Flagship Rapid HIT Test Set to be in 250
US Hospitals by Year End
Conference Call Scheduled for 9:00 a.m.
EST Today
Akers Biosciences, Inc. (NASDAQ:AKER) (AIM:AKR.L), (the "Company,"
"Akers" or "Akers Bio"), a medical device company focused on
reducing the cost of healthcare through faster, easier diagnostics,
reports its earnings for the third quarter and nine months ended
September 30, 2015.
Financial Highlights:
- Total Revenue for nine months ended September 30, 2015 was
$1,325,887 (9M 2014: $2,980,389). The decrease resulted from there
having been an initial stocking order for Tri-Cholesterol "Check"
tests during the nine months ended September 30, 2014 which was not
repeated in the nine months ended September 30, 2015; and from the
impact on sales of BreathScan breathalyzer products following the
French government's postponement, indefinitely, of the fine that
was to be imposed for drivers failing to possess breathalyzers in
their vehicles
- Importantly, sales of the flagship PIFA Heparin/PF4 Rapid Assay
products increased by 9% over the nine month period ended September
30, 2014
- Product Revenue for Q3 2015 was $169,473 (Q3 2014: $359,980),
reflecting lower than usual distributor stock depletion of PIFA
Heparin/PF4 Rapid Assay products during the summer months – demand
returning to normal levels in Q4
- Loss before income tax for Q3 was $2,326,893 (Q3 2014: loss of
$1,124,320), reflecting significantly expanded personnel costs,
higher marketing costs associated with product launches, higher
R&D costs associated with new product development and a one-off
impairment ($466,476) of historic patents/trademarks no longer
contributing to sales
- Cash and marketable securities at September 30, 2015 were
$5,622,597 ($9,720,802 at December 31, 2014)
Operational Highlights
- PIFA Heparin/PF4 Rapid Assay products now in over 200 US
hospitals – and growing by approximately 20 new hospitals per
month, each worth an annualized average of $15,000 per annum to
Akers Bio
- Assuming these average metrics continue, annualized PIFA
Heparin/PF4 Rapid Assay product revenue for the US alone should be
$3.75 million entering 2016
- At the current growth rate, the Company believes it has the
potential to be at close to 500 hospitals in the US by December 31,
2016. This would represent a significant milestone for Akers Bio as
the US hospital base for PIFA Heparin/PF4 Rapid Assay products
alone would substantially underpin the Company's overhead
- Added further sales executives across the US to support
distributors – Company now has 10 sales executives in the field
- China Food and Drug Administration approval of PIFA Heparin/PF4
Rapid Assay products is expected to stimulate purchasing from our
exclusive distributor for these products in Mainland China
- Significant progress in commercialization of new breath tests
in the Akers Wellness line for the health and wellness industry and
consumers - commenced first production during the third quarter
- In addition to selling Akers Wellness products through the
Amazon Marketplace, the Company is in advanced stages of appointing
distributors to target multi-level marketing companies in the
nutraceutical business, fitness and weight loss centers,
chiropractors, and anti-aging medicine physicians
Raymond F. Akers, Jr. PhD, Co-founder and Executive
Chairman, commented:
"Akers Bio's product revenues in the first nine months of the
year were $1,325,877. This is primarily being driven by the growth
in domestic sales of our flagship rapid tests for Heparin-Induced
Thrombocytopenia – an allergic reaction to the widely used blood
thinner, heparin. Sales of these products are up 9% in the year to
date. In fact, Akers Bio now has over 200 hospital customers in the
US using these tests out of the 2,500 large hospitals we are
initially targeting. Each of our PIFA Heparin/PF4 Rapid Assay
hospital customers is worth an average of $15,000 to Akers Bio
annually.
"On this basis, assuming these average metrics continue,
annualized PIFA Heparin/PF4 Rapid Assay product revenue for the US
alone should be $3.75 million entering 2016. Furthermore, at the
current growth rate, we believe we have the potential to be at
close to 500 hospitals in the US by 31 December 2016. This would
represent a significant milestone for Akers Bio as the US hospital
base for PIFA Heparin/PF4 Rapid Assay products alone would
substantially underpin the Company's overhead.
"In addition to the core domestic PIFA Heparin/PF4 Rapid Assay
business, the Company is making significant progress on its
international strategy for these tests. We believe that China could
ultimately become one of the Company's biggest ex-US markets for
these tests and a huge advancement was made in the Chinese
commercialization strategy when, earlier this month, the China Food
and Drug Administration (CFDA) approved our tests for medical use
throughout Mainland China. As a result, the Company is confident of
a growing and material contribution to PIFA Heparin/PF4 Rapid Assay
revenues from NovoTek, our exclusive distributor for this product
in Mainland China.
"Beyond the US and China, we have a growing network of
distributors – currently totaling 27 - seeking to establish
marketing channels for PIFA Heparin/PF4 Rapid Assay products in
countries including within Europe and Scandinavia.
"Another area of significant progress during the third quarter
was in the commercialization of our new breath tests designed for
the health and wellness industry and consumers. We strongly believe
that consumers are increasingly looking for personalized health
information and that our BreathScan technology platform, which
facilitates diagnoses through simple breath tests, will provide the
footprint for the Company to enter into this new era of digital
medicine.
"Our new health and wellness products, under the Akers Wellness
line, are poised to make an impact as we commenced first production
during the third quarter. The response to their launch has been
overwhelmingly positive. In addition to selling through the Amazon
Marketplace, we are in the advanced stages of appointing
distributors to target multi-level marketing companies in the
nutraceutical business, fitness and weight loss centers,
chiropractors, and anti-aging medicine physicians.
Outlook
"Like many medical device companies in the early phases of
commercialization, Akers Bio has yet to establish consistent
ordering patterns with its customers. This was evident in the third
quarter in the lower than usual distributor stock depletion of PIFA
Heparin/PF4 Rapid Assays during the summer months which, in turn,
reduced domestic product revenue for these products during the
third quarter. However, I am pleased to say that our early sales
figures indicate that demand in the US is returning to normal
levels in the fourth quarter.
"We remain confident that the CFDA's approval of PIFA
Heparin/PF4 Rapid Assay products in China will serve as a catalyst
for further orders there from our exclusive distributor for these
products prior to year-end. We believe these factors, combined with
a resurgence of demand in the EU for alcohol breathalyzers, will
deliver a significantly stronger fourth quarter than all three
quarters of the year thus far. It should also be noted that $2.4
million of the $5.7 million loss before income tax in the first
nine months of the year is non-recurring.
"Beyond year end, assuming we continue to add hospital customers
in the US for PIFA Heparin/PF4 Rapid Assay products at the same
rate, we should be moving into 2016 with a core revenue base from
these products in the US alone of $3.75 million; and, with further
acceleration of this growth rate anticipated, be on a clear path to
doubling that moving into 2017."
Conference Call Information:
Friday, November 13, 2015 at 2.00 p.m. GMT
(9:00 a.m. Eastern Time) |
US: 1-888-503-8175 |
International: 1-719-325-2244 |
Conference ID: 464156 |
Webcast:
http://public.viavid.com/index.php?id=117263. |
Summary of Statements of Operations for the Three Months
Ended September 30, 2015 and 2014
Revenue
Akers' revenue for the three months ended September 30, 2015
totaled $169,473, a 63% decrease from the three months ended
September 30, 2014. The revenue decline is attributed to two
factors; first, lower than usual distributor stock depletion of our
PIFA Heparin/PF4 Rapid Assay products; and second, no licensing
revenue was recorded during the three month period ended September
30, 2015 (2014: $93,333) following the cancellation of the License
and Supply Agreement with ChubeWorkx Guernsey Limited
("ChubeWorkx") in May, 2015.
The Company's MPC product sales declined 37%. The decline is
related to the irregular timing of orders from various distributors
that purchase alcohol breathalyzers annually or semi-annually. The
new distributor in the European Union ("EU"), which placed an
initial order for 2,000,000 devices in June, 2015, did not request
the release of any additional device shipments during the three
month period ending September 30, 2015; however, the Company will
release product as directed by the distributor over the next nine
months. The Company launched its METRON disposable breath test for
ketones on the Amazon Marketplace in the three month period ended
September 30, 2015. While the METRON sales were small in its debut
quarter, the Company believes that revenues will grow in the fourth
quarter. The Company also expects to realize revenue from its
BreathScan Lync health and wellness line in the fourth quarter.
Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay
products, part of the PIFA line, declined 62%, primarily reflecting
lower than usual distributor stock depletion of our PIFA
Heparin/PF4 Rapid Assay products during the third quarter. Demand
for these products is returning to normal levels in the fourth
quarter and our distributors are returning to their usual
purchasing patterns. The Company has expanded its sales and
marketing staff to cover most of the United States, adding
technical sales account executives whose role is to significantly
support the sales representatives of Akers' US distribution
partners, Cardinal Health ("Cardinal"), Fisher HealthCare
("Fisher") and Typenex Medical ("Typenex"). We expect to see the
revenue benefits from the expansion of the sales and marketing
staff as the additional sales executives become more involved with
the distributor representatives in their sales regions.
International sales of the Company's PIFA Heparin/PF4 Rapid
Assay products were still developing, but will be greatly enhanced
with the recent approval of the product in China. This
approval is expected to stimulate minimum purchase requirements
with our distributor, Novotek, of approximately $1 million in 2015
and $6 million in 2016.
Cost of sales for the three months ended September 30, 2015
increased by 10% to $177,952 (2014: $162,145). Direct cost of sales
increased to 42% of product revenue while indirect cost of sales
increased to 63% for the three months ended September 30, 2015 as
compared to 19% and 26% respectively for the same period in
2014.
Direct cost of sales for the three month period ended September
30, 2015 were $71,722 (2014: 67,940). The increase for the three
months ended September 30, 2015 was related to direct personnel
costs.
Indirect cost of sales for the three months ended September 30,
2015 were $106,230 (2014: 94,205). The increase is attributed to an
ongoing project to improve the management, reporting and turn-over
rate of our production inventory. The increase was mitigated by a
reduction in indirect personnel expenses in the three months ended
September 30, 2015. In addition, the percentage increase is
affected by the fixed cost nature of many of the components in this
category.
Costs
General and administrative expenses for the three months ended
September 30, 2015, totaled $760,336, which was an 8% decrease as
compared to $826,756 for the three months ended September 30,
2014.
Sales and marketing expenses for the three months ended
September 30, 2015 totaled $725,832, which was a 102% increase as
compared to $358,650 for the three months ended September 30,
2014.
Personnel costs increased in the three months ended September
30, 2015 due to the expansion of the sales and marketing department
from 3 employees at September 30, 2014 to 11 employees as of
September 30, 2015.
Other sales and marketing costs increased primarily due to the
increased travel by the expanded sales and marketing staff in
support of our customer and distributor base.
Research and development expenses for the three months ended
September 30, 2015 totaled $319,646, which was a 74% increase as
compared to $183,886 for the three months ended September 30,
2014.
Personnel costs increased during the three months ended
September 30, 2015. The increase is due to the addition of
laboratory technicians and the promotion of a senior technician to
provide technical product support to the Company's sales
associates, distributors and end customers.
Clinical trial costs, professional service costs and other
research and development costs have increased in the three months
ended September 30, 2015 due to the significant costs associated
with preparing several key products for market. Major expenses
include engineering fees related to the development of molds for
new products, development of the BreathScan Lync and associated
apps for tablets and smartphones, new packaging design, testing and
clinical trials.
Impairment of Non-Current Assets
The Company performed a routine analysis of its intangible
assets and determined that two patents and a trademark acquired in
the fiscal year ended December 31, 2007 are no longer contributing
to the Company's revenue flows and were therefore impaired for
$466,476 (2014: $-) during the three months ended September 30,
2015.
Summary of Statements of Operations for the Nine Months
Ended September 30, 2015 and 2014:
Revenue
Akers' revenue for the nine months ended September 30, 2015
totaled $1,646,443, a 45% decrease from the same period in 2014.
Importantly, sales of the flagship PIFA Heparin/PF4 Rapid Assay
products increased by 9% over the nine month period ended September
30, 2014. The reduction in overall revenue resulted from there
having been an initial stocking order for Tri-Cholesterol "Check"
tests during the nine months ended September 30, 2014 which was not
repeated in the nine months ended September 30, 2015; and from the
impact on sales of BreathScan breathalyzer products following the
French government's postponement, indefinitely, of the fine that
was to be imposed for drivers failing to possess breathalyzers in
their vehicles.
The Company's MPC product sales declined during the nine months
ended September 30, 2015. This reflects that during the same period
of 2014, the Company received its last order from ChubeWorkx for
the Company's alcohol breathalyzer product. The decline was
partially offset by an initial stocking order from a new
distributor in the European Union ("EU") for alcohol breathalyzers.
An initial order for 2,000,000 devices was received and units began
to ship in June, 2015. Additional shipments will be released as
directed by the distributor over the next nine months. The company
launched its METRON disposable breath test for ketones on the
Amazon Marketplace in the three month period ended September 30,
2015. While the METRON sales were small in its debut quarter, the
Company believes that revenues will grow in the fourth quarter. The
Company also expects to realize revenue from its BreathScan Lync
health and wellness line in the fourth quarter.
Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay
products continue to grow. The Company has expanded its sales and
marketing staff to cover most of the United States, adding
technical sales account executives whose role is to significantly
support the sales representatives of Akers' US distribution
partners, Cardinal Health ("Cardinal"), Fisher HealthCare
("Fisher") and Typenex Medical ("Typenex"). We have begun to
recognize the revenue benefits from the expansion of the sales and
marketing staff and expect this to continue as the additional sales
executives become more involved with the distributor
representatives in their sales regions.
In fact, there are now over 200 US hospitals using our product,
and we expect this number to a total close to 250 by the end of
2015. We are currently experiencing growth rates of approximately
20 hospitals per month, on average. Each hospital represents
approximately $15,000 per annum in revenue net to Akers. On this
basis, assuming these average metrics continue, by December 31,
2015, annualized PIFA Heparin/PF4 Rapid Assay product revenue for
the US alone should be $3.75 million entering 2016.
There were no sales in the nine months ended September 30, 2015
for the Tri-Cholesterol "Check" tests, part of the REA line of
products, which generated sales of $864,000 during the same period
of 2014. The revenue generated in the 2014 sale of the
Tri-Cholesterol "Check" tests was due to an initial stocking order
from 36 Strategies General Trading, LLC to distribute the tests in
Australia, Singapore, the United Arab Emirates and Oman. The
Company continues to work with 36S to gain approval for the
Company's Tri-Cholesterol product in Australia.
Other operating revenue increased due to a rise in shipping and
handling fees, a result of the mix of domestic and international
shipments and an increase in sales of miscellaneous components.
The Company's exclusive License and Supply Agreement with
ChubeWorkx Guernsey Limited ("ChubeWorkx") for the Company's
proprietary breathalyzer product was cancelled by both parties on
May 7, 2015. As a result of this event, and per the terms of the
original agreement, the Company recognized the remaining $166,667
of deferred revenue in the statement of operations for the nine
months ended September 30, 2015. The Company is now able to solicit
business outside the United States for its alcohol breathalyzer
products and has begun to receive and ship orders.
Cost of sales for the nine months ended September 30, 2015
decreased by 18% to $745,319 (2014: $907,876). Direct cost of sales
increased to 26% of product revenue while indirect cost of sales
increased to 30% for the nine months ended September 30, 2015 as
compared to 22% and 12% respectively for the same period in 2014.
Overall, cost of sales, as a percentage of product revenue, was 56%
and 34% for the nine month periods ended September 30, 2015 and
2014.
Direct cost of sales for the nine month period ended September
30, 2015 showed an increase due to one significant event that
occurred in the nine months ended September 30, 2014; during prior
periods, the Company had written-off its REA product inventory
while it worked to develop a market and identify a distributor for
the product line. As a result of this action, no significant cost
of sales was associated with the REA product revenue in the nine
months ended September 30, 2014.
The increase in indirect cost of sales is attributed to an
ongoing project to improve the management, reporting and turn-over
rate of our production inventory which will be completed during the
fourth quarter. The increase was mitigated by a reduction in
indirect personnel expenses in the nine months ended September 30,
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,
decreased to 55% for the nine months ended September 30, 2015 as
compared to 70% in 2014 for the reasons described above.
Costs
General and administrative expenses for the nine months ended
September 30, 2015, totaled $3,205,300, which was a 28% increase as
compared to $2,497,485 for the nine months ended September 30,
2014.
Professional services included significant increases in
recruiting services and legal fees during the nine months ended
September 30, 2015. The increase in recruiting fees are related to
the expansion of the sales and marketing staff while the legal fees
are associated with various corporate and legal affairs. Offsetting
the professional service expenses was the elimination of management
fees paid to Nicolette Consulting Group for services that were
incurred in the nine months ended September 30, 2014.
The Company recognized cost savings in all of its stock market
and investor relations categories. These include consulting,
investor relations, stock exchange fees and transfer agent
fees.
The Company established an allowance for doubtful accounts of
$864,000 for a receivable that was due June 30, 2015 after
receiving communications from the customer that indicated a high
level of risk of collectability in the nine months ended September
30, 2015. This allowance is reflected in the other general and
administrative expenses.
Sales and marketing expenses for the nine months ended September
30, 2015 totaled $1,854,623, which was a 92% increase as compared
to $966,357 for the nine months ended September 30, 2014.
Personnel costs increased in the nine months ended September 30,
2015 due to the expansion of the sales and marketing department
from 3 employees at September 30, 2014 to 11 employees as of
September 30, 2015.
The increase in professional service costs is for international
sales consultants and domestic marketing consultants to assist in
the development of new market opportunities and to increase our
market penetration in our existing markets; and web designers to
assist with the design and implementation of a new internet
presence.
Royalties and outside commission costs increased due to the
accrual of a legal settlement liability of $75,000 (2014: $-).
Research and development expenses for the nine months ended
September 30, 2015 totaled $1,003,445, which was a 46% increase as
compared to $686,376 for the nine months ended September 30,
2014.
Personnel costs decreased during the nine months ended September
30, 2015. During the nine months ended September 30, 2014, the
Company issued stock options to key employees, where during the
same period of 2015, no costs were incurred which was offset by
increased due to the addition of laboratory technicians and the
promotion of a senior technician to provide technical product
support of the Company's sales associates, distributors and end
customers.
Clinical trial costs, professional service costs and other
research and development costs have increased in the nine months
ended September 30, 2015 due to the significant costs associated
with preparing several key products for market. Major expenses
include engineering fees related to the development of molds for
new products, development of the BreathScan Lync and associated
apps for tablets and smartphones, new packaging design, testing and
clinical trials.
Impairment of Non-Current Assets
The Company performed a routine analysis of its intangible
assets and determined that two patents and a trademark acquired in
the fiscal year ended December 31, 2007 are no longer contributing
to the Company's revenue flows and were therefore impaired for
$466,476 (2014: $-) during the nine months ended September 30,
2015.
Other Income and Expense
Other income increased for the nine months ended September 30,
2015 to $87,728 from $56,719 for the same period in 2014. The
increase is the result of interest and dividend earnings on the
marketable securities and the note receivable totaling $89,647
(2014: $49,176) and was partially offset by a loss on foreign
currency transactions of $7,971 (2014: gain of $2,874).
Liquidity and Capital Resources
For the nine months ended September 30, 2015 and 2014, the
Company generated a net loss attributable to shareholders of
$5,734,921 and $2,230,708, respectively. As of September 30, 2015
and December 31, 2014, the Company has an accumulated deficit of
$90,599,007 and $84,864,086 and had cash totaling $393,272 and
$455,841, respectively.
About Akers Biosciences, Inc.
Akers Biosciences 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: For more information:
Akers Biosciences, Inc.
Raymond F. Akers, Jr. PhD
Executive Chairman
Tel. +1 856 848 8698
finnCap (UK Nominated Adviser and Broker)
Adrian Hargrave / Scott Mathieson (Corporate Finance)
Steve Norcross (Broking)
Tel. +44 (0)20 7220 0500
Taglich Brothers, Inc. (Investor Relations)
Chris Schreiber
Tel. +1 917 445 6207
Vigo Communications (Public Relations)
Ben Simons / Fiona Henson
Tel. +44 (0)20 7016 9570
Email: akers@vigocomms.com
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