TIDMAKR
RNS Number : 1259N
Akers Biosciences, Inc.
14 May 2015
Embargoed: 0700hrs 14 May 2015
Akers Biosciences, Inc.
Financial Results for First Quarter 2015
U.S. Sales of Flagship PIFA Heparin/PF4 Rapid Test Sales
Continue to Grow
Akers Biosciences, Inc. (NASDAQ: AKER) (AIM: AKR.L), ("Akers
Bio" or the "Company"), a medical device company focused on
reducing the cost of healthcare through faster, easier diagnostics,
reports its financial results for the first quarter ended March 31,
2015. The Form 10-Q containing the financial statements will be
available for viewing later today on the Company's website at
www.akersbiosciences.com or at www.sec.gov.
Q1 Highlights
-- Revenue for Q1 2015 was $510,047 (Q1 2014: $1,173,919, of
which $766,379 related to alcohol breathalyzer business from
ChubeWorkx Guernsey Limited which contributed nil in Q1 2015)
-- Domestic sales of PIFA Heparin/PF4 Rapid Assay products for
the period increased to $338,361 (Q1 2014: $288,581)
-- Gross profit margin of 56% (Q1 2014: 49%)
-- Loss before income tax was $1,321,799 (Q1 2014: loss of $595,600)
-- Cash and marketable securities at March 31, 2015 was
$8,394,553 ($9,720,802 at March 31, 2014)
-- Sales and Marketing leadership team strengthened with
appointments of John C. Cheneval (Senior VP, Sales and Marketing)
and Chris Ellis (VP, Global Marketing)
-- Added multiple sales executives across the U.S. to support
distributors - benefits of which we expect to see beginning in
Q2
-- Achieved ISO 13485 (2003) Certification which accelerates the
process of gaining regulatory clearance for medical devices in
certain countries, allowing the Company to get products to market
faster
-- Awarded patent by European Patent Office for novel blood
separator technology and method of separating a fluid fraction from
whole blood
Raymond F. Akers, Jr. PhD, Co-founder and Executive Chairman,
commented:
"Domestic sales of our flagship rapid test to detect an allergic
condition associated with the blood thinner heparin continue to
rise, with sales of these products up 17% compared with Q1 2014.
What is particularly encouraging is that this strong growth does
not yet include the anticipated benefits of either the price
increase (which took effect on May 1, 2015 for new customers and
will be gradually implemented from July 2016 for existing
customers), or from the expanded U.S. sales team."
"We estimate this test has the capacity to save the average U.S.
hospital over $1 million a year. That's not just because our tests
cost less than the existing testing procedures. By providing a
near-instant diagnostic result that rules out a heparin allergy, we
can often help physicians avoid the unnecessary use of very
expensive medicines and the associated medical monitoring costs
when a heparin allergy is otherwise suspected. This, we believe,
will be the basis for driving domestic sales growth of these tests
in the months and years ahead."
"The Q1 financial performance is in line with management's
expectations for the period. Like other medical device companies in
the early phases of commercialization, our revenues are staggered
as we receive initial stocking orders from new distributors in new
territories. The effect is that some quarters' sales, such as Q1
2015, are lighter than others due to the timing of product
shipments to new markets. We expect this trend to continue and
remain confident of the revenue prospects for the full fiscal
year."
"The reduction in revenues for Q1 2015 when compared to Q1 2014
is due to our alcohol breathalyzer distributor, ChubeWorkx Guernsey
Limited, placing no orders in the period for those products. That
distributor was positioning the product last year for sales
predominantly in France where the opportunity has since been
impeded by the French Government's postponement of the fine that
was to be imposed for drivers failing to possess breathalyzers in
their vehicles. The decline in revenues from this distributor was
therefore anticipated and, while we are exploring some
opportunities in the U.S. for this product, international sales of
alcohol breathalyzers are not core to Akers Bio's strategy at
present as we continue to focus on higher margin tests."
"I was delighted to welcome, in Q1, more highly accomplished
sales and marketing professionals both to the senior leadership
team and out in the field across the U.S. The ability to attract
people of their caliber to drive product commercialization is
precisely why the cash infusion from 2014's NASDAQ IPO was such an
important catalyst for Akers Bio."
"Our operational goals throughout 2015 are four-fold: firstly,
to work with our newly expanded sales and marketing team to unlock
the true growth potential of the heparin allergy test in the U.S.;
secondly, to assist our distribution partners to establish
international sales for these - and other - tests - particularly in
China where sales have already begun; thirdly, to establish sales
channels for our Akers Wellness products aimed at the substantial
health and wellness sector including weight-loss and anti-aging;
and, finally, to bring to market new, highly disruptive rapid
testing solutions for conditions including chlamydia and diabetic
ketoacidosis."
Conference Call Information:
Thursday, May 14, 2015 at 3.30 p.m. BST
(10:30 a.m. Eastern Time)
International: 1-913-312-0950
US:1-888-797-2982
Conference ID:6690033
Webcast: http://ir.akersbiosciences.com/events.cfm
Replays - Available through May 28, 2015
International: 1-858-384-5517
US:1-877-870-5176
Conference ID: 6690033
Summary of Statements of Operations for the Three Months Ended
March 31, 2015 and 2014
Revenue
Akers' revenue for the three months ended March 31, 2015 totaled
$510,047, a 57% decrease from the same period in 2014. The majority
of the revenue reduction was due to the anticipated decline in
orders from ChubeWorkx Guernsey Limited, our distributor of the
alcohol breathalyzer product from the MPC product line. During the
three months ended March 31, 2015, ChubeWorkx accounted for $-
whereas they accounted for $766,379 of our MPC product revenue in
the same period of 2014, prior to the French government's
postponement, indefinitely, of the fine that was to be imposed for
drivers failing to possess breathalyzers in their vehicles. Sales
of MPC products therefore decreased by 95%.
Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay
products for the period ended March 31, 2015 totaled $338,361, a
17% increase from the same period in 2014. The Company's added
multiple technical sales account executives during the period whose
role is to support more than 300 sales representatives of Akers' US
distribution partners, Cardinal Health ("Cardinal"), Fisher
HealthCare ("Fisher") and Typenex Medical ("Typenex"). The revenue
benefit from additional sales executives is not expected to be seen
until the second quarter.
Other operating revenue increased 28% for the period ended March
31, 2015. The improvement was due to increases in licensing fees
and shipping and handling fees.
Cost of sales for the three months ended March 31, 2015
decreased by 63% compared to the same period in 2014 to $226,341
from $604,323 in 2014. Direct cost of sales decreased to 24% of
product revenue while indirect cost of sales increased to 33% for
the three months ended March 31, 2015 as compared to 45% and 11%
respectively for the same period in 2014. Overall, cost of sales,
as a percentage of product revenue, was 56% and 55% for the three
month periods ended March 31, 2015 and 2014.
The increase in indirect cost of sales is attributed to
significant increases in shipping expenses and repairs and
maintenance of equipment and was mitigated by a reduction in
indirect personnel expenses in the three months ended March 31,
2015. In addition, the percentage increase is affected by the fixed
cost nature of many of the components in this category.
Akers' gross profit margin, as a percentage of revenue,
continued to improve, increasing to 56% for the three months ended
March 31, 2015 as compared to 49% in 2014. The improvement in gross
profit margin was derived from an increase in the average selling
price of products in the three months ended March 31, 2015.
General and Administrative Expenses
General and administrative expenses for the three months ended
March 31, 2015, totaled $698,433, which was a 7% increase as
compared to $653,682 for the three months ended March 31, 2014. The
most significant expenses are personnel, professional services and
stock market and investor relations fees which totaled $517,399
(2014: $553,539). Increased travel ($55,598 (2014: $98)) in support
of investor relations activities, the joint venture with Hainan
Savy Investment Management, Ltd in the People's Republic of China
and the creation of the Facilities Management department ($57,242
(2014: $-)) that was completed in April, 2014 accounted for the
majority of the increase in expenses for the period ended March 31,
2015. Prior to April, 2014, facility management expenses were
distributed across several functional areas and cost
categories.
Sales and Marketing Expenses
Sales and marketing expenses for the three months ended March
31, 2015 totaled $575,252, which was a 173% increase as compared to
$211,098 for the three months ended March 31, 2014. The increase is
the result of a significant increase in personnel costs ($323,209
(2014: $110,702)) for additional sales and marketing staff and for
market development studies and other professional services
($204,576 (2014: $28,550)). The increases were offset by lower
royalty and external sales commission expenses ($6,639 (2014:
$60,774)).
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