Co-Diagnostics, Inc. (NASDAQ:CODX) Q1 2024 Earnings Conference Call May 9, 2024 4:30 PM ET
Company Participants
Andrew Benson – Head, Investor Relations
Dwight Egan – Chief Executive Officer
Brian Brown – Chief Financial Officer
Conference Call Participants
Operator
Good day, and welcome to the Co-Diagnostics First Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. [Operator Instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Andrew Benson, Investor Relations. Please go ahead.
Andrew Benson
Good afternoon, everyone. Thank you all for participating in today’s conference call. On the line today from Co-Diagnostics, we have Dwight Egan, Chief Executive Officer; and Brian Brown, Chief Financial Officer. Earlier today, Co-Diagnostics released financial results from the first quarter ended March 31, 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 up the call to analyst Q&A.
Before we begin, we would like to inform the listeners that certain statements made by Co-Diagnostics during this call are not historical facts and are forward-looking statements. This include statements concerning the company’s forthcoming Co-Dx PCR testing platform, which requires regulatory approval and marketing authorization for diagnostic use is currently being reviewed by the U.S. FDA and is not currently for sale. 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 out 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?
Dwight Egan
Thank you, Andrew, and good afternoon, everyone. Thank you all for joining Co-Diagnostics first quarter 2024 earnings call. We are pleased with the progress we have made across several key initiatives in the first quarter that will bring us closer to the commercialization of our Co-Dx PCR platform.
In recent months, we have added additional manufacturing capacity, implemented strategic changes to our organizational structure and nearly completed our 510(k) submission to the FDA for our Co-Dx PCR Pro and Co-Dx PCR COVID-19 test kit. We believe that these recent and upcoming developments serve to advance Co-Diagnostics mission to establish ourselves as a disruptive point-of-care PCR diagnostics company.
As mentioned, we are excited that our 510(k) submission to the FDA for our Co-Dx PCR Pro and Co-Dx PCR COVID-19 test kit is nearly complete. This will represent another major accomplishment for our platform as we approach a commercial launch and will serve as a benchmark for future regulatory submissions for additional tests in our pipeline. I’m extremely proud of the work our team has done over the past several months and look forward to building out our pipeline in 2024.
In March, we made four leadership changes that we anticipate will be instrumental to our company’s success in the coming months and years. We appointed Richard Abbott as President, alongside the promotions of David Nielsen as Chief Operating Officer; Christopher Thurston as Chief Technology Officer; and Seth Egan as Chief Commercialization Officer. I am very confident that the team now in place is well equipped to lead Co-Diagnostics into the next stage of growth and development.
Last month, we held the grand opening of our new manufacturing facility located just minutes from our headquarters in Salt Lake City. We now have dedicated space close to home with the ability to manufacture our own co-primers oligonucleotides in-house to supplement our existing third-party capacity and to help reduce research costs.
The new facility in South Salt Lake will also allow for in-house manufacturing of our new Co-Dx PCR platform for the U.S. and certain international markets. In addition to growing capacity in Salt Lake, we have also been working to expand our manufacturing facility in India at Cosara Diagnostics, our joint venture.
Cosara will assist in manufacturing and distribution to support the upcoming launch of our platform in India and in other areas of the world. As we continue development throughout the year on our TB multiplex and HPV tests, we are confident that expanded capacity in Salt Lake City and India will support future operational efficiency.
Moving to our pipeline. We remain focused on the development of several tests that will serve as the cornerstones for our new platform. During the first quarter, we continued the grant funded development of our tuberculosis test which will play an important role in our commercial efforts and growth outside of the United States where TB has a disproportionate impact on developing countries around the world.
We remain on track to begin clinical evaluations for our TB test on the new platform this summer in preparation for pursuing regulatory clearance and submission of the test to the World Health Organization, or WHO, whose prequalification assessment would make the test eligible for use and commercialization in priority markets across Africa.
The opportunity for tuberculosis testing is large and growing, especially for point-of-care diagnostic platforms. And we believe we have the manufacturing and distribution capacity to deliver test to underserved markets like India, where there are 2.8 million cases of tuberculosis in 2022, representing 27% of the global burden according to the WHO’s 2023 Global TB report.
Additionally, we are pleased with the continued progress we are making in the development of our upper respiratory multiplex test driven by support from the NIH RADx Tech initiative. Co-Diagnostics believes this test has the potential to play an important role in respiratory infection testing at home and at the point of care, given that it would provide gold standard diagnostic evaluation for multiple indications with one sample at a low unit cost and at a very low cost for diagnosis.
Being run on the new Co-Dx PCR Pro instrument, the multiplex test will detect COVID-19, Flu A, Flu B and RSV all at once, which would increase efficiency and accessibility of respiratory testing in remote locations around the globe. We plan to begin clinical evaluations during the upcoming North American flu season, and we’ll continue to provide you with updates as we progress throughout 2024.
Turning to HPV. Our development plans have been progressing with the support of a grant from the Bill & Melinda Gates Foundation, and we continue to focus our efforts in India where there is a significant underserved population.
Like tuberculosis, HPV is a high area of focus for the WHO, and we continue to work hard to move our test development efforts forward. As mentioned in previous communications, we are currently in development of a strep A test, which we believe could bring additional value to our test menu, especially in pediatric and family practice settings.
Lastly, we are pleased that the Co-Dx Vector control footprint continues to expand in the U.S., including two mosquito abatement equipment installations in the first quarter. Our present Vector Smart testing products primarily include those for mosquito abatement, but an internal analysis of the flu market in our existing Logix Smart flu AB and COVID-19 or ABC test shows that it would be capable of detecting the H5N1 virus or avian flu, that has been recently found circulating in livestock populations. We are exploring the potential for a modified version of this test to meet certain needs for this market, if necessary, and have also proactively completed the principal design work for a co-primers test specific to H5N1 in the event the need to develop such a product arises in the future.
In summary, I would like to share why I believe that Co-Diagnostics is uniquely positioned to become a leading global point-of-care molecular diagnostics company. First, the technology of our platform is truly differentiated and unlike any current instrument or test on the market, beginning with our patented Co-Primers technology, which produces enhanced test quality via significant primer dimer reduction, in turn, leading to fewer faults positives.
The platform returns test results to a mobile app in just 30 minutes delivered via our platform’s cloud-based technology, which can allow for HIPAA-compliant integration into electronic medical records for health and government official monitoring and tracking.
Additionally, we continue to be deliberate with our spending and have invested appropriately in our Co-Dx PCR platform development and manufacturing capacity to support a commercial launch. We have received support from multiple renowned organizations, including grants to further the research, development and manufacturing capacity of our test pipeline and instruments.
Through the investments made in our facilities, we are now able to begin producing our own Co-Primers molecules in-house, enabling greater cost efficiencies for R&D and ultimately for product manufacturing as well. The new platform’s features and our joint venture relationship provide Co-Diagnostics, with the opportunity to address some of the most vulnerable and underserved populations around the world who may not have access to infrastructure such as a hospital, doctor’s office or clinical laboratory facilities.
In India, where diseases like TB and HPV are most prevalent, Cosara will play a vital role in distributing the new platform to places that are harder to reach the more accessible point-of-care target locations for the Co-Dx PCR Pro and have a large unmet need for high-quality diagnostics, which is all keeping with our mission of improving the quality of health care on a global scale through increasing the availability of the highest quality of diagnostics to communities and patients everywhere.
I’m very proud of our team at Co-Diagnostics and our accomplishments so far in 2024. I believe we are now closer to achieving our long-term goals, and I look forward to updating you on our progress throughout the remainder of the year.
I will now turn the call over to Brian to discuss our first quarter financial results.
Brian Brown
Thanks, Dwight, and thanks to everyone who joined today’s call. For the first quarter of 2024, total revenue decreased to $0.5 million as compared to $0.6 million in the prior year same period. Grant revenue in Q1 2024 was $0.2 million, and product revenue was $0.3 million.
Gross profit for the first quarter increased to $0.2 million compared to $0.1 million in the prior year comparable period. Total operating expenses for the quarter ended March 31, 2024, increased to $10.5 million compared to $10.1 million in Q1 2023.
The increase from the prior year is primarily due to strategic investments in research and development to support our development and commercialization initiatives for our Co-Dx PCR platform.
Research and development expenses in the first quarter were $5.7 million compared to $5.0 million in the comparable prior year period. The year-over-year increase was driven by investments in our Co-Dx PCR platform and the ongoing development of our diagnostic pipeline.
For the first quarter, income before taxes decreased to a loss of $9.3 million as compared to a loss of $8.0 million reported in the prior year. Income tax expense in the first quarter was $0.02 million, representing an effective tax rate of 0.2%.
We have previously discussed that our effective tax rate will differ from the U.S. federal statutory rate of 21.0% due to state taxes, permanent items and discrete items, including changes in valuation allowances.
Net loss for the first quarter of 2024 was $9.3 million or a loss of $0.31 per fully diluted share compared to a net loss of $5.8 million or a loss of $0.20 per fully diluted share in the prior year. Adjusted EBITDA was a loss of $8.4 million compared to an adjusted EBITDA loss of $7.2 million in the prior year.
We ended the quarter with $50.0 million in cash, cash equivalents and marketable securities and continue to manage our spend as we look to maintain a healthy balance sheet to position ourselves for long-term growth.
Co-Diagnostics remains focused on maintaining our cash position through appropriate and diligent spend to position the company for success upon a future commercial launch of our platform. We believe that we are operating from a strong cash position, and we’ll continue to focus on driving operational efficiencies.
We remain excited about our 2024 plan and are very optimistic about our test pipeline and the Co-Dx PCR platform. I look forward to updating you on our next earnings call.
With that, I will now turn the presentation back over to Dwight.
Dwight Egan
Thank you, Brian. Before opening for Q&A, I want to take this time to extend a warm thank you to our Codiak [ph] shareholders in addition to our employees, distributors and consultants whose hard work, support and belief in the value of our platform helps us execute on our goals every day. We will now take questions from our analysts. Operator?
Question-and-Answer Session
Operator
Operator
This concludes our question-and-answer session and concludes the conference call. Thank you for attending today’s presentation. You may now disconnect.+
