Akers Biosciences Announces Q1 2017 Earnings
Significant Cost Reductions and Progress Towards Breakeven
THOROFARE, NJ-(Marketwired - May 16, 2017) - Akers Biosciences,
Inc. (NASDAQ: AKER) (AIM: AKR.L), ("Akers Bio" or the "Company"), a
developer of rapid health information technologies, reports its
financial results for the first quarter ended March 31, 2017.
Q1 Financial Highlights:
- Total revenue $667,250 (Q1 2016: $738,023)
- Gross profit margin 61% (2015: 73%) resulting in gross income
of $408,529 (Q1 2016: $537,995)
- Significant reductions in major expense areas:
- Reduced net loss attributable to shareholders by 11% to
$1,349,270 (Q1 2016: $1,508,929)
- Cash and marketable securities at March 31, 2017 of $2,242,557
following successful raises of approximately $1.7 million from a
public offering and $1.8 million from a private placement on
January 13 and March 31, 2017 respectively
Q1 Operational Highlights:
- Significant advancements in the commercialization of BreathScan
OxiChek™ from the Akers Wellness™ line
- Received initial order for rapid cholesterol self-test from
First Check Diagnostics, LLC, the exclusive distributor for this
product in the United States, for sale under their popular "First
Check" brand, which is sold in major retailers including CVS, Rite
Aid, Target, Kmart, Meijer, Giant Eagle, Stop & Shop, Giant and
ShopKo - revenues expected to commence in Q2 and beyond
- Began marketing rapid test for heparin-induced thrombocytopenia
to the large number of hospital facilities in Puerto Rico as an
extension of strategy to accelerate U.S. sales of this flagship
product
Chief Executive Officer's Remarks:
The positive momentum continued in Q1 2017 with domestic US
sales of PIFA Heparin PF/4 Rapid Assay products up on the prior
quarter by approximately 2.3%. We are poised for growth from these
products through the remainder of the year, both domestically and
from renewed buying from international markets in Europe and Asia.
Our refocused sales strategy in the U.S. has resulted in a
significant increase in sales per sales consultant.
Rigorous cost management continued in Q1 and the results of this
are evident in the major reductions in all key areas of expense:
General and Administrative expenses reduced by 14% to $790,529 (Q1
2016: $923,560); Sales and Marketing expenses reduced by 19% to
$588,934 (Q1 2016: $725,324); and Research and Development expenses
reduced by 4% to $348,442 (Q1 2016: $363,292). This resulted in an
11% reduction in the net loss attributable to shareholders to
$1,349,270 (Q1 2016: $1,508,929) - and we continue to strive
towards cash flow breakeven.
The Company undertook several initiatives to accelerate the
commercialization of BreathScan OxiChek™, the first commercialized
Akers Wellness™ breath test which rapidly determines levels of
oxidative stress in the body by measuring the levels of certain
abundant free radicals. Unlike current laboratory testing methods
that test only a few free radicals using an invasive blood draw -
and have a turnaround time of 7 to 10 days - Akers Bio's rapid
OxiChek™ test detects a broad spectrum of free radicals contained
in a person's exhaled breath in just a few minutes. Frequent use of
OxiChek™ may help health practitioners to monitor and adjust their
clients' regimen of nutritional supplementation, diet and exercise
in order to manage oxidative stress - an indicator of the overall
health and wellbeing of a person.
During the quarter, the United States Patent and Trademark
Office allowed a patent covering the proprietary cartridge for the
optical scanning device utilized in BreathScan Lync™ - the new
bluetooth-enabled reading device from Akers Wellness™ which enables
users to track the results of OxiChek™ via their mobile device
including iOS devices.
OxiChek™ is now fully commercialized and selling through the
Company's distributor, Aero-Med, to anti-aging, functional and
integrative health and wellness treatment practitioners in the US.
We continued to participate in large trade shows targeting
naturopaths, wellness coaches, anti-aging practitioners,
nutritionists and chiropractors and initiated a major television
marketing campaign through the popular Balancing Act national
television show on the Lifetime network. Balancing Act is America's
premier morning show that introduces positive solutions to busy,
on-the-go modern women.
These initiatives are beginning to translate into sales of
BreathScan Lync™ and OxiChek™ and such sales are included in the
revenues for Q1 2017. We expect to see the contribution from Akers
Wellness™ products grow through the remainder of the year.
During the quarter, the Company received an initial order for
our rapid cholesterol self-test from First Check Diagnostics, LLC,
the exclusive distributor for this product in the United States,
for sale under their popular "First Check" brand, which is sold in
major retailers including CVS, Rite Aid, Target, Kmart, Meijer,
Giant Eagle, Stop & Shop, Giant and ShopKo. We expect to record
sales for this product in the second quarter and beyond.
Akers Bio also began marketing its flagship rapid test for
heparin-induced thrombocytopenia to the large number of hospital
facilities in Puerto Rico as an extension of strategy to accelerate
U.S. sales of this flagship product. Puerto Rico represents a large
new market opportunity which is closely aligned to the U.S. and has
more than 60 potential hospital targets.
Outlook
Looking ahead through the remainder of 2017, we expect to see
growth in our flagship PIFA Heparin PF/4 Rapid Assay product line,
as well as sales of our rapid cholesterol test direct to consumers
through major U.S. retailers under the "First Check" brand, growing
sales from OxiChek™, and the launch into the market of the first
breath test for nutritional ketosis or fat burning, and, subject to
regulatory approvals, the launch of the first rapid blood test for
chlamydia and a. We will continue to manage our costs rigorously as
we move closer towards breakeven.
John J. Gormally Chief Executive Officer
Summary of Statements of Operations for the Three Months Ended
March 31, 2017
Revenue
Akers' revenue for the three months ended March 31, 2017 totaled
$667,250, a 10% decrease from the same period in 2016. The table
below summarizes our revenue by product line for the three months
ended March 31, 2017 and 2016 as well as the percentage of change
year-over-year:
Product Lines
|
|
3 Months Ended March 31, 2017
|
|
3 Months Ended March 31, 2016
|
|
Percent Change
|
|
Particle ImmunoFiltration Assay ("PIFA")
|
|
$
|
560,921
|
|
$
|
635,173
|
|
(12
|
)%
|
MicroParticle Catalyzed Biosensor ("MPC")
|
|
|
85,659
|
|
|
64,785
|
|
32
|
%
|
Other
|
|
|
20,670
|
|
|
38,065
|
|
(46
|
)%
|
Product Revenue Total
|
|
$
|
667,250
|
|
$
|
738,023
|
|
(10
|
)%
|
Total Revenue
|
|
|
-
|
|
|
-
|
|
-
|
%
|
Total Revenue
|
|
$
|
667,250
|
|
$
|
738,023
|
|
(10
|
)%
|
Revenue from the Company's PIFA Heparin/PF4 Rapid Assay products
decreased 12% during the three months ended March 31, 2017 over the
same period of 2016. The decrease is due primarily to two events;
first, the implementation, effective April 1, 2016, of revisions to
the contract terms, conditions and rebate programs with our
distribution partners that impacted revenue for the product group
by approximately $54,000. This one time anomaly was necessary for
the Company to implement its 'value expressed in price' strategy
and the effect of these changes on the year-over-year comparatives
will only be apparent for the three months ended March 31, 2017
versus the same period of 2016.
Secondly, during the three months ended March 31, 2016 the
Company recognized approximately $28,000 in PIFA revenue from the
Company's distribution partner in the People's Republic of China
("PRC"). No revenue was recognized during the same period of 2017.
The distributor is patiently working with the various provincial
governments in the PRC to finalize reimbursement rates for the
providers. Once these rates are established, the distributor
expects strong demand for the PIFA products.
Total unit sales volumes for PIFA Classic and PIFA PLUSS in the
United States remained steady, however; the sales mix changed
slightly year-over-year. The Company experienced renewed interest
in Western Europe and the Far East for the products after reviving
the Conformité Européene Mark ("CE Mark") PIFA Classic product and
has begun shipping PIFA into Great Britain and India.
Excluding sales to the People's Republic of China, the Company
has realized small, but consistent growth in the sales of the PIFA
Heparin/PF4 products since the second quarter of 2016. The graph
below illustrates this performance:
MPC revenue increased 32% during the three months ended March
31, 2017 over the same period of 2016. Domestic and International
sales of the new BreathScan Lync™ and OxiChek™ products accounted
for the majority of the improvement.
Other operating revenue decreased to $20,670 (2016: $38,065)
during the three months ended March 31, 2017. The category is made
up of the sales of miscellaneous raw material components or
sub-assembled products that are not normally available for sale,
for example, unlabeled BreathScan Alcohol tubes in bulk for private
labeling by the distributor. The category also includes fees
collected for shipping and handling charges.
The Company's gross margin declined to 61% (2016: 73%) for the
three months ended March 31, 2017. Higher costs for manufacturing
supplies ($21,742 (2016: $7,591)) and services provided by
sub-contractors for material preparation, assembly and packaging
($113,761 (2016: $8,092)) were offset by the transfer of production
costs to inventory for sub-assemblies and finished goods ($133,111
(2016: $82,958)). Part of these increased costs are associated with
the introduction of new products and, as such, are not expected to
be recurring. The Company expects the gross margin rate to return
to the 65% to 68% range in the near-term.
Cost of sales for the three months ended March 31, 2017 totaled
$258,721 (2016: $200,028). Direct cost of sales increased to 16% of
product revenue while other cost of sales increased to 23% for the
three months ended March 31, 2017 as compared to 11% and 16%
respectively for the same period in 2016.
Direct cost of sales for the three-month period ended March 31,
2017 were $106,129 (2016: $80,789). Other cost of sales for the
three months ended March 31, 2017 were $152,593 (2016:
$119,240).
General and Administrative Expenses
General and administrative expenses for the three months ended
March 31, 2017, totaled $790,529, which was a 14% decrease as
compared to $923,560 for the three months ended March 31, 2016.
Sales and Marketing Expenses
Sales and marketing expenses for the three months ended March
31, 2017 totaled $588,934 which was a 19% decrease as compared to
$725,324 for the three months ended March 31, 2016.
Research and Development
Research and development expenses for the three months ended
March 31, 2017 totaled $348,442, which was a 4% decrease as
compared to $363,292 for the three months ended March 31, 2016.
Liquidity and Capital Resources
For the three months ended March 31, 2017 and 2016, the Company
generated a net loss attributable to shareholders of $1,349,270 and
$1,508,929, respectively. As of March 31, 2017 and December 31,
2016, the Company has an accumulated deficit of $98,828,807 and
$97,479,537 and had cash and marketable securities totaling
$2,242,557 and $122,701, respectively.
During the three months ended March 31, 2017, the Company raised
$1,692,044 in net proceeds from a public offering of 1,789,500
shares of common stock, $1,760,817 in net proceeds from a private
placement of 1,448,400 shares of common stock and $244,950 from the
exercise of warrants for 163,300 shares of common stock.
Conference Call Information:
Tuesday, May 16, 2017 at 9:00 a.m. Eastern Time US callers:
1-877-545-1409 International callers: 1-719-325-4825 Conference ID:
3478083 Webcast: http://public.viavid.com/index.php?id=124510
A recording of the call will be available in the Investor Center
of the Company's website at
http://www.akersbio.com/investor-center.
About Akers Biosciences, Inc.
Akers Bio develops, manufactures, and supplies rapid screening
and testing products designed to deliver quicker and more
cost-effective healthcare information to healthcare providers and
consumers. The Company has advanced the science of diagnostics
while responding to major shifts in healthcare through the
development of several proprietary platform technologies. The
Company's state-of-the-art rapid diagnostic assays can be performed
virtually anywhere in minutes when time is of the essence. The
Company has aligned with major healthcare companies and high volume
medical product distributors to maximize product offerings, and to
be a major worldwide competitor in diagnostics.
Additional information on the Company and its products can be
found at www.akersbio.com. Follow us on Twitter @AkersBio.
Cautionary Statement Regarding Forward Looking Statements
Statements contained herein that are not based upon current or
historical fact are forward-looking in nature and constitute
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933 and Section 21E of the Securities Exchange
Act of 1934. Such forward-looking statements reflect the Company's
expectations about its future operating results, performance and
opportunities that involve substantial risks and uncertainties.
These statements include but are not limited to statements
regarding the intended terms of the offering, closing of the
offering and use of any proceeds from the offering. When used
herein, the words "anticipate," "believe," "estimate," "upcoming,"
"plan," "target", "intend" and "expect" and similar expressions, as
they relate to Akers Biosciences, Inc., its subsidiaries, or its
management, are intended to identify such forward-looking
statements. These forward-looking statements are based on
information currently available to the Company and are subject to a
number of risks, uncertainties, and other factors that could cause
the Company's actual results, performance, prospects, and
opportunities to differ materially from those expressed in, or
implied by, these forward-looking statements.
Contact Information
For more information: Akers Biosciences, Inc. John J. Gormally,
Chief Executive Officer Raymond F. Akers, Jr. PhD, Vice Chairman
Tel. +1 856 848 8698 Taglich Brothers, Inc. (Investor Relations)
Chris Schreiber Tel. +1 917 445 6207 Email: cs@taglichbrothers.com
finnCap (UK Nominated Adviser and Broker) Adrian Hargrave / Scott
Mathieson (Corporate Finance) Steve Norcross (Broking) Tel. +44
(0)20 7220 0500 Vigo Communications (Global Public Relations) Ben
Simons / Fiona Henson Tel. +44 (0)20 7830 9704 Email:
akers@vigocomms.com
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