Akers Biosciences Announces Q3 2015 Earnings

Flagship Rapid HIT Test Set to be in 250 US Hospitals by Year End

Conference Call Scheduled for 9:00 a.m. EST Today

THOROFARE, N.J., Nov. 13, 2015 (GLOBE NEWSWIRE) -- Akers Biosciences, Inc. (NASDAQ:AKER) (AIM:AKR.L), (the "Company," "Akers" or "Akers Bio"), a medical device company focused on reducing the cost of healthcare through faster, easier diagnostics, reports its earnings for the third quarter and nine months ended September 30, 2015.

Financial Highlights:

• Total Revenue for nine months ended September 30, 2015 was $1,325,887 (9M 2014: $2,980,389). The decrease resulted from there having been an initial stocking order for Tri-Cholesterol "Check" tests during the nine months ended September 30, 2014 which was not repeated in the nine months ended September 30, 2015; and from the impact on sales of BreathScan breathalyzer products following the French government's postponement, indefinitely, of the fine that was to be imposed for drivers failing to possess breathalyzers in their vehicles
   
• Importantly, sales of the flagship PIFA Heparin/PF4 Rapid Assay products increased by 9% over the nine month period ended September 30, 2014
   
• Product Revenue for Q3 2015 was $169,473 (Q3 2014: $359,980), reflecting lower than usual distributor stock depletion of PIFA Heparin/PF4 Rapid Assay products during the summer months – demand returning to normal levels in Q4
   
• Loss before income tax for Q3 was $2,326,893 (Q3 2014: loss of $1,124,320), reflecting significantly expanded personnel costs, higher marketing costs associated with product launches, higher R&D costs associated with new product development and a one-off impairment ($466,476) of historic patents/trademarks no longer contributing to sales
   
• Cash and marketable securities at September 30, 2015 were $5,622,597 ($9,720,802 at December 31, 2014)

Operational Highlights

• PIFA Heparin/PF4 Rapid Assay products now in over 200 US hospitals – and growing by approximately 20 new hospitals per month, each worth an annualized average of $15,000 per annum to Akers Bio
   
• Assuming these average metrics continue, annualized PIFA Heparin/PF4 Rapid Assay product revenue for the US alone should be $3.75 million entering 2016
   
• At the current growth rate, the Company believes it has the potential to be at close to 500 hospitals in the US by December 31, 2016. This would represent a significant milestone for Akers Bio as the US hospital base for PIFA Heparin/PF4 Rapid Assay products alone would substantially underpin the Company's overhead
   
• Added further sales executives across the US to support distributors – Company now has 10 sales executives in the field
   
• China Food and Drug Administration approval of PIFA Heparin/PF4 Rapid Assay products is expected to stimulate purchasing from our exclusive distributor for these products in Mainland China
   
• Significant progress in commercialization of new breath tests in the Akers Wellness line for the health and wellness industry and consumers - commenced first production during the third quarter
   
• In addition to selling Akers Wellness products through the Amazon Marketplace, the Company is in advanced stages of appointing distributors to target multi-level marketing companies in the nutraceutical business, fitness and weight loss centers, chiropractors, and anti-aging medicine physicians

Raymond F. Akers, Jr. PhD, Co-founder and Executive Chairman, commented:

"Akers Bio's product revenues in the first nine months of the year were $1,325,877. This is primarily being driven by the growth in domestic sales of our flagship rapid tests for Heparin-Induced Thrombocytopenia – an allergic reaction to the widely used blood thinner, heparin. Sales of these products are up 9% in the year to date. In fact, Akers Bio now has over 200 hospital customers in the US using these tests out of the 2,500 large hospitals we are initially targeting. Each of our PIFA Heparin/PF4 Rapid Assay hospital customers is worth an average of $15,000 to Akers Bio annually.

"On this basis, assuming these average metrics continue, annualized PIFA Heparin/PF4 Rapid Assay product revenue for the US alone should be $3.75 million entering 2016. Furthermore, at the current growth rate, we believe we have the potential to be at close to 500 hospitals in the US by 31 December 2016. This would represent a significant milestone for Akers Bio as the US hospital base for PIFA Heparin/PF4 Rapid Assay products alone would substantially underpin the Company's overhead.

"In addition to the core domestic PIFA Heparin/PF4 Rapid Assay business, the Company is making significant progress on its international strategy for these tests. We believe that China could ultimately become one of the Company's biggest ex-US markets for these tests and a huge advancement was made in the Chinese commercialization strategy when, earlier this month, the China Food and Drug Administration (CFDA) approved our tests for medical use throughout Mainland China. As a result, the Company is confident of a growing and material contribution to PIFA Heparin/PF4 Rapid Assay revenues from NovoTek, our exclusive distributor for this product in Mainland China.

"Beyond the US and China, we have a growing network of distributors – currently totaling 27 - seeking to establish marketing channels for PIFA Heparin/PF4 Rapid Assay products in countries including within Europe and Scandinavia.

"Another area of significant progress during the third quarter was in the commercialization of our new breath tests designed for the health and wellness industry and consumers. We strongly believe that consumers are increasingly looking for personalized health information and that our BreathScan technology platform, which facilitates diagnoses through simple breath tests, will provide the footprint for the Company to enter into this new era of digital medicine.

"Our new health and wellness products, under the Akers Wellness line, are poised to make an impact as we commenced first production during the third quarter. The response to their launch has been overwhelmingly positive. In addition to selling through the Amazon Marketplace, we are in the advanced stages of appointing distributors to target multi-level marketing companies in the nutraceutical business, fitness and weight loss centers, chiropractors, and anti-aging medicine physicians.

Outlook

"Like many medical device companies in the early phases of commercialization, Akers Bio has yet to establish consistent ordering patterns with its customers. This was evident in the third quarter in the lower than usual distributor stock depletion of PIFA Heparin/PF4 Rapid Assays during the summer months which, in turn, reduced domestic product revenue for these products during the third quarter. However, I am pleased to say that our early sales figures indicate that demand in the US is returning to normal levels in the fourth quarter.

"We remain confident that the CFDA's approval of PIFA Heparin/PF4 Rapid Assay products in China will serve as a catalyst for further orders there from our exclusive distributor for these products prior to year-end. We believe these factors, combined with a resurgence of demand in the EU for alcohol breathalyzers, will deliver a significantly stronger fourth quarter than all three quarters of the year thus far. It should also be noted that $2.4 million of the $5.7 million loss before income tax in the first nine months of the year is non-recurring.

"Beyond year end, assuming we continue to add hospital customers in the US for PIFA Heparin/PF4 Rapid Assay products at the same rate, we should be moving into 2016 with a core revenue base from these products in the US alone of $3.75 million; and, with further acceleration of this growth rate anticipated, be on a clear path to doubling that moving into 2017."

Conference Call Information:

Summary of Statements of Operations for the Three Months Ended September 30, 2015 and 2014

Revenue

Akers' revenue for the three months ended September 30, 2015 totaled $169,473, a 63% decrease from the three months ended September 30, 2014. The revenue decline is attributed to two factors; first, lower than usual distributor stock depletion of our PIFA Heparin/PF4 Rapid Assay products; and second, no licensing revenue was recorded during the three month period ended September 30, 2015 (2014: $93,333) following the cancellation of the License and Supply Agreement with ChubeWorkx Guernsey Limited ("ChubeWorkx") in May, 2015.

The Company's MPC product sales declined 37%. The decline is related to the irregular timing of orders from various distributors that purchase alcohol breathalyzers annually or semi-annually. The new distributor in the European Union ("EU"), which placed an initial order for 2,000,000 devices in June, 2015, did not request the release of any additional device shipments during the three month period ending September 30, 2015; however, the Company will release product as directed by the distributor over the next nine months. The Company launched its METRON disposable breath test for ketones on the Amazon Marketplace in the three month period ended September 30, 2015. While the METRON sales were small in its debut quarter, the Company believes that revenues will grow in the fourth quarter. The Company also expects to realize revenue from its BreathScan Lync health and wellness line in the fourth quarter.

Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay products, part of the PIFA line, declined 62%, primarily reflecting lower than usual distributor stock depletion of our PIFA Heparin/PF4 Rapid Assay products during the third quarter. Demand for these products is returning to normal levels in the fourth quarter and our distributors are returning to their usual purchasing patterns. The Company has expanded its sales and marketing staff to cover most of the United States, adding technical sales account executives whose role is to significantly support the sales representatives of Akers' US distribution partners, Cardinal Health ("Cardinal"), Fisher HealthCare ("Fisher") and Typenex Medical ("Typenex"). We expect to see the revenue benefits from the expansion of the sales and marketing staff as the additional sales executives become more involved with the distributor representatives in their sales regions.

International sales of the Company's PIFA Heparin/PF4 Rapid Assay products were still developing, but will be greatly enhanced with the recent approval of the product in China. This approval is expected to stimulate minimum purchase requirements with our distributor, Novotek, of approximately $1 million in 2015 and $6 million in 2016.

Cost of sales for the three months ended September 30, 2015 increased by 10% to $177,952 (2014: $162,145). Direct cost of sales increased to 42% of product revenue while indirect cost of sales increased to 63% for the three months ended September 30, 2015 as compared to 19% and 26% respectively for the same period in 2014.

Direct cost of sales for the three month period ended September 30, 2015 were $71,722 (2014: 67,940). The increase for the three months ended September 30, 2015 was related to direct personnel costs.

Indirect cost of sales for the three months ended September 30, 2015 were $106,230 (2014: 94,205). The increase is attributed to an ongoing project to improve the management, reporting and turn-over rate of our production inventory. The increase was mitigated by a reduction in indirect personnel expenses in the three months ended September 30, 2015. In addition, the percentage increase is affected by the fixed cost nature of many of the components in this category.

Costs

General and administrative expenses for the three months ended September 30, 2015, totaled $760,336, which was an 8% decrease as compared to $826,756 for the three months ended September 30, 2014.

Sales and marketing expenses for the three months ended September 30, 2015 totaled $725,832, which was a 102% increase as compared to $358,650 for the three months ended September 30, 2014.

Personnel costs increased in the three months ended September 30, 2015 due to the expansion of the sales and marketing department from 3 employees at September 30, 2014 to 11 employees as of September 30, 2015.

Other sales and marketing costs increased primarily due to the increased travel by the expanded sales and marketing staff in support of our customer and distributor base.

Research and development expenses for the three months ended September 30, 2015 totaled $319,646, which was a 74% increase as compared to $183,886 for the three months ended September 30, 2014.

Personnel costs increased during the three months ended September 30, 2015. The increase is due to the addition of laboratory technicians and the promotion of a senior technician to provide technical product support to the Company's sales associates, distributors and end customers.

Clinical trial costs, professional service costs and other research and development costs have increased in the three months ended September 30, 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.

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 three months ended September 30, 2015.

Summary of Statements of Operations for the Nine Months Ended September 30, 2015 and 2014:

Revenue

Akers' revenue for the nine months ended September 30, 2015 totaled $1,646,443, a 45% decrease from the same period in 2014. Importantly, sales of the flagship PIFA Heparin/PF4 Rapid Assay products increased by 9% over the nine month period ended September 30, 2014. The reduction in overall revenue resulted from there having been an initial stocking order for Tri-Cholesterol "Check" tests during the nine months ended September 30, 2014 which was not repeated in the nine months ended September 30, 2015; and from the impact on sales of BreathScan breathalyzer products following the French government's postponement, indefinitely, of the fine that was to be imposed for drivers failing to possess breathalyzers in their vehicles.

The Company's MPC product sales declined during the nine months ended September 30, 2015. This reflects that during the same period of 2014, the Company received its last order from ChubeWorkx for the Company's alcohol breathalyzer product. The decline was partially offset by an initial stocking order from a new distributor in the European Union ("EU") for alcohol breathalyzers. An initial order for 2,000,000 devices was received and units began to ship in June, 2015. Additional shipments will be released as directed by the distributor over the next nine months. The company launched its METRON disposable breath test for ketones on the Amazon Marketplace in the three month period ended September 30, 2015. While the METRON sales were small in its debut quarter, the Company believes that revenues will grow in the fourth quarter. The Company also expects to realize revenue from its BreathScan Lync health and wellness line in the fourth quarter.

Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay products continue to grow. The Company has expanded its sales and marketing staff to cover most of the United States, adding technical sales account executives whose role is to significantly support the sales representatives of Akers' US distribution partners, Cardinal Health ("Cardinal"), Fisher HealthCare ("Fisher") and Typenex Medical ("Typenex"). We have begun to recognize the revenue benefits from the expansion of the sales and marketing staff and expect this to continue as the additional sales executives become more involved with the distributor representatives in their sales regions.

In fact, there are now over 200 US hospitals using our product, and we expect this number to a total close to 250 by the end of 2015. We are currently experiencing growth rates of approximately 20 hospitals per month, on average. Each hospital represents approximately $15,000 per annum in revenue net to Akers. On this basis, assuming these average metrics continue, by December 31, 2015, annualized PIFA Heparin/PF4 Rapid Assay product revenue for the US alone should be $3.75 million entering 2016.

There were no sales in the nine months ended September 30, 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 to distribute the tests in Australia, Singapore, the United Arab Emirates and Oman. The Company continues to work with 36S to gain approval for the Company's Tri-Cholesterol product in Australia.

Other operating revenue increased due to a rise in shipping and handling fees, a result of the mix of domestic and international shipments and an increase in sales of miscellaneous components.

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 for the nine months ended September 30, 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.

Cost of sales for the nine months ended September 30, 2015 decreased by 18% to $745,319 (2014: $907,876). Direct cost of sales increased to 26% of product revenue while indirect cost of sales increased to 30% for the nine months ended September 30, 2015 as compared to 22% and 12% respectively for the same period in 2014. Overall, cost of sales, as a percentage of product revenue, was 56% and 34% for the nine month periods ended September 30, 2015 and 2014.

Direct cost of sales for the nine month period ended September 30, 2015 showed an increase due to one significant event that occurred in the nine months ended September 30, 2014; during prior periods, the Company had written-off its REA product inventory while it worked to develop a market and identify a distributor for the product line. As a result of this action, no significant cost of sales was associated with the REA product revenue in the nine months ended September 30, 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 will be completed during the fourth quarter. The increase was mitigated by a reduction in indirect personnel expenses in the nine months ended September 30, 2015. 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 nine months ended September 30, 2015 as compared to 70% in 2014 for the reasons described above.

Costs

General and administrative expenses for the nine months ended September 30, 2015, totaled $3,205,300, which was a 28% increase as compared to $2,497,485 for the nine months ended September 30, 2014.

Professional services included significant increases in recruiting services and legal fees during the nine months ended September 30, 2015. The increase in recruiting fees are related to the expansion of the sales and marketing staff while the 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 nine months ended September 30, 2014.

The Company recognized cost savings in all of its stock market and investor relations categories. These include consulting, investor relations, stock exchange fees and transfer agent fees.

The Company established an allowance for doubtful accounts of $864,000 for a receivable that was due June 30, 2015 after receiving communications from the customer that indicated a high level of risk of collectability in the nine months ended September 30, 2015. This allowance is reflected in the other general and administrative expenses.

Sales and marketing expenses for the nine months ended September 30, 2015 totaled $1,854,623, which was a 92% increase as compared to $966,357 for the nine months ended September 30, 2014.

Personnel costs increased in the nine months ended September 30, 2015 due to the expansion of the sales and marketing department from 3 employees at September 30, 2014 to 11 employees as of September 30, 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.

Royalties and outside commission costs increased due to the accrual of a legal settlement liability of $75,000 (2014: $-).

Research and development expenses for the nine months ended September 30, 2015 totaled $1,003,445, which was a 46% increase as compared to $686,376 for the nine months ended September 30, 2014.

Personnel costs decreased during the nine months ended September 30, 2015. During the nine months ended September 30, 2014, the Company issued stock options to key employees, where during the same period of 2015, no costs were incurred which was offset by increased due to the addition of laboratory technicians and the promotion of a senior technician to provide technical product support of the Company's sales associates, distributors and end customers.

Clinical trial costs, professional service costs and other research and development costs have increased in the nine months ended September 30, 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.

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 increased for the nine months ended September 30, 2015 to $87,728 from $56,719 for the same period in 2014. The increase is the result of interest and dividend earnings on the marketable securities and the note receivable totaling $89,647 (2014: $49,176) and was partially offset by a loss on foreign currency transactions of $7,971 (2014: gain of $2,874).

Liquidity and Capital Resources

For the nine months ended September 30, 2015 and 2014, the Company generated a net loss attributable to shareholders of $5,734,921 and $2,230,708, respectively. As of September 30, 2015 and December 31, 2014, the Company has an accumulated deficit of $90,599,007 and $84,864,086 and had cash totaling $393,272 and $455,841, respectively.

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.