay, great. John, anything else on the DPP HIV-Syphilis U.S. program that you can talk about relative to FDA's response and what they may be looking for in terms of additional studies?

That dialog is ongoing, Brian, so it's probably a little bit out of order and inappropriate for me to discuss that, because we don't have a complete agreement on exactly what needs to be done. The thing that I would say is this is not unusual. It's very typical that the FDA comes back and asks for additional information. We defined it pretty specifically in the press release and in our prepared remarks. We're really enthusiastic about the product. We're enthusiastic about the data so far. And we're confident that we're going to be the first to market with a combo test, and we think that that's going to be meaningful for customers and for our business.

Our next question comes from Larry Haimovitch.

Nice quarter, congrats. You actually answered one of my questions which I was going to ask which was RVR or Asia did very, very well, but you clarified that we shouldn't really annualize that. But nonetheless it seems like that part of the business, even if you take out the lumpiness, is still doing very, very well. Do you have any more color on Asia as far as the performance they had and what you look for for the rest of the year?

We're very pleased with the start. Keep in mind, when we acquired the company we obviously had a line of sight to what they were doing on the commercial side, and obviously that's why we made the decision to act when we did. What we're doing at the moment is we're going through what I would describe as a very structured, very disciplined, very aggressive process to register multiple products throughout Southeast Asia. It doesn't happen overnight, but because we have approval in country of origin, which is now Malaysia for us, we can actually have a more expedited, smoother regulatory path. So we expect to get additional regulatory approvals in many countries throughout Southeast Asia and continue to build on the $1.4 million that we put in the books for Q1.

And which diseases do you expect in Asia will be the most successful for you as you win business there?

Well, we start with dengue. And I think we continue to build on a fever and tropical disease portfolio, adding Zika behind that once we get the appropriate regulatory approvals, and HIV and HIV-syphilis combo. I think those are the ones we would expect to focus on.

Our next question comes from Ross Taylor.

First, great quarter, and the outlook looks exceptionally strong, John, so congratulations. I wanted to talk about a couple of things. First, with winning these tenders both in Brazil and elsewhere in the U.S., is that getting you back into the business where we should see ongoing future revenues beyond the 2017 year from those sources?

Well, we believe so. If you take them one at a time, Brazil, in a way, we are back in the HIV testing programs in Brazil. And we've been there for a long time. Of course, we lost that position due to a competitor who's no longer in that position in end of 2015 and throughout 2016. And we've talked about that quarter after quarter. So we're pleased to be back there. It strengthens our position in Brazil, and, again, we're very pleased with that.

In terms of the U.S., I mean, we absolutely (inaudible) tenders in the United States. We put that sales team in place on public health. We've continued to push and strengthen our partnerships with key medical-surgical distributors in the U.S. And we're starting to show signs of progress. We've completed transitioned the STAT-PAK business from our former U.S. distributor, and we are at the tail end of transitioning the SURE CHECK business from our U.S. distributor, our former U.S. distributor.

And some of these key wins in the United States, these large tender wins that we've previously announced, we went head to head against our former U.S. distribution partner with a product that is OEM the same product. So, again, it's an indicator of our ability to be successful on the commercial side in the U.S., in Brazil, and I think we'll see that expanded now that we have Javier, Kenneth and Mohan in the respective regions.

Okay, now, looking at HIV-syphilis with the FDA timing-wise, what kind of timing do you expect? And it sounds like you might need to run additional tests or cull prior tests for additional data. What does that do on a timing horizon for bringing something through the FDA this year?

Well, it certainly doesn't stick with the original timing that we had. I could see some deviation of the schedule that we had. But I will say this. Data that we've seen so far is solid, and I think by next quarter I'll be able to give an update specifically what the FDA has asked for and specifically when we believe that we will submit it.

Our next question comes from David Morgan.

Yes, I wanted an update on some of the development programs on the concussion and the cancer. Has there been any additional progress made this quarter?

Yes, there is. The only thing that I would say is those are in what we would call the early phase of development, which is the long yardstick in the process of feasibility to commercialization. So there's nothing specific that I can update other than we continue to see progress and we are working with two different partners. Obviously on the cancer assay I'm not able to disclose the partner. On the concussion assay I can obviously say that it's Perseus Science. And they continue to fund the projects. We continue to make progress. But on a quarter-to-quarter basis there's not a lot that I can report when we're in that development phase.

So at this point it's all preclinical at this point.

Well, I would describe the brain injury assay as preclinical, and I would describe the cancer assay as development. We've moved past feasibility in both cases.

Our next question comes from Raymond Myers.

John, a follow-up. On your Zika development can you give us an update as to where the FDA emergency use authorization process is? Where are you, and what progress are you making?

So, first of all, we're very pleased with the data on our Zika Assay. As you know, Ray, we have a CE mark, so we're selling a version of our Zika Assay in the Caribbean region, which is suffering a lot from Zika. And I know that Zika is not front page of the newspaper and headline of the television, but I think at the recent count Zika is in more than 80 countries. So it continues to be a significant problem.

And if you pay attention to what Tom Frieden, the Director of CDC says, and I quote, "Zika is likely to be with us for years to come," end quote. So it's not going anywhere. It continues to entrench itself. He said that we expect it to be back in parts of the United States. Where we are with FDA I can only characterize as actively engaged. It is an iterative process like we see with HIV-syphilis, and we are well into that process, because you know when we made the initial Emergency Use Authorization submission.

Okay, and a related question is I read that you started shipping under the CDC Zika-Chikungunya-Dengue pilot program, and I was curious what the progress is of that, and what are the results or outcome of that process that would be the determinants of success.

So, that is a pilot surveillance program which the CDC initiated for Peru, India, Guatemala and Haiti. We have supplied CDC with DPP Zika Assay as well as the combination DPP Zika/Dengue/Chikungunya Assay. And I don't think that we will get the results from that pilot program, that pilot testing, until sometime in the back half of 2017. And we'll be happy to share that when we get it.

Fantastic. Thanks, and congrats on the great results.

Thank you, Ray.

Our next question comes from Larry Haimovitch.

John, someone, a previous questioner, asked the exact same question I did, so I'm going to jump back in the queue. Thanks.

Okay, thanks, Larry.

We have one more question from Ross Taylor.

John, first, the operator did something even my teenaged daughter can't do, which was cut me off. But I wanted to get a better picture on how the febrile diseases -- you've continued to say you expect to see commercialization this year. You talked in the last call about the fact you had product out for testing with some of your funding organizations. Can you give us -- I mean, to me those are huge potential markets which can really quite simply change the company in the swipe of a pen on a news release, like that, such a huge opportunity in those. Can you give us an idea of where you stand with the review process, the testing process, and also what you see the market potential in those spaces being?

Sure. That's quite a question, Ross. Let me try to take it piece by piece. First, I'll talk about which test we think we're going to get over the goal line in 2017. And part of that is easy, because we've already pushed some of them over the goal line. Our Zika Assay, our Dengue Assay, and our Zika/Dengue/Chikungunya Assay, we've all started -- we've started the commercialization process with all of those. I think you could add a standalone Chikungunya Assay to that mix. And those are the products that we are likely to see commercialized in various places around the world during 2017, which I think you characterized as upside potential.

So it's not a simple answer to say commercialize those everywhere around the world, because we have to get certain regulatory approvals. I mean, the major ones, obviously, U.S. FDA, which covers the U.S. and certain parts of the Caribbean, U.S. Virgin Islands and Puerto Rico; WHO, either Emergency Use or Prequalification will cover Africa; the CE mark will cover the Caribbean and Europe. And then we have to go sort of country by country, right? ANVISA in Brazil, COFEPRIS in Mexico, and we go country by country in Asia Pacific, as well.

We are going through that process at the moment. And I can't, obviously, for competitive reasons, say where we are with every one of those processes, but it's a really important part of our growth strategy for 2017 to check many boxes on the regulatory front and start to commercialize those assays. You mentioned the size of the markets. I mean, putting malaria aside, because that's a separate initiative that we haven't (inaudible) market, I mean, estimates are for dengue 390 million cases of dengue. It's probably wildly underreported is what the experts say. So there is significant potential for dengue.

There are obviously more sporadic outbreaks of viruses like chikungunya and Zika. (inaudible) combination assay is going to have serious global utility, because where do you start in an algorithm? If you're concerned about -- you could pull out a standalone dengue test. If you get a negative, then you have to pull out another test. And so that's a cumbersome process for the customer. If you start with a dengue test and you get a positive, do you stop or do you keep testing (inaudible) infected patients? So the real value of our combination Zika/Dengue/Chikungunya test is with one finger stick, with a 10 microliter drop of blood, (inaudible) identify each of these viruses, and we can also identify co-infected patients, which is becoming a bigger and bigger problem.

So if there's -- if you're looking at a market where you have in dengue, for example, 390 million cases and you feel it might be underreported, there is a test out there which I understand is rather ineffective, might not be quite as good as flipping a coin, but are you looking then, and I tend to use a 2:1 ratio for kind of the number of tests that would be needed for a disease. First, is that a reasonable ratio, and does that imply there might be something in the neighborhood of the need for as many as 800 million dengue tests?

So, that's a ratio that is the ratio that we see in malaria, roughly a little over 200 million cases of malaria annually, and approximately 400 million rapid diagnostic (inaudible) used. So if you want to apply that same ratio, you're in the ball park. That's not what we see today. So certainly that degree of testing isn't there. There are some decent dengue tests in the market. Chikungunya, on the other hand, there are only two. CDC evaluated both of them. Because the sensitivity and specificity was below 40% they literally stopped the evaluation.

So we see varying degrees of quality of all rapid diagnostic tests around the world. Certainly the bar is set extremely high in the United States, and we're proud of the fact, for example, that we have 3 of the 7 PMA-approved, CLIA-waived HIV assays. We think that's good corporate DNA to continue to make high-quality fever and tropical disease assays and go after some of these large markets.

So, getting back to the idea of size of market, how big do you think these markets would be? I mean, if you're looking at the company today and the industry space, you're basically trading at roughly 3 times -- your EV/EBITDA is about 3 times sales, a little over 3 times sales. UNICEF I think is looking for what, doing $30 million, $40-plus million in a malaria test alone, and you've got other markets. It seems that each of these diseases literally could more than double the size, and perhaps meaningfully more than double the size of the company.

Well, UNICEF has an RFP out for Zika, and it's in the range of millions of tests. We understand that one of the requirements is to be involved in the WHO process for Emergency Use. There are only two companies involved in that process. Chembio is one of them. Unitaid has RFPs out for HIV self-tests. We are absolutely going after some of these large RFPs. There's no guarantee that we have success, but we're putting ourselves in a position to have success. You asked about the malaria market and the dengue market. We understand today that the market leader in malaria has approximately $100 million in annual revenue and roughly 50% market share. We understand that the market leader in rapid dengue testing has approximately $50 million business and has approximately 50% market share. So you can see what the potential is on 2 of the larger fever and tropical disease assays.

And when you were asked to develop a malaria test, you were asked specifically, I believe, to develop a test that's significantly superior to the test that's in the market today? Is that correct?

Yes. In terms of sensitivity we were asked to make a 10x improvement on the sensitivity of that test.

And so you're comfortable that your test that you have in the field being tested now is an order of magnitude better than what's in the market today?

That's correct.

And that's a $200 million market. Okay. Good luck.

Thank you, Ross.

Okay, thank you. And with that I'd like to turn it back to John.

Well, just to wrap up, thank you again for your participation and your continued support of Chembio Diagnostics. We look forward to updating you again next quarter.

Thank you. That does conclude today's call. We thank you for your participation. You may disconnect at this time, and have a great day.