Zacks_Analysts' Blog : Business Update - No Meaningful Surprises - Analyst Blog

Business Update - No Meaningful Surprises

Brian Marckx, CFA



Chembio Diagnostics' (CEMI) business update this morning provided a development status of their pipeline as well as general revenue guidance for 2011 and 2012.  Positive take-aways are that we should see strong revenue growth for the full-year 2011 and for this to continue into 2012.  In addition, Chembio notes that they continue to be encouraged by the DPP HIV U.S. trial data - including for oral fluid - while the press release does not offer specifics, the implication that the oral fluid still looks to be viable for inclusion in an eventual FDA submission is very good news.  



The not-so positive take-aways are that completion of U.S. studies for the DPP HIV and DPP Syphilis tests continue to experience delays.  Prior to this morning's update, we had been expecting the DPP HIV trials to wrap up in Q4 2011.  Chembio notes that they now hope to have these completed by the end of Q1 2012 and for the final PMA module filing to happen in Q2.  We had most recently (per our 11/4/2011 report) modeled the test to launch in the U.S. during Q4 2012.  While it's still possible that Chembio could have the test on the U.S. market before year-end 2012, this is now less likely.  The press release also notes that Chembio decided to restart the clinical study for support of a 510(k) submission for their DPP Syphilis test.  The study is expected to start in Q1 2012 and Chembio hopes to have the DPP Syphilis test on the U.S. market in early 2013, delayed from a launch sometime during the current year which we had been modeling.



Other updates include that Chembio has established distributors to sell the DPP Syphilis test in Europe (was CE Marked in October 2011) and continues to evaluate the regulatory process and potential market opportunity for an OTC version of their Sure Check (lateral flow) HIV test.  



In aggregate, the update provided no real meaningful surprises and although the development delays will impact our model, as the delays are relatively minor, the impact will be similarly relatively insignificant to our financial outlook and estimates (assuming no changes between now and when we update our model, with the release of Q4 2011 results).      



We cover Chembio with an Outperform rating and a $1.10 price target.          

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