COLLABORATIVE RESEARCH AND DEVELOPMENT ARRANGEMENTS

6 Months Ended

Jun. 30, 2011

COLLABORATIVE RESEARCH AND DEVELOPMENT ARRANGEMENTS [Abstract]

COLLABORATIVE RESEARCH AND DEVELOPMENT ARRANGEMENTS

NOTE      3     -      COLLABORATIVE RESEARCH AND DEVELOPMENT ARRANGEMENTS:

a.   Oswaldo Cruz Foundation/Fiocruz:

In November 2010, the Company signed an Agreement with the Bio-Manguinhos unit of the Oswaldo Cruz Foundation of Brazil (“FIOCRUZ”) for the supply, license and transfer of certain products and related technologies from the Company to FIOCRUZ.  The agreement is for DPP® Syphilis Screen and Confirm.  This Agreement provides for a staged technology transfer collaboration pursuant to which FIOCRUZ will ultimately be able to fully manufacture the applicable product for supply in Brazil provided certain minimum purchases of products and related components have occurred.

In accordance with guidance, management has concluded the FIOCRUZ events recorded in the second quarter for Syphilis Screen met the definition of milestone events. The Company earned $100,000 for the three months ended June 30, 2011.

Under the Syphilis contract, there are additional royalties and purchase commitments due to the Company over the remaining life of the Agreement which will result in a larger revenue stream.

During the three months ended June 30, 2011 and 2010 the Company recognized $100,000 and $400,000, respectively in milestone revenues from FIOCRUZ.

During the six months ended June 30, 2011 and 2010 the Company recognized $405,000 and $400,000, respectively in milestone revenues from FIOCRUZ.

b.   Infectious Disease Research Institute (IDRI) Agreement:

In April 2009, Chembio entered into a development agreement for up to approximately $400,000 in connection with the development and initial supply of a low-cost, rapid point-of-care ("POC") test for infectious diseases. The agreement contemplated a period of approximately two years in which the development activity is to be completed.

As of June 30, 2011, the Company received an aggregate of $390,000 in research and development payments from this agreement.  Future milestone payments of $10,000 are expected over the next quarter and will be recognized when the milestones are met.

c.     National Institutes of Health (NIH) Grant:

In June 2009, the Company received a $3 million, three-year grant from the United States National Institutes of Health to complete development of a test for Leptospirosis.  Grants are invoiced after expenses are incurred.   The Company earned for the three- and six-month periods ended June 30, 2011 $177,000 and $370,000,respectively from this grant. The Company earned an aggregate of $1,939,000 from this grant from inception through June 30, 2011, of which $660,000 was paid to sub-contractors.

In March 2011, the Company received a $2.4 million, three-year grant from the United States National Institutes of Health to complete development of a test for Tuberculosis.  Grants are invoiced after expenses are incurred.  The Company earned for the three- and six-month periods ended June 30, 2011 $110,000 and $158,000 respectively from this grant. The Company earned $158,000 from this grant from inception through June 30, 2011.