Co-Diagnostics, Inc. (CODX) Earnings Call Transcript & Summary

Good morning, and welcome, everyone, to the Co-Diagnostics fireside chat. My name is Valter Pinto. I'm Managing Director at KCSA Strategic Communications. I'm joined today by Chief Executive Officer, Dwight Egan. We're all looking forward to hearing an update from Dwight on the company's diagnostics technology, its history, where we are today in our clinical pathway and our commercialization efforts. First, I want to congratulate the entire team on the joint venture in Saudi Arabia announced just last week. And this past Monday, the company also announced its initiatives in artificial intelligence. We'll be going through each announcement in further detail today. But before we begin, let me quickly remind everyone that statements made during today's fireside chat may be deemed forward-looking statements within the meaning of the safe harbor of the Private Securities Litigation Reform Act of 1995, and applicable federal securities laws and that actual results may differ materially from what is contemplated by such forward-looking statements due to a variety of risks, uncertainties and other factors. For a detailed discussion of some of the ongoing risks and uncertainties, I refer you to the company's quarterly report on Form 10-Q as well as the company's investor presentation and other reports filed periodically with the SEC. The company disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, unless otherwise required by law. I want to thank everyone again for joining us today. It's clearly an exciting time for the company, and we're going to be discussing several interesting topics today with Dwight. As many of you know, Co-Diagnostics is a molecular diagnostics company that develops, manufactures and markets state-of-the-art diagnostics technologies. This global diagnostics technology is accurate, affordable, fast, easy to use, noninvasive and covers a variety of indications. At the conclusion of our fireside chat, we'll have a live Q&A. We received a lot of questions from our audience today, so I appreciate that. If for some reason, you didn't submit your questions beforehand, we will do our best to get to each of your questions within the time frame allotted for today's call. Again, if we don't get to your question, just e-mail our team at [email protected]. Please note, this call is being recorded today, Wednesday, November 5, 2025, at 11:00 a.m. Eastern. The recording will be available on the company's Investor Relations website under the Events section at the conclusion of this call. With that, let me give Mr. Dwight a warm welcome on today's call. Dwight, good morning. It's great to see you.

Good morning to you, Valter.

Dwight, I think I echo the gratitude from your shareholders for hosting today's chat, especially given the recent news and progress you've made on so many fronts that we'll be going through today. If I may, I want to set the stage for our conversation by quickly going through the timeline and background of how the company got to where it is today, when the company was established, the origination of the technology and certainly walk us through what happened for the company during COVID.

Valter, this is a very exciting story in terms of where we've been and where we have come. We started this company in 2013, and it was founded on the concept of a very cool molecular technology that we refer to as Co-Primers. It was invented by Dr. Brent Satterfield, who worked for a long period of time with the company. This technology enables us to do a lot of very unique things in the context of PCR. But the thing that it manifests itself the most to -- for individual investors to understand is that it enables us to multiplex kind of in a class by ourselves. By that, I mean that it enables us to test for more than one indication at a time. Of note, for example, would be our forthcoming ABCR test, which is an acronym that stands for the testing of flu A, flu B, COVID-19 and RSV, all in one test, one patient, one sample, approximately 30-minute time to result when the test has started. So back in 2013, when we started this adventure, we originally had just wet reagents. And of course, we had the technology of the Co-Primer and all the things that go along with that. And because of that, we were able to respond very rapidly to the COVID pandemic. In fact, we developed a test within 3 days after the GISAID actually published the molecular map of this pathogen. And we then quickly made it an actual usable product. We were the very first U.S.-based company to have a molecular test that was approved by the European Union with a CE Mark. Shortly thereafter, we were one of the first companies to have an emergency use authorization from the FDA. And then we went on to sell approximately 35 million of these tests worldwide in about 50 markets. So that was an incredibly dynamic period for the company where we proved our ability to scale significantly and to take our place in the international and national market of what was going on during the pandemic. Nobody knew how long the pandemic was going to last. We set out almost immediately after we started with the wet reagents to develop a sort of miniaturized PCR device or instrument, which we refer to as the Co-Dx PCR Pro. This is an incredibly robust and wonderful instrument. It's taken us longer to get it ready to go than we expected, but it is a really awesome device along with the tremendous amount of IP that's contained in the cartridges or cups as we colloquially call them. And this is a device which makes it so we have an accessible, affordable and accurate product to take worldwide, and it suits a very large diagnostic gap, not only here in the United States, but in places like India, which we believe ultimately will become the largest healthcare market in the world and in places like Saudi Arabia and other places. So it's a wonderful technology. I'm pleased to report the progress that we've made with it. As we have indicated, we'll begin clinical trials starting with our APCR test during this month, in fact, and we expect to have on the tails of that, a human papillomavirus and TB clinical trials start as well.

I appreciate that. And obviously, COVID was an unfortunate period that affected us all. But as you articulated, I feel it was a significant inflection point for the company. It certainly validated the technology, show that you all can scale quickly. And as a result, you generate significant cash flow. You talked about it a little bit, but can you give us an idea if we fast forward, the cash flow that you had certainly gave you the opportunity to invest. Where did you focus your investments to where you are today and a lot of the things that we can look forward to in the future?

Well, let me state at the outset here that we don't want to be a COVID company. And so the reason that we began developing the broader technology, what we would refer to as a platform technology with the Co-Dx PCR Pro is that we wanted to be able to fit in where we could have an ongoing robust diagnostics business that covered a whole bunch of different indications. So while we're currently focused on the ABCR test, which, of course, you have to breathe to be alive. So that is always a very, very important group of tests and the tuberculosis test, which is one of the -- that is the deadliest infectious disease in the world. And it has particular relevance in India and Africa and other markets where we are advancing our cause. We also are advancing what we're doing in human papillomavirus. And some of the tests that we're doing we were aided by important NGOs and government entities to create the tests. For example, the ABCR test, which I mentioned, was supported by a grant from the NIH RADx Tech program and our programs for TB and HPV were both supported by significant grants from the Bill & Melinda Gates Foundation. And we appreciate the help and financing that they provided in the form of grants to move this along and in other ways that they helped us in terms of preclinical trials and other things that have been going on in the background. So this is an environment where we now have a device and a menu of tests that will be coming forward, and that will be enhanced by tests that will go into development here in the future that will cover things like sexually transmitted infections or STIs. It will cover things like Strep A. And of course, we have other markets where we have real opportunity, including personal pets, dogs and cats and cattle that are not personal pets, of course. But there's a lot of other things that we can do in agriculture and in these other types of veterinary type tests. So you're just seeing the very beginning of our development of the platform itself and the ongoing test pipeline that will be coming online.

I want to take a moment, Dwight, if we can talk now more specifically, you talked about India last week, everyone saw the JV that you all signed in Saudi Arabia. I know you and a lot of team members were there to sign that agreement. Both are large underserved market opportunities. You talked about a little bit with tuberculosis and other indications that certainly need as much testing as it can possibly be. But talk us through kind of the agreements in each market. If you want to talk about your trip to Saudi Arabia, which I'm sure we're all curious about and the market opportunity for both, that would be great?

Yes. So let me start with India because we began the India joint venture in 2017, right around the time that we took the company on to NASDAQ through an IPO. So we've been involved in India now for about 8 years, and we have a significant infrastructure in India. We have laboratories, and we're doing more laboratories on a very nice campus of the Sarabhai family who is our partner in the venture in India. We also have 15 tests, which are being sold in the Indian market now. So we have a lot of experience in getting tests cleared through the CDSCO, which is their version of the FDA. And we're very enthusiastic about our coverage in the country. We have sales personnel virtually throughout India. And it's a big country. It's now the most populous country in the world, the world's largest democracy. And we're as excited as we can be about the progress that has been made there. What we learned early on is there was no way we were going to be able to penetrate an Indian market without having boots on the ground and having infrastructure and personnel and leadership at every level. And we've done that. We've now matured it through 8 years of development. And as you may have noted this morning, we announced a furtherance of our financing objectives with this very important JV. Going on to Saudi Arabia. The reason we pursued this agreement in Saudi Arabia for another joint venture is that we have had the advantage of being involved with a team in Saudi Arabia, which has been our largest international customer all through the COVID pandemic. And since then, they are -- they have been our largest customer. And they have resources in Saudi Arabia. They have great leadership, and they really know the territory. So it's similar to India in terms of you want to do business there, go in and participate with their national objectives, their 2030 objectives like in India, the same kind of thing going on with Make it in India with Prime Minister Modi. And so we're really involved with the governments there and our teams there understand the territory, and we're very excited about what the future portends for both of these joint ventures. So we -- there's a lot of horsepower there. We spend a lot of time deciding how we're going to properly leverage it for both those joint venture partners and for our own shareholders. And I think as you see the news flow develop and you follow along what we're doing, I think our shareholders will become a big fan of what our initiatives are and what we hope to accomplish through them.

And so clearly, you have multiple shots on goal with Saudi Arabia, India, but certainly, the U.S. is a large market as well. How does the U.S. differ in terms of market dynamics? And how are we planning to be able to commercialize in the U.S. versus India or Saudi Arabia or other regions of the world?

Yes. So clearly, our regulatory path, let's take, for instance, our ABCR test, that will be cleared through a regulatory pathway through the FDA here in the United States, whereas tuberculosis and the human papillomavirus will be cleared through regulatory paths in India through the CDSCO and [ ENS ] in Africa, in South Africa through the [ SAHPRA ]. So we have different regulatory paths that we're doing that will unleash the power of those indications in those respective regions of the world. With respect to the United States, particularly, we are very enthused about our opportunities in several key markets, point-of-care markets, and that includes physicians and clinics. It includes pharmacies, of which there are over 60,000 locations in the United States. It includes skilled nursing facilities where they have vulnerable populations that need to be regularly tested for these types of things. And of course, the home market, which we are also in pursuit of. Now we're approaching our initial commercialization from the standpoint of where we get the biggest bang per device. So specifically, we're looking for locations like pharmacies and clinics and things that give us an opportunity to test half a dozen people a day as opposed to a home market, which may test half a dozen or a dozen a year. So we think there's a significant home market because there are just so many homes, and we think we'll do well with a certain segment of the population. But the point-of-care market is where our initial focus is going to be. We've done a tremendous amount of internal research to validate the -- these markets and why they are our preferred targets for initial commercialization. We have also hired some significant players that are outside field marketing companies to give us additional data and input so that we know that when we spend our marketing dollars that we're going after the right places.

I appreciate that, Dwight. And we received -- we have a full house and we received a lot of questions. [Operator Instructions] Let's talk about artificial intelligence, probably my favorite topic, and it's obviously top of mind for a lot of investors. Clearly, billions are being invested into AI across the board. I personally don't think that diagnostic testing is any different. And on Monday, you just announced for me a new business unit focused on AI. It's fascinating that you're doing this. Please tell us more.

Thank you, Valter. This is not an exercise in catch-up for us. We've been involved in artificial intelligence constructs for a long time. And as you know, dealing with artificial intelligence has a lot to do with patterns. And very few things that have as many patterns associated with them as the human DNA, which has 3.2 billion pairs of nucleic acids that make up our genomic structure. And so we've been using this for quite some time. We think of it in these terms. We think of it in things that we've already completed in terms of artificial intelligence models, and that includes the fact that we scan genomic datasets and comparing conservation and mutation rates and cross-reactivity to pinpoint the most stable and diagnostically relevant targets. I would point out to that, for instance, with our COVID test, we're selling the same COVID test today as we were selling 5 years ago because our software and our analysis makes it, so we pick the right targets. We also analyze reagent chemistries and our consumable designs. There's a tremendous amount of IP in our consumables. Our instrument tolerances, we are always fine-tuning the system components and reducing variability and strengthening reproducibility at scale. Finally, in terms of things that we've already completed, our adaptive algorithms that continuously learn from amplification and melt curve data, and it filters noise and sharpens the result calling for an ever-greater accuracy. Then we think of it in terms of the AI models that are currently in development. And that includes additional analysis with melt and mutation and synergy and regional entropy, our instrument performance and our customer service. And then in the future, we look to future plan AI models that include sophisticated surveillance viral transmission, breakout detection syndromic transit. It's amazing that we've gone all the way through the pandemic, and we still don't have a way to figure out where we are as kind of -- we don't know where the breakouts are, what pharmacies are experiencing a lot of trouble at the doctors' offices. We aim to address all of those things through our whole journey over the last 5 years in developing this very powerful platform. So AI is something that we have embraced in the past very rigorously. We're doing some really wonderful things that are sort of perspective in the context of automation in our manufacturing processes and things. And these all involve some level of artificial intelligence.

It's certainly very fascinating to me. And before we turn the call over to our audience, I would be remiss if we didn't touch on this morning's news. You talked about it a little earlier regarding the pursuit of spinning off CoSara JV in India via potentially a SPAC. It seems like this opportunity is a little early, but is there anything you can comment on for our audience today regarding the news this morning?

Well, what we wanted to announce this morning is to let our shareholder base understand that we have big plans for CoSara. Like I said, we have spent 8 years there building the infrastructure. It is a significant infrastructure. We have a significant number of employees there. And in order to help CoSara reach its full goals -- it's going to require a certain amount of capitalization so that we can really put the pedal to the metal here. And so in discussing this with our investment banker, which we identified in this morning's press release, we anticipate pursuing the opportunity for a SPAC transaction that involves CoSara. And it also involves the company in important ways that I'm not going to go into detail on this morning, but you'll see those kind of details of what we have in mind from a structure standpoint evolving, but we think it will bring a great deal of additional value to our current stakeholders and certainly to our partners. We will anticipate we will remain a significant shareholder in the company, similar to the shareholding that would be held by our partners at the Sarabhai family. And then, of course, we'll have new partners through the SPAC initiative. And we're very enthusiastic about this. It's been in the works for a while, and we're going to be excited to bring it to reality.

It's interesting, and I think it's really creative of you all to explore that opportunity for your shareholders. So we'll see how that progresses over time. And Dwight, honestly, you have a really interesting company and I think a timely company. It's been great to know you to say the least, and congrats to you and your entire team on all the progress you all have made. We've been polling questions from our audience. So I'd like to spend the rest of our time today going through some of those questions. And the first question is regarding pricing. How does your technology compare to existing technology in terms of pricing for your device? And then for the test itself, how should we think about our margin profile?

Well, it's a very good question, and the answer is very simple and a wonderful answer. We are significantly less expensive than really anything I can think of in the market. And I don't mean just a little bit, I mean, by a lot. Our -- many people know that the standard sort of PCR device out there can cost anywhere from $4,000 to $10,000 to $20,000. And many of them need cold chains and different temperature types of restrictions to even operate. Ours in contrast does not need to be calibrated. We're talking about a $300 to $500 device at scale compared to something that costs $10,000 or $20,000. And that means that you can go to a place like India and take a look at the limited number of people that they have now that can get a PCR test. And there are almost half of the country that have no access to diagnostics at all. But with what we're doing, this makes it go right down to the primary healthcare centers, of which there are tens of thousands. And we believe that we can replace things like smear microscopy, which is a 125-year-old technology that's only accurate 20% to 80% of the time. So it's inaccurate a lot of the time. And then it feeds into -- if you treat people and you have inaccurate results, then you end up with drug-resistant problems that are really onerous. So we're going to be a leader with a very robust -- this is not a toy. This is a very significant PCR device that when we talk about human papillomavirus, for example, we're testing for 8 different indications, which were identified for us by the Bill & Melinda Gates Foundation. And it includes all the major primary cancer-causing mutations that are in the human papillomavirus complex. This is able to be done because of our Co-Primer technology, allowing a very massive multiplexing capabilities. And so you have 9 different pathogens plus a human DNA control, all done in one test, one sample in 30 minutes. So it's a very powerful technology. We're just very excited to be on the lip of the cup of getting it into the market through our commercialization. And we've spent so much time getting ready for this event that we're ready to jump on it.

Appreciate that. And we talked about the U.S., we talked about India, Saudi Arabia. How do you think about the largest unmet needs in each market that our technology can support from a diagnostics perspective?

Well, it really comes down to filling the gap, Valter. There's -- you just can't push a $20,000 or $10,000 or $18,000 PCR instrument down into the environments like the environments in India or in Africa where they need to get access. This is why they have no access now. And the key opinion leaders around the world are uniform in asserting that we've got to get rid of smear microscopy and replace it with molecular tests. That's exactly what we are. And the nice thing is that we can do it at a price that makes it relevant in these markets. And that's just going to continue to be a great strong point for us. I didn't mention our cups or our consumables, but they also will be very, very competitively priced compared to the competition. And I think I would also add that this is something that just overcomes a lot of the barriers that have made us all these big systems can't help with what is ailing us in lots of different areas of the country. And in the U.S., as we go in to make this available at places like pharmacies and skilled nursing facilities and doctors' offices and clinics, it's the same thing. When you look at the margins that we produce, we are anticipating essentially the same types of margins in this product line that we have experienced previously in our wet reagents. And that is approximately about a 30% margin on the instruments. That's not really the main business. It's really the cartridges or consumable cups, which have a 70% to 80% margin in them. And of course, when we go overseas in places like India, there will be a compassionate pricing that's deployed, but the market is so huge. We're looking forward to our value proposition being extremely competitive no matter who it is we're coming up against.

And Dwight, as we conclude 2025, we have a few months left heading into '26. How do we think about upcoming milestones that investors should look forward to?

Well, you should look forward, first and foremost, I think, to the introduction of our tests into clinical trials, both in the United States with respect to ABCR and in India and in Africa with our human papillomavirus test and our TB test. Those will be important milestones that we're looking forward to getting through, and we're -- we've spent a lot of time getting ready so that we can do that with aplomb and we're looking forward to the results of that. Those are the primary initiatives, along with the initiatives that we've already announced that have to do with our artificial intelligence initiatives, our joint venture in Saudi Arabia and what we're doing in terms of pursuing our SPAC financing at CoSara. So there's a lot of -- it's a very dynamic period from us. I can't express to our shareholders how much processing this takes of senior level management to be on top of all of this and to -- and we're very enthusiastic about the results that we're getting and the interest we're getting around the world. And so I think there are plenty of catalysts to be interested in and to keep an eye on us.

Yes. And that's a good segue. So it was one of my favorite questions speaking about catalysts. Why do you think your stock is undervalued?

Well, when I'm asked that question, I always sort of respond with, look, it's really the market's responsibility to price us. We, of course, believe that we're significantly undervalued. We think our value proposition speaks for itself. And in some ways, we feel like we were thrown out the baby with the bathwater as COVID normalized. And people -- I think people have misinterpreted what's going on even with COVID. And that's why it's part of our multiplex test that's being going into clinical trials shortly here. And that is that COVID is still the number -- it's the #1 problem in terms of infectious disease in the world. Tuberculosis is the #1 killer. But in terms of just numbers of diseases, COVID is still raging like crazy. And COVID fatigue or whatever you want to call it, made it so it was largely abandoned emotionally by the population, but it's still a real problem. And we think we're going to be able to fill a very cool diagnostic gap at the markets that I've articulated so that this is a technology that can be done all the way down to the home with real sophisticated PCR diagnostics, what the CDC refers to as the gold standard. This is not isothermal technology. This is not antigen technology. This is the real McCrory "Lock Stock & Barrel". So we're excited about people being able to have access to it for very little cost and the ongoing revenue from the cartridges, we think will make a very sustainable and growing business for our shareholders.

Well, I appreciate that. That's right. And we're just about up on the time for today's fireside chat. I really appreciate your time, and I know that your shareholders are grateful as well. Really appreciate the detail that you gave us, and I hope that we can do this again. Any last comments before we conclude today's chat?

Just that it's been a thrilling ride for us to be able to develop and build this significant technology, which we think will improve the quality of life for a lot of people and maybe even save some lives. We certainly hope that. And we appreciate the support of our shareholders and those who share our vision. which is a very important vision in terms of creating real value in the healthcare sector. So we look forward to doing this again, too, and thank you for the opportunity to get on this fireside chat. Thanks to our shareholders as well.

I appreciate it, Dwight. It was a great time spending with you. And for -- and thank you for all of our investors for joining us today. If we didn't get to your question, again, please just e-mail us [email protected]. Really appreciate everybody's time until next time. Thank you so much.