As filed with the Securities
and Exchange Commission on November 15 , 2016
WHERE
YOU CAN FIND MORE INFORMATION; INCORPORATION BY REFERENCE
Available
Information
We
file reports, proxy statements and other information with the SEC. Information filed with the SEC by us can be inspected and copied
at the Public Reference Room maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You may also obtain copies of
this information by mail from the Public Reference Room of the SEC at prescribed rates. Further information on the operation of
the SEC’s Public Reference Room in Washington, D.C. can be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains
a web site that contains reports, proxy and information statements and other information about issuers, such as us, who file electronically
with the SEC. The address of that website is
http://www.sec.gov
.
Our
web site address is
http://www.akersbio.com
. The information on our web site, however, is not, and should not be deemed
to be, a part of this prospectus.
This
prospectus and any prospectus supplement are part of a registration statement that we filed with the SEC and do not contain all
of the information in the registration statement. The full registration statement may be obtained from the SEC or us, as provided
below. Forms of the documents establishing the terms of the offered securities are or may be filed as exhibits to the registration
statement. Statements in this prospectus or any prospectus supplement about these documents are summaries and each statement is
qualified in all respects by reference to the document to which it refers. You should refer to the actual documents for a more
complete description of the relevant matters. You may inspect a copy of the registration statement at the SEC’s Public Reference
Room in Washington, D.C. or through the SEC’s website, as provided above.
Incorporation
by Reference
The
SEC’s rules allow us to “incorporate by reference” information into this prospectus, which means that we can
disclose important information to you by referring you to another document filed separately with the SEC. The information incorporated
by reference is deemed to be part of this prospectus, and subsequent information that we file with the SEC will automatically
update and supersede that information. Any statement contained in a previously filed document incorporated by reference will be
deemed to be modified or superseded for purposes of this prospectus to the extent that a statement contained in this prospectus
modifies or replaces that statement.
We
incorporate by reference our documents listed below and any future filings made by us with the SEC under Sections 13(a), 13(c),
14 or 15(d) of the Securities Exchange Act of 1934, as amended, which we refer to as the “Exchange Act” in this prospectus,
between the date of this prospectus and the termination of the offering of the securities described in this prospectus. We are
not, however, incorporating by reference any documents or portions thereof, whether specifically listed below or filed in the
future, that are not deemed “filed” with the SEC, including any information furnished pursuant to Items 2.02 or 7.01
of Form 8-K or related exhibits furnished pursuant to Item 9.01 of Form 8-K.
This
prospectus and any accompanying prospectus supplement incorporate by reference the documents set forth below that have previously
been filed with the SEC:
|
●
|
|
Our
Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on March 30, 2016.
|
|
|
|
|
|
●
|
|
Our
Annual Report on Form 10-K/A for the year ended December 31, 2015, filed with the SEC on March 30, 2016.
|
|
|
|
|
|
●
|
|
Our
Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 12, 2016.
|
|
|
|
|
|
●
|
|
Our
Quarterly Report on Form 10-Q for the quarter ended June 30, 2016, filed with the SEC on August, 11, 2016.
|
|
|
|
|
|
●
|
|
Our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2016, filed with the SEC on November 14, 2016.
|
|
|
|
|
|
●
|
|
Our
Current Reports on Form 8-K filed with the SEC on April 25, 2016, May 18, 2016, August 19, 2016, and October 12, 2016.
|
|
|
|
|
|
●
|
|
The
description of our Common Stock contained in our Registration Statement on Form S-1, filed with the SEC on August 7, 2013,
and any amendment or report filed with the SEC for the purpose of updating the description.
|
All
reports and other documents we subsequently file pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act prior to the
termination of this offering, including all such documents we may file with the SEC after the date of the initial registration
statement and prior to the effectiveness of the registration statement, but excluding any information furnished to, rather than
filed with, the SEC, will also be incorporated by reference into this prospectus and deemed to be part of this prospectus from
the date of the filing of such reports and documents.
You
may request a free copy of any of the documents incorporated by reference in this prospectus (other than exhibits, unless they
are specifically incorporated by reference in the documents) by writing or telephoning us at the following address:
Akers
Biosciences, Inc.
201
Grove Road
Thorofare,
New Jersey 08086
(856)
848-8698
Exhibits
to the filings will not be sent, however, unless those exhibits have specifically been incorporated by reference in this prospectus
and any accompanying prospectus supplement.
THE
COMPANY
Overview
Akers
Biosciences, Inc. (“Akers,” “ABI”, “we” or the “Company”) develops, manufactures,
and supplies rapid, point-of-care screening and testing products designed to bring health-related information directly to the
patient or clinician in a time- and cost-efficient manner. Akers believes it has advanced the science of diagnostics through the
development of several innovative proprietary platform technologies that provide product development flexibility.
All
of Akers’ rapid, single-use tests are performed
in vitro
(outside the body) and are designed to enhance patient well-being
and reduce total outcome costs of healthcare. The Company’s current product offerings and pipeline products focus on delivering
diagnostic assistance in a wide variety of healthcare fields/specialties, including cardiology/emergency medicine, metabolism/nutrition,
diabetes, respiratory diseases and infectious diseases detection, as well as for on and off-the-job alcohol safety initiatives.
Akers
believes that low-cost, unit-use testing not only saves time and money, but allows for more frequent, near-patient testing which
may save lives. We believe that Akers’ FDA-cleared rapid diagnostic tests help facilitate targeted diagnoses and real-time
treatment. We also believe that Akers’ rapid diagnostic tests surpass most other current diagnostic products with their
flexibility, speed, ease-of-use, readability, low cost and accuracy. In minutes, detection of disease states and medical conditions
can be performed on single-patient specimens, without sacrificing accuracy.
We believe the use of rapid tests, which can
be performed at the point-of-care when and where the patient is being consulted, can result in immediate diagnostic decisions
and subsequent treatment regimens and is an important development in the practice of medicine. Point-of-care testing addresses
today’s challenges in the healthcare industry, including:
|
●
|
cost
pressures/efficiency of healthcare delivery;
|
|
|
|
|
●
|
need
for easy to use, accurate at-home tests for individuals to monitor their personal health and wellness;
|
|
|
|
|
●
|
need
for affordable mass screening tests for key infectious diseases, cardiac conditions, and metabolic markers; and
|
|
|
|
|
●
|
public
health needs in developing countries lacking basic health infrastructure.
|
Recently,
the Company has developed tests for non-medical use within the health and wellness industry. These tests will monitor general
markers of health and wellness as they relate to diet, nutrition and exercise programs.
Market
Overview
Worldwide, healthcare professionals use laboratory
tests to support their clinical diagnosis and treatment decisions. According to a MarketsandMarkets report,
In-Vitro Diagnostic
(IVD) Market (Applications, End-users & Types) Trends & Global Forecasts (Major & Emerging Markets — G7, Japan
& BRIC) (2011 – 2016)
, published in January 2012 (the “IVD Market Report”), the use of such tests continues
to grow as a result of increased patient awareness, patient self-testing, and the aging baby boomer population across the globe.
Other major drivers for the growth of the
in vitro
diagnostic (“IVD”) industry are a rise in the number
of diseases like respiratory and hospital-acquired infections and a rise in chronic diseases such as diabetes, hypertension, cardiovascular
diseases, and cancer, which allows for both an increased understanding of the molecular processes underlying many
disease states and the opportunity for clinicians to quickly incorporate that targeted information into treatment decisions (e.g.
companion testing). According to an article published on in vitro diagnostics by Medical Device and Diagnostic Industry (“MDDI”)
online in March 2013, in the past, the
in vitro
diagnostics industry has focused on developing tests that require significant
time, skill, and often costly, specialized equipment. Patient specimens often had to be collected remotely and processed in a
central laboratory with test results sent to a physician at a later date. This general protocol is not particularly well-adapted
to the practice of medicine in a cost-effective, timely manner. The pressures on public health budgets and falling profits among
third party payors such as insurers, necessitates an alternative approach to disease management. Moreover, the implementation
of “Obamacare” in the United States mandates that tens of millions of additional people receive cost-effective healthcare.
This reality has changed the American healthcare landscape as evidenced by the steady growth of the retail health clinic and urgent
care center markets.
According
to the IVD Market Report, outside of the United States, socialized medicine and/or a general atmosphere of cost-containment and
healthcare efficiency are driving the need for diagnostic testing solutions that are fast, affordable, accurate, simple-to-perform
and help enable early diagnosis and treatment of medical conditions or provide an assessment of a person’s health status.
Akers designed its products based on single-use
assay platforms with straightforward test procedures that can be completed in minutes. In the healthcare setting, the Company’s
clinical laboratory products can be utilized near to or at the point-of-care and do not require the use of expensive equipment
or a highly trained or specialized staff. As a result, an individual’s current health status can immediately be incorporated
into diagnostic and treatment decisions, improving the overall efficiency of the healthcare experience in the eyes of the patient,
and ultimately the payor. In addition, in the developing world, the portability and ease-of-use of such point-of-care tests can
serve to drastically improve the level of disease screening and subsequent patient care. We believe the benefits of our technology
platforms are therefore well-suited to the diagnostic demands of third world countries that seek to deliver modern medical diagnosis
in the midst of primitive infrastructures. In addition, some of our products have received FDA clearance for over-the-counter
use and others that do not fall within the oversight of regulatory authorities have the added benefit of being self-tests that
deliver personal health information on-demand. Akers believes that the products that emerge from its technology platforms address
the needs of the evolving healthcare delivery system that is moving patient care closer to or into the home.
A June 6, 2013 article, “
Global In
Vitro Diagnostics Markets Outpace Pharma Industry Growth”
by Frost & Sullivan estimated the global IVD market was
$45 billion, with forecasted revenue expected to reach $64 billion in 2017. While the U.S. and Western Europe are the largest
IVD markets, the Asian-Pacific region and Eastern Europe are projected to be the fastest growing by Frost & Sullivan. The
Company’s main presence is in the United States, but the Company’s recently executed joint venture, distribution
and licensing agreements have initiated the Company’s strategic move to the China and European Union marketplaces.
Strategy
Akers’
strategy is to target carefully chosen, high margin market segments within the diagnostics industry where existing tests do not
effectively fulfill clinical requirements, or an emerging, unfulfilled need has been identified. The Company seeks to develop
tests for applications based on their ability to compliment a particular treatment, lifestyle or testing regimen that requires
a time and cost-efficient diagnostic alternative or solution. Akers utilizes its existing platform technologies to internally
develop its new products as the Company’s proprietary methods.
Akers
has established and will continue to pursue distribution relationships with high volume, medical and health & wellness product
marketers to maximize its revenue potential, and to be a worldwide competitor in specialized markets within the diagnostics industry.
Akers has developed and continues to develop
key strategic relationships with established companies that have well-trained technical sales forces and strong distribution
networks in the following key market segments:
|
●
|
Clinical
Laboratories;
|
|
|
|
|
●
|
Physicians’
Office and Urgent Care Clinics;
|
|
|
|
|
●
|
Retail;
|
|
|
|
|
●
|
Nutraceutical
Suppliers; and
|
|
|
|
|
●
|
Military/Government.
|
The
Company plans to target other attractive markets such as aid organizations with purchasing power for rapid infectious disease
tests and other biotechnology companies or pharmaceutical manufacturers that may require companion tests to promote patient compliance
with a medication regimen or facilitate initial screenings to qualify patients for a particular therapy.
Technology
Overview
Akers’
proprietary platform technologies merge scientific innovation with user-friendly formats to deliver cost-effective and time-efficient
testing and sample preparation solutions where and when they are needed.
Testing
Platform Technologies
MPC
Biosensor Technology
MicroParticle
Catalyzed Biosensor (“MPC Biosensor”) Technology permits the rapid identification of medical conditions through biomarkers
in exhaled breath. These products contain microparticles that change color when a subject has a positive test result. The microparticles
are coated with recently discovered agents that both decrease the time to result and provide a more defined color change when
appropriate. MPC Biosensor-based products are packaged in small, disposable cartridges through which test subjects can easily
blow for several seconds. In the United States, the MPC Biosensor Technology is protected by three United States patents pending,
covering all MPC Biosensor products such as BreathScan and the Breath PulmoHealth “Check” suite of products. Breath
Ketone “Check” has one US and one international patent granted. In addition, Akers also holds three US, three Australian
and three European Community Design patents for Color Comparison Card technology that users can utilize to interpret detector
results.
Particle
ImmunoFiltration Assay (PIFA®) Technology
PIFA®
technology is an accurate, rapid, immunoassay (
a procedure for detecting or measuring specific proteins or other substances
through their properties as antigens or antibodies
) method based on the selective filtration of dyed microparticles coated
with antigen or antibody. The microparticles are combined with a test sample (whole blood, serum, urine or saliva) within a self-contained
device. If a patient tests positive for the antibody or antigen, a binding event will occur and the dyed microparticles will be
trapped by a filter within the device. As a result, the test window will be void of any color. Conversely, if the patient tests
negative, the dyed microparticles will flow freely into the test window. Akers’ PIFA® Technology is currently protected
by United States patent (5,827,749) covering all PIFA tests such as Heparin, Malaria and Chlamydia. Specific to the PIFA Heparin
tests, the Company has one international Patent (JP 4,931,821) granted in force, and three patent applications pending (one US
and two international).
SMC
Technology
Synthetic
Macrocycle Complex (“SMC”) Technology is a colorimetric testing methodology that pairs a proprietary reagent (
a
substance or mixture for use in chemical analysis or other reactions)
with a hand-held, photometric reader that determines
the quantitative level of a therapeutic drug in a patient’s blood sample. The technology also permits the use of whole blood
samples collected from a simple finger stick, making products that use this technology extremely flexible within the healthcare
delivery system.
Rapid
Enzymatic Assay
Rapid
Enzymatic Assay (“REA”) technology enables the rapid detection of metabolites in blood and urine in assay formats
that are easy-to-use and deliver quantitative or semi-quantitative results. Products that employ REA technology are primarily
intended for pharmaceutical, nutritional and over-the-counter (“OTC”) markets. Akers has three United States patents
(8,808,639; 8,003,061; 8,425,859) for this technology covering our Tri-Cholesterol “Check” test, along with one US
patent application pending.
minDNA
TM
Technology
minDNA
TM
technology facilitates the analysis of DNA, in one minute, by a hand-held photometric reader. A mixture consisting
of a patient’s whole blood specimen and a disposable reagent is exposed to the minDNAnalyzer, a digital hand-held reflectance
photometer. These assays can be utilized at the point of care setting by non-clinical laboratory personnel using finger stick
blood samples, or in the laboratory using EDTA whole blood specimens obtained through venous blood draws. This technology can
be applied to the development of rapid white blood cell count and absolute neutrophil count assays that can monitor side effects
of certain psychiatric and oncology drugs.
Sample
Preparation Technology
Rapid
Blood Cell Separation Technology
Akers’
Rapid Blood Cell Separation (“Separator”) Technology, marketed under the brand name seraSTAT®, further accelerates
the rate at which a test result is obtained as the often-required sample preparation step is abbreviated drastically. Conventional
methods of blood cell separation are labor-intensive and time-consuming, typically involving blood collection and laboratory personnel,
as well as electrically-powered centrifuges and other specialized equipment. The disposable Separator device requires only a small-volume
blood sample obtained from a time and cost-efficient finger stick procedure or through a venous blood draw. Akers has obtained
the appropriate US FDA regulatory clearances for seraSTAT® as a stand-alone device and the technology is currently integrated
into PIFA PLUSS PF4 devices, and will be utilized in the infectious disease products currently under development. The seraSTAT®
Rapid Blood Cell Separation Technology is currently protected by two United States patents (7,896,167; 8,097,171) and one international
patent (JP 4,885,134), with two additional international patent applications pending.
Product
Portfolio
Akers
is positioned as a provider of rapid diagnostic solutions that encompass the totality of the point-of-care testing process, from
sample preparation to immediate test result. In addition, we believe we are a pioneer in disposable breath condensate technology,
a testing format that has significant potential given the variety of wellness- and disease-predicting biomarkers present in an
exhaled breath sample.
At
present, Akers’ commercialized and emerging product portfolio incorporates four of the Company’s six proprietary platform
testing technologies: PIFA®, MPC Biosensor, REA and Rapid Blood Cell Separation Technology. Directly below, is a discussion
of the products within our current and emerging portfolio that will be segmented by platform.
Akers
designed its products based on single-use assay platforms with straightforward test procedures that can be completed in minutes.
In the U.S. some of the Company’s clinical laboratory products and those with medical intended uses generally require “prescription
use” Federal Drug Administration (“FDA”) 510(k) clearance prior to product marketing given that they will be
ordered or used by medical practitioners in the course of his or her professional practice. Despite this categorization, Akers’
professional use products are still designed for ease of use, can be utilized near or at the point-of-care, and do not require
the use of expensive equipment or a highly trained or specialized staff. As a result, an individual’s current health status
can rapidly be incorporated into diagnostic and treatment decisions, improving the overall efficiency of the healthcare experience
in the eyes of the patient, and ultimately the payer. In addition, in the developing world, the portability and ease-of-use of
such point-of-care tests can serve to drastically improve the level of disease screening and subsequent patient care. We believe
the benefits of our technology platforms are therefore well-suited to the diagnostic demands of countries in the developing world
that seek to deliver modern medical diagnosis in the midst of primitive infrastructures. In addition, some of our products have
received FDA 510(k) clearance for over-the-counter (“OTC”) use. Other self-tests deliver personal health information
of a non-medical nature, on-demand, and are not FDA regulated; these products are still manufactured in compliance with its ISO
13485 quality management system (“QMS-Compliant”). Akers believes that all its technology platforms and products address
the needs of the evolving healthcare delivery system that is moving patient care closer to or in the home.
The
following table sets forth our marketed and current pipeline products, identifies the appropriate “prescription use”
or “OTC” designation and whether the required clearance has been obtained or is still needed prior to product marketing.
Our
marketed and emerging products include:
Product
|
|
Platform
|
|
Marketed/Pipe
line
|
|
Not
FDA-
regulated;
QMS-
Compliant
Only
|
|
FDA
Clearance
Required
Prescription
Use/OTC
|
|
FDA
Clearance
Status
Obtained/Needed
|
|
Description
|
BreathScan
TM
|
|
MPC
|
|
Marketed
|
|
|
|
OTC
|
|
Obtained
|
|
Disposable breath alcohol detector
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BreathScan® PRO
|
|
MPC
|
|
Marketed
|
|
|
|
OTC
|
|
Obtained
|
|
Quantitative breath alcohol detection system
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Breath Ketone “Check”®
|
|
MPC
|
|
Pipeline
|
|
|
|
Prescription Use
|
|
Needed
|
|
Disposable breath ketone device for diabetic monitoring and management of senile dementia and Alzheimers disease patients
|
|
|
|
|
|
|
|
|
|
|
|
|
|
METRON ®
|
|
MPC
|
|
Marketed
|
|
X
|
|
|
|
|
|
Disposable breath ketone device to monitor weight loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Breath PulmoHealth “Check”®
|
|
MPC
|
|
Pipeline
|
|
|
|
Prescription Use
|
|
Needed
|
|
A suite of breath tests for biomarkers indicating asthma, chronic obstructive pulmonary disease (COPD), and lung cancer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BreathScan Lync
|
|
MPC
|
|
Marketed
|
|
X
|
|
|
|
|
|
Non-invasive, quantitative measurement of biological markers for health and wellness
|
Product
|
|
Platform
|
|
Market/Pipe
line
|
|
Not
FDA-
regulated;
QMS-
Compliant
Only
|
|
FDA
Clearance
Required
Prescription
Use/OTC
|
|
FDA
Clearance
Status
Obtained/Needed
|
|
Description
|
PIFA®
Heparin/PF4 & PIFA PLUSS® PF4
|
|
PIFA
|
|
Marketed
|
|
|
|
Prescription
Use
|
|
Obtained
|
|
Rapid
tests for Heparin/PF4 antibodies to detect an allergy to the widely used blood thinner, Heparin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIFA
PLUSS® Chlamydia
|
|
PIFA
|
|
Pipeline
|
|
|
|
Prescription
Use
|
|
Needed
|
|
Rapid
tests for a the most prevalent sexually transmitted disease
|
|
|
|
|
|
|
|
|
|
|
|
|
|
seraSTAT®
|
|
seraStat
|
|
Marketed
|
|
|
|
Prescription
Use
|
|
Obtained
|
|
Rapid
Blood Cell Separator, marketed under the brand name seraSTAT®, further accelerates the rate at which a test result is
obtained as the often-required sample preparation step is abbreviated drastically.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Tri-Cholesterol
“Check”®
|
|
REA
|
|
Marketed
|
|
|
|
OTC
|
|
Obtained
|
|
Rapid
test for Total and high density lipoprotein cholesterol and estimates low density lipo protein
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PIFA
PLUSS TroponinI
|
|
PIFA
|
|
Pipeline
|
|
|
|
Prescription
Use
|
|
Needed
|
|
Rapid
test for the diagnosis of a myocardial infarction
|
MPC
Biosensor Technology
The
Company’s MPC Biosensor breath condensate testing platform forms the basis of a number of Akers’ marketed and pipeline
products.
Breath
Alcohol Franchise
BreathScan®
originated the disposable breath alcohol detector category and was the first single-use breathalyzer to obtain the FDA 510(k)
clearance in 2006 for Over-the-Counter use required to facilitate sales to US consumers; CE certification is not required to market
the product in the EU given that BreathScan® results are not used to diagnose any medical conditions. However, the Company
has received certification under the French Standard, NF X 20-702 which defines the specifications that chemical breath alcohol
detectors must meet in order to be sold to consumers in France. In addition, the Company’s breath alcohol detector technology
was granted an Australian Standard certification trademark, which cleared the commercial pathway for product sales in Australia,
New Zealand, and South Africa.
The
Company’s disposable breath alcohol detectors are available in .02%, .04%, .05% and .08% blood alcohol concentrations (“BACs”)
and provide users with a test result in two minutes. If the crystals in the interior of the device change from yellow to aqua,
the user has tested positive for the specific alcohol level. Should the crystals remain yellow, the result is negative.
The
Company’s proprietary breath alcohol detection technology is paired with the quantitative precision of an electronic analyzer
in the BreathScan® PRO alcohol detection system. As with all BreathScan® products, the test subject exhales into a specially
calibrated, BreathScan® PRO detector. The testing coordinator then inserts the used detector into the BreathScan® PRO
Digital Analyzer. After two minutes, the Analyzer’s sophisticated optics calculate the subject’s BAC; the detectable
range spans from 0.00% to 1.50% BAC. Unlike other electronic breathalyzers, BreathScan® PRO never requires recalibration so
it is in “ready” mode at all times. In 2011, the Company received FDA over-the-counter clearance for the system, providing
a commercialization path in the U.S. for use by trained professionals, including those in civil and military law enforcement,
and the general public; in addition, the CE-Mark was affixed to the alcohol detection system for professional use. Unlike the
aforementioned BreathScan® disposable detectors, BreathScan® PRO is required to have a CE-Mark as the system includes
an electronic component, namely the digital analyzer.
Since
the appropriate regulatory clearances have been obtained in the United States and other major markets requiring specific certifications
for specific devices (i.e. France and Australia for the Company’s single-use detectors for these products), the Company
does not anticipate needing to fund additional clinical trials to facilitate or initiate product marketing in other international
regions thus far.
Other
Emerging MPC Platform Products
The
Company’s MPC Biosensor technology is being applied to the development of products that serve the nutraceutical and weight
loss marketplaces. As a category, these disposable screening tests are exempt from FDA 510(k) premarket clearances. Biomarkers
related to various metabolic processes can be measured in breath condensate. As a result, Akers has used its proprietary, easy-to-use
platform to design disposable breath tubes that measure ketone (acid) production associated with fat-burning (METRON® and
KetoChek) and oxidative stress levels that relate to cellular damage and the development of many preventable diseases (OxiChek).
The Company believes that personalized health and wellness - and eventually personalized medicine – will become an increasingly
significant market. The Company is positioning its tests for weight loss and oxidative stress for this market by designing a more
consumer-focused reagent device, and linking this device to an application for smartphones and tablets that can not only produce
a result, but also track progress over time. Initial marketing activities have commenced for these products and the Company is
preparing for commercialization. The Company is currently assessing distribution opportunities with companies specializing in
weight loss and/or mass distribution through health-related multilevel marketing organizations. Since devices with claims related
to weight loss or nutrition are exempt from FDA oversight, a clinical program to support 510(k) submission is not required for
any of these products. Given the non-medical intended use, the Company does not believe products will be required to hold a CE-mark
prior to marketing in the EU.
Akers
is continuing its clinical development of the Breath Ketone “Check” disposable breath tube for the diagnosis of ketoacidosis
in diabetics. Breath Ketone “Check” is being designed to provide real-time information that allows diabetics to determine
if they have a more severe level of ketone (acid) build up in their body that can cause a life-threatening medical emergency called
ketoacidosis. The estimated 28.5 million Type I (insulin-dependent) diabetics worldwide are at particular risk for ketoacidosis
and require routine monitoring of their ketone levels. To date, the medical industry relies on blood and urine-based ketone testing
methods, which are invasive and/or inconvenient. Since breath and blood ketone levels are closely correlated, the Breath Ketone
“Check” is designed to offer healthcare professionals and their patients a convenient, accurate method, which can
be completed anytime, anywhere, to quickly determine if an individual’s ketone level is approaching a dangerous threshold
requiring medical attention. Since this product requires FDA 510(k) clearance, the Company continues to develop its technical
file and complete required clinical studies to complete the regulatory submission.
The
Company is also devoting resources to the research and development of the Breath PulmoHealth “Check” suite of assays.
These disposable detectors are being designed to signal the detection of various biomarkers related to pulmonary health, namely
asthma, chronic obstructive pulmonary disease (“COPD”) and lung cancer, through convenient, rapid analysis of an individual’s
breath sample. Akers has chosen to target this trio of conditions due to their significant impact on global health:
|
●
|
over
300 million people worldwide are living with asthma and up to 18% of a country’s population are undiagnosed
asthmatics;
|
|
|
|
|
●
|
210
million individuals are being treated for COPD but each of the 1 billion smokers worldwide are at risk for the disease;
and
|
|
|
|
|
●
|
more
than 1.6 million people worldwide receive the diagnosis of lung cancer annually with many more victims expected as 80% of all
lung cancers can be attributed to smoking.
|
Akers
believes these statistics suggest that pulmonary conditions are under-diagnosed and under-treated and will continue to pose a
chronic strain on worldwide public health. Currently, diagnostic methods used for the detection of lung-related diseases and illnesses
are often costly as specialized medical personnel must facilitate analysis and testing, and radiologic exams or invasive surgical
procedures may be required. While Akers does not presume Breath PulmoHealth “Check” products to be replacements for
such tests in all markets, it does however have ambitions for the devices to become effective, highly cost-efficient, primary
screening tools. Their ease-of-use, portability and non-invasive nature provide healthcare professionals and public health officials
with a testing platform that can be deployed in high volume, and even in regions of the developing world. At present, the Company’s
primary development efforts are focused on configuring the clinical dossier for the asthma product.
The
Breath Ketone “Check” and the Breath PulmoHealth “Check” suite of products will require the development
of individual clinical trial programs to facilitate eventual FDA 510(k) submissions. The Company has self-certified Breath Ketone
“Check” as being in compliance with CE requirements in the EU, and intends to pursue the same designation for each
product in the Breath PulmoHealth “Check” trio once the appropriate technical file is assembled.
MPC
Biosensor technology is currently protected by one United States patents (8,871,521).
PIFA®
Technology
The
core products marketed under the PIFA® platform are the PIFA® Heparin/PF4 Rapid Assay, PIFA PLUSS® PF4, and a variety
of rapid Infectious Disease screening tests which target markets in the developing world.
PIFA®
Heparin/PF4 Rapid Assay and PIFA PLUSS® PF4 remain the only FDA-cleared rapid manual assays that quickly determine if a patient
being treated with the blood thinner Heparin may be developing a drug allergy. This clinical syndrome, referred to as Heparin-Induced
Thrombocytopenia (“HIT”), reverses the Heparin’s intended therapeutic effect and transforms it into a clotting
agent. According to “
Current Concepts Review: Heparin-Induced Thrombocytopenia”
, published by Foot and Ankle
International in 2008 (the “HIT Report”), patients with HIT are at risk of developing limb- and life-threatening complications,
so the timely test result provided by Akers’ Heparin/PF4 devices is paramount to effective clinical decision making. In
the U.S. alone, approximately 12 million patients are exposed to Heparin annually and 1% to 5% of those patients receive a HIT
diagnosis. The largest at-risk populations are patients undergoing major cardiac or orthopedic surgical procedures. It is estimated
that up to 50% of cardiac surgery patients develop HIT-antibodies. Given the size of the aging baby boomer market segment and
the prevalence of cardiac disease, surgeries within this category is expected to increase, as would the potential demand for the
Company’s convenient, rapid tests.
The
PIFA® Heparin/PF4 Rapid Assay improves the standard of care in HIT-testing with its result delivered in less than five minutes
after the patient sample has been prepared. Traditional methods required the use of expensive equipment, specialized laboratory
personnel and approximately four hours of technician time to complete the 20+ assay test procedure in-house, Clinicians were subjected
to a 24-to-72 hour turnaround time if the HIT-antibody determination was outsourced to a reference laboratory. Especially in the
latter scenario, the patient information obtained is retrospective in nature as the HIT-antibody result cannot be factored into
time-sensitive diagnostic and treatment decisions. The Company has also introduced PIFA PLUSS PF4 to U.S. hospitals to further
improve the rate at which healthcare professionals can obtain a HIT-antibody result.
This
PIFA® line extension merges the ease-of-use of the PIFA testing platform with Akers’ recently patented Rapid Blood Cell
Separation Technology, marketed under the brand name seraSTAT®. The marriage of these two technologies condenses the sample
preparation and analysis procedures as the precise micro-volume of a seraSTAT® -prepared patient specimen is delivered directly
into the PIFA® cassette for immediate testing. This eliminates an additional one-hour of sample processing time and the need
for healthcare personnel to have access to a centrifuge to separate the liquid fraction of blood from the cellular fraction. As
a result, HIT-testing can be initiated and completed at or near the point-of-care, especially in emergency and critical care departments
where time-efficient diagnostic results can drastically improve patient outcomes.
Since
the appropriate regulatory clearances have been obtained in the United States for these products, the Company does not anticipate
needing to fund additional clinical trials to facilitate product marketing domestically. In addition, the current technical file
that has been assembled for seraSTAT® and PIFA PLUSS PF4® will also be used to support Akers’ CE-marking self-certification
process to initiate product sales in the EU; the PIFA Heparin/PF4 Rapid Assay is already CE-marked. The Company’s strategy
in foreign jurisdictions that may require additional clinical trials to support regulatory clearance, as is the case in China,
is to partner with a distributor that will fund the required clinical program in exchange for some degree of marketing exclusivity.
Other
PIFA® Platform Assays in development
According
to the Center for Disease Control and Prevention, “
Emerging Infectious Diseases: a 10-Year Perspective from the National
Institute of Allergy and Infectious Diseases, volume 11, Number 4 — April 2005”,
infectious diseases account for
more than 15 million deaths annually. That equates to one in every two deaths in developing countries. Given that more than 80%
of the world’s population lives in the 100-plus developing countries, the need for infectious disease screening tests and
effective treatment options has global implications. The expansive geographies combined with underdeveloped, underfunded healthcare
infrastructures make rapid, single-use, portable devices that do not require special instrumentation, key to any infectious disease-containment
solution.
Akers’
PIFA® technology provides a testing format that meets the aforementioned criteria. The Company can quickly apply the PIFA
PLUSS® methodology to its infectious disease testing products to further consolidate the test result turn-around time and
eliminate the need for any specialized sample preparation personnel or equipment which are usually not at the disposal of healthcare
professionals in remote locations. To date, the Company’s custom reagent work has focused on a variety of infectious diseases,
markers of cardiovascular disease, and blood typing tests including the following:
|
●
|
Chlamydia
|
|
|
|
|
●
|
Malaria
|
|
|
|
|
●
|
Dengue
Fever
|
|
|
|
|
●
|
Troponin
I
|
|
|
|
|
●
|
ABOD
Battlefield Blood Transfusion Card
|
REA
Technology
Akers’
Tri-Cholesterol “Check” test is initiated with an easy-to-obtain finger stick blood sample, and provides users with
an estimate of both their total and high density lipoprotein (“HDL”) cholesterol levels, and by a simple calculation,
approximates their low density lipoprotein (“LDL”) level. We believe that there is global demand for this category
of disposable tests given healthcare trends that identify cardiovascular disease, and related risk factors like high cholesterol,
diabetes and high blood pressure. These complications are particularly on the rise in developing nations that have gained access
to the dietary habits of the west. In fact, studies reported by Middle East Health Magazine recently conducted in various medical
centers throughout Saudi Arabia and the United Arab Emirates (“UAE”) categorized the cardiovascular health risk as
being on the edge of a potentially serious epidemic. In addition, the research revealed that half the subjects were undiagnosed
prior to participating in the study that may be indicative of insufficient healthcare resources. This regional case study has
global application as cardiovascular disease is the leading cause of death worldwide and access to healthcare remains a challenge
to much of the aggregate population. This drives home the need for rapid, straightforward screening tests that are easily accessible
to individuals for routine monitoring.
Tri-Cholesterol
“Check” has the appropriate U.S. FDA market clearances and is also CE-marked for sale in the European Union for professional
use. At present, the Company’s Tri-Cholesterol “Check” business strategy is to focus on distribution activities
in countries within the developing world. Once Akers completes an assessment of opportunities within the region, it intends to
determine if additional clinical data outside of the robust technical file assembled to support FDA-clearance and CE-certification
will be required for product marketing.
The
REA Technology is currently protected by three United States patents (8,808,639; 8,003,061; 8,425,859).
Sample
Preparation Technology
Rapid
Blood Cell Separation Technology
In
addition to the Company’s testing platforms, Akers’ recently patented Rapid Blood Cell Separation (“Separator”)
Technology, marketed under the brand name seraSTAT®, further accelerates the rate at which a test result is obtained as the
often-required sample preparation step is abbreviated drastically. Conventional methods of blood cell separation are labor-intensive
and time-consuming, typically involving blood collection and laboratory personnel, as well as electrically-powered centrifuges
and other specialized equipment. The Separator device requires only a small-volume blood sample obtained from a time- and cost-efficient
finger stick procedure.
The
required micro-volume specimen of serum or plasma is immediately extracted and introduced into a rapid assay device for real-time
analysis. The savings afforded by the Separator device can be measured in time and cost given its quick turn-around-time and straightforward,
easy-to-master procedure.
Since
the appropriate regulatory clearances have been obtained in the United States for seraSTAT® as a stand-alone device, the Company
does not anticipate needing to fund additional clinical trials to expand product marketing domestically. Currently, seraSTAT®
is integrated into PIFA PLUSS PF4 devices, and will be utilized in the infectious disease products currently under development.
Akers may consider partnerships with other medical device companies, functioning as an Original Equipment Manufacturer (“OEM”),
as the benefits of the seraSTAT® Rapid Blood Cell Separation Technology can be integrated into other assay platforms. Also,
the current technical file that has been assembled for seraSTAT® will be used to support Akers’ CE-marking self-certification
process to initiate product sales in the EU. The Company’s strategy in foreign jurisdictions that may require additional
clinical trials to support regulatory clearance is to partner with a distributor that will fund the required clinical program
in exchange for some degree of marketing exclusivity.
The
seraSTAT® Rapid Blood Cell Separation Technologies currently protected by two United States patents (7,896,167; 8,097,171)
and one international patent (JP 4,885,134).
Competition
Competitors
of Akers include other companies developing and marketing rapid, point-of-care diagnostic devices and companies with dedicated
laboratory instruments and/or automated test systems. We face intense competition from companies with dominant market positions
within the
in vitro
diagnostic testing market such as Abbott, ACON Laboratories, Inc., Alere, Diagnostica Stago, SA., Immucor,
Inc., OraSure Technologies, Inc., and Quidel Corporation.
The
Company believes the primary criteria for determining competitiveness within the rapid point-of-care sector are cost, ease-of-use,
speed, readability, accuracy and flexibility. The time required by Akers to develop a working prototype test ready for clinical
trials typically ranges from eight to twelve weeks from inception. We believe that competitors’ laboratory tests normally
require at least a year to develop to a similar point.
However,
our competitors have significantly greater financial, technical, marketing and other resources than we have and may be better
able to:
|
●
|
respond
to new technologies or technical standards;
|
|
|
|
|
●
|
devote
resources to the development, production, promotion, support and sale of products;
|
|
|
|
|
●
|
acquire
other companies to gain new technologies or products that may displace our product lines;
|
|
|
|
|
●
|
react
to changing customer requirements and expectations;
|
|
|
|
|
●
|
manufacture,
market and sell products; and
|
|
|
|
|
●
|
deliver
a broad range of competitive products at lower prices.
|
Our
principal competitors are able to leverage their broader product portfolios and dominant market positions in some segments by,
for example, bundling their products into specially priced packages that create strong financial incentives for their customers
to purchase their products. These practices may negate savings customers would gain from buying select products from Akers and
may deter such customers from buying Akers’ products. We expect competition in the markets in which we participate to continue
to increase as existing competitors improve or expand their product offerings.
How
we Generate Revenue
The
majority of our revenue comes from selling rapid, screening and testing products, largely through our distribution networks. Some
of our assays are used in the clinical laboratory to ultimately help healthcare professionals to diagnose a medical condition
or complication that may require treatment. Other products can be sold over-the-counter, to the general public, to help assess
an individual’s status as it relates to his/her blood alcohol or cholesterol level, to help monitor his/her progress on
a specific wellness regimen, and/or to screen for a biomarker that may be indicative of an individual’s general level of
health. Some of our revenue is associated with licensing payments that may relate to exclusive access to specific markets.
Our
Current Target Markets
Regarding
the Company’s test for the heparin drug allergy, the testing market largely resides within the clinical hospital laboratories
of medical facilities. In the U.S., the Company accesses decision makers within these institutions through profiling by its highly
trained technical sales team and collaborative prospecting with distributor sales representatives. Internationally, Akers provides
comprehensive training to its distributor partners which will enable them to implement the same selling and technical training
strategies.
The
markets for alcohol breathalyzers are reached through a network of large and small distributors. These markets include industrial
safety, education, law enforcement, social responsibility and retail.
The
health and wellness markets include nutraceutical companies, fitness centers and diet and weight loss centers.
Manufacturing
and Suppliers
We
are a vertically integrated manufacturer, producing substantially all of our devices in-house. The vast majority of our products
start out as high quality, medical grade polymers and exit our facilities as fully manufactured and packaged medical devices.
As a result, we have a short supply line between our raw materials and finished goods which gives us greater control over our
product quality. The downside of our in-house manufacturing is the requirements for facilities, power, and equipment. This approach
also requires mid-to-long-term planning and the ability to predict future needs. Many of our processes are unique to us, but the
Company’s flexible manufacturing capabilities and unused current capacity generally translate into relatively short production
timelines. As demand for our products increase, additional capacities may be required to advance our evolving needs.
We
use a diverse and broad range of raw materials in the manufacturing of our products. We purchase all of our raw materials and
select items, such as packaging, from external suppliers. In addition, we purchase some supplies from single sources for reasons
of proprietary know-how, quality assurance, sole source availability, or due to regulatory qualification requirements. US medical
device manufacturers must establish and follow quality systems to help ensure that their products consistently meet applicable
requirements and specifications. The quality systems for FDA-regulated products are known as current good manufacturing practices
(“cGMP’s”). cGMP requirements for devices in part 820 (21 CFR part 820) were first authorized by section 520(f)
of the Federal Food, Drug, and Cosmetic Act. We work closely with our suppliers to ensure continuity of supply while maintaining
high quality and reliability. To date, we have not experienced any significant difficulty locating and obtaining the materials
necessary to fulfill our production requirements.
On
February 4, 2015, the Company’s quality management system was certified as compliant with the International Standards Organization’s
(“ISO”) 13485:2003 requirements for the design, manufacture and distribution of medical devices including in vitro
diagnostic products.
Distribution
We
distribute our products through direct and indirect channels of distribution. We have well-developed indirect distribution channels
in the U.S. with, among others, Cardinal Health 200, Inc. (“Cardinal Health”), Fisher Healthcare, a Division of Fisher
Scientific Company L.L.C. (“Fisher Healthcare”), Medline Industries, Inc. (“Medline”), and Typenex Medical
L.L.C. (“Typenex”) for the Company’s PIFA Heparin/PF4 assays. The relationships with Cardinal Health and Fisher
Healthcare provide us with access to the majority of U.S. hospitals.
With
respect to the Company’s breath alcohol franchise, historically Akers focused its commercial attention within the on-the-job
safety/human resources sector. Access was and currently is largely achieved through designated BreathScan® distributors and
limited arrangements in which the Company serves in an OEM capacity.
Our
dedicated technical sales force works in tandem with distributor sales representatives to uncover opportunities in the clinical
laboratory marketplace. The Company facilitates direct sales for hospitals that prefer to purchase direct from the manufacturer.
Since
2012, the Company has also had a distribution relationship with Novotek Therapeutics Inc. (“Novotek”), a Beijing-based
pharmaceutical and
in vitro
diagnostic business development corporation. The multi-year distribution agreement assigns
exclusive sales and marketing rights to Novotek to make Akers’ Particle ImmunoFiltration Assay (“PIFA”) products
available in Mainland China and that market clearance has now been obtained.
In
select European countries and Australia we have distribution relationships with specialized sales and marketing organizations
for some of our products. We do not have a strong presence in many emerging markets, but are seeking to enter into agreements
to enable us to enter other international markets in the current fiscal year.
During
the year ended December 31, 2015 sales to Cardinal Health and Fisher Healthcare accounted for a significant part of the Company’s
product revenue. This concentration makes the Company vulnerable to a near-term severe impact should the relationships be terminated.
Joint
Venture
On
October 24, 2014, the Company entered into a Joint Venture Agreement (the “Joint Venture Agreement”) by and among
the Company, Hainan Savy Investment Management Ltd. (“Hainan”) and Mr. Thomas Knox, the Company’s Non-Executive
Co-Chairman, to research, develop, produce and sell certain Akers rapid diagnostic screening and testing products in China (the
“Joint Venture”). The Joint Venture is located in Haikou, the capital city of Hainan, China, and is incorporated as
Hainan Savy Akers Biosciences, Ltd (“HSAB”).
Intellectual
Property
We
rely on a combination of patent, trademark and trade secret laws in the U.S. and other jurisdictions to protect our proprietary
platform technologies and our brands. We also rely on confidentiality procedures and agreements with key employees and distribution/business
partners where appropriate, and contractual provisions to achieve the same. We do not pursue patent protection where the possibility
for meaningful enforcement is limited.
The
Akers logo is a registered trademark in the U.S. Other registered trademarks/service marks include: BreathScan®, PIFA®,
PIFA PLUSS®, seraSTAT®, HealthTest®, and Be a Hero, Get Their Keys®, and METRON®.
The
following table summarizes the U.S. and international utility patents that currently protect Akers intellectual property; the
core and emerging products to which they relate are also noted:
Description
|
|
Jurisdiction
|
|
Utility
Patent
No.
|
|
Type
of
Protection
|
|
Expiration
Date
|
|
Product(s)
To Which
They Relate
|
|
|
|
|
|
|
|
|
|
|
|
breath
Ketone detector
|
|
US
|
|
8,871,521
|
|
Manufacture
|
|
3/8/2031
|
|
Breath
Ketone “Check” ®
|
|
|
|
|
|
|
|
|
|
|
|
blood
separator and method of separating fluid fraction from whole blood
|
|
US
|
|
7,896,167
|
|
Manufacture
|
|
9/7/2026
|
|
seraSTAT®;
PIFA PLUSS® PF4; PIFA PLUSS® Infectious Diseases Rapid Assays
|
|
|
|
|
|
|
|
|
|
|
|
blood
separator and method of separating fluid fraction from whole blood
|
|
US
|
|
8,097,171
|
|
Manufacture
|
|
8/5/2025
|
|
seraSTAT®;
rapid blood cell separator also integrated into PIFA PLUSS® PF4 and PIFA PLUSS® Infectious Diseases Rapid Assays
|
|
|
|
|
|
|
|
|
|
|
|
blood
separator and method of separating fluid fraction from whole blood
|
|
Japan
|
|
4,885,134
|
|
Manufacture
|
|
8/5/2025
|
|
seraSTAT®;
rapid blood cell separator also integrated into PIFA PLUSS® PF4 and PIFA PLUSS® Infectious Diseases Rapid Assays
|
|
|
|
|
|
|
|
|
|
|
|
ligand
assay method
|
|
US
|
|
5,827,749
|
|
Manufacture
|
|
|
|
PIFA®
Heparin/PF4 Rapid Assay; PIFA PLUSS® PF4; PIFA PLUSS® Infectious Diseases Rapid Assays
|
|
|
|
|
|
|
|
|
|
|
|
methods
and kits for detecting heparin/platelet factor 4 antibodies
|
|
Japan
|
|
4,931,821
|
|
Manufacture
|
|
10/4/2025
|
|
PIFA®
Heparin/PF4 Rapid Assay; PIFA PLUSS® PF4
|
|
|
|
|
|
|
|
|
|
|
|
test
strip card
|
|
US
|
|
8,003,061
|
|
Manufacture
|
|
5/6/2024
|
|
Tri-Cholesterol
“Check”®
|
|
|
|
|
|
|
|
|
|
|
|
test
strip card
|
|
US
|
|
8,425,859
|
|
Manufacture
|
|
5/6/2024
|
|
Tri-Cholesterol
“Check”®
|
|
|
|
|
|
|
|
|
|
|
|
test
strip card
|
|
US
|
|
8,808,639
|
|
Manufacture
|
|
5/6/2024
|
|
Tri-Cholesterol
“Check”®
|
Circumstances
outside our control could pose a threat to our intellectual property. For example, effective intellectual property protection
may not be available in every country in which our products are distributed. Also, the efforts we have taken to protect our proprietary
rights may not be sufficient or effective. Any significant impairment of our intellectual property rights is costly and time consuming.
Any increase in unauthorized use of our intellectual property could make it more expensive to do business and harm our operating
results.
Akers’
Tri-Cholesterol “Check”, PIFA Heparin/PF4 Rapid Assay, BreathScan PRO alcohol detection system, and the Breath Ketone
“Check” are CE-marked for sale in the EU for professional use. The CE-mark must be affixed to a product that is intended,
by the manufacturer, to be used for a medical purpose and will be sold into EU member states as well as Iceland, Norway and Liechtenstein.
For Akers’ current and proposed “medical-purpose” products, the CE-marking process is facilitated by self-certification,
as a manufacturer must carry out a conformity assessment, perform any appropriate electromagnetic testing, create a technical
file with supporting documentation, and sign an EC declaration of conformity. The documentation is verified by the Company’s
authorized representative in the EU and must be made available to authorities upon request.
Government
Regulations
FDA
Approval/Clearance Requirements
Unless
an exemption applies, each medical device that we wish to market in the U.S. must receive 510(k) clearance. It has been the Company’s
experience thus far, that the FDA’s 510(k) clearance process usually takes from four to twelve months, but can last significantly
longer. We cannot be sure that 510(k) clearance will ever be obtained for any product we propose to market. We have obtained the
required FDA clearance for all of our current products that require such clearance.
The
FDA decides whether a device line must undergo either the 510(k) clearance or Premarket approval (“PMA”). PMA is the
FDA process of scientific and regulatory review to evaluate the safety and effectiveness of Class III medical devices. Class III
devices are those that support or sustain human life, are of substantial importance in preventing impairment of human health,
or which present a potential, unreasonable risk of illness or injury. The PMA approval process is based on statutory criteria.
These criteria include the level of risk that the agency perceives is associated with the device and a determination whether the
product is a type of device that is similar to devices that are already legally marketed. Devices deemed to pose relatively less
risk are placed in either Class I or II, which requires the manufacturer to submit a premarket notification (“PMN”)
requesting 510(k) clearance, unless an exemption applies. The PMN must demonstrate that the proposed device is “substantially
equivalent” in intended use and in safety and effectiveness to a legally marketed predicate device, which is a pre-existing
medical device to which equivalence can be drawn, that is either in Class I, Class II, or is a Class III device that was in commercial
distribution before May 28, 1976, for which the FDA has not yet called for submission of a PMA application.
Class
I devices are those for which safety and effectiveness can be assured by adherence to the FDA’s general regulatory controls
for medical devices, or the General Controls, which include compliance with the applicable portions of the FDA’s quality
system regulations, facility registration and product listing, reporting of adverse medical events, and appropriate, truthful
and non-misleading labeling, advertising, and promotional materials. Some Class I devices also require premarket clearance by
the FDA through the 510(k) PMN process described below. A small number of our products are Class I devices.
Class
II devices are subject to the FDA’s General Controls, and any other special controls as deemed necessary by the FDA to ensure
the safety and effectiveness of the device. Premarket review and clearance by the FDA for Class II devices is accomplished through
the 510(k) PMN procedure. Pursuant to the Medical Device User Fee and Modernization Act of 2002, or MDUFMA, as of October 2002
unless a specific exemption applies, 510(k) PMN submissions are subject to user fees. Certain Class II devices are exempt from
this premarket review process. A majority of our products, encompassing all of our significant product lines, are Class II devices.
Class
III devices are those devices which have a new intended use, or use advanced technology that is not substantially equivalent to
that of a legally marketed device. The safety and effectiveness of Class III devices cannot be assured solely by the General Controls
and the other requirements described above. These devices almost always require formal clinical studies to demonstrate safety
and effectiveness and must be approved through the premarket approval process described below. Premarket approval applications
(and supplemental premarket approval applications) are subject to significantly higher user fees under MDUFMA than are 510(k)
PMNs. None of our products are Class III devices.
A
clinical trial may be required in support of a 510(k) submission. These trials generally require an Investigational Device Exemption,
or IDE, application approved in advance by the FDA for a specified number of patients, unless the product is deemed a non-significant
risk device eligible for more abbreviated IDE requirements. The IDE application must be supported by appropriate data, such as
animal and laboratory testing results. Clinical trials may begin if the IDE application is approved by the FDA and the appropriate
institutional review boards at the clinical trial sites.
Pervasive
and Continuing FDA Regulation
A
host of regulatory requirements apply to our marketed devices, including the quality system regulation (which requires manufacturers
to follow elaborate design, testing, control, documentation and other quality assurance procedures), the Medical Reporting Regulations
(“MDR”) regulations (which require that manufacturers report to the FDA specified types of adverse events involving
their products), labeling regulations, and the FDA’s general prohibition against promoting products for unapproved or “off-label”
uses. Class II devices also can have special controls such as performance standards, post-market surveillance, patient registries
and FDA guidelines that do not apply to class I devices. Unanticipated changes in existing regulatory requirements or adoption
of new cGMP requirements could hurt our business, financial condition and results of operations.
Health
Care Fraud and Abuse
In
the United States, there are federal and state anti-kickback laws that generally prohibit the payment or receipt of kickbacks,
bribes or other remuneration in exchange for the referral of patients or other health-related business. For example, the Federal
Health Care Programs’ Anti-Kickback Law (42 U.S.C. §1320a-7b(b)) prohibits anyone from, among other things, knowingly
and willfully offering, paying, soliciting or receiving any bribe, kickback or other remuneration intended to induce the referral
of patients for, or the purchase, order or recommendation of, health care products and services reimbursed by a federal health
care program (including Medicare and Medicaid). Recognizing that the federal anti-kickback law is broad and potentially applicable
to many commonplace arrangements, the Office of Inspector General within the Department of Health and Human Services, or OIG,
has issued regulations, known as the safe harbors, which identify permissible practices. If all of the requirements of an applicable
safe harbor are met, an arrangement will not be prosecuted under this law. Safe harbors exist for a number of arrangements relevant
to our business, including, among other things, payments to bona fide employees, certain discount arrangements, and certain payment
arrangements involving GPOs. The failure of an arrangement to fit precisely within one or more safe harbors does not necessarily
mean that it is illegal. However, conduct that does not fully satisfy each requirement of an applicable safe harbor may result
in increased scrutiny by government enforcement authorities, such as the OIG or the Department of Justice. Violations of this
federal law can result in significant penalties, including imprisonment, monetary fines and assessments, and exclusion from Medicare,
Medicaid and other federal health care programs. Exclusion of a manufacturer would preclude any federal health care program from
paying for its products. In addition to the federal anti-kickback law, many states have their own kickback laws. Often, these
state laws closely follow the language of the federal law. Some state anti-kickback laws apply regardless of whether a federal
health care program payment is involved. Federal and state anti-kickback laws may affect our sales, marketing and promotional
activities, and relationship with health care providers or laboratory professionals by limiting the kinds of arrangements we may
have with hospitals and others in a position to purchase or recommend our products.
Federal
and state false claims laws prohibit anyone from presenting, or causing to be presented, claims for payment to third-party payors
that are false or fraudulent. For example, the federal Civil False Claims Act (31 U.S.C. §3729 et seq.) imposes liability
on any person or entity who, among other things, knowingly presents, or causes to be presented, a false or fraudulent claim for
payment by a federal health care program (including Medicaid and Medicare). Manufacturers, like us, can be held liable under false
claims laws, even if they do not submit claims to the government, where they are found to have caused submission of false claims
by, among other things, providing incorrect coding or billing advice about their products to customers that file claims, or by
engaging in kickback arrangements with customers that file claims. A number of states also have false claims laws, and some of
these laws may apply to claims for items or services reimbursed under Medicaid and/or commercial insurance. Sanctions under these
federal and state laws may include civil monetary penalties, exclusion of a manufacturer’s products from reimbursement under
government programs, and imprisonment.
The
Health Insurance Portability and Accountability Act of 1996, or HIPAA, created two new federal crimes: health care fraud and false
statements related to healthcare matters. The health care fraud statute prohibits knowingly and willingly executing a scheme to
defraud any health care benefit program, including private payors. A violation of this statute is a felony and may result in fines,
imprisonment or exclusion from government sponsored programs. The false statements statute prohibits knowingly and willfully falsifying,
concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with
the delivery of or payment for health care benefits, items or services. A violation of this statute is a felony and may result
in fines or imprisonment.
Due
to the breadth of some of these laws, it is possible that some of our current or future practices might be challenged under one
or more of these laws. In addition, there can be no assurance that we would not be required to alter one or more of our practices
to be in compliance with these laws. Evolving interpretations of current laws or the adoption of new federal or state laws or
regulations could adversely affect many of the arrangements we have with customers and physicians. Our risk of being found in
violation of these laws is increased by the fact that some of these laws are open to a variety of interpretations. If our past
or present operations are found to be in violation of any of these laws, we could be subject to civil and criminal penalties,
which could hurt our business, results of operations and financial condition.
Foreign
Regulation
Many
foreign countries in which we market or may market our products have regulatory bodies and restrictions similar to those of the
FDA. International sales are subject to foreign government regulation, the requirements of which vary substantially from country
to country. The time required to obtain approval by a foreign country may be longer or shorter than that required for FDA approval
and the requirements may differ. Companies are now required to obtain a CE Mark, which shows conformance with the requirements
of applicable European Conformity directives, prior to sale of some medical devices within the European Union. Some of our current
products that require CE Markings have them and it is anticipated that additional and future products may require them as well.
As of the date of this filing, the Company has received CE marks for eight for of its commercialized products/product components:
PIFA Heparin/PF4 Rapid Assay; Heparin/PF4 Serum Panels; Tri-Cholesterol “Check” and BreathScan PRO Detectors, Analyzer
Field Kit, Starter Kit and Blow Bags.
Third-Party
Reimbursement
Health
care providers, including hospitals, that purchase our products generally rely on third-party payors, including the Medicare and
Medicaid programs, and private payors, such as indemnity insurers and managed care plans, to cover and reimburse all or part of
the cost of the products and the procedures in which they are used. As a result, demand for our products is dependent in part
on the coverage and reimbursement policies of these payors.
CMS,
the federal agency responsible for administering the Medicare program, along with its contractors establishes coverage and reimbursement
policies for the Medicare program. In addition, private payors often follow the coverage and reimbursement policies of Medicare.
We cannot assure you that government or private third-party payors will cover and reimburse the procedures using our products
in whole or in part in the future or that payment rates will be adequate.
In
general, Medicare will cover a medical product or procedure when the product or procedure is reasonable and necessary for the
diagnosis or treatment of an illness or injury. Even if the medical product or procedure is considered medically necessary and
coverage is available, Medicare may place restrictions on the circumstances where it provides coverage. For some of our products,
our success in non-U.S. markets may depend upon the availability of coverage and reimbursement from the third-party payors through
which health care providers are paid in those markets. Health care payment systems in non-U.S. markets vary significantly by country,
and include single-payor, government managed systems as well as systems in which private payors and government-managed systems
exist, side-by-side. For some of our products, our ability to achieve market acceptance or significant sales volume in international
markets may be dependent on the availability of reimbursement for our products under health care payment systems in such markets.
There can be no assurance that reimbursement for our products, will be obtained or that such reimbursement will be adequate.
Other
U.S. Regulation
We must also comply with numerous federal,
state and local laws relating to matters such as environmental protection, safe working conditions, manufacturing practices, fire
hazard control and, among other things, the generation, handling, transportation and disposal of hazardous substances.
Employees
We currently employ 32 full-time equivalent
employees, contractors or consultants, which include 12 in research and development, 4 in general and administrative,
5 in sales and marketing and 11 in direct and indirect manufacturing. We also engage a number of temporary employees and
consultants. None of our employees are represented by a labor union or are a party to a collective bargaining agreement. We believe
that we have good relations with our employees.
Corporate
Information
We
were incorporated in the State of New Jersey in 1989 under the name A.R.C. Enterprises, Inc. The Company changed its name to Akers
Research Corporation on September 28, 1990. On February 24, 1996 the Company changed its name from Akers Research Corporation
to Akers Laboratories, Inc. On March 26, 2002 the Company changed its name to Akers Biosciences, Inc. The mailing address of our
headquarters is 201 Grove Road, Thorofare, New Jersey 08086, and our telephone number at that location is (856) 848-8698.
DESCRIPTION
OF CAPITAL STOCK
The
following description of our capital stock is not complete and may not contain all the information you should consider before
investing in our capital stock. This description is summarized from, and qualified in its entirety by reference to, our articles
of incorporation and bylaws, which have been publicly filed with the SEC. See “Where You Can Find More Information; Incorporation
by Reference.”
Our
authorized capital stock consists of 550,000,000 shares, of which 500,000,000 are common stock, without par value, and 50,000,000
are preferred stock, without par value.
Common
Stock
Voting
Rights
Each
Stockholder has one vote for each share of common stock held on all matters submitted to a vote of stockholders. A shareholder
may vote in person or by proxy. Elections of directors are determined by a plurality of the votes cast and all other matters are
decided by a majority of the votes cast by those shareholders entitled to vote and present in person or by proxy.
Because
our stockholders do not have cumulative voting rights, stockholders holding a majority of the voting power of our shares of common
stock will be able to elect all of our directors. Our amended and restated certificate of incorporation and bylaws provide that
stockholder actions may be effected at a duly called meeting of stockholders or pursuant to written consent of the majority of
shareholders. A special meeting of stockholders may be called by the President, Chief Executive Officer or the Board of Directors
pursuant to a resolution approved by the majority of the Board of Directors.
Dividend
Rights
The
holders of outstanding shares of common stock are entitled to receive dividends out of funds legally available at the times and
in the amounts that our board may determine, provided that required dividends, if any, on preferred stock have been paid or provided
for. However, to date we have not paid or declared cash distributions or dividends on our common stock and do not currently intend
to pay cash dividends on our common stock in the foreseeable future. We intend to retain all earnings, if and when generated,
to finance our operations. The declaration of cash dividends in the future will be determined by the board based upon our earnings,
financial condition, capital requirements and other relevant factors.
No
Preemptive or Similar Rights
Holders
of our common stock do not have preemptive rights, and common stock is not convertible or redeemable.
Right
to Receive Liquidation Distributions
Upon
our dissolution, liquidation or winding-up, the assets legally available for distribution to our stockholders and remaining after
payment to holders of preferred stock of the amounts, if any, to which they are entitled, are distributable ratably among the
holders of our common stock subject to any senior class of securities.
Series
A Preferred Stock
The
Company has authorized 10,000,000 shares of Series A Cumulative Preferred Stock (the “Series A Preferred Stock”).
As of November 11, 2016 there were no shares of the Company’s Series A Preferred Stock issued and outstanding.
Holders
of Series A Preferred Stock shall be entitled to receive preferential dividends at a rate of $0.00135 per share of Series A Preferred
Stock per annum. Such dividends shall compound annually and be fully cumulative, and shall accumulate from the date of original
issuance of the Series A Preferred Stock.
The
holders of Series A Preferred Stock are entitled to the number of votes into which their shares of Series A Preferred Stock are
convertible and votes together with the Company’s common stock as a class. The Series A Preferred Stock is convertible at
any time into common stock, at the rate of 0.0320512 shares of common stock for each 1 share of Series A Preferred Stock, for
an additional payment of $0.05 per each 1 share of converted Series A Preferred Stock, subject to adjustment (the “Conversion
Price”).
If
the Company issues any additional shares of its common stock, options or convertible securities, excluding any securities issued
as compensation or options issued in connection with an employee incentive plan approved by the board of directors (the “Additional
Shares”), for consideration less than $0.0145, then the Conversion Price shall be reduced, concurrently with such issue,
to the consideration per share received by the Company for such issuance of Additional Shares; provided that if such issuance
or deemed issuance was without consideration, the Company shall be deemed to have received an aggregate of $0.001 of consideration
for all such Additional Shares.
In
the event of (i) any liquidation, dissolution or winding up of the affairs of the Company, whether voluntary or involuntary (each
a “Liquidation”), (ii) merger, consolidation or transfer of voting control in which the stockholders immediately prior
to such transaction do not own securities representing a majority of the voting power of the surviving entity or its parents immediately
following such transaction, but excluding (x) any transaction effected exclusively to change the domicile of the Company, or (y)
any transaction effected principally for bona fide equity financing purposes in which cash is received by the Corporation or indebtedness
is cancelled or converted or a combination thereof (an “Acquisition”), (iii) a sale, lease, or other disposition of
all or substantially all of the assets of the Company (an “Asset Transfer”)(items (i), (ii) and (iii), each a “Liquidation
Event”), the holder of Series A Preferred Stock shall be entitled to receive, prior and in preference to holders of common
stock, assets of the Company available for distribution to the holders of capital stock of the Company up to and including any
amounts of any dividends due and owing.
For
so long as the Series A Preferred Stock is outstanding, the holders of the Series A Preferred, provided that the holders own more
than 15% of the Company’s common stock or all of the Series A Preferred Stock, voting as a separate class, shall be entitled
to elect one (1) member of the board at each election of directors.
For
so long as the Series A Preferred Stock is outstanding, the approval of a majority of holders of the Series A Preferred Stock,
voting as a separate class, shall be required to take certain actions, including but not limited to, (i) any amendment alteration
or repeal to certificate of Incorporation or Bylaws so as to adversely affect the rights of the Series A Preferred Stock, (ii)
any authorization or designation of securities ranking on a parity with or senior to the Series a Preferred Stock and (iii) any
increase or decrease to the number of members of the board.
Options
and Warrants
As
of November 11, 2016, we had 259,000 shares issuable upon exercise of outstanding options and no shares issuable
upon the exercise of warrants. There are no other outstanding warrants or options at this time.
Anti-Takeover
Provisions
The
authorization of undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting
or other rights or preferences that could impede the success of any attempt to change our control.
These
provisions are intended to enhance the likelihood of continued stability in the composition of our board of directors and its
policies and to discourage certain types of transactions that may involve an actual or threatened acquisition of us.
These
provisions are also designed to reduce our vulnerability to an unsolicited acquisition proposal and to discourage certain tactics
that may be used in proxy fights. However, such provisions could have the effect of discouraging others from making tender offers
for our shares and may have the effect of deterring hostile takeovers or delaying changes in our control or management. As a consequence,
these provisions also may inhibit fluctuations in the market price of our stock that could result from actual or rumored takeover
attempts.
The
NASDAQ Capital Market Listing
Our
common stock is listed on the NASDAQ Capital Market under the symbol “AKER.”