Akers Biosciences Announces Q3 Earnings
Sales of Flagship Rapid HIT Test +341% over Q3 2015 - Total
Revenue +262%
Conference Call Scheduled for 9:00 a.m. Eastern Time Today
THOROFARE, NJ-(Marketwired - Nov 14, 2016) - Akers Biosciences,
Inc. (NASDAQ: AKER) (AIM: AKR), ("Akers Bio" or the "Company"), a
developer of rapid health information technologies, reports its
financial results for the third quarter ended September 30,
2016.
Q3 Financial Highlights:
- Total Revenue - all from product sales - up 262% to $613,198
(Q3 2015: $169,473)
- Sales of flagship PIFA Heparin/PF4 Rapid Assay products up 341%
to $514,839 (Q3 2015: $116,783) - entirely from US-based
customers
- Significant improvement in gross margin to 61% (Q3 2015: (5)%)
as a result of higher selling prices, improved volumes and
different component mix on core products
- Gross profit of $376,498 (Q3 2015: $(8,479))
- Major reductions in costs in all key areas of the business:
General and Administrative costs (27)%, Sales and Marketing costs
(28)%, Research and Development costs (23)%
- Profit before tax in the quarter of $310,155 (Q3 2015:
$(2,326,893)) following the reversal of an allowance for bad debts
of $1,299,609
- Loss before income tax (excluding the reversal of bad debt
allowance) more than halved to $(989,454) (Q3 2015:
$(2,326,893))
- Cash and marketable securities at September 30, 2016 of
$795,802 (December 31, 2015: $4,472,163)
Q4 Outlook
- The Company believes that Q4 will continue to show growth with
continuing improvements in domestic product sales, the remaining
$2,000,000 due under the Novotek order for PIFA Heparin/PF4 Rapid
Assay products in China and growing interest in a number of Akers
Wellness products
Q3 Operational Highlights
- Experienced strong growth from flagship PIFA Heparin/PF4 Rapid
Assay product sales without any contribution from China in Q3
2016
- Revenues from breath test product sales improved by 256%
derived from alcohol breathalyzer sales and initial stocking orders
for BreathScan OxiCheck
- Completed highly successful clinical study on BreathScan
OxiCheck - the first disposable breath test to rapidly determine
levels of oxidative stress in the body. Demonstrated 99.5%
correlation with standard blood testing method. Initial stocking
orders placed during the period
Commentary from Raymond F. Akers, Jr. PhD, Co-founder and Chief
Scientific Director and John J. Gormally, Chief Executive
Officer:
Sales of the Company's flagship rapid test for heparin-induced
thrombocytopenia (HIT) are continuing on an upward trajectory. The
Company recorded an increase in sales of this product of 341%
compared to the same period in 2015 - this is as a result of both
the implementation of a significant price increase for the product
line and higher customer demand. Given previous evidence of lower
stock depletion during the summer months - as a result of fewer
surgeries - and therefore lighter demand for this product during
the third quarter, we are particularly encouraged by this year's
third quarter sales which lead us to believe the fourth quarter may
be even stronger.
Importantly, these robust revenues for PIFA Heparin/PF4 Rapid
Assay products in the third quarter were entirely derived from
domestic sales and did not benefit from any contribution from
China. The Company has product shipments scheduled for China in the
fourth quarter which are expected to result in the receipt of the
remaining $2,000,000 of payments under the $2,500,000 order placed
by the Company's Chinese distributor, Novotek, earlier in the year.
We believe that this, coupled with the continuing momentum in
domestic sales for this product, is an encouraging sign for the
potential of a strong fourth quarter.
Akers Bio is not merely making progress with its flagship rapid
HIT test, but also with other commercialized products. Sales of our
breath-based rapid assays improved in the third quarter by 256% as
demand slowly returns for the Company's rapid alcohol breathalyzer
and, more significantly, initial stocking orders were placed for
BreathScan OxiCheck ("OxiChek"), the first disposable breath test
to rapidly determine levels of oxidative stress in the body - an
indicator of the overall health and wellbeing of a person. This
follows our appointment, in June, of Aero-Med as the distributor
for this product targeting the large specific markets in the United
States of anti-aging, functional and integrative health and
wellness treatment practitioners.
The Company's marketing efforts for OxiChek were given a boost
in August following the completion of a clinical study which
demonstrated a correlation between OxiChek and the standard
reference laboratory blood testing method of 99.5%.
OxiChek is a general wellness product from Akers Wellness,
intended to measure indicators of oxidative stress in exhaled
breath. Unlike current laboratory testing methods that test only a
few free radicals using an invasive blood draw - and have a
turnaround time of 7 to 10 days - Akers Bio's rapid OxiChek test
detects a broad spectrum of free radicals contained in a person's
exhaled breath in just a few minutes.
Not only did this clinical study demonstrate the effectiveness
of our test for oxidative stress, but the comparison to the
standard reference laboratory test - blood vs breath - was
remarkable. We believe that we have a powerful tool for the
expansive health and wellness and anti-aging industry and are
delighted to be seeing initial stocking orders from paying
customers.
At the same time as growing revenues, Akers Bio is also
shrinking costs. The evidence of this in the third quarter is very
clear. The Company recorded reductions in all key areas of cost.
General and Administrative expenses were reduced by 27% in the
quarter as a result of lower legal and other professional service
costs; Sales and Marketing expenses were reduced by 28% in the
quarter as a result of a reduction in the number of sales and
marketing staff from 11 to 5 as of September 30, 2016 as our new
sales model requires fewer - but more senior - sales personnel; and
Research and Development expenses were reduced by 23% in the
quarter principally as a result of lower professional service
costs.
Outlook
Akers Bio moves into the final quarter of 2016 with excellent
momentum in domestic sales of our flagship rapid test for HIT and
with the remaining $2,000,000 due under the Novotek order for
products in China which we expect to be fulfilled in the fourth
quarter. There is also evidence of further demand for Akers
Wellness products which are expected to produce additional sales in
the remaining months of the year. The combination of these growing
product sales and a leaner cost base is expected to enable Akers
Bio to trade profitably both in the final quarter and, more
significantly, in 2017.
Conference call information:
Monday, November 14, 2016 at 9:00 a.m. Eastern Time US:
1-877-545-1402 International: 1-719-325-4907 Conference ID: 4526875
Webcast: http://public.viavid.com/index.php?id=121969
About Akers Biosciences, Inc.
Akers Bio develops, manufactures, and supplies rapid screening
and testing products designed to deliver quicker and more
cost-effective healthcare information to healthcare providers and
consumers. The Company has advanced the science of diagnostics
while responding to major shifts in healthcare through the
development of several proprietary platform technologies. The
Company's state-of-the-art rapid diagnostic assays can be performed
virtually anywhere in minutes when time is of the essence. The
Company has aligned with major healthcare companies and high volume
medical product distributors to maximize product offerings, and to
be a major worldwide competitor in diagnostics.
Additional information on the Company and its products can be
found at www.akersbio.com. Follow us on Twitter @AkersBio.
Summary of Statements of Operations for the Three Months Ended
September 30, 2016 and 2015
Revenue
Akers' revenue for the three months ended September 30, 2016
totaled $613,198, a 262% increase from the same period in 2015. The
table below summarizes our revenue by product line for the three
months ended September 30, 2016 and 2015 as well as the percentage
of change year-over-year:
Product Lines
|
|
3 Months Ended September 30, 2016
|
|
|
3 Months Ended September 30, 2015
|
|
|
Percent Change
|
|
Particle ImmunoFiltration Assay ("PIFA")
|
|
$
|
514,839
|
|
|
$
|
116,783
|
|
|
|
341
|
%
|
MicroParticle Catalyzed Biosensor ("MPC")
|
|
|
85,338
|
|
|
|
23,953
|
|
|
|
256
|
%
|
Other
|
|
|
13,021
|
|
|
|
28,737
|
|
|
|
(55
|
)%
|
Product Revenue Total
|
|
$
|
613,198
|
|
|
$
|
169,473
|
|
|
|
262
|
%
|
License Fees
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
%
|
Total Revenue
|
|
$
|
613,198
|
|
|
$
|
169,473
|
|
|
|
262
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from the Company's PIFA Heparin/PF4 Rapid Assay products
increased 341% during the three months ended September 30, 2016
over the same period of 2015. The increase is due primarily to two
events; first, the implementation of a significant price increase
for the product line and second, during 2015, the Company
experienced lower than usual distributor stock depletion for the
PIFA Heparin/PF4 Rapid Assay products which did not re-occur during
the three months ended September 30, 2016.
The Company received a $2.5 million order for PIFA Heparin/PF4
Rapid Assay products from Novotek on February 29, 2016. The Company
received an initial payment of $250,000 on April 29, 2016 and a
second payment of $250,000 on June 28, 2016 for scheduled product
shipments, per the terms of sale. The Company recognized no revenue
for PIFA Heparin/PF4 products from Novotek during the three months
ended September 30, 2016; however, the remaining products will be
scheduled to ship at various points throughout the remainder of the
current fiscal year with the remaining $2,000,000 of revenue under
the order being recognized when the criteria for the recognition of
revenue is met.
The Company's MPC breathalyzer technology product sales
increased 256% during the three months ended September 30, 2016
over the same period of 2015. A distributor's initial stocking
order of $41,800 for the Company's BreathScan Lync and BreathScan
OxiChek products and renewed interest in the Company's BreathScan
Alcohol Breathalyzers, both domestically and internationally
contributed to the increase during the three months ended September
30, 2016.
Other operating revenue decreased due to a decline in
miscellaneous component sales during the three months ended
September 30, 2016.
The Company's gross margin improved significantly, rising to 61%
(2015: (5)%) for the three months ended September 30, 2016. The
improvement is attributed to higher selling prices for the PIFA
Heparin PF/4 Rapid Assay products, improved volumes and a
significantly different component mix for the MPC products and the
continued implementation of the new inventory and cost management
procedures.
Cost of sales for the three months ended September 30, 2016
totaled $236,700 (2015: $177,952). Direct cost of sales decreased
to 18% of product revenue while other cost of sales decreased to
21% for the three months ended September 30, 2016 as compared to
42% and 63% respectively for the same period in 2015.
Direct cost of sales for the three-month period ended September
30, 2016 were $109,835 (2015: $71,722). Other cost of sales for the
three months ended September 30, 2016 were $126,865 (2015:
$106,230).
General and Administrative Expenses
General and administrative expenses for the three months ended
September 30, 2016, totaled $558,293, which was a 27% decrease as
compared to $760,336 for the three months ended September 30,
2015.
Sales and Marketing Expenses
Sales and marketing expenses for the three months ended
September 30, 2016 totaled $526,197, which was a 28% decrease as
compared to $725,832 for the three months ended September 30,
2015.
Research and Development
Research and development expenses for the three months ended
September 30, 2016 totaled $247,578, which was a 23% decrease as
compared to $319,646 for the three months ended September 30,
2015.
Reversal of Reserve for Bad Debts
The Company reversed a reserve for bad debts for $1,299,609
during the three months ended September 30, 2016 as a result of the
legal settlement with ChubeWorkx Guernsey Limited ("ChubeWorkx") on
August 17, 2016. Details of the settlement are included in Part II,
Section 1, Legal Proceedings.
Other Income and Expense
Other income, net of expense for the three months ended
September 30, 2016 totaled $8,893, which was a 52% decrease as
compared to $18,519 for the three months ended September 30,
2015.
Summary of Statements of Operations for the Nine Months Ended
September 30, 2016 and 2015:
Revenue
Akers' revenue for the nine months ended September 30, 2016
totaled $2.307,708, a 40% increase from the nine months ended
September 30, 2015. Product revenue increased by 74%, primarily a
result of sales of our PIFA Heparin/PF4 Rapid Assay products. Total
revenue was impacted by the elimination of license fee revenue
following the cancellation of the License and Supply Agreement with
ChubeWorkx Guernsey Limited ("ChubeWorkx") in May, 2015 in respect
to BreathScan Alcohol Breathalyzer products.
The table below summarizes our revenue by product line for the
nine months ended June 30, 2016 and 2015 as well as the percentage
of change year-over-year:
Product Lines
|
|
9 Months Ended September 30, 2016
|
|
|
9 Months Ended September 30, 2015
|
|
|
Percent Change
|
|
Particle ImmunoFiltration Assay ("PIFA")
|
|
$
|
2,029,094
|
|
|
$
|
1,015,742
|
|
|
|
100
|
%
|
MicroParticle Catalyzed Biosensor ("MPC")
|
|
|
195,040
|
|
|
|
233,758
|
|
|
|
(17
|
)%
|
Other
|
|
|
83,574
|
|
|
|
76,387
|
|
|
|
9
|
%
|
Product Revenue Total
|
|
$
|
2,307,708
|
|
|
$
|
1,325,887
|
|
|
|
74
|
%
|
License Fees
|
|
|
-
|
|
|
|
320,556
|
|
|
|
(100
|
)%
|
Total Revenue
|
|
$
|
2,307,708
|
|
|
$
|
1,646,443
|
|
|
|
40
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue from the Company's PIFA Heparin/PF4 Rapid Assay products
increased 100% during the nine months ended September 30, 2016 over
the same period of 2015. The increase is due primarily to two
events; first, the implementation of a significant price increase
for the product line and second, the partial fulfillment of the
$2.5 million order from Novotek, our exclusive distributor in the
Peoples Republic of China.
The Company received a $2.5 million order for our PIFA
Heparin/PF4 Rapid Assay products from Novotek on February 29, 2016.
The Company received an initial payment of $250,000 on April 29,
2016 and a second payment of $250,000 on June 28, 2016 for
scheduled product shipments, per the terms of sale resulting in the
recognition of $493,850 for PIFA Heparin/PF4 products and $12,551
of other products from Novatek for the nine months ended September,
30, 2016. The remaining products will be scheduled to ship at
various points throughout the remainder of the current fiscal year
with the remaining $2,000,000 of revenue under the order being
recognized when the criteria for the recognition of revenue is
met.
The Company's MPC product sales declined 17% during the nine
months ended September 30, 2016 over the same period of 2015. A
distributor's initial stocking order of approximately $144,000 for
the Company's BreathScan Alcohol Breathalyzer products in Great
Britain was included for the nine months ended September 30, 2015
but not repeated in the nine months ended September 30, 2016. Net
of this significant order, MPC product sales increased 117% for the
nine months ended September 30, 2016.
While most of the MPC product sales in the nine months ended
September 30, 2016 came from BreathScan Alcohol Breathalyzers, we
have begun generating sales of other MPC products within our health
and wellness line, primarily the Company's BreathScan OxiChek
disposable breath test for oxidative stress which contributed
$65,969.
Other operating revenue increased due to a rise in miscellaneous
component sales and shipping and handling fees.
The Company's gross margin improved significantly, rising to 69%
(2015: 54%) for the nine months ended September 30, 2016. The
improvement is attributed to improved margins for the PIFA Heparin
PF/4 products resulting from the increase in average selling price
of these products.
Cost of sales for the nine months ended September 30, 2016
decreased by 4% to $713,576 (2015: $745,319). Direct cost of sales
decreased to 14% of product revenue while other cost of sales
decreased to 17% for the nine months ended September 30, 2016 as
compared to 26% and 30% respectively for the same period in
2015.
Direct cost of sales for the nine-month period ended September
30, 2016 were $325,922 (2015: $353,659). The decrease is attributed
to the offset of manufacturing costs to inventory.
Other cost of sales for the nine months ended September 30, 2016
were $387,654 (2015: $391,660). The decrease is attributed to
reductions in expenses related to quality control testing and
inventory shrinkage and is offset by increases in manufacturing
consumable supplies and repairs and maintenance expenses.
General and Administrative Expenses
General and administrative expenses for the nine months ended
September 30, 2016, totaled $2,298,099, which was a 2% decrease as
compared to $2,341,500 for the nine months ended September 30,
2015.
Sales and Marketing Expenses
Sales and marketing expenses for the nine months ended September
30, 2016 totaled $1,764,952, which was a 5% decrease as compared to
$1,854,623 for the nine months ended September 30, 2015.
Research and Development
Research and development expenses for the nine months ended
September 30, 2016 totaled $932,858, which was a 9% decrease as
compared to $1,003,444 for the nine months ended September 30,
2015.
Reversal of Reserve for Bad Debts
The Company reversed a reserve for bad debts for $1,299,609
during the nine months ended September 30, 2016 as a result of the
legal settlement with ChubeWorkx Guernsey Limited ("ChubeWorkx") on
August 17, 2016. Details of the settlement are included in Part II,
Section 1, Legal Proceedings.
During the nine months ended September 30, 2015, the Company
established a reserve for bad debts for $864,000 for 36 Strategies
General Trading, a related party.
Impairment of Non-Current Assets
The Company performed a routine analysis of its intangible
assets and determined that two patents and a trademark acquired in
the fiscal year ended December 31, 2007 are no longer contributing
to the Company's revenue flows and were therefore impaired for
$466,476 (2014: $-) during the nine months ended September 30,
2015.
Other Income and Expense
Other income, net of expenses for the nine months ended
September 30, 2016 totaled $22,792, which was a 74% decrease as
compared to $87,729 for the nine months ended September 30,
2015.
Liquidity and Capital Resources
For the nine months ended September 30, 2016 and 2015, the
Company generated a net loss attributable to shareholders of
$2,207,707 and $5,734,921, respectively. As of September 30, 2016
and December 31, 2015, the Company has an accumulated deficit of
$96,383,706 and $94,175,999 and had cash totaling $195,860 and
$402,059, respectively.
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 Co-founder and Chief Scientific Director Tel. +1 856 848
8698 Taglich Brothers, Inc. (Investor Relations) Chris Schreiber
Tel. +1 917 445 6207 Email: cs@taglichbrothers.com finnCap (UK
Nominated Adviser and Broker) Adrian Hargrave / Scott Mathieson
(Corporate Finance) Steve Norcross (Broking) Tel. +44 (0)20 7220
0500 Vigo Communications (Global Public Relations) Ben Simons /
Fiona Henson Tel. +44 (0)20 7830 9700 Email:
akers@vigocomms.com
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