Earnings Call Transcript - CODX Q2 2025

Operator, Operator

I would like to turn the conference over to Andrew Benson, Head of Investor Relations. Andrew, please go ahead.

Andrew Benson, Head of Investor Relations

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 second quarter ended June 30, 2025. A copy of the press release is available on the company's website. We will begin with management's prepared remarks and then open up the call to analyst Q&A. Before we begin, we would like to inform listeners that certain statements made by Co-Diagnostics during this call, which are not historical facts, are forward-looking statements. This includes 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?

Dwight H. Egan, CEO

Thank you, Andrew, and good afternoon, everyone. Thank you for joining Co-Diagnostics Second Quarter 2025 Earnings Call. The second quarter of this year continued to bring steady advancements of our Co-DX PCR point-of-care platform, and thanks to the diligent efforts of our team working towards our goal to bring the instrument to market. We remain on track to initiate clinical evaluations for all tests in our pipeline during 2025. In addition to the Co-DX PCR COVID-19 test, which is expected to imminently begin enrolling participants for its clinical evaluations, the test pipeline for the new platform includes real-time PCR tests for flu A and B, COVID, and RSV in a 4-plex respiratory panel supported by a grant from the National Institute of Health's RADx Tech program, as well as tests for tuberculosis (TB) and an HPV 8-type multiplex panel, both of which are supported by grants from the Bill & Melinda Gates Foundation. These indications were identified as among the best opportunities in the near term to bring our unique technology and platform to market and to help advance the Co-Diagnostics vision of increasing the accessibility of affordable, high-quality diagnostics in the States, India, and around the world. Our focus remains on bringing the Co-DX PCR platform to the point-of-care market, which has included incorporating ongoing advancements developed by our scientific engineering and software development teams as we prepare for our upcoming regulatory submissions in the appropriate jurisdictions for each indication. As mentioned in our previous call, the augmented Co-DX PCR COVID-19 test underwent extended verification testing, and we are pleased to report that the clinical evaluation sites for this updated test are currently being trained, with testing of trial participants expected to begin imminently. Our plans continue to be to submit a 510(k) application to the FDA for this updated version of our COVID-19 test after the completion of the clinical evaluations. We look forward to the platform's initial introduction to the market next year and to the disruptive potential of this new diagnostic solution. Perhaps the greatest opportunity for the platform to disrupt the current testing paradigm is through tuberculosis. TB caused an estimated 1.25 million deaths in 2023 according to the World Health Organization, making it the #1 infectious disease killer globally. Several preliminary analytical and pre-clinical studies for the Co-DX PCR MTB test have been completed or are currently in process, and testing on clinical samples have demonstrated the high-performance properties of the test. We believe that the efficient affordable workflow process supported by the straightforward mobile app will help to speed adoption at the point-of-care in areas across India and Africa that have previously had little to no access to gold standard PCR diagnostic technology for a disease that is highly treatable if diagnosed early and accurately. The company remains on track to begin clinical evaluations for our TB test in both India and South Africa before the end of 2025, which will gather data to support regulatory submissions to the South Africa Health Products Regulatory Agency, or SAHPRA, and the Central Drugs Standard Control Organization, or CDSCO in India. Helping to increase the accessibility of high-quality, real-time PCR diagnostics in India has been a focus of the company since the early days of its founding. 27% of global TB cases and 26% of global TB deaths were found in India alone in 2023, and the country continues to be our top priority market for TB testing. Our footprint in India is significantly strengthened by our joint venture, CoSara Diagnostics, who provide substantial experience and regulatory, commercial, and manufacturing infrastructure in India. Principal manufacturing for tests and instruments will take place in our domestic manufacturing facility in South Salt Lake, inaugurated a little over a year ago, before being completed in the upgraded CoSara manufacturing campus prior to distribution and commercialization in India. As we proceed with the preparations for the clinical evaluations, we continue to engage with local health officials and potential customers in both India and Africa to evaluate the most effective and efficient commercialization strategy in specific target markets. We are pleased to report that the Co-DX PCR ABCR 4-plex respiratory panel is nearly prepared for clinical evaluations expected to begin concurrent with the 2025 North American fall and winter flu season. The test has been designed to build simultaneous differentiated real-time PCR test results for patients suspected of having flu A and B, COVID-19, or RSV. It remains the test with the highest domestic demand in our pipeline, driven by the burden these diseases place on everyday life in the United States and around the world. Once complete, the data collected by the clinical evaluations will be used in a 510(k) application to the FDA. The 510(k) clearance will not only allow the test to be commercialized as an infectious disease in vitro diagnostic in the United States but also in other countries around the world that accept U.S. FDA clearance and regulatory approval following a straightforward registration process in those countries. This international commercialization model allowed Co-DX to achieve significant growth during the pandemic based on the sales of our centralized lab COVID-19 PCR test, and we believe we will be able to follow a similar pathway for this new platform. Finally, the Co-DX PCR HPV 8-type multiplex panel is also on track to initiate clinical evaluations before year-end. HPV is the most widespread and sexually transmitted infection worldwide. And despite the widespread availability of an HPV vaccine, there remains a vast need for HPV testing around the world. Human papillomavirus has many subtypes of which are linked to cervical cancer, which causes hundreds of thousands of deaths annually. We believe the Co-DX PCR platform can have a significant impact on testing accessibility and efficiency, which remain key constraints to mitigating the impact of HPV on global health. Supported by a grant from the Bill & Melinda Gates Foundation and powered by our Co-Primers technology, this HPV assay is designed to simultaneously detect 8 different high-risk HPV subtypes from a single self-collected vaginal swab sample and differentiate between HPV 16, HPV 18, and HPV 45. These are considered to be the 3 most carcinogenic HPV variations, collectively responsible for roughly 75% of cervical cancers worldwide. Early detection of HPV can improve intervention and treat precancerous cells and lesions before they develop into cervical cancer or other types of cancer. We believe that a test with these performance characteristics has the potential to dramatically increase the availability of HPV PCR diagnostics around the world. Like TB, the regulatory pathway for this test will follow areas of greatest need in India and Africa, and clinical evaluations to support submissions to the CDSCO and SAHPRA are anticipated to begin this year. We look forward to the initiation and completion of the upcoming clinical evaluations, regulatory submissions, and commercialization of this test on the Co-DX PCR Pro. One of the most original and embedded features of the Co-DX PCR platform is the cloud-based analysis of tests performed on the Co-DX PCR Pro, which allows de-identified epidemiological data to be made available to help departments at the local, regional, national or international level. The ability to track the spread of infectious diseases in real-time is often compartmentalized in other testing paradigms or even absent outright. And we anticipate this situational awareness can provide health officials with key data and insights that could save lives and limit outbreaks. We believe that this feature was a key factor in receiving the support of several leading organizations who share in our passion for improving the global health infrastructure, including the Bill & Melinda Gates Foundation, SMART4TB, and the National Institute of Health's RADx Tech program. As we near the initiation of clinical evaluations for all 4 tests currently in our Co-DX PCR product pipeline, and firm up our pathway to commercialization, we anticipate increasing activity at trade shows and other events to continue engaging with local and international potential customers and key stakeholders. Over the past couple of years, we have developed solid relationships with local trade and commerce organizations, some of which support the growth of Utah's businesses by offering grants for their travel and participation in trade shows and conferences. We have been successful in securing grants to help offset the cost of some recent and upcoming events. And we will continue to pursue these and other opportunities to be mindful of our spend while we prepare for our expansion. To conclude, I want to emphasize our commitment to achieve our clinical evaluations and regulatory submission objectives as the next critical steps to successfully launching the Co-DX PCR Pro instrument and test kits to the world. This pathway remains the most expeditious way to return value to our shareholders, and the foundation we have built for near and long-term success is possible, thanks to the investments in infrastructure, technology, and people that we have made along the way. We believe this framework will allow us to replicate the process more quickly and efficiently for other critical infectious disease test panels in the future and can be applied to other areas of interest such as veterinary, agricultural, and livestock applications. The company remains on schedule to reach the critical milestones discussed here, as well as to expand our manufacturing capacity domestically and in India to be able to scale to meet market demand upon platform launch. We believe the Co-DX PCR platform can revolutionize and set a new bar for the affordability, accessibility, decentralization, and accurate gold standard PCR infectious disease testing. I'm very proud of the work of our team and look forward to another quarter of success. With that, I will now turn the call over to Brian to discuss our financial results. Brian?

Brian L. Brown, CFO

Thanks, Dwight, and thanks to everyone who joined today's call. For the second quarter of 2025, total revenue decreased to $0.2 million as compared to $2.7 million in the prior year same period. In the prior year same period, revenue from grants represented $2.5 million, while all revenue recognized during the second quarter of 2025 came from product sales. Total operating expenses for the second quarter of 2025 decreased to $8.2 million from $10.1 million in the second quarter of 2024. This decrease continues to reflect our efforts to become more operationally efficient. Research and development expenses in the second quarter of 2025 were $4.7 million compared to $5.6 million during the prior year comparable period. Net loss for the second quarter of 2025 was $7.7 million, or a loss of $0.23 per fully diluted share, compared to a net loss of $7.6 million, or a loss of $0.25 per fully diluted share, in the prior year comparable period. For the EBITDA was a loss of $7.2 million compared to an adjusted EBITDA loss of $5.9 million in the second quarter of 2024. We ended the second quarter with $13.4 million in cash, equivalents, and marketable investment securities. As always, we are managing our spend to maintain a healthy balance sheet as we position ourselves for commercialization. Throughout the year, 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 and/or debt financing, additional grant funding, and operational efficiencies. More specifically, we are using our ATM to generate capital when appropriate. We are evaluating various debt and equity financing structures, and will continue to press forward with seeking grant support for our Co-DX PCR platform. In the near term, we are focused on progressing our development pipeline towards completing clinical evaluations and preparations for regulatory submissions, and are managing our allocation of time and resources accordingly. We're very excited about our continued progress and remain optimistic about 2025, multiple commercial launches in 2026, 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.

Dwight H. Egan, CEO

Thank you, Brian. To close, we want to extend our gratitude to Co-Diagnostics shareholders and to our employees whose consistent dedication and hard work is one of our most valuable assets to achieving the Co-DX vision. We will now take questions from our analysts. Operator?

Operator, Operator

Your first question comes from Yi Chen with H.C. Wainwright.

Antonio Eduardo Arce, Analyst

This is Eduardo on for Yi. I was hoping if you could just kind of repeat your expected timeline. You mentioned that all sites are being trained and you're going to start recruiting imminently. I was just hoping if I could get a timeline for the specific tests in order, which one you expect to have earlier completion of those trials and then the consequent 510(k) applications. Just kind of get a feel for the progression of cadence of things.

Dwight H. Egan, CEO

Yes. Thank you for the question. Our clinical trials for all 4 of the indications, that are COVID-19, our multiplex flu A/B, COVID-19 and RSV test, our MTB or tuberculosis test, and our HPV or human papillomavirus test. We expect all of those indications to be into clinical trials during the remainder of this calendar year. We anticipate to begin with the COVID-19 test, which has already begun its site visits and training prior to putting customers through the trial or applicants through the trial. We believe that the next test up will be our ABCR or multiplex flu A/B over COVID and RSV test. And probably the next one after that will be our tuberculosis test followed by HPV. That order could vary with respect to the final treatment. We expect the need first for all of them to commence clinical trials during the remainder of this calendar year.

Antonio Eduardo Arce, Analyst

Got it. That's really helpful. And you expect applications. Are you going to prioritize them in that order as they finish as well? Or do you think you'd prioritize TB or multiplex given the acute need, both internationally and domestically for those 2, respectively?

Dwight H. Egan, CEO

We believe there is a significant demand for all four panels. The MGB and HPV tests are primarily aimed at the Indian market, along with support from South Africa. We also think the COVID market remains strong, particularly in the U.S., and we are pursuing FDA approval for a 510(k) application for both the COVID-19 test and the multiplex ABCR test, which includes Flu A/B, COVID, and RSV. Although there has been some COVID fatigue, it still ranks as the second leading cause of death among infectious diseases. Therefore, we see a strong market for COVID and expect it to be our first focus.

Antonio Eduardo Arce, Analyst

Got it. So COVID first. Got it. And curious if you have some visibility towards commercial launch. I know that might be a ways down. But if you have any visibility there and how you plan your marketing strategy. Are you planning on point-of-care or over-the-counter? Are you in conversations with distributors at this point in time? Or how you plan on executing in regard to commercial launch?

Dwight H. Egan, CEO

Well, with respect to getting into commercialization, we plan to do that as soon as we have clearance from the FDA in the case of COVID-19. We don't expect that the clinical trial submission with the FDA will be protracted. The FDA generally has about a 120-day period in which they endeavor to clear a test. It doesn't always happen that way. But what we believe, with what we will be doing, that is a reasonable time frame after we get this commission done. As to the clinical trial, that depends largely on how many people that come to the testing sites actually have COVID because we will need to have a certain number of positive and negative applicants in order to conclude the clinical trial. The other part of your question with respect to where we will deploy it from a commercialization standpoint is really as follows. In the United States, we are targeting physician offices and clinics. This is a point-of-care application. We're also targeting skilled nursing facilities and residential homes, as they are the vulnerable population that has a need for extensive testing. We also anticipate doing marketing into the home market. So we are seeking clearance for home use. And finally, we expect to have activity in the pharmacy market. There are tens of thousands of pharmacies in the United States, many of which are set up to test. And we believe that will also be a fertile market for us. So those are the areas in the United States where we're targeting for the COVID and for the ABCR test. In India, we're mainly targeting the primary health care facilities where there are almost 30,000 primary care centers that are primarily microscopy that really needs to be replaced with our type of technology that is a molecular technology. We have the gold standard technology for that type of application, including its accessibility, affordability, and accuracy.

Antonio Eduardo Arce, Analyst

Got it. Just trying to put the timelines together. There's some variability in the readout for the COVID trial as you mentioned. I'm curious if this could lead to a commercial launch at the end of 2026 or early 2027.

Dwight H. Egan, CEO

I hope we can achieve commercialization before the end of 2026. I anticipate that we will be finalizing this as we are about to start the clinical trial for COVID. I expect we will complete that trial by the end of the year, and there is a reasonable chance of getting FDA clearance by the end of the second quarter. While I can't promise this will happen, I would be surprised if it takes until the end of the year to launch something in the market. I am looking more towards mid-year for that.

Antonio Eduardo Arce, Analyst

Got it. Thanks so much for the clarity and for taking the questions.

Operator, Operator

And that concludes our question-and-answer session, and that does conclude today's conference call. Thank you for your participation, and you may now disconnect.