Co-Diagnostics, Inc. (CODX) Q4 2024 Earnings Call Transcript

Good day, and welcome to the Co-Diagnostics Fourth Quarter and Full Year 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, that this event is being recorded. I would now like to turn the conference over to Andrew Benson, Investor Relations. Please go ahead, sir.

Good afternoon, everyone, and 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 fourth quarter and full year ended December 31, 2024. A copy of the press release is available on the company's website. We will begin the call with management's prepared remarks, and then open 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 that are not historical facts are forward-looking statements. This include statements concerning the company's Co-Dx PCR testing platform, which requires regulatory approval and marketing authorization for diagnostic use, and is not currently for sale. In addition - to diagnostic test developments and timing for commencement of clinical evaluations, 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. 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 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 Co-Diagnostics Chief Executive Officer, Dwight Egan. Dwight?

Thank you, Andrew, and good afternoon, everyone. Thank you all for joining Co-Diagnostics' fourth quarter and full year 2024 earnings call. 2024, was an important year for Co-Diagnostics. We advanced the development of the Co-Dx PCR platform and associated test pipeline, and added important manufacturing infrastructure, as we strengthened the foundation for the platform's commercialization. During the course of the year, our team has worked hard to bring our low-cost, rapid and easy-to-use platform closer to launch, and I'm excited to build upon our progress in 2025. I'd like to begin my remarks, by discussing some recent developments within our test pipeline, before discussing some of our key accomplishments in 2024, and our future development plans. Our main objective at Co-Diagnostics, is to increase the accessibility of affordable, high quality diagnostics in the United States, and around the world. In June of 2024, we completed our first application, to the U.S. FDA seeking - 510(k) clearance for the Co-Dx PCR Pro instrument, and the Co-Dx PCR COVID-19 test, for over the counter use. The Co-Dx team maintained active and collaborative dialogue with the FDA, as they reviewed our submission, and as we responded to requests for information, providing additional context and support for our submission as needed. As our conversations regarding the submission evolved, we received feedback from the FDA, regarding the ability to monitor the shelf life stability, of one of our COVID-19 test components. We explored several options to address this, and concluded that replacing the component, was the best course of action, to help ensure the reliability and accuracy of the test, for our customers and to be successful in our regulatory ambitions. Any change to the design, or composition of a medical device under review by the FDA, requires the collection of new clinical data, to evaluate the device's performance. Because this was not feasible, to provide within FDA's review deadline, for the original submission, management made the decision to withdraw our 510(k) application, with the intention of submitting again, with updated clinical data at a later date. We determined that a new submission, with the updated chemistry and supporting clinical data, represented the most efficient way, to bring the new version of our test before the FDA, while simultaneously addressing the issues brought up by the FDA, and improving the probability of a successful clearance. The FDA was extremely informative throughout our review process, and we believe we have a clear path forward, based on their feedback. Since we believe our COVID-19 test, represents the quickest path to regulatory clearance and commercialization, we have focused our efforts on completing the design updates for the test that, will be used in the revised 510(k) application, with the goal of accelerating our submission timeline. We have full confidence in the quality of the test performance, and in our team to submit an enhanced COVID-19 test to the FDA, with an application that is largely similar to that submitted in 2024. I am pleased to report that, the design for the new test has already been completed, and undergone extensive verification testing. Throughout the duration of the FDA's review process, our work on the other tests in the pipeline was furthered, by our RD team's continued enhancements to the platform's capabilities, including aspects of the PCR instrument and Test Cups. An important byproduct, of the decision to complete a new 510(k) submission, is that we can now also incorporate these new platform developments, into the instrument and the Test Cups for the COVID-19 test in the new submission, which we anticipate will enhance operational and manufacturing efficiencies, for future tests in our pipeline. At Co-Diagnostics, we pride ourselves on quality and reliability, and continue to believe in the potential of our new platform, to increase the accessibility of real-time PCR technology, and play a transformative role in the domestic and global diagnostics landscapes. We continue to make great progress, across our test development pipeline, throughout 2024 and into 2025, which includes our diagnostic tests for tuberculosis or TB, respiratory multiplex and HPV multiplex. These indications reflect diseases, where the Co-Dx PCR platform, has an opportunity to make a significant impact on the diagnostic standard of care, and eventual patient outcomes. We have been supported in our development efforts, by several leading organizations, who share our values and our passion for improving the global health infrastructure, including the Bill & Melinda Gates Foundation, Smart for TB, and the National Institute of Health's RADx Tech program. Starting with our TB test, we are excited by our 2024 progress, which included the completion of several preliminary analytical studies. TB is a high priority in several countries, and regions around the world, including India, where we have a strong presence through our joint venture CoSara Diagnostics. A limiting factor for real-time PCR TB diagnostics at the point-of-care, has historically been finding a way to prepare the patient's sample, for the PCR process, in place of the sample extraction step, performed in high complexity clinical labs. Sample extraction, is required to make the genetic material of the TB bacterium, accessible to the primers, used in the centralized lab's PCR tests, but incurs additional costs, adds to the overall PCR testing time, and must be performed in highly regulated, controlled conditions to limit contamination risk. Developing a TB PCR test, used at the point-of-care, has required re-envisioning how a patient's sample can be collected, and prepared for the PCR analysis. Key to the operation of the TB test on the Co-Dx PCR platform, has been identifying a procedure that would simply, and affordably prepare patient TB samples, prior to being added to the Co-Dx PCR TB test kit. After an exhaustive and global search, we have identified instruments that, we believe allow us to achieve our performance and cost efficiency targets, and to proceed with preparations for our clinical evaluations. We are on track, to commence clinical evaluations in both South Africa and India, in the second half of 2025, to support regulatory submissions in those countries. In India, we plan to pursue a regulatory pathway, through the Central Drug Standard Control Organization or CDSCO, initially targeting the point-of-care remote settings, and local healthcare centers. We believe that our tests on the new platform, can be a critical asset to the country's goal of eradicating TB. As we continue to prepare for clinical studies. Our team has been collaborating with local health officials, potential customers and other organizations, to map our optimal go-to-market strategy. In 2024, we evaluated higher throughput smear microscopy centers, where target customers and experts agree that a point-of-care diagnostic solution, could improve upon and help close the accessibility gaps, left by outdated testing methods. Our regulatory and commercial pathway, also includes the pursuit of clearance in South Africa, through the South Africa Health Products Regulatory Agency or SAHPRA, which we believe could facilitate registering, and marketing our tuberculosis test, and the PCR Pro instrument, throughout several jurisdictions in Africa, as an in vitro diagnostic solution. The respiratory multiplex test, developed in part with financial support from the NIH's RADx Tech initiative, has been designed to deliver real-time PCR test results, for flu A and B, COVID-19 and RSV. Co-Dx completed the pre-submission, to the FDA earlier this month, and we have been assigned a reviewer. Our development team continues to work hard, on preparing the assay for clinical evaluations, which are expected to begin in the second half of this year. The burden that respiratory illnesses place on the healthcare system, businesses, families and patients, has always been high. We continue to see a considerable degree of interest in this multiplex test, and believe interest will remain high, as we look forward to completing the steps that will allow us, to put it into commercialization. One of the key differentiating features of the platform, is its operability via a smartphone, with cloud-based analysis that, can allow de-identified data, to be provided to health departments at the local, regional, national or international level, to help track outbreaks of infectious diseases. We anticipate use cases for this situational awareness feature, to benefit areas as small as an assisted-living center, potentially being afflicted by an outbreak of RSV within a community, or a region in India covering several hundred square miles, enabling public health officials to target their efforts, to deliver TB therapeutics to patients, whose need is most urgent. Thanks to the early warning system that, this awareness could provide. The development of the HPV multiplex test, which was supported by a grant from the Bill & Melinda Gates Foundation, experienced substantial positive movement during 2024. High risk human papillomavirus subtypes, can lead to cervical cancer, which caused an estimated 350,000 deaths in 2022, and HPV remains a disease for, which there is a vast international need for testing as testing accessibility, and efficiency remains a key constraint, to combating the impact of HPV on global health. Like the other tests on the new platform, the Co-Dx HPV multiplex test, utilizes the multiplexing advantages of Co-Dx Co-Primers technology, and is designed to use the unique architecture of the Co-Dx PCR Pro instrument, to detect 8 high-risk HPV subtypes, from cervical swab samples and the goal of providing an affordable, accessible HPV screening tool for patients around the world, especially in low and middle income countries. The chemistry optimization is complete, and we are pleased with the preliminary performance data. We are working with funding partners, and other collaborative stakeholders in the project, to determine the most appropriate an expeditious pathway, towards initiating clinical studies with the Co-Dx HPV multiplex test, with the goal of pursuing regulatory clearance in India, and expanding clearance into other regions. Similar to TB, we believe the combination of our joint venture CoSara, and the fully differentiated nature of our platform, leave us well-positioned to address another unmet diagnostic need in the Indian market. In addition to new test development, we also accomplished several goals in 2024 that, have positioned Co-Diagnostics for the successful commercialization of the Co-Dx PCR platform. In April, we inaugurated a new manufacturing facility in South Salt Lake, Utah which has been designed to manufacture the Co-Dx PCR Pro instrument Test Cups, and our Co-Primers technology. This facility will play a key role in supporting our commercialization efforts, and will be instrumental in helping us to meet, the anticipated demand for our platform, upon our initial launch. Later in the year, we inaugurated a second facility in India, to support cost effective manufacturing, of our Co-Primers oligonucleotides. The facility also has space for future production capacity, for our instrument and kits, which will allow in country manufacturing of our platform and tests that, we plan to commercialize in the Indian market. Earlier this month, CoSara received what is known as a test license on Form MD-13 from the CDSCO in India, which licenses CoSara to manufacture limited predetermined quantities of Co-Dx PCR Pro instruments, Co-Dx PCR MTB Test Cups and Co-Dx PCR HPV Test Cups in its facilities, for the purpose of gathering data from evaluations and clinical studies. The data gathered in these studies, will be used in submissions to the CDSCO for IVD clearance. While it's important to point out that, it does not authorize CoSara to manufacture these items for commercial use or sale, receiving this test license from the CDSCO, is a vital step towards regulatory submission and IVD clearance, as well as for qualifying for the Make in India initiative. Manufacturing instruments and test kits in-house, is required to qualify under this initiative, which will allow the Co-Dx PCR platform to benefit, from the cost saving advantages, over importing complete instruments and tests into India, and is expected to help overcome other hurdles, confronting foreign companies doing business in India. In addition, to building new manufacturing capacity overseas and in Utah, we also spent time in discussions, with potential commercial partners at industry conferences, and trade shows around the world. We are receiving encouraging feedback on the platform, and maintaining a regular dialogue, with the valuable contacts made through these efforts. I am pleased with both the quantity and quality, of our commercial discussions and look forward to building upon our relationships in 2025. I am proud of our 2024 progress, and I'm eager to tackle the opportunities before Co-Diagnostics in 2025. In addition, to working diligently to complete a new 510(k) submission for this COVID-19 test, and the Co-Dx PCR Pro instrument during 2025, we also are planning to initiate clinical evaluations, for all the other tests in our pipeline discussed today on the new platform. I am confident we are taking the right steps, to advance the commercial and technical aspects of the Co-Dx PCR platform, which has the potential to revolutionize diagnostic testing around the world. With all the work we have done in 2024, including building manufacturing capacity, advancing discussions with potential customers and commercial partners, and further advancing our test pipeline, I am excited to build upon our progress to drive a successful 2025. With that, I will now turn the call over to Brian, to discuss our financial results.

Thanks, Dwight and thanks to everyone, who joined today's call. For fiscal year 2024, total revenue decreased to $3.9 million, as compared to $6.8 million in the prior year same period. Grant revenue in 2024, was $3.1 million and product revenue, was $0.8 million. Gross profit for the full year 2024, increased to $2.9 million, compared to $2.6 million in the prior year. Total operating expenses for the year ended December 31, 2024, decreased to $43.0 million, from $45.3 million in 2023. The decrease from the prior year, is primarily due to higher expenses in 2023, from platform development and regulatory submission preparation. Research and development expenses in 2024, were $21.0 million, compared to $23.0 million in 2023. Legal expenses for the year ended December 31, 2024, increased to $7.0 million, from $1.7 million in 2023. The significant increase in legal expenses, is due to funding the defense, of two securities class action lawsuits, and related derivative suits. As announced on March 6, 2025, the Securities & Governance Litigation Team at BakerHostetler, the legal firm retained to represent the company won complete dismissal on summary judgment of one of the securities class action suits that had been pending against the company in the United States District Court, for the District of Utah. For 2024, income before taxes was a loss of $37.6 million, as compared to a loss of $38.1 million, reported in the prior year. Net loss for 2024, was $37.6 million, or a loss of $1.24 per fully diluted share, compared to a net loss of $35.3 million, or a loss of $1.20 per fully diluted share in the prior year. Adjusted EBITDA was a loss of $33.5 million, compared to an adjusted EBITDA loss of $33.0 million in the prior year. We ended the quarter with $29.7 million in cash, cash equivalents and marketable investment securities. We continue to manage our spend as we look to maintain a healthy balance sheet, to position ourselves for a future commercial launch. In 2025, we will continue to make improvements to our operating footprint that, will drive efficiency gains and cost savings. We plan to provide, for the company's capital requirements through equity financing, seeking additional grant funding, and through operational efficiencies. In the near term, we are focused on progressing our development pipeline, towards regulatory submission, and are managing our allocation of time and resources accordingly. We're very excited about our continued progress, and remain optimistic about 2025 and future developments, within our test pipeline. I look forward to providing you with more updates on next quarter's call. With that, I will now turn the presentation back over to Dwight.

Thank you, Brian. To close, we want to extend our gratitude to Co-Diagnostics, shareholders and our employees, who work hard each day to progress our test pipeline and missions. We will now take questions from our analysts. Operator?

Thank you. [Operator Instructions] And your first question today will come from Yi Chen with H.C. Wainwright. Please go ahead.

Good afternoon. This is [Eduardo] on for Yi. I had a quick question. Whether or not you all would be interested, or open to the possibility of developing an avian flu test either for birds or humans?

This is Dwight. Thank you for your question. We have developed a H5N1 test, and we are, very prepared to make additions to that type of test, should the need arise.

Okay. And is it being used actively? Is it the ambition that it be used for, obviously, human testing rather than bird testing?

Our ambition would be that it would have use both for humans, and for livestock and birds. It may have some optimizations for the different types of people, or animals that it's used for, but we jumped on that opportunity when the H5N1 first became, an item of interest. And we're prepared, as I said, to respond if need be.

Okay. That's helpful.

This will conclude our question-and-answer session, as well as conference call. Thank you for attending today's presentation. You may now disconnect your lines, and have a great day.