Akers Biosciences Reports Earnings for Fiscal Year 2015
US Sales of PIFA Heparin/PF4 Rapid Test Up 12%; Conference Call
Scheduled for 09:00 a.m. ET Today
THOROFARE, NJ-(Marketwired - Mar 30, 2016) - Akers Biosciences,
Inc. (NASDAQ: AKER) (AIM: AKR.L) ("Akers Bio" or the "Company"), a
developer of rapid health information technologies, reports its
financial results for the fiscal year ended December 31, 2015.
2015 Financial Highlights:
- 12% increase in US sales of flagship heparin allergy test to
$1,391,017 (2014: $1,241,406)
- Total revenue declined to $2,115,050 (2014: $4,427,174), partly
due to deferment of certain international orders into 2016 -
received in Q1 2016
- Net cash loss from operations of $5,132,343 (2014: loss of
$3,883,929)
- Total loss of $9,311,913 (2014: loss of $3,142,960)
substantially increased by non-cash and non-recurring items
totaling approximately $4.7 million
- Maintaining liquid balance sheet with cash and marketable
securities of $4,427,163 (2014: $9,720,802)
2015 Operational Highlights:
- Significant operational and regulatory approval progress
achieved in China laying the groundwork for Chinese sales to
commence this year
- China Food and Drug Administration approved the Company's rapid
heparin allergy test leading to $2.5 million of placed orders for
2016 to date
- Chinese production facility completed and made fully
operational
- In addition to the rapid heparin allergy test, marketing
commenced in China for four breath tests focused on the major
markets of diabetes, weight loss, fitness and alcohol
- Introduced new Akers Wellness product line targeting large and
growing market for personalized health - including app-enabled
tests for monitoring and tracking personal health over time
- Expanded global distribution network for rapid heparin allergy
test providing access to all major diagnostic markets
- Appointed a new, highly experienced CEO to drive product
commercialization - impact already showing in strong US sales in Q1
2016 for the Company's rapid heparin allergy tests
- European Patent Office issued a patent surrounding the
Company's novel blood separator technology and method of separating
a fluid fraction from whole blood
- Achieved ISO 13485 certification of quality management system
enabling acceleration of regulatory approval process for the
Company's products in certain countries
2016 Current Trading
- Company performing well in 2016 with orders for rapid
heparin allergy tests already exceeding $3 million in the
current year
- Sales of rapid heparin allergy tests into US hospitals in Q1
are up 70% over the same quarter in 2015
Chairman's Statement
2015 was principally about augmenting the senior commercial
team, refining the execution strategy, laying the groundwork for
entry into China and developing a product suite to target the huge
personalized health and wellness market. I am pleased to say that
this preparatory work in 2015 is already paying off in 2016 with
orders for our rapid heparin allergy tests already exceeding $3
million in the current year.
We already have sufficient visibility from the first twelve
weeks of the year in our core heparin allergy test business to know
that sales are materially outperforming last year's. Not only is
this being driven by orders from China but it is also coming from
improvements in our domestic US business. We hope to see this trend
continue as the full impact of our new commercial team and
execution strategy begins to be felt.
Substantial work was undertaken in 2015 to prepare for market
entry into China. In November we received clearance from the China
Food and Drug Administration for our flagship rapid heparin allergy
test which led to our Chinese distributor placing $2.5 million
worth of orders for 2016. Furthermore, we worked extensively in
2015 with our Chinese joint venture partners to establish a first
class manufacturing facility in Hainan province which is now fully
operational. It is envisaged that the majority of Akers' products
for sale into China will be manufactured in-country leading to
significant commercial benefits. Marketing in China commenced for
four of our breath tests in the prolific areas of diabetes, weight
loss, fitness and alcohol. The Chinese healthcare system has
identified the critical need to address soaring obesity rates and a
diabetes epidemic which highlights the compelling opportunity to
introduce Akers' simple, inexpensive breath-based tests in these
areas.
While not yet generating significant revenue, the Company has
developed and introduced three transformational breath tests
designed for the health and wellness industry and consumers during
2015. These include the consumer-focused METRON, as well as the
BreathScan OxiChek ("OxiChek") and BreathScan KetoChek ("KetoChek")
tests which work with a new bluetooth-enabled reading device,
BreathScan Lync and its associated BreathScan mobile app, to enable
consumers and professional users to monitor trends in health via a
mobile device. Being able to generate near-instant health
information is, I believe, key to the future of medicine. With our
Akers Wellness tests, clinicians, suppliers of nutritional
supplements and diet plans, health coaches or even consumers
themselves, can now monitor their - or their clients' - health over
time by utilizing Akers Wellness products.
With the development for the Akers Wellness line now largely
completed, the focus has turned to marketing and sales execution,
and we look forward to reporting on progress in these areas later
this year.
In February, the Company's Management System was certified to
ISO 13485. The certification is a requirement in certain countries
to enable regulatory approval of medical devices, so it an
extremely important asset when seeking accelerated product
clearance in certain countries.
Another regulatory milestone achieved in 2015 was the European
Patent Office's issuance of a patent surrounding the Company's
novel blood separator technology and method of separating a fluid
fraction from whole blood. We now have patent protection both in
the US and Europe enabling Akers to incorporate the technology into
certain of our blood-based assays where the speed of our test is
paramount to clinical decision making. It may also enable the
Company in the future to offer the technology under license to
third parties seeking to accelerate their own testing procedures by
facilitating the blood cell separation process as a component of
their test.
Multiple new distribution agreements outside of the US were
signed in 2015 giving the Company access to every major diagnostic
market in the world. The primary drivers of this distribution
network are the Company's flagship rapid heparin allergy tests, and
we are supporting our distribution partners' efforts to introduce
these tests in their respective territories. Additionally, the
Company's BreathScan Alcohol Detector continues to generate
interest through our international distribution network with sales
to the EU and South Africa contributing to revenues in 2015.
Towards the end of last year I was delighted to welcome a new
CEO to focus entirely on product and technology commercialization.
The commercial team is being further strengthened with a number of
new senior hires and the improved execution of our US heparin
allergy test sales strategy has led to encouraging early sales
indicators from the first twelve weeks of this year. I am very
excited about the team we are building at Akers Bio.
Looking ahead through 2016, we have had a tremendous start to
the year with the receipt of over $2.5 million worth of orders from
China (with initial sales expected imminently) and approximately
$600,000 worth of sales of tests into US hospitals already recorded
in Q1 - an increase of 70% over the same quarter in 2015. We hope
to see a continuing upward trajectory in the US heparin allergy
test business and look forward to seeing meaningful contributions
beginning to flow through again from our alcohol breathalyzers and
from the newly launched Akers Wellness line.
Raymond F. Akers, Jr. PhD, Co-founder and Executive Chairman
March 30, 2016
Summary of Results of Operations
Revenue
The Company's total revenue for the year ended December 31, 2015
was $2,115,050, a 52% decrease compared to the same period in
2014.
This decline in product revenue is associated with three
significance transactions that occurred during the year ended
December 31, 2014, which were not repeated in 2015. These
transactions (ChubeWorkx (MPC: $766,379), NovoTek (PIFA:
$1,000,000) and 36S (REA: $864,000)) are further described
below.
The Company's MPC product sales declined during the year ended
December 31, 2015. This reflects that during the same period of
2014, the Company received its last order from ChubeWorkx
($766,379) for the Company's alcohol breathalyzer product. Three
new distributors began placing orders for the alcohol breathalyzer
products during the year, two in the European Union ("EU") and one
in South Africa which generated revenue of $189,889 for the year
ended December 31, 2015.
The Company's total PIFA sales declined during the year ended
December 31, 2015; however, the domestic sales of the PIFA
Heparin/PF4 Rapid Assay products increased by 12% to $1,391,017
(2014: $1,241,406). The Company's dedicated technical sales account
executives are supporting over 300 sales representatives of Akers'
US distribution partners, Cardinal Health ("Cardinal Health"),
Fisher HealthCare ("Fisher Healthcare"), Typenex Medical, LLC
("Typenex") and Medline Industries, Inc. ("Medline"). The Company's
relationship-building initiative with our partners has already
delivered a measureable increase in product trials and adoptions.
Domestic sales for the year ended December 31, 2015 of our
distributors, Cardinal Health and Fisher Health, accounted for
$1,161,199 of the total PIFA Heparin/PF4 Rapid Assay as compared to
$1,064,733 for the same period of 2014 and individually represented
55% and 28% of such sales.
The Company did not generate any international sales of its PIFA
Heparin/PF4 Rapid Assay products during the year ended December 31,
2015 (2014: $1,000,000) primarily the result of pending regulatory
approvals. The recent approval of the product in China is expected
to stimulate minimum purchase requirements with our distributor,
NovaTek Therapeutics Inc. ("NovaTek") beginning in 2016.
There were no sales in the year ended December 31, 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, a related party, to distribute the
tests in Australia, Singapore, the United Arab Emirates and
Oman.
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 and
comprehensive income for the year ended December 31, 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.
Licensing fee revenue declined to $320,556 (2014: $343,333). The
decline is associated with the cancellation of the Company's
exclusive License and Supply Agreement with ChubeWorkx as described
above.
Cost of sales for the year ended December 31, 2015 decreased by
19% to $950,792 (2014: $1,175,232). The reduction is primarily
reflective of the decrease in revenue during the year ended
December 31, 2015. Direct cost of sales increased to 29% (2014:
18%) and indirect cost of sales increased to 24% (2014: 11%) of
product revenue for year ended December 31, 2015. Overall, cost of
sales, as a percentage of product revenue, was 53% and 29% for the
years ended December 31, 2015 and 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 was completed during the
fourth quarter, significantly higher shipping costs associated with
an increase in international shipments and an increase in the cost
of consumable supplies related to production. 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 year ended December 31, 2015 as compared
to 73% in 2014.
General and Administrative Expenses
General and administrative expenses in the year ended December
31, 2015 totaled $6,193,125, which was a 56% increase as compared
to $3,979,079 for the year ended December 31, 2014.
Professional services included significant increases in
recruiting services and legal fees during the year ended December
31, 2015. The increase in recruiting fees is related to the
expansion of the sales and marketing staff and the recruitment of
the Company's Chief Executive Officer. The increase in 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 year ended December 31, 2014.
The Company established an allowance for doubtful accounts of
$864,000 for a trade receivable - related party that was due June
30, 2015 after receiving communications from the customer that
indicated a high level of risk of collectability. In addition, the
Company also established an allowance for doubtful accounts for
$1,299,609 for a note receivable - related party as a result of an
internal assessment indicating a high level of risk of
collectability.
Sales and Marketing Expenses
Sales and marketing expenses in the year ended December 31, 2015
totaled $2,543,286, which was a 95% increase as compared to
$1,302,103 for the year ended 2014.
Personnel costs increased in the year ended December 31, 2015
due to the expansion of the sales and marketing department from 5
employees at December 31, 2014 to 10 employees as of December 31,
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.
Travel expenses are a result of the increased size of the sales
force and make up the most significant component of the other sales
and marketing costs.
Research and Development
Research and development expenses in the year ended December 31,
2015 totaled $1,406,895, which was a 54% increase as compared to
$916,308 for the year ended 2014.
Clinical trial costs, professional service costs and other
research and development costs have increased in the year ended
December 31, 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.
Other Income and Expense
Other income and expense increased for the year ended December
31, 2015 to $370,317 from $61,161 for the same period in 2014.
The increase is the result of interest and dividend earning on
the marketable securities and note receivable - related party and
the sale of the Company's New Jersey Net Operating Losses.
Income Taxes
During 2015, the Company was approved by the State of New Jersey
to sell a portion of its state tax benefits that existed as of
December 31, 2014, pursuant to the Technology Tax Certificate
Transfer Program. The Company received net proceeds of $269,344 for
the year ended December 31, 2015 (2014: $-) as a result of the sale
of the tax benefits.
Liquidity and Capital Resources
For the years ended December 31, 2015 and 2014, the Company
generated a net loss attributable to shareholders of $9,311,913 and
$3,142,960, respectively. As of December 31, 2015 and 2014, the
Company has an accumulated deficit of $94,175,999 and $84,864,086
and had cash and cash equivalents totaling $402,059 and $455,841,
respectively (although the Company had additional marketable
securities of $4,025,104 and $9,264,961 available as of December
31, 2015 and 2014).
Operating Activities
The Company's net cash consumed by operating activities in the
year ended December 31, 2015 totaled $5,132,343, which was a 32%
increase as compared to $3,883,929 for the year ended 2014.
Financial Statements
A Form 10-K containing the detailed report of operations and
financial statements is available for viewing on the Company's
website at www.akersbio.com or www.sec.gov.
Conference Call Information:
Wednesday, March 30, 2016 at 09:00 a.m. Eastern Time US callers:
1-888-364-3109 International callers: 1-719-457-1035 Conference ID:
4375738 Webcast:
http://www.akersbio.com/investor-center/earnings-center#Conference-Call
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.
For more information: Akers Biosciences, Inc. Raymond F. Akers,
Jr. PhD Executive Chairman Tel. +1 856 848 8698 Taglich Brothers,
Inc. (Investor Relations) Chris Schreiber Tel. +1 917 445 6207
Email: cs@taglichbrothers.com finnCap (UK Nominated Adviser and
Broker) Adrian Hargrave / Scott Mathieson (Corporate Finance) Steve
Norcross (Broking) Tel. +44 (0)20 7220 0500 Vigo Communications
(Public Relations) Ben Simons / Fiona Henson Tel. +44 (0)20 7830
9700 Email: akers@vigocomms.com
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