Co-Diagnostics Inc New

Good afternoon and welcome to the Code Diagnostics Q3 2021 earnings call. All participants will be in listen-only mode. 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 one on your touchtone phone. To withdraw your question, please press star then two. Please note this event is being recorded I would now like to turn the conference over to Andrew Benson, Head of Investor Relations. Please go ahead.

Thank you, Grant. I am Andrew Benson, and joining me this afternoon are members of the Co-Diagnostics Management Team, including Dwight Egan, Chief Executive Officer, and Brian Brown, Chief Financial Officer. We will begin the call with management's prepared remarks and then open up the call to questions from our analysts. Before we begin, we would like to inform the listeners that certain statements made by co-diagnostics during the course of this call may constitute forward-looking statements. Any statement about company expectations, beliefs, plans, objectives, assumptions of future events or performance are forward-looking statements. For example, statements concerning 2021 financial and operational guidance, the development, regulatory clearance, commercialization, and features of new products, plans and objectives of management and market trends are all forward-looking statements. The company believes these statements are based on reasonable assumptions. However, these statements are not guarantees of performance and involve known and unknown risks and uncertainties that may cause the actual results to be materially different from any future result expressed or implied by such statements. 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 in 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 may contain reconciliations to the non-GAAP financial measures presented to their most comparable GAAP results. At this time, I would like to turn the call over to CoDiagnostics Chief Executive Officer Dwight Egan. Dwight?

Thank you, Andrew, and thank you all for joining us. On this call, we will provide an overview of our results for the quarter, updates on key financial performance metrics, and a discussion of progress against our strategy. Then we will take your questions. This quarter saw CoDiagnostics achieve record sales with strong gross margins, and we are proud that we've been able to deliver on our predictions and exceed expectations while providing valuable products in the ongoing battle with SARS-CoV-2. We believe our international growth along with our clean balance sheet and strong cash accumulation are positioning us to become a leading global molecular diagnostics company, and that the sales momentum we have been experiencing over the last seven quarters continues to demonstrate demand for our products. We have stated before that we agree with experts who believe that COVID-19 will likely involve infection, followed by potential subsequent reinfection, and that vaccination would likely need to be followed by revaccination, similar to patterns seen with the flu. For example, researchers with the Public Health Institute, the University of Texas School of Public Health, and the Veterans Affairs Medical Center recently performed a study published in the journal Science. The research showed that the effectiveness of the vaccines from Moderna, Pfizer, and Johnson & Johnson to prevent COVID-19 dropped to 58%, 43.3%, and 13.1%, respectively, from March to September. The study also indicated that the vaccine's protection against death decreased after six months, especially among older people. As COVID-19 continues to spread, The virus has more opportunities to mutate, potentially resulting in mutation characteristics that increase its spread, particularly as it relates to fighting natural and vaccine-induced immunity. The appearance of new variants may require a coordinated public health initiative for many years to come to fight against COVID-19 and its potential new variants. The company has also asserted that in order to normalize society, that is, to go back to school, to go back to work, to travel, et cetera, regular testing with reliable protocols will need to be done. The company agrees with Dr. Scott Gottlieb, who said on Face the Nation, the other thing schools should be doing is operationalizing testing on a regular basis. We believe that operationalizing testing on a regular basis will be required wherever we intend to normalize and create safe schools, safe workplaces, restaurants, hotel ships, entertainment venues, and so forth. A probable scenario is that there will be vaccinated and unvaccinated individuals returning to the office, increasing the spread of COVID-19. In January 2021, the Biden administration issued a national strategy for the COVID-19 response and pandemic preparedness plan, which stated, to control the COVID-19 pandemic and safely reopen schools and businesses, America must have widespread testing, Accordingly, Biden established a $50 billion plan for increased COVID-19 testing, of which $10 billion is allocated to schools in an effort to reopen. Just yesterday, the U.S. Department of Health and Human Services announced that as at-home testing increases, the need for follow-up testing in healthcare settings will likely grow. For example, if someone buys an over-the-counter rapid antigen test at their local pharmacy to take at home and test positive, They may seek a healthcare provider who would conduct another test to confirm that result. Accordingly, as part of the Biden-Harris administration's ongoing commitment to increasing access to COVID-19 testing for Americans, HHS will invest $650 million from the American Rescue Plan to strengthen manufacturing capacity for quick, high-quality diagnostic testing through rapid point-of-care molecular tests and increase America's access to them. The company believes that a combination of testing, vaccination, and therapeutics will be required to address COVID-19. We applaud the emergence of therapeutics on the market, which go hand in glove with accurate diagnostics before they can be prescribed by a physician. As COVID-19 becomes endemic in our worldwide society, testing is likely to become an ongoing part of normal life. Co-diagnostics was able to achieve record sales in Q3 in large part to the strength of our international partnerships and our business model that involves sales to a large cross-section of customers. This demand, as well as continued sales in the U.S., as fueled by the rise of the Delta and other variants, have allowed us to recently achieve record sales of our COVID-related products, including the ABC test for flu A, B, and COVID, and our COVID-19 2G multiplex test. The former gained clearance to be sold in Mexico in September, Then last week, we announced that the latter test has been approved in the United Kingdom, both of which have been more recently been followed by the approval of our original COVID-19 assay in Paraguay and our direct saliva test being approved in Guatemala. Our original COVID-19 test kit also received regulatory clearance by Anvisa in Brazil in Q3, all of which illustrate our international presence and success of this model. Importantly, those overseas relationships are now also driving sales not just for our suite of COVID-related offerings, but for our other diagnostic products as well, opening up opportunities for our existing and planned products built on our patented co-private platform to an even larger market. We are already seeing this take place as our Zika dengue chikungunya test, for example, is registered in several countries. This uptake of co-diagnostic products is a driving factor in our emphasis on new infectious disease products development expanding our product offerings to better serve our important and profitable centralized laboratory segment. COSERA, our joint venture in India, recently announced its seragine dengue and chikungunya multiplex RT-PCR test as an in vitro diagnostic. This CDSCO approved marks the 10th assay manufactured and sold by COSERA to receive clearance from the CDSCO and follows the recent clearance of standalone dengue and chikungunya assays last month. In addition to those dengue and chikungunya assays and the new multiplex test, Coursera has previously received CDSCO clearance for real-time PCR tests for tuberculosis, malaria, hepatitis B, hepatitis C, human papillomavirus, and two COVID-19 assays, all designed using the company's patented co-primer technology and cleared to be manufactured and sold as IVDs in the Indian market. In the infectious disease vertical, the company pursues two business segments. The first business segment comprises our centralized lab customers, of which there have been many hundreds in domestic and foreign markets. This is what currently drives strong sales in the company and a large focus of our R&D efforts as we grow that product pipeline. And we continue to expand our worldwide network of capable distributors and participating labs in over 50 countries. Among the future product offerings that are actively in development include a multiplex STI panel to detect and differentiate between our four prevalent causes of sexually transmitted infections for which analytical performance testing is currently underway in collaboration with clinical partners, a malaria test designed to differentiate between the different species of the parasite known to be resistant to treatment, and an expansion of our logic smart ABC test to include respiratory syncytial virus, or RSV. The development of these tests for our centralized laboratory customers is taking place in tandem with versions that would work in at-home point of care settings. This market represents the second segment of the company's infectious disease vertical, which is being targeted by our forthcoming ICON platform. The ICON development continues at a rapid pace with preclinical studies and optimizations in progress to prepare for FDA EUA submission We believe that the addressable market for at-home and point-of-care diagnostic applications is considerable, and we are optimistic about the potential impact our new platform will have throughout the world, not just for COVID, but for many other diseases as well. The system is designed to be easy to use, inexpensive, and fast, while maintaining the superior performance of PCR. The result is a low-cost, small footprint platform that can be deployed widely in nearly every setting comprised of a reusable instrument, a single-use test kit, and a mobile app. Operation is simple and accessible. After introducing an oral rinse or swab sample into the test cup, it is capped and inserted into the instrument. Results are delivered via a mobile app. Sample preparation, RNA, DNA amplification results, interpretation, reporting are automatically performed by the system. The system is capable of addressing other testing needs in the future, including the expansion to a variety of multiplex assays. During our last quarterly call, I remarked that the company has been vigorously pursuing the ICON development, and we are very aware of competitive offerings seeking to attract the same fast market that we envision. CoDiagnostics believes this versatile platform will exceed the overall capabilities of competitive offerings. checking all the boxes of being a low-cost, fully integrated, sample-to-answer molecular diagnostic system designed to meet all the three criteria of cheap, fast, and accurate testing. But ICON also includes certain key differentiators compared to other less robust at-home or point-of-care systems. ICON test results are PCR gold standard results compared to less accurate antigen test results. Moreover, going forward, The ICON system will facilitate significant multiplexing results compared to other non-PCR technologies that, while molecular, do not provide the same multiplexing opportunities. Many diseases present with similar symptoms. Syndromic panel ICON testing, or testing of several infections with one patient sample with a single test, such as flu A, flu B, RSV, and COVID, will provide robust testing with multi-analyte differentiation as compared to non-PCR-based testing protocols from our competitors. In our last call, I also indicated that we anticipated being able to provide updates on the validation and timeline for submission for an emergency use authorization with the FDA for the device and the initial test by the next earnings call. Accordingly, I'm pleased to announce that a significant user factor study is currently underway which will be followed by a clinical trial, which we expect will commence in December. After conclusion of the clinical trial, FDA EUA CE marking in the EU and CDSCO clearance submissions will be completed as soon as possible. The key to getting it right with the ICON platform is not just for the short term. It is rather a long-term strategy that enables the company to play a significant potential role in syndromic panel testing covering a large number of ongoing pernicious infections, all with the primary speed and cost benefits of an antigen test, while also delivering gold standard PCR multiplexing compared to non-PCR molecular tests, and PCR accuracy as opposed to less accurate antigen-based tests. We believe the overall value proposition of this product has the potential to leapfrog over diagnostic systems currently in place, as well as open up the at-home and point-of-care markets with a better product than those developed using less robust technologies. From the creation of the co-primer technology, to the engineering of this device, to the human factor studies and focus groups, to the regulatory team, this product development represents a high level of innovation, expertise, and skill sets, which together portend a successful future for the product and the company as a whole. Immediately upon receiving regulatory authorization, the company expects to conduct sales campaigns to a vast number of potential clients, which include outreach to the public sector, including schools and college campuses. Enterprise sales, including airlines, theme parks, cruise ships, restaurants, entertainment venues. Healthcare sector sales, including doctors and dental offices. And of course, the residential or individual consumer sector. The company infrastructure is currently being enhanced to address our product launch. The company strategy goes way beyond COVID-19 to addressing many infections that were here before COVID, and that, like COVID, will continue to require diagnostic testing long into the future. At its core, this strategy for the company includes utilizing the conditions brought about by the pandemic and leveraging those conditions into a bright future for co-diagnostics, including a potentially explosive at-home and point-of-care diagnostic market. In addition, as a platform technology company, co-diagnostics and our co-private platform as applications extending far beyond COVID and infectious diseases. These include liquid biopsy for cancer detection, the development of which is ramping up as we position the company to take part in this historic and challenging development in human healthcare. The exquisite specificity of CoPrivers has been shown to have excellent capabilities in the detection of cancer mutations present in human blood. and a panel is being developed that detects six of the most common single nucleotide mutations of the EGFR gene associated with non-small cell lung cancer. This panel is undergoing performance verification with clinical samples. Negotiations are in process with clinical partners for further development and clinical evaluation. Other assays are being developed for several pathogens of significance in dentistry, mental health, and veterinary medicine. Analytical performance is being evaluated for these assays with partnerships in each of these areas. Progress in our agricultural vertical also continues, including our work with Bayer Crop Services and LGC. The company is under contract with Bayer pursuant to an ongoing proof of concept project using our patent-pending NGS library prep technology. Overall, we believe that our strong profits are positioning co-diagnostics well for these and other future growth initiatives. as significant investments in talent and R&D continue to yield positive results. The ICON platform has been designed from the beginning with the ability to operationalize testing on a regular basis in at-home and point-of-care settings. It is the optimal solution, not only for COVID, but for other infectious diseases that will be added to our testing menu over time. It is inexpensive, fast, accurate, with gold-standard PCR results. and capable of multiplex syndromic testing going forward, we believe that our history of remaining ahead of the curve since the onset of the pandemic will continue to drive this trajectory of growth. This concludes my initial remarks. Let me now turn things over to Brian Brown for a review of the key metrics and numbers. Brian? Thanks, Dwight.