Chembio Diagnostics Inc (CEMI) 2020 Q2 法說會逐字稿

Good day, ladies and gentlemen. And welcome to Chembio's Second Quarter 2020 Earnings Conference Call and Webcast. (Operator Instructions)

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

Thank you, operator. Thank you for joining. And welcome to Chembio's Second Quarter 2020 Earnings Conference Call. (Operator Instructions) As a reminder, we're recording today's conference call. If you have any objections, you may disconnect at this time.

Before we begin today, let me remind you that the company's remarks made during this conference call today, August 6, 2020, include forward-looking statements within the meaning of the Securities Act of 1933 concerning the current beliefs and expectations of the company.

Forward-looking statements are subject to numerous assumptions, risks and uncertainties, many of which are beyond Chembio's control, including risks and uncertainties described from time to time in Chembio's SEC filings, including those under Risk Factors and elsewhere in Chembio's filings with the SEC, including its annual report on Form 10-K for 2019 and its quarterly report on Form 10-Q for the first quarter of 2020.

Chembio's results may differ materially from those projected. Chembio undertakes no obligation to publicly revise or update any forward-looking statement made today. I encourage you to review all of the company's filings with the SEC concerning these and other matters.

With that, I'd like to turn the call over to Rick Eberly, President and Chief Executive Officer.

Thank you all for joining us this afternoon. Before we begin, I must recognize that we continue to work amid challenging times as the COVID-19 pandemic persists in our communities. Thank you to the frontline health care workers who remain steadfast in their service and sacrifice, cared for those directly affected by this virus. Our thoughts are with all of you.

Thank you also to our employees. I applaud your resilience and dedication in driving our products aimed at being a partner solution to the public health crisis we face.

Today, I will provide updates on the initiatives we have undertaken to drive a new strategic direction for our business by bringing new products to new customers initially through the development of our COVID-19 testing products.

Next, I will review our legacy Infectious Disease business and R&D services vertical before turning the call over to Neil for detailed financial results. After that, I will provide concluding remarks and open the call for questions and answers.

I'd like to start by briefly reviewing key quarterly financial results. In the second quarter, as we previously described in our preliminary results release, we executed the initial steps to implement this new business model and focus our resources on the development and commercialization of COVID-19 testing products. At the same time, the customers of our legacy infectious disease tests also focused much of their resources on COVID-19 management.

In the second quarter of 2020, our total revenues were $5.1 million. This includes product revenue of $3.8 million in license, royalty and R&D and grant revenue of $1.3 million. The FDA's revocation of the emergency use authorization, or EUA, for our DPP COVID-19 IgM/IgG system, had a significant negative impact on our product revenues and gross product margins in the second quarter. The revocation triggered a recall of unused tests from customers in the United States. And we are aware that it was noted by international regulatory thoughts. Based on that, we determined that it was not appropriate to recognize revenue in the second quarter for certain shipments of the COVID-19 system outside the United States. The cost of the chip product is included in cost of sales, and together with the impact of the foregone revenue resulting from the U.S. recall, resulted in our reporting negative gross profit margins for the second quarter of 2020. Neil will provide further comments on this accounting treatment.

As I said during the July 7 conference call, we stand behind the real-world clinical data and performance of our original COVID-19 system. I can assure you that we are working closely and collaboratively with our customers with the intent to bring closure to these shipments outside the United States, including ultimately recognizing the revenue associated with that. From the offset of the pandemic, we recognize our proprietary DPP technology could provide value across several COVID-19 related testing applications. The DPP technology in combination with our micro readers provides specific benefits that we believe make it well suited to point-of-care testing. The system is portable, provides accurate results in 15 minutes from finger stick blood or other samples and is designed to detect multiple biomarkers simultaneously and discreetly.

At the same time, the easy to use testing workflow is scalable. Clinicians can run multiple tests at the same time because test cartridges are only required to be inserted in the micro reader for 15 seconds to obtain results following the 15-minute test incubation period. How technology facilitates the decentralization of tests away from core labs. (inaudible) diagnostic results closer to patients and providers allows treatment and patient management decisions to be made more rapidly while also freeing up hospital and central laboratory resources. Additionally, operating cuts at doctors' offices and urgent care centers that require only simple sample collection makes higher frequency testing more feasible and efficient.

With a deeper understanding of this virus, many public health officials have determined that to better manage the health of the general population, the question is no longer whether we should be testing or what types of tests should be used but rather how often we should be testing. The recent increases in case volumes has highlighted the need for both more tests and test that can provide results much sooner after the onset of symptoms than the long waiting periods being experienced in parts of the country right now.

We believe our point-of-care system addresses these market needs. The demand for COVID-19 testing products in the United States extends beyond our current customer base that utilizes our Rapid HIV tests. We believe this provides us the opportunity to build a broader base of customers as we sell microreader analyzers to clinicians at hospitals physician offices, urgent care centers and other locations that provide health care. As we diversify our customer base, we intend to serve these new customers over the long term, by expanding our menu of DPP tests to meet initial needs in the market for the detection of biomarkers to help identify respiratory, gastroenterology and neurological conditions. We feel there are many tests we can develop over time to competitively address high-value and high demand areas. This strategy represents a significant shift in our focus in business model.

In the United States, we will be focused on driving recurring revenue. We will drive more frequent and regular GPP assay orders from many customers with micro readers as opposed to the large, discrete and in many cases, tender-driven orders placed by governments and NGOs that we experienced in our legacy Infectious Disease Business outside the United States. We feel this model represents an opportunity to grow revenues over time in a stable and predictable manner.

Now I would like to discuss our plans to leverage Chembio's technology to develop a portfolio of COVID-19 tests. We are encouraged by the exponential market growth observed as a result of the immense demand for various types of COVID-19 tests across a wide variety of settings and providers. This interest includes demand from areas outside of traditional health care verticals, such as companies seeking to establish back to work programs. We feel the advantages and versatility provided by our DPP assays and micro readers, creates an opportunity for us to take share and build a meaningful position in this market. Our success here is dependent on 3 factors: product development, regulatory clearance and commercial execution.

In product development, we are working on a complementary set of COVID-19 tests with unique capabilities to assist clinicians in all phases of virus detection and infection monitoring. We have 2 tests currently under development, the revised DPP CPVOD-19 IgM/IgG system for antibody detection and the DPP COVID-19 antigen system for viral protein detection.

Further prolonging development is a revised DPP COVID-19 IgM/IgG systems, serology test for the detection of 2 types of COVID-19 antibodies.

In June, the FDA identified new performance criteria that serology tests must now me2008 to achieve EUA. These criteria include test performance that's evaluated under a protocol that is part of a national Institute of Health, National Cancer Institute or NCI, studies consisting of antibody detection across a panel of preselected samples. These defined standards have provided us with clarity and direction for our development objectives. The scientific and clinical knowledge base, along with our understanding of the virus and how it interacts our technology, have both expanded significantly since our initial EUA was received. We are optimistic that with the clear definition of these requirements, combined with the expertise of our scientists and the flexibility of our platform, we can complete a revised system in a short period of time.

We remain on track to submit this revised system for EUA in this third quarter. At this stage, we are in the process of revising the test to meet or exceed the FDA's performance criteria, including the NCI panel. The next step include completing preclinical and clinical studies and then provides the performance meets or exceeds their criteria, submitting an EUA to the FDA for approval. The second separate offering in our COVID-19 testing portfolio will be the DPP COVID-19 antigen system. This test is being designed for use in identifying viral proteins or active infections in patients at a point of care in 15 minutes using either a nasal or nasopharyngeal swab sample, a DPP assay and our micro reader.

We are honored that to assist in the development and pursuit of an EUA of this test, we were awarded a $628,000 contract from BARDA, Biomedical Advanced Research and Development Authority of the U.S. Department of Health and Human services. Funding is being provided periodically over the coming months. Thus far, results from our feasibility studies have been positive. Our next step is to begin pilot studies from which we will implement any changes before ultimately beginning clinical trials to generate the data for EUA submission. We were very excited about our future testing systems and believe that collectively, their wide range of clinical utility could provide us with an opportunity to offer clinicians a highly efficient, convenient and comprehensive point-of-care approach while using a single portable analyzer.

A less than $1,500 investment in a micro reader, combined with a suite of our GPP assays to help clinicians identify active infections, past infections, infection progression, research immunity status as vaccines are developed. And finally, conduct population surveillance research. With expanding knowledge of resources, the health care system is entering the next phase of testing in which the focus will expand beyond symptomatic patients to asystematic patients as well. We feel we are very well-positioned to capitalize on this expanded opportunity through our platform, which we believe has the capacity to become one of the most comprehensive offerings in point-of-care testing. Transitioning now to the build-out of our commercial infrastructure in the United States.

As part of our broader corporate strategic shift, we will be targeting new customers in different health care markets, addressing a much broader and decentralized market will require investments to increase our commercial footprint.

To grow most efficiently, we will employ both an expanded direct sales force and partner with distributors. The initial focus for both of these teams will be on hospital laboratory, physician office laboratories and local and state health departments. To lead our direct sales force, we hired Chuck Caso as Vice President of Sales and Marketing. Throughout his career, Chuck has achieved success in launching new diagnostic products, and he brings deep industry relationships to the team. We also remain engaged with Fisher Healthcare, and we'll continue discussions with other distributors to focus on other channels beyond physicians' offices and hospital labs.

To support our commercial efforts and support future growth, we are also adding to our marketing and customer service teams in a manner that is aligned with our growth expectations. Considering our prior experience in the market with our serology test, we anticipate the launch of the revised system to ramp up more quickly once regulatory approval has been obtained. There are many reasons we remain optimistic about our near-term opportunity for the modified serology system. These include -- we received over 2,000 leads, representing interest in purchasing systems based on our initial EUA prior to revocation. The team at Fisher has already been trained, and we have developed stronger report as our team will aid in field sales support. We've experienced no market pushback on the pricing for either the assays or micro readers. Customers confirmed reimbursement has been implemented by both CMS and commercial payers for both IgM and IgG test results, further increasing the value proposition of a multiplex test.

Our mid-quarter direct sales run rate outside the United States shipment schedule, demand indications from Fisher and other opportunities together implied second quarter sales in the range of $11 million to $13 million prior to the EUA revocation. On the manufacturing and logistics front, we were prepared to accommodate this level of demand with additional capacity to scale accordingly. From what we have observed in the market, a similar opportunity exists for the antigen test. Right now, testing manufacturers cannot keep up with the demand for tests. As I've described, once regulatory approval has been obtained, we plan to offer a complementary set of tests, so utilizing DPP assays and micro readers to fulfill unmet needs and decentralized testing in the market.

Before turning the call over to Neil, I will touch on our legacy business in terms of both the infectious disease vertical and the R&D services vertical. As we mentioned, demand for our HIV and fever and tropical disease tests had slowed as our government and NGO customers also focus their resources on efforts to combat COVID-19. In a positive sign, UNICEF placed an additional $1.5 million order under the previous long-term arrangement for the purchase of multiplex Zika, Chikungunya and Dengue IgM/IgG assay and micro readers.

Also notably, we received 510(k) FDA clearance for the DPP Zika IgM system. This represented the first FDA approval for a micro reader that will be used with our COVID-19 test. The development of this test was also assisted by an award from BARDA. Regarding the PMA of our DPP HIV-Syphilis Multiplex systems, we continue the dialogue with the FDA regarding their review of our reproducibility study.

In the R&D services vertical, Chembio has been selected to conduct a second research and development services program for Takeda Pharmaceutical Company Limited. The program utilizes Chembio's DPP technology and micro reader analyzers. As you likely know, Takeda is the largest pharmaceutical company in Asia and one of the largest in the world.

Now I'll turn the call over to Neil for the detail of our second quarter financial results.

Thanks. I'm going to start with an overview of the results for the second quarter of 2020. And as Rick indicated, I will provide some comments on how the EUA revocation impacted our financial results.

For the 3 months ended June 30, 2020, total revenue was $5.1 million, a decrease of 48.3% compared to the prior year quarter. Net product sales for the second quarter of 2020 were $3.8 million, an increase -- excuse me, a decrease of 56.8% compared to the prior year quarter. License and royalty and R&D and grant revenues combined for the 3 months ended June 30, 2020, were $1.3 million, an increase of 19.7% compared to the prior year period.

R&D revenue is related to the timing and cadence of program performance obligations, which do not always occur in a certain period, but we continue to incur certain of the expenses. Compared to the 3 months ended June 30, 2019, net product sales experienced gains of 134.7% in the United States related to DPP COVID-19 IgM/IgG systems that were sold and utilized by customers. Net product sales were relatively flat in Europe, the Middle East and Asia, and were down 76.4% and 84.1% in Africa and Latin America, respectively, related to the shift in our focus from HIV to COVID-19 tests.

Gross product margins during the 3 months ended June 30, 2020, declined by $3.7 million compared to the prior year period. The reduction in gross product margins and indeed, the negative gross margin figure in the quarter overall resulted from 2 things: first, cost of product sales includes the cost of COVID-19 systems that were produced and sold to customers in the U.S. and then were subsequently returned by those customers following the FDA's revocation of the EUA. Second, cost of product sales also includes the cost of COVID-19 systems that were produced and shipped outside the U.S., but for which revenue was not recognized in the quarter. This scenario is due to the requirement of U.S. Generally Accepted Accounting Principles or GAAP that we have a high degree of confidence that it is probable that a significant reversal in revenue will not occur.

Many factors can affect that consideration, including as examples, things outside our influence, actions of third parties and evidence from similar situations. After considering all the information available to us, we decided we were unable to recognize the revenue from those shipments in the second quarter due to the hurdle that requires a high degree of confidence that is probable that a significant reversal in revenue will not occur. We are certainly hopeful that in time, the factors that affect consideration will be satisfied to allow us to recognize this revenue on a future date. While recognition of the shipment revenue could happen in the third or fourth quarter of 2020, similarly, it is possible that recognition might not happen at all, and that is reflected in our accounting treatment at this time.

One final point on the accounting implications of what I've been describing because we were required to recognize the cost of the product shift in the second quarter in cost of sales, if the sales value of that inventory is recognized as revenue in the future, it will be a 100% gross product margin.

As Rick said earlier, we stand behind the real-world clinical data and performance of our original COVID-19 system, and we are working closely and collaboratively with our non-U.S. customers with the intent to bring closure to these shipments including recognizing the revenue associated with them.

Now I'll continue moving down the income statement. During the quarter, we made progress implementing project Renaissance, which is the expense reduction program that we previously announced. We have taken measures to rightsize the organization, reduce operating expenses and remove other nonessential costs. As part of this evaluation, we have taken steps to retrench our Malaysian facility and the workforce there. We are preserving our corporation in Malaysia and the product registrations will remain active, allowing for continuing operations if needed in the future. At this time, investment there does not enable the profitable growth upon which we are focused.

Other expenses, which includes research and development and selling, general and administrative expenses combined were $6.7 million for the 3 months ended June 30, 2020, compared to $6.2 million in the prior year period. R&D costs declined modestly by $0.3 million, excluding severance, restructuring and other related costs of $0.4 million related to Project Renaissance. Selling, general and administrative expenses increased by $0.3 million or 7.3% for the 3 months ended June 30, 2020, compared to the prior year period. Net loss in the quarter ended June 30, 2020, was $7.8 million or $0.42 per diluted share compared to a net loss of $3.2 million or $0.19 per diluted share in the prior year period. On the balance sheet, cash and cash equivalents as of June 30, 2020, totaled $36.4 million, including net proceeds of $28.4 million from our public offering of common stock in May. Net working capital as of June 30, 2020, was $39.6 million.

Now I'll turn the call back to Rick for concluding remarks.

Thank you, Neil. To wrap up, in summary, we are driving towards creating a high-value point-of-care diagnostics company by expanding the menu of DPP assays that utilize our micro readers. As we have proven our leadership internationally with infectious disease testing, we are excited to pursue a number of opportunities described today to do the same in the United States. Starting with our COVID-19 tests, we plan to gain regulatory approval from the FDA and then expand the pace of customers using micro reader across new health care markets that can benefit from point of care testing over the long term. We look forward to growing these relationships with subsequent additional high-value tests in areas like gastroenterology and neurology.

We are progressing along a defined strategic path and are confident that with our technology and team, we can execute on our priorities to diversify and expand upon our legacy business to drive sustained long-term growth, increase profitability and create value.

Again, I would like to thank our employees for their hard work and dedication, and thank you all for joining us today. We look forward to updating you on our next call.

With that, operator, please open up the call to questions.

(Operator Instructions) And first, we go to Catherine Schulte with Baird.

I guess, first, just 2 antigen tests that have the EUAs were approved for wage settings in their original EUAs. Is it your intent to have the data packages available for both your antigen and antibody tests to enable your EUAs to cover testing and wave settings from the get-go? Or do you plan to submit for high and moderate complexity first and then pursue that at a later date?

Catherine, thanks for the question. We are pursuing the antigen and antibody tests in terms of an EUA submission for a point-of-care application. Both of the tests will be run on the same micro reader, both micro reader 1 and micro reader 2. What we're planning is the serology test will have the identical features and benefits of our original product, which will include data to support a finger stick claim as well as a point-of-care application. So that is what we are pursuing, and that will be the revised serology test. In terms of the antigen test, we are also pursuing a point-of-care claim for that assay. So for a customer who acquires either the micro reader 1 or the micro reader 2 will have the option to run either the antibody test or the antigen test, depending on the clinical need and what the clinician is ordering. It will provide that flexibility for the user. And that way, we'll have a portfolio of products to offer to the customer. And hopefully, that answers your question.

Okay. Great. I guess you've talked in the past about the potential for a flu versus COVID multiplex test. Are you still planning to pursue that application? And what's the development and submission time line there?

Yes. We are currently under discussions internally. We're doing market research on that. We're also looking at timing relative to the flu season. So we are in the early stages of planning, but we have not committed resources to execute upon that product development. So we continue to look at the market and look at our options. Certainly, we think that there's a competitive position for a multiplex product like that. We certainly think the DPP technology since we've demonstrated we can multiplex up to 8 different targets on a single device, we've got the technology and the ability to do it. But at the current stage, we're still evaluating the market. And we will announce that at some point in the future once we make a final decision.

Okay. Maybe one for Neil. Just given the types of investments you've talked about ramping up in your commercial organization, how should we think about the magnitude of an OpEx step-up in the back half?

Yes. So thanks for the question. We're not giving guidance at this time in terms of the forward-looking, in terms of the numbers. So I'm not in a position to characterize that for you. But what I would like to refer you back to is the comments that Rick shared as it relates to the fact that we are indeed investing in our sales and marketing infrastructure in a rightsized way to reflect the demand and opportunities we see in the marketplace. Also, as Rick stated in the prepared remarks, we believe that based on the positioning that we've achieved through the first pass of the product launch, we're in a much better position to step off of when it's time to commercialize the test in due course.

Next, we go to Kyle Bauser with Colliers Securities.

Maybe I'll start with the COVID antibody test. I know the NIH and NCI is pretty focused on spike being the target rather than nucleocapsid is what you targeted in the original test. But there were a couple of other companies that targeted the nucleocapsid and were able to achieve 95% plus accuracies from the independent group. So can you talk about how their tests differed from your initial test? And will you be targeting the nucleocapsid and the spike protein in the new version?

Kyle, this is Rick. Thanks for the question. In terms of the NCI study, as we've talked about in our opening remarks, the samples that were preselected by the methodology that the NCI study group is using, does focus on spike protein. And when we developed the original product, back in, I would say, the first quarter of this year with limited reagents, we did choose the NP protein. And that's what we pursued in terms of the original EUA submission.

Relative to the NCI study, what we have done is we have revised the system that targets the protein, the spike protein in the serology assay. And we did that to ensure that when our product is evaluated by the NCI, that we will have correlation to the methodology used by the NCI study evaluation group. So that's the only change to the system. All the other components are the same in terms of the cartridge. The components that go into the kit. So the revised system largely is aimed at protecting human antibodies, the spike protein, which is how the samples are preselected by the NCI study group.

Okay. So I guess, just for clarity, so the competitors that also targeted nucleocapsid initially that did achieve favorable results. Was that a function of them just doing internal validation with a larger sample size? I guess I'm just a little confused about how those companies were able to use that target and still kick out acceptable accuracies.

So Kyle, we do stand by our original clinical data that we submitted to the EUA or to the FDA for EUA. So I can't speak for other competitors in terms of what they did and how they designed their assays. But I think the point is that we decided we're going to revise the system and to ensure that when we are evaluated by the NCI, that we have great assurance that we're going to pass the NCI study evaluation.

Got it. Okay. And maybe just switching a little bit, but on the same application, how have you been addressing the cross reactivity issue of that test as well? I mean, if we move on from the spike protein. It looked like the cross reactivity with HIV was quite high, which was surprising since HIV assays are Chembio's bread and butter. So kind of what happened there? And are you confident that 40% reactivity number will come down?

Yes, Kyle. I can't speak to the cross reactivity from the original assay at this point. But in terms of the revised assay that we have -- that we're in the process of completing development, we have done extensive cross reactivity studies, not only for HIV, but for also all the other required targets for a EUA submission.

Okay. Got it. And then just lastly, if I may. What's the process for resubmitting your -- do you do the -- do you send it on for independent validation with NIH before submitting the application packet to the FDA? Or is that done after you've submitted that? And then what is timing for the antigen approval? I know it's down the road, but what are your internal estimates for that?

Yes, Kyle. The first question relative to the submission of the serology product, it's no different than our original EUA submission in that we have the notification process followed by EUA submission followed by the NCI study evaluation. So that sequencing, we're not expecting to be any different than what it was with our original submission.

Relative to the antigen test, Kyle, we're still in the development phase of the antigen test. As I said in the opening remarks, we're encouraged by the initial positive results in our partnership with BARDA. I can tell you that BARDA has been a great partner for us, and their scientists are working with us literally on a day in and day out basis to accelerate the development of the antigen test. They see a great need in the market as we do. And as you see with the other antigen companies on the market. So we're optimistic that with BARDA's assistance and their funding that we will accelerate that product development through an EUA submission as quickly as possible.

Our next question comes from Per Ostlund with Craig-Hallum Capital.

Neil, I'm going to start with you to the dovetail into probably a Rick here. I assume when we look at the balance sheet, we see the spike in deferred revenue up towards $4 million, that is what that spike represents is the revenue sitting there for those [OUS] shipments that you haven't recognized the revenue for. Is that correct?

That's part of it. Some part of it (inaudible) the majority of it here -- sorry, just to be clear, the majority of it relates to a different program that -- where the customer is prepaid for that program, we will be shipping over a period of time, and there's more details for that in the Q that you'll see when it's filed.

Okay. Okay. Fantastic. Nevertheless, I guess, relating to those [OUS] sales that could turn around and come back into revenue in the second half of the year. What are the gating factors, I guess, to having that convert into revenue? Is there a formal acceptance process for OUS jurisdictions where they just kind of have to say, hey, we're not going to return this to you? Or what's going to go into that decision-making process where the couple of million dollars of those OUS shipments can find their way back into revenue in the second half? And then broadly speaking, is there any OUS activity ongoing today? Or is everything outside the U.S., essentially in the holding pattern as you work through this resubmission process?

Yes, Per, this is Rick. Thanks for the question. I'll turn it over to Neil to handle the accounting measures in terms of how we're dealing with those shipments. At a high level, our shipments outside the United States, we did for COVID-19, we made the decision not to recognize that revenue, largely due to what we saw as a heightened awareness among the regulatory bodies around the world relative to the FDA's decision on our original serology system. And so that heightened awareness we were aware of, and so what we decided to do was to continue to work with our customers who we have shipped product to, to work with them very, very closely to collaborate on answering any ongoing questions and/or issues around the FDA's decision to revoke the serology product in the United States. So we continue to work through those questions. And I think given the factors that we're monitoring, we're going to have to make that decision based on a number of criteria which Neil can go into a little more in detail.

Yes. So -- and respectively, Per, that we can only go to a certain level of detail, as you can imagine. So getting into the specifics of particular transactions or otherwise, just isn't appropriate to get into. But consistent with what Rick was saying, it's around monitoring what's going on in the environment and in the underlying transactions and what's going on in the relationships with the customers. As I described, there's a variety of factors that go into that. I talked about things that are outside our influence, but we can certainly pay close attention to third parties and other evidence and the like. So as you can imagine, as we are certainly doing and as I described, we're very focused on getting these over the goal line. But as I said, there can be no assurance that we will, which is why we treated it the way we have. But you know us and we work hard, and we try to make things happen. So we're obviously well focused on it.

So Per, the thing I would add to what Neil said is that we had a number of international customers at different stages of evaluating the product and buying the product up into and shortly after the revocation. So we are working with those customers. Some are continuing to look at the current product. Others have decided to entertain the revised product. And as we publicly announced the antigen test on the same platform, we're beginning to have dialogues with them, too, as to their interest in distributing that product once it is passed through the FDA EUA and/or any other international regulatory approvals. So we're sort of in that phase where we're taking early customers through the process, and they're evaluating what's best for their particular needs in their countries.

Okay. That all sounds very reasonable. Turning outside of COVID and realizing that the pivot here is largely to COVID, but acknowledging that there are some other high-value diagnostics in the queue here for you. Can you give us an update on the HIV syphilis submission? I know the reproducibility study that you had to resubmit that felt to us, I think, like a bit of a perfunctory step, but I don't know how much the FDA is just simply waylaid and overwhelmed with other things right now. But if you have any updates there, it's appreciated.

Sure, Per. Happy to do so. We continue to be in an active dialogue with the FDA. The review of the PMA, as you may know, is being reviewed by both CBER and CDRH, 2 branches of the FDA. So we continue to be in dialogue with both branches of the FDA for the PMA submission. And we continue to answer their questions relative to the reproducibility study. And so it's an active dialogue back in quarter relative to their continued questions. And we think we're making progress in those discussions. And what we can't estimate at this time is the review process timing and ultimately, what the FDA is going to view relative to -- they believe the final questions being answered. And so we'll continue to answer their questions and hopefully move it closer to PMA approval.

Okay, that's fair as well. One last question for me. I suspect there's not going to be a lot you can say to elaborate on the second Takeda program, but clearly, that's interesting to see that another one has gotten its way into the hopper. I guess the question is, can you say anything about it, whether it's a program type duration size, that sort of thing? And then maybe secondarily, just how much of that was catalyzed by the successful initial development of the first.

Yes, Per. I think one of the things we're proud of is that certainly, the second program is building off the success of the first program in the collaboration we had with the Takeda team. So we're delighted to announce the second program due to the nature of the program and the confidentiality of it, we're limited in terms of what we can say about the scope of the program, the biomarker and any funding levels. But we're certainly excited to take on the second program with Takeda, and I think it really demonstrates the capability, the DPP technology and the platform and the ability to drive enhanced sensitivity and specificity in a point-of-care asset.

We take our final question or comment from the line of Bruce Jackson with The Benchmark Company.

In terms of the new test that we -- so in terms of the other new tests you've been watching out for the eosinophilic test for the asthma that you've been working with AstraZeneca. What's the status of that program?

Yes, Bruce, if you go and take a look in our first quarter 10-Q, and you'll see this again in the table in the second quarter Q, in the MD&A section. We have tables where we talk about the various products in development. And you'll see there's some documentation there that, as you said, the test has gotten through the process went from 0 to CE Mark inside of 12 months. And is now available for research use only. And that's similar to -- described around Takeda. That's all that -- what else we can say about it at this time.

Okay. And then and then just a quick question on LumiraDx. Can you comment at all on how that program is moving along? And if you can provide any other details on the types of things that you're working on, that would be great.

Yes, Bruce, as we announced, the Lumira agreement was a strategic relationship. So given the fact that Lumira is a private company, and we can't speak to their development program. We're very limited in terms of what we can say. But generally, Bruce, we've had a very, very positive, strong collaboration with LumiraDx. And so we continue to move forward in that strategic relationship. And we're hopeful that we'll continue to be in that relationship.

Okay. It does conclude our question period, Mr. Eberly, please go ahead.

So thank you for your time today. We appreciate all of your questions and your interest, and have a good day. Thank you. Thank you.

This does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time. Have a great day.