SOURCE: Akers Biosciences, Inc.

Akers Biosciences, Inc.

August 11, 2016 07:00 ET

Akers Biosciences Announces H1 and Q2 2016 Earnings

Sales of Flagship Rapid HIT Test +68% Over H1 2015 and +57% Over Q2 2015; Conference Call Scheduled for 9:00 a.m. Eastern Time Today

THOROFARE, NJ--(Marketwired - Aug 11, 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 six months ("H1") and three months ("Q2") ended June 30, 2016.

Financial Highlights:

  • Product revenue up 47% for H1 2016 to $1,694,510 (Q2 2016 product revenue: $956,486)

  • Total revenue up 15% for H1 2016 to $1,694,510 (Q2 2016 total revenue: $956,486)

  • Sales of flagship PIFA Heparin/PF4 Rapid Assay products in H1 2016 up 68% to $1,514,255 (Q2 2016 PIFA Heparin/PF4 Rapid Assay sales: $879,081)

  • Significant improvement in gross margin to 72% in H1 2016 from 62% in the corresponding period last year (Q2 2016 gross margin: 71%) reflecting the increase in average sale price of PIFA Heparin/PF4 Rapid Assay products

  • Gross profit up 34% in H1 2016 to $1,217,634 (Q2 2016 gross profit: $679,638)

  • Loss before income tax in H1 2016 reduced by 26% to $(2,517,861) (Q2 2016 loss before income tax: $(1,008,932))

  • Cash and marketable securities at June 30, 2016 of $1,927,560

  • Reductions in key costs began to impact in Q2 2016 with full effect expected to be realized in H2 2016

Operational Highlights:

  • Experiencing strong growth from flagship PIFA Heparin/PF4 Rapid Assay product sales boosted by sales to China ($2,500,000 order from Novotek for 2016 placed in H1 2016 of which $505,380 shipped in H1 2016 and balance due in tranches through H2 2016)

  • Strengthened commercial team in H1 2016 with the appointments of Douglas Carrara and Tony Saporito (both ex-Becton, Dickinson) in senior sales and marketing roles

  • Restructuring of in-field sales and marketing team ongoing for PIFA Heparin/PF4 Rapid Assay products to focus less on individual hospitals and more on integrated delivery networks (hospital groups)

  • Received Notice of Allowance in H1 2016 for key US patent covering the Company's flagship product, the PIFA Heparin/PF4 Rapid Assay

  • Signed first distribution agreement in Q2 2016 for newly launched Akers Wellness product, BreathScan OxiChek™, with Aero-Med -- and shipped first products

  • Completed clinical trial in Q2 2016 for rapid Chlamydia test -- results were highly successful with 96% overall agreement with reference laboratory method

Commentary from Raymond F. Akers, Jr. PhD, Co-founder, Chief Scientific Director and John J. Gormally, Chief Executive Officer:

Akers Bio met its objectives in all key areas of the business during the second quarter. We saw 57% growth in sales of our flagship rapid test for heparin-induced thrombocytopenia -- which we are now selling in volume in both China as well as the US. The Company is now tracking a gross profit margin across the business in excess of 70% reflecting the successful implementation of sales price increases in our core product, while cost of production remained generally the same. We signed our first distribution deal for a new Akers Wellness product, BreathScan OxiChek™, with a major distributor and shipped our first order. Furthermore, we made significant advances in product development with the highly successful clinical trial of our rapid, five-minute, finger stick blood test for Chlamydia -- the first of its kind.

Additionally, during Q2 we began realizing meaningful reductions in operating costs related to the implementation of the cost management program commenced at the end of Q1. These cost savings are evident in the Q2 financial statements with further benefits expected to be fully realized in the second half of the year.

In product research and development, the Company made a major advancement in the commercialization of the first rapid test for Chlamydia, the most prevalent sexually transmitted disease in the world, using a finger stick blood sample. A clinical trial was carried out across two sites in the US. The results were highly successful with overall agreement between the PIFA/Chlamydia Rapid Assay and the reference laboratory method of 96% in patient populations of acute infection and historical exposure.

Akers Bio's PIFA/Chlamydia Rapid Assay is an antibody test that has been developed to identify infection of Chlamydia in five minutes or less and we believe the availability of a rapid test in doctors' offices or health clinics that does not require an invasive genital swab procedure -- and can lead to the provision of immediate therapy -- could have a significant impact in reducing the spread of this disease. Akers Bio is pursuing FDA 510(k) market clearance for the US for this product and is evaluating the regulatory requirements in the territories covered by its international distribution network.

The strong commercial performance enabled the Company to achieve total revenue for Q2 of $956,486, resulting in a gross profit of $679,638. Administrative, sales and marketing, R&D and other costs -- together with amortization of non-current assets -- turned this into a markedly reduced net loss for the period of $1,008,932 -- a reduction of more than 50% compared to Q2 2015. We expect the net loss to continue to decline as the impact of growing revenues and shrinking expenses takes further hold in the second half of the year.

Revenue from the Company's PIFA Heparin/PF4 Rapid Assay products was boosted by the receipt of a $2.5 million order from Novotek, the Company's exclusive distributor for these products in China, in Q1. Approximately $500,000 of this order was shipped and paid in Q2 with the material balance expected to be shipped and payable in tranches throughout the remainder of the year. In the US, we are in the process of reshaping the sales and marketing strategy for this product to focus less on individual hospitals and more on integrated delivery networks where the purchasing volume potential of a single new customer with multiple hospitals in its group has the capacity to dramatically transform domestic sales of this product. This approach requires fewer sales personnel in the field -- and this is reflected in a reduction of sales and marketing staff from 12 to 6 in the first half -- but going forward is likely to require additional, more senior sales representatives with the appropriate level of access to the integrated delivery network's decision makers.

We were delighted to welcome two new accomplished senior sales and marketing executives to the Company earlier this year. Douglas Carrara joined as Vice President, Global Marketing and Commercial Operations. He has over 25 years' experience in the clinical diagnostics arena, particularly within sales, marketing and global operations. Tony Saporito joined as Vice President, US Sales and Distribution. He has a track record of building and leading high-performance businesses in the medical device and clinical diagnostics areas for two decades.

Our first distribution agreement for the Company's digital health and wellness information platform was established in Q2 with Aero-Med. Developed by Akers Bio as part of the Akers Wellness line, BreathScan OxiChek™ is the first disposable breath test to rapidly determine levels of oxidative stress in the body by measuring the levels of certain abundant free radicals. Frequent use may help health practitioners to monitor and adjust their clients' regimen of nutritional supplementation in order to manage oxidative stress -- an indicator of the overall health and wellbeing of a person. OxiChek™ works with BreathScan Lync™, the new bluetooth-enabled reading device from Akers Wellness, to enable users to monitor oxidative stress via a mobile device. Through Aero-Med, we are targeting the large anti-aging, functional and integrative health and wellness treatment practitioner market in the US, where first shipment was achieved at the end of Q2. We are in active discussions with other distribution partners for OxiChek™ with capabilities within other target markets and believe this product could make an attractive contribution in the second half of the year.

With approximately $2 million of sales to Novotek anticipated in the second half for PIFA Heparin/PF4 Rapid Assay products in China, and the continuing improvements in our domestic sales effort for these products, we have very good visibility over revenues in our core business. In addition, we expect to see contributions from other tests, such as alcohol breathalyzers and BreathScan OxiChek™, gaining momentum in the second half of the year. At the same time the Company is implementing tight cost controls in all key areas of the business. The Company has turned a corner and the combined effect of improved sales and reduced costs is accelerating the path to profitability -- a goal which we believe is now coming firmly into view.

Conference call information:

Thursday, August 11, 2016 at 2.00 p.m. BST (9:00 a.m. Eastern Time)
International: 1-719-325-2499
US: 1-888-417-8465
Conference ID: 5673717
Webcast: https://public.viavid.com/index.php?id=120809

Summary of Statements of Operations for the Six Months Ended June 30, 2016 and 2015

Akers Bio's revenue for the six months ended June 30, 2016 totaled $1,694,510, a 15% increase from the six months ended June 30, 2015. Product revenue increased by 47%, 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 six months ended June 30, 2016 and 2015 as well as the percentage of change year-over-year:

               
Product Lines   6 Months
Ended
June 30, 2016
  6 Months
Ended
June 30, 2015
  Percent Change  
Particle ImmunoFiltration Assay ("PIFA")   $ 1,514,255   $ 898,959   68 %
                   
MicroParticle Catalyzed Biosensor ("MPC")     109,703     209,805   (48 )%
                   
Other     70,552     47,650   48 %
                   
Product Revenue Total   $ 1,694,510   $ 1,156,414   47 %
                   
License Fees     -     320,556   (100 )%
                   
Total Revenue   $ 1,694,510   $ 1,476,970   15 %
                   

Revenue from the Company's PIFA Heparin/PF4 Rapid Assay products increased 68% during the six months ended June 30, 2016 over the same period of 2015, reflecting 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. The remaining products will be scheduled to ship at various points throughout the current fiscal year with revenue being recognized when the criteria for the recognition of revenue is met. The Company recognized $505,380 for PIFA Heparin/PF4 products from Novotek during the six months ended June 30, 2016.

The Company's MPC product sales declined 48% during the six months ended June 30, 2016 over the same period of 2015. A distributor's initial stocking order of approximately $146,000 for the Company's BreathScan Alcohol Breathalyzer products in Great Britain was included for the six months ended June 30, 2015. Net of this significant order, MPC product sales increased 72% for the six months ended June 30, 2016.

While most of the MPC product sales in the six months ended June 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.

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 72% (2015: 62%) for the six months ended June 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 six months ended June 30, 2016 decreased by 16% to $476,876 (2015: $567,367). Direct cost of sales decreased to 13% of product revenue while other cost of sales decreased to 15% for the six months ended June 30, 2016 as compared to 24% and 25% respectively for the same period in 2015.

General and administrative expenses for the six months ended June 30, 2016, totaled $1,739,806, which was a 29% decrease as compared to $2,444,964 for the six months ended June 30, 2015.

Sales and marketing expenses for the six months ended June 30, 2016 totaled $1,238,754, which was a 10% increase as compared to $1,128,792 for the six months ended June 30, 2015.

Research and development expenses for the six months ended June 30, 2016 totaled $685,280 as compared to $683,799 for the six months ended June 30, 2015.

Other income, net of expenses for the six months ended June 30, 2016 totaled $13,899, which was an 80% decrease as compared to $69,209 for the six months ended June 30, 2015.

For the six months ended June 30, 2016 and 2015, the Company generated a net loss attributable to shareholders of $2,517,861 and $3,408,028, respectively. As of June 30, 2016 and December 31, 2015, the Company has an accumulated deficit of $96,693,860 and $94,175,999 and had cash and marketable securities totaling $1,927,560 and $4,427,163, respectively.

Summary of Statements of Operations for the Three Months Ended June 30, 2016 and 2015

Akers Bio's revenue for the three months ended June 30, 2016 totaled $956,486, a 1% decrease from the three months ended June 30, 2015. Product revenue increased by 28%, primarily a result of sales of our PIFA Heparin/PF4 Rapid Assay products. The total revenue decline was the result of 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 three months ended June 30, 2016 and 2015 as well as the percentage of change year-over-year:

               
Product Lines   3 Months
Ended
June 30, 2016
  3 Months
Ended
June 30, 2015
  Percent Change  
Particle ImmunoFiltration Assay ("PIFA")   $ 879,081   $ 560,598   57 %
                   
MicroParticle Catalyzed Biosensor ("MPC")     44,918     168,444   (73 )%
                   
Other     32,487     15,658   107 %
                   
Product Revenue Total   $ 956,486   $ 744,700   28 %
                   
License Fees     -     222,222   (100 )%
                   
Total Revenue   $ 956,486   $ 966,922   (1 )%
                   

Revenue from the Company's PIFA Heparin/PF4 Rapid Assay products increased 57% during the three months ended June 30, 2016 over the same period of 2015, reflecting 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. The remaining products will be scheduled to ship at various points throughout the current fiscal year with revenue being recognized when the criteria for the recognition of revenue is met. The Company recognized $473,853 for PIFA Heparin/PF4 products from Novotek during the three months ended June 30, 2016.

The Company's MPC product sales declined 73% during the three months ended June 30, 2016 over the same period of 2015. A distributor's initial stocking order of approximately $146,000 for the Company's BreathScan Alcohol Breathalyzer products in Great Britain was included for the three months ended June 30, 2015. Net of this significant order, MPC product sales increased 100% for the three months ended June 30, 2016.

While most of the MPC product sales in the three months ended June 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.

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 71% (2015: 65%) for the three months ended June 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 three months ended June 30, 2016 decreased by 19% to $276,848 (2015: $341,025). Direct cost of sales decreased to 12% of product revenue while other cost of sales decreased to 17% for the three months ended June 30, 2016 as compared to 19% and 27% respectively for the same period in 2015.

General and administrative expenses for the three months ended June 30, 2016, totaled $816,244, which was a 53% decrease as compared to $1,746,532 for the three months ended June 30, 2015.

Sales and marketing expenses for the three months ended June 30, 2016 totaled $513,430, which was a 7% decrease as compared to $553,539 for the three months ended June 30, 2015.

Research and development expenses for the three months ended June 30, 2016 totaled $321,989, which was a 15% decrease as compared to $378,224 for the three months ended June 30, 2015.

Other income, net of expense for the three months ended June 30, 2016 totaled $5,870, which was a 81% decrease as compared to $30,811 for the three months ended June 30, 2015.

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.

Cautionary Statement Regarding Forward Looking Statements

Statements contained herein that are not based upon current or historical fact are forward-looking in nature and constitute forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Such forward-looking statements reflect the Company's expectations about its future operating results, performance and opportunities that involve substantial risks and uncertainties. These statements include but are not limited to statements regarding the intended terms of the offering, closing of the offering and use of any proceeds from the offering. When used herein, the words "anticipate," "believe," "estimate," "upcoming," "plan," "target", "intend" and "expect" and similar expressions, as they relate to Akers Biosciences, Inc., its subsidiaries, or its management, are intended to identify such forward-looking statements. These forward-looking statements are based on information currently available to the Company and are subject to a number of risks, uncertainties, and other factors that could cause the Company's actual results, performance, prospects, and opportunities to differ materially from those expressed in, or implied by, these forward-looking statements.

Contact Information

  • For more information:

    Akers Biosciences, Inc.
    John J. Gormally (Chief Executive Officer)
    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 (Public Relations)
    Ben Simons / Fiona Henson
    Tel. +44 (0)20 7830 9700
    Email: akers@vigocomms.com