Total Revenue Up 33%
THOROFARE, N.J., April 03, 2018 (GLOBE NEWSWIRE) -- 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, 2017.
2017 Financial Highlights:
- Total revenue up 33% to $3,929,527 (2016: $2,960,912)
- PIFA Heparin/PF4 Rapid Assay products continue to account for the majority of revenues – however, growth was driven primarily by BreathScan Alcohol Breathalyzers, BreathScan OxiChek™ and the re-introduced Tri-Cholesterol test
- Total revenue up across all geographic regions
- USA: 23%
- China: 25%
- Rest of World: 247%
- Gross profit margin remained strong at 63% (2016: 63%)
- Gross profit up 34% to $2,509,564 (2016: $1,877,825)
- Major expense areas increased 17% overall
- General and Administrative expenses increased 36% to $4,082,313 (2016: $3,008,811) - the Company has been conservative in its approach to debt collectability and has reserved $494,436 for doubtful accounts during the year included in this figure
- Sales and Marketing expenses reduced by 4% to $2,048,571 (2016: $2,137,282)
- Research and Development expenses increased by 6% to $1,260,378 (2016: $1,188,868)
- Loss from operations increased 25% to $(5,805,326) (2016: $(4,628,244) (excluding allowance for reversal of bad debts))
- Balance sheet strengthened significantly with net proceeds of approximately $10.5 million from Public Offerings, a Private Placement and the execution of stock warrants in 2017
- Cash and marketable securities at December 31, 2017 of $5,450,039 (2016: $122,701)
2017 Operational and Corporate Highlights:
- Company continues to grow sales of a key product of the future: BreathScan OxiChek™ - a rapid breath test for oxidative stress
- Ongoing discussions within the nutraceutical sector with regards to significant potential commercial partnership
- United States Patent and Trademark Office allowed a patent covering the proprietary cartridge for the optical scanning device utilized in BreathScan Lync™ - the new bluetooth-enabled reading device from Akers Wellness™ which enables users to track the results of OxiChek™ via their mobile device, now including iOS devices
- Broadened distribution from anti-aging, functional and integrative health and wellness treatment practitioners in the US to now include the US chiropractic sector
- Established contractual relationship with a respected authority and key opinion leader within the US chiropractic sector to represent and promote OxiChek™
- Television marketing campaign undertaken through the popular Balancing Act national television show on the Lifetime network - America's premier morning show that introduces positive solutions to busy, on-the-go, modern women
- Sales of BreathScan Alcohol Breathalyzer products growing
- Received initial stocking order for products in Australia and New Zealand
- Demand re-emerging in Western Europe and the Far East
- Shipments of rapid cholesterol self-test commenced to First Check Diagnostics, LLC, the exclusive distributor for this product in the US, for sale under their popular "First Check" brand, which is sold in major retailers including CVS, Rite Aid, Target, Kmart, Meijer, Giant Eagle, Stop & Shop, Giant and ShopKo
- Continued progress in positioning PIFA Heparin/PF4 Rapid Assay products for sales to large integrated delivery network customers in the US
- Company actively campaigning to drive PIFA Heparin/PF4 Rapid Assay products to the next level by pursuing further clinical pathway studies, heparin-induced thrombocytopenia (HIT) awareness campaigns and a strategic focus on clinical end-users
- Began marketing rapid test for heparin-induced thrombocytopenia to hospital facilities in Puerto Rico
- In May 2017, the Company submitted its PIFA Chlamydia Rapid Assay - the first rapid blood test for this highly prevalent sexually transmitted disease - to the US Food and Drug Administration (FDA) for 510(k) approval
- The Company continues to work proactively with the FDA to advance the approval process. The Company is in communication with the FDA regarding a potential requirement for additional data. In the event that the FDA requires additional data to support the application, the Company is committed to completing further studies as expeditiously as possible in order to complete the FDA 510(k) process
- The Company continues to work proactively with the FDA to advance the approval process. The Company is in communication with the FDA regarding a potential requirement for additional data. In the event that the FDA requires additional data to support the application, the Company is committed to completing further studies as expeditiously as possible in order to complete the FDA 510(k) process
- New directors elected with diverse and relevant skills to steer Akers Bio through next phase of growth and product commercialization
- John J. Gormally (the Company’s CEO since November 2015) elected to the Board of Directors – 35+ years of experience in the healthcare industry
- Bill J. White elected as Non-executive Director – 30+ years of experience in financial management, operations and business development
- Richard C. Tarbox III elected as Non-executive Director – 40+ years of management experience in the medical device and diagnostics sector of the healthcare industry
- Christopher C. Schreiber elected as Non-executive Director – 30+ years of experience in the securities industry
- US commercial team strengthened with appointment of Pamela E. Hibler as Vice President, Sales and Distribution, North America – 25+ years of success in medical device sector sales
Chief Executive Officer’s Commentary
Akers Bio grew stronger in 2017 on a number of levels. We strengthened our Board of Directors, with the appointments of highly experienced directors in the fields of healthcare, medical devices, finance and capital markets; we strengthened our leadership team, particularly in Sales and Distribution; we strengthened our product positioning across core products including PIFA Heparin/PF4 Rapid Assay and BreathScan OxiChek™; and we strengthened our balance sheet, with net proceeds from Public Offerings a Private Placement and the executions of stock warrants totaling approximately $10.5 million. The combined effect of these accomplishments will, I believe, be reflected in accelerated growth in the months and years ahead.
A key product of our future is BreathScan OxiChek™ - the first commercialized product from the Akers Wellness™ line which applies the Company’s proprietary breath analysis technology to the large and growing health and wellness market. OxiChek™ is a rapid breath test for oxidative stress – a good indicator of a person’s overall health and wellbeing. It works with BreathScan Lync™ - the new bluetooth-enabled reading device from Akers Wellness™ which enables users to track the results of OxiChek™ via their mobile device. The Company initiated discussions during the year within the nutraceutical sector with regards to a significant potential commercial partnership for OxiChek™. We further broadened distribution from anti-aging, functional and integrative health and wellness treatment practitioners in the US to now include the chiropractic sector; and undertook a major television marketing campaign on the Lifetime network.
I am encouraged that OxiChek™ and BreathScan Lync™ continued to contribute incrementally over the course of the year to our MPC Biosensor platform sales, which grew overall by 237% to $950,946. It is also notable that sales of BreathScan Alcohol Breathalyzer products – another commercialized product in this platform category – enjoyed a stronger year, boosted by a $267,750 initial stocking order from Australia and New Zealand; and interest re-emerging in Western Europe and the Far East.
Akers Bio is proud to see its over-the-counter rapid self-test for cholesterol on the shelves of major US retailers as shipments commenced to First Check Diagnostics, LLC, the exclusive distributor for this product in the US, for sale under their popular "First Check" brand, which is sold in stores including Rite Aid, Target, Kmart, Meijer, Giant Eagle, Stop & Shop, Giant and ShopKo. We are encouraged by demand and have received re-orders in 2018.
Revenue from the Company’s PIFA Heparin/PF4 Rapid Assay products decreased 13% to $2,232,684 (2016: $2,577,148) during the year ended December 31, 2017. Additional revenue from PIFA-related components, totaling $500,000, is included in other revenue. We are disappointed by this plateau and continue to believe the Company has significant market share upside for these assays. Accordingly, we have adjusted our marketing strategy to target large integrated delivery network (IDN) customers in the US While these IDNs take longer to penetrate than smaller, individual hospitals, once they are converted, we believe they will drive a step-change in revenues. Other components of our strategy to break through this plateau include clinical pathway studies, heparin-induced thrombocytopenia (HIT) awareness campaigns and a strategic focus on clinical end-users (particularly cardiac and orthopedic surgeons). We expect to announce a number of exciting developments in this area in the coming months.
In July, we recruited Pamela E. Hibler as Vice President, Sales and Distribution, in particular to lead the sales strategy for PIFA Heparin/PF4 Rapid Assay products in North America. I have worked with Pamela prior to Akers Bio. She has more than 25 years of success in medical device sector sales and I am excited about the work that she and our expanding team of Regional Sales Representatives reporting to her are doing to take PIFA to the next level.
I was delighted that we announced, after the year-end, a three-year National Distribution Agreement with Diagnostica Stago, Inc. (“Stago”) for the sale of the PIFA PLUSS PF4™ Rapid Assay across the US Stago is a global leader in hemostasis, with a specialized sales team and a large and established customer base to which to market our product.
Our most advanced products in the development pipeline are PIFA Chlamydia Rapid Assay and BreathScan KetoChek™. Each of these products has considerable market potential.
KetoChek™ is a breath-based device providing rapid, non-invasive identification of an optimal fat-burning state for weight loss (nutritional ketosis).
PIFA Chlamydia Rapid Assay is the first rapid blood test for this highly prevalent sexually transmitted disease. Subject to regulatory approval, we believe it will be highly appealing to our target markets which include Planned Parenthood, ambulatory care, health clinics and college campus clinics. In May 2017, the Company submitted PIFA Chlamydia to the FDA for 510(k) approval. The Company continues to work proactively with the FDA to advance the approval process. The Company is in communication with the FDA regarding a potential requirement for additional data. In the event that the FDA requires additional data to support the application, the Company is committed to completing further studies as expeditiously as possible in order to complete the FDA 510(k) process.
Having strengthened our business across key areas in 2017, Akers Bio is wholly focused on achieving a step-change in revenue growth in the current year and beyond. We aim to achieve this principally by breaking through the plateau in PIFA Heparin/PF4 Rapid Assay sales to take that product to the next level; securing a major channel to market for OxiChek™; and introducing new products to the market with large market potential.
John J. Gormally
Chief Executive Officer
Summary of Statements of Operations for the Year Ended December 31, 2017
Results of Operations
Revenue
The Company’s total revenue for the year ended December 31, 2017 was $3,929,527, a 33% increase compared to the same period in 2016. The table below presents a summary of our sales by product line:
| Year Ended | Year Ended | Percent | ||||||||||
| Product Line | December 31, 2017 | December 31, 2016 | Change | |||||||||
| Particle ImmunoFiltration Assay (“PIFA”) | $ | 2,232,684 | $ | 2,577,148 | (13 | )% | ||||||
| MicroParticle Catalyzed Biosensor (“MPC”) | 950,946 | 282,516 | 237 | % | ||||||||
| Rapid Enzymatic Assay (“REA”) | 133,848 | - | - | % | ||||||||
| Other | 562,049 | 97,498 | 476 | % | ||||||||
| Product Revenue Total | $ | 3,879,527 | $ | 2,957,162 | 31 | % | ||||||
| License & Service Fees | 50,000 | 3,750 | 1,233 | % | ||||||||
| Total Revenue | $ | 3,929,527 | $ | 2,960,912 | 33 | % | ||||||
Product revenue increased by 31% to $3,879,527 (2016: $2,957,162) during the year ended December 31, 2017 driven primarily by sales of BreathScan Alcohol Breathalyzers, BreathScan OxiChek™ and the Company’s re-introduced Tri-Cholesterol products. License and service fees increased to $50,000 (2016: $3,750), the result a fee from a potential customer for the Company’s BreathScan OxiChek™ products in exchange for the use of equipment, access to product documentation and data, technical support and to restrict the Company from actively pursuing another commercial partner in a specific market segment.
Revenue from the Company’s PIFA Heparin/PF4 Rapid Assay products decreased 13% to $2,232,684 (2016: $2,577,148) during the year ended December 31, 2017 over the same period of 2016. Additional revenue from PIFA -related components, totaling $500,000, during the year ended December 31, 2017 is included in other revenue. The Company is taking steps to improve its market presence including the use of specialized Independent Sales Representatives and a program to educate the marketplace through the preparation and publication of additional clinical studies and physician seminars on the risks associated with heparin induced thrombocytopenia.
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, 2017 of our distributors, Cardinal Health and Fisher HealthCare, accounted for $1,902,606 of the total PIFA Heparin/PF4 Rapid Assay sales as compared to $1,820,186 for the same period of 2016.
During the year ended December 31, 2017 the Company recognized $- (2016: $505,380) in PIFA revenue from the Company’s distribution partner in the People’s Republic of China (“PRC”). During the year ended December 31, 2017, NovoTek purchased PIFA components totaling $500,000 which is included in other revenue. NovoTek will utilize these components along with additional materials to be purchased in a future period to assemble PIFA Heparin/PF4 products in either the PRC or Poland.
The Company’s MPC product sales increased by 237% to $950,946 (2016: $282,516) during the year ended December 31, 2017. A distributor’s initial stocking order of $267,750 for the Company’s BreathScan Alcohol Breathalyzer products in Australia and New Zealand and revenue from the Company’s new BreathScan Lync™ and BreathScan OxiChek™ products contributed to the increase for the year ended December 31, 2017.
Demand for the BreathScan Breath Alcohol products is beginning to re-emerge in Western Europe, Australia and the Far East through the efforts of our Independent Manufacturing Representative (“IMR”) in Italy working in conjunction with our Corporate staff. The Company expects this trend to continue as the distribution partners in these areas continue to expand their markets.
The Company’s re-introduction of its Tri-Cholesterol test generated $133,848 (2016: $-) during the year ended December 31, 2017. The first shipment of this product occurred in September with follow-on shipments in December of 2017.
Other operating revenue increased by 476% to $562,049 (2016: $97,498) for the year ended December 31, 2017. The product group consists of fees received for shipping and handling and the sale of components. The significant increase resulted from an initial order, as explained above, for manufacturing components from NovoTek totaling $500,000.
License and service fee revenue increased to $50,000 (2016: $3,750) during the year ended December 31, 2017. The Company received a non-refundable $50,000 fee from a potential customer for the Company’s BreathScan OxiChek™ products in exchange for the use of equipment, access to product documentation and data, technical support and to restrict the Company from actively pursuing another commercial partner in a specific market segment.
The table below summarizes our revenue by geographic region for the years ended December 31, 2017 and 2016 as well as the percentage of change year-over-year:
| Geographic Region | Year Ended December 31, 2017 | Year Ended December 31, 2016 | Percent Change | |||||||||
| United States | $ | 2,861,613 | $ | 2,330,723 | 23 | % | ||||||
| People’s Republic of China | 627,132 | 502,998 | 25 | % | ||||||||
| Rest of World | 440,782 | 127,191 | 247 | % | ||||||||
| Total Revenue | $ | 3,929,527 | $ | 2,960,912 | 33 | % | ||||||
Domestic sales represent the most significant portion of the Company’s revenue, contributing 73% (2016: 79%). The primary sales and marketing efforts are concentrated on expanding the Company’s domestic market share in the rapid clinical diagnostic and health and wellness segments and the recent introduction of the Tri-Cholesterol test has allowed the Company to re-enter the retail market.
Revenue from China continues to be highly unpredictable. NovoTek Pharmaceuticals (“NovoTek”), our distribution partner for the PIFA Heparin/PF4 Rapid Assay products, continues to pursue approvals for reimbursement rates from the various Provinces and although they anticipate receipt of these approvals, their timing is unknown. Over the past several years, NovoTek has created significant product demand by identifying and working with the key opinion leaders and seeding the marketplace with sample products. As a result, they anticipate strong demand for the PIFA Heparin/PF4 Rapid Assay product once reimbursement rates are approved.
Revenue from the rest of the world consists mostly of the BreathScan Alcohol Breathalyzer products being distributed in Western Europe and Australia.
Cost of sales for the year ended December 31, 2017 totaled $1,419,963 (2016: $1,083,087). Direct cost of sales increased to 21% (2016: 15%) and indirect cost of sales decreased to 16% (2016: 21%) of product revenue for year ended December 31, 2017. Overall, cost of sales, as a percentage of product revenue, remained unchanged at 37% for the years ended December 31, 2017 and 2016.
Direct costs of sales for the year ended December 31, 2017 were $809,059 (2016: $448,240). Other cost of sales for the year ended December 31, 2017 were $610,904 (2016: $634,848).
The initial commercial production of the Company’s Tri-Cholesterol product contributed to the increase in direct costs. One-time costs associated with the transition from Research and Development to Manufacturing as the production plans were implemented and adjusted included engineering, raw material waste as processes were fine-tuned to meet commercial production levels, training of the production staff and increased quality review and testing. The inclusion of several of the Research and Development department’s professional staff as part of the initial production team significantly increased direct labor costs.
The Company continues to maintain strong gross margins which remained unchanged at 63% for the years ended December 31, 2017 and 2016.
General and Administrative Expenses
General and administrative expenses in the year ended December 31, 2017 totaled $4,082,313, which was a 36% increase as compared to $3,008,811 for the year ended December 31, 2016.
Sales and Marketing Expenses
Sales and marketing expenses in the year ended December 31, 2017 totaled $2,048,571, which was a 4% decrease as compared to $2,137,282 for the year ended 2016.
Research and Development
Research and development expenses in the year ended December 31, 2017 totaled $1,260,378, which was a 6% increase as compared to $1,188,868 for the year ended 2016.
Other Income and Expense
Other income decreased 51% to $12,412 (2016: $25,097) and other expenses totaled $764,932 (2016: $-) for the year ended December 31, 2017.
Liquidity and Capital Resources
For the years ended December 31, 2017 and 2016, the Company generated a net loss attributable to shareholders of $5,805,326 and $3,303,538, respectively. As of December 31, 2017 and 2016, the Company has an accumulated deficit of $103,284,863 and $97,479,537 and had cash and cash equivalents totaling $438,432 and $72,700, respectively The Company had marketable securities of $5,011,607 and $50,001 available as of December 31, 2017 and 2016.
Operating Activities
The Company’s net cash consumed by operating activities in the year ended December 31, 2017 totaled $5,080,412, which was a 22% increase as compared to $4,173,148 for the year ended December 31, 2016.
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 3, 2018 at 9:00 a.m. Eastern Time
US callers: 1-866-548-4713
International callers: 1-323-794-2093
Conference ID: 3259966
Webcast: http://public.viavid.com/index.php?id=128828
For more information:
Akers Biosciences, Inc.
John J. Gormally, Chief Executive Officer
Tel. +1 856 848 8698
Taglich Brothers, Inc. (Investor Relations)
Chris Schreiber
Tel. +1 917 445 6207
Email: cs@taglichbrothers.com
Vigo Communications (Global Public Relations)
Ben Simons / Fiona Henson
Tel. +44 (0)20 7830 9700
Email: akers@vigocomms.com
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.