SOURCE: Akers Biosciences, Inc.

Akers Biosciences, Inc.

April 11, 2017 07:00 ET

Akers Biosciences Reports Earnings for Fiscal Year 2016

Sales of Flagship Rapid HIT Test +85% over prior year

THOROFARE, NJ--(Marketwired - Apr 11, 2017) - Akers Biosciences, Inc. (NASDAQ: AKER) (AIM: AKR.L), ("Akers", "Akers Bio" or the "Company"), a developer of rapid health information technologies, reports its financial results for the fiscal year ended December 31, 2016.

2016 Financial Highlights:

  • Total revenue up 40% to $2,960,912 (2015: $2,115,050)
  • Growth driven by 85% increase in sales of flagship heparin allergy test to $2,577,148 (2015: $1,391,017)
  • Total product sales of $2,957,162 exceeded 2015 sum by approximately $1.2 million or 65%.
  • Gross profit margin increased to 63% (2015: 55%) resulting in gross income of $1,877,825 (2015: $1,164,258)
  • Significant reductions in major expense areas:
    • General and Administrative expenses reduced by 25% to $3,008,811 (2015: $4,029,516)
    • Sales and Marketing expenses reduced by 16% to $2,137,282 (2015: $2,543,286)
    • Research and Development expenses reduced by 15% to $1,188,868 (2015: $1,406,895)
  • Reversal of an allowance for bad debts of $1,299,609 in exchange for inventory and a prepaid royalty (this is now accounted for separately from the General and Administrative expense)
  • These factors contributed to a markedly reduced net loss attributable to shareholders of $3,303,538, down 65% compared to 2015 (2015: $9,311,913)
  • Cash and marketable securities at December 31, 2016 of $122,701 (2015: $4,427,163) bolstered by net proceeds of approximately $1.7 million from a public offering and $1.8 million from a private placement on January 13 and March 31, 2017 respectively
  • As of April 5, 2017, the Company had cash and marketable securities of approximately $2.3 million

2016 Operational Highlights:

  • Successfully implemented significant price increase for flagship PIFA Heparin PF/4 Rapid Assay products
  • Sales of PIFA Heparin PF/4 Rapid Assay products to U.S. hospitals enjoyed their strongest ever half year period during H2 2016, providing momentum moving into the current year
  • PIFA Heparin PF/4 Rapid Assay products recorded sales of $493,850 to China in 2016 -- further orders are anticipated when pricing approvals are received in key provinces
  • Three-year agreement signed with GNYHA Services, a group purchasing organization affiliated with Greater New York Hospital Association (GNYHA), to introduce PIFA Heparin PF/4 Rapid Assay products across GNYHA's network of over 300 member hospitals and health systems
  • Exclusive U.S. distribution agreement signed for rapid cholesterol self-test with First Check Diagnostics, LLC for sale under their "First Check" brand, which is sold in major retailers including CVS, Rite Aid, Target, Kmart, Meijer, Giant Eagle, Stop & Shop, Giant and ShopKo (initial order received after year-end)
  • Completed highly successful clinical trials for rapid breath test for diabetic ketoacidosis (BreathScan® DKA) and rapid blood test for chlamydia (PIFA/Chlamydia Rapid Assay); as well as a highly successful clinical study for rapid breath test for oxidative stress (BreathScan OxiChek™)
    • Overall agreement between the BreathScan® DKA test and gold standard hospital blood test was 92%
    • Overall agreement between the PIFA/Chlamydia Rapid Assay and the reference laboratory method was 96% in patient populations of acute infection and historical exposure
    • Overall agreement between OxiChek™ and the standard reference laboratory blood testing method (TBARS) was 99.5%
  • Strengthened commercial team with the appointments of Doug Carrara and Tony Saporito in senior sales and marketing roles following the appointment of new CEO, John J. Gormally in November 2015
    • Reshaped U.S. sales strategy for PIFA Heparin PF/4 Rapid Assay products to target large integrated delivery networks which require fewer, but more experienced, sales personnel

Chief Executive Officer's Review

We continued to see strong evidence during 2016 of growing demand for our PIFA Heparin PF/4 Rapid Assay products. This is reflected in an uplift in sales for these products of 85% in the period. We believe it is a notable achievement to have successfully implemented our evidence-based outcome proposition that supported our pricing for our PIFA Heparin PF/4 Rapid Assay within the market. This fact speaks volumes about our branded flagship offering that has the ability to provide significant savings for hospitals through the implementation of our test for platelet factor four antibodies.

Our strategy to focus on integrated delivery networks and group purchasing organizations in the U.S. is gaining traction, as demonstrated in the three-year agreement announced with the GNYHA Services in December 2016 to introduce our tests across their network of over 300 member hospitals and health systems.

Furthermore, we believe that once additional regulatory hurdles in China are complete, Akers Bio will be able to release further product there as demand grows, creating a very attractive non-U.S. revenue stream for PIFA Heparin PF/4 Rapid Assay products.

As revenues increase, our cost base is decreasing allowing for cash flow breakeven to move into our sights. We have recorded material reductions in all key areas of expense. This is reflected in a significant reduction in the loss from operations, down from approximately $9.3 million in 2015 to approximately $3.3 million in 2016. The impact of this is a markedly reduced loss attributable to shareholders of approximately $3.3 million, down 65%.

I am excited about the future not only for our currently commercialized tests -- in particular PIFA Heparin PF/4 Rapid Assay and Tri-Cholesterol "Check" -- but also for our near-term pipeline which is underpinned by hugely successful clinical trials and studies completed during 2016 for rapid tests for cholesterol, diabetic ketoacidosis and oxidative stress. The success of these trials reinforces the value we believe lies within our proprietary platform technologies. Each of the markets targeted by our pipeline of new tests is significant and we believe Akers Bio's new generation of testing technology will greatly enhance the patient experience while reducing costs for the healthcare system. 

Outlook

I expect 2017 to be characterized by further growth in our flagship PIFA Heparin PF/4 Rapid Assay product line, sales of our rapid cholesterol test direct to consumers through major U.S. retailers under the "First Check" brand, growing sales from our new generation of app-connected wellness products and, subject to regulatory approvals, the launch into the market of the first rapid blood test for chlamydia and a breath test for nutritional ketosis or fat burning.

John J. Gormally
Chief Executive Officer

Summary of Statements of Operations for the Year Ended December 31, 2016

Results of Operations

Revenue

The Company's total revenue for the year ended December 31, 2016 was $2,960,912, a 40% increase compared to the same period in 2015.

Product revenue increased by 65% to $2,957,162 (2015: $1,794,494) during the year ended December 31, 2016 driven primarily by a price increase for our PIFA Heparin/PF4 Rapid Assay products. Licensing revenue declined by 99% to $3,750 ($320,556), the result of the loss of licensing revenue from ChubeWorkx as a result of the termination of the distribution agreement for the Company's BreathScan Alcohol Breathalyzers that occurred in the second quarter of 2015.

The Company's MPC product sales declined by 5% to $282,516 (2015: $296,328) during the year ended December 31, 2016. 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 year ended December 31, 2015 but not repeated in 2016. Net of this significant order, MPC product sales increased 85% year-over-year. The Company's new BreathScan Lync and BreathScan OxiChek™ products and renewed interest in the Company's BreathScan Alcohol Breathalyzers, both domestically and internationally, contributed to the increase for the year ended December 31, 2016.

The Company's total PIFA sales increased during the year ended December 31, 2016 by 85% to $2,577,148 (2015: $1,391,017). The increase is due primarily to two events; first, the implementation of a significant price increase for the product line and second, the fulfillment during the year of approximately 20% of the $2.5 million order from NovoTek, our exclusive distributor for PIFA Heparin/PF4 Rapid Assay products in the People's Republic of China.

The Company's dedicated technical sales account executives are supporting over 300 sales representatives of Akers' U.S. distribution partners, Cardinal Health ("Cardinal Health"), Fisher HealthCare ("Fisher Healthcare") and Typenex Medical, LLC ("Typenex"). The Company's relationship-building initiative with our partners has delivered a measurable increase in product trials and adoptions. Domestic sales for the year ended December 31, 2016 of our distributors, Cardinal Health and Fisher HealthCare, accounted for $1,820,186 of the total PIFA Heparin/PF4 Rapid Assay sales as compared to $1,213,006 for the same period of 2015 and individually represented 37% and 22% of such sales, respectively.

The Company's international sales of its PIFA Heparin/PF4 Rapid Assay products totaled $493,850 (2015: $-) during the year ended December 31, 2016 primarily as a result of the partial fulfillment of a $2.5 million order from NovoTek. Although the product has been approved for use in China by the China Food and Drug Administration, each province in which it is sold must establish reimbursement rates for the medical facilities that utilize the test. NovoTek is diligently working through this provincial approval process and is projecting reimbursement rate approvals in several provinces during 2017 which is expected to allow for the release of and payment for further products in line with user demand.

Other operating revenue decreased by 9% to $97,499 (2015: $107,149) for the year ended December 31, 2016 due in a major part to a decline in the sale of miscellaneous components to $42,570 (2015: $50,612).

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 $3,750 (2015: $320,556). 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, 2016 totaled $1,083,087 (2015: $950,792) on the increased revenue during the year ended December 31, 2016. Direct cost of sales decreased to 26% (2015: 43%) and indirect cost of sales decreased to 21% (2015: 24%) of product revenue for year ended December 31, 2016. Overall, cost of sales, as a percentage of product revenue, was 37% and 53% for the years ended December 31, 2016 and 2015.

Direct costs associated with the MPC products remained constant at 30% (2015: 30%) and PIFA products decreased to 9% (2015: 11%) related to the increased use of sub-contractors for the assembly of components.

Indirect cost of sales for the year ended December 31, 2016 totaled $634,848 (2015: $425,609) which represented 21% (2015: 24%) of product revenue. Costs associated with personnel, consumable supplies other general production declined while a project to identify and discard expired, stale and obsolete inventory resulted in a significant increase in expenses related to slippage and obsolescence. In addition, the percentage change is affected by the fixed cost nature of many of the components in this category.

Akers' gross profit margin, as a percentage of revenue, increased to 63% for the year ended December 31, 2016 as compared to 55% in 2015 for the reasons described above.

General and Administrative Expenses

General and administrative expenses in the year ended December 31, 2016 totaled $3,008,811, which was a 25% decrease as compared to $4,029,516 for the year ended December 31, 2015.

Sales and Marketing Expenses

Sales and marketing expenses in the year ended December 31, 2016 totaled $2,137,282, which was a 16% decrease as compared to $2,543,286 for the year ended 2015.

Research and Development

Research and development expenses in the year ended December 31, 2016 totaled $1,188,868, which was a 15% decrease as compared to $1,406,895 for the year ended 2015.

(Reversal of Allowance for) Bad Debt Expense - Related Party

The Company 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 as of December 31, 2015. In August 2016, the two companies reached a settlement agreement which included recovery for the value of the note receivable. As a result, the allowance for doubtful accounts was reversed during the year ended December 31, 2016.

Other Income and Expense

Other income and expense decreased for the year ended December 31, 2016 to $25,097 from $100,973 for the same period in 2015.

Liquidity and Capital Resources

For the years ended December 31, 2016 and 2015, the Company generated a net loss attributable to shareholders of $3,303,538 and $9,311,913, respectively. As of December 31, 2016 and 2015, the Company has an accumulated deficit of $97,479,537 and $94,175,999 and had cash and cash equivalents totaling $72,700 and $402,059, respectively. The Company had marketable securities of $50,001 and $4,025,104 available as of December 31, 2016 and 2015.

Operating Activities

The Company's net cash consumed by operating activities in the year ended December 31, 2016 totaled $4,173,148, which was a 19% decrease as compared to $5,132,343 for the year ended December 31, 2015.

For the year ended December 31, 2016, cash was consumed by the loss of $3,303,538 and non-operating gains of $1,153,413 offset by a non-cash adjustment of $14,244 for accrued interest and dividends, $286,162 for depreciation, amortization of non-current assets, $32,333 for a reserve for obsolete inventory, $30,153 for amortization of deferred compensation and $51,653 for non-cash share based compensation and services. Decreases in deposits and other receivables ($71,795), prepaid expenses ($17,689), prepaid expenses - related party of ($76,927) and an increase in trade and other payables - related party ($234,067) provided cash. Increases in trade receivables ($138,272), trade receivables - related party ($380), inventories ($187,200) and a decrease in trade and other payables ($205,368) consumed cash. The decrease in net cash used in operating activities was related to improvements to the Company's budgeting process, termination of several consulting agreements and a significant reduction in legal expenses.

For the year ended December 31, 2015, cash was consumed by the loss of $9,311,913 and non-operating gains of $6,052 offset by a non-cash adjustment of $4,199 for accrued interest and dividends, $766,471 for depreciation, amortization and impairment of non-current assets, $2,163,609 for allowances for doubtful accounts and $397,012 for non-cash share based compensation and services. Decreases in trade receivables ($513,583), trade receivables - related party ($176,157) and an increase in trade and other payables ($827,601) provided cash. Increases in other receivables ($54,142), inventories ($226,538), other assets ($76,774) and a decrease in deferred revenue - related party ($305,556) consumed cash. The increase in net cash used in operating activities was related to routine changes in operating activities.

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:

Tuesday, April 11, 2017 at 9:00 a.m. Eastern Time
US callers: 1-877-857-6150
International callers: 1-719-325-4933
Conference ID: 2794993
Webcast: http://public.viavid.com/index.php?id=123815

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
    Vice 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 (Global Public Relations)
    Ben Simons / Fiona Henson
    Tel. +44 (0)20 7830 9700
    Email: akers@vigocomms.com