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US Sales of PIFA Heparin/PF4 Rapid Test Up 12%; Conference Call Scheduled for 09:00 a.m. ET Today
THOROFARE, NJ--(Marketwired - Mar 30, 2016) - Akers Biosciences, Inc. (
2015 Financial Highlights:
2015 Operational Highlights:
2016 Current Trading
2015 was principally about augmenting the senior commercial team, refining the execution strategy, laying the groundwork for entry into China and developing a product suite to target the huge personalized health and wellness market. I am pleased to say that this preparatory work in 2015 is already paying off in 2016 with orders for our rapid heparin allergy tests already exceeding $3 million in the current year.
We already have sufficient visibility from the first twelve weeks of the year in our core heparin allergy test business to know that sales are materially outperforming last year's. Not only is this being driven by orders from China but it is also coming from improvements in our domestic US business. We hope to see this trend continue as the full impact of our new commercial team and execution strategy begins to be felt.
Substantial work was undertaken in 2015 to prepare for market entry into China. In November we received clearance from the China Food and Drug Administration for our flagship rapid heparin allergy test which led to our Chinese distributor placing $2.5 million worth of orders for 2016. Furthermore, we worked extensively in 2015 with our Chinese joint venture partners to establish a first class manufacturing facility in Hainan province which is now fully operational. It is envisaged that the majority of Akers' products for sale into China will be manufactured in-country leading to significant commercial benefits. Marketing in China commenced for four of our breath tests in the prolific areas of diabetes, weight loss, fitness and alcohol. The Chinese healthcare system has identified the critical need to address soaring obesity rates and a diabetes epidemic which highlights the compelling opportunity to introduce Akers' simple, inexpensive breath-based tests in these areas.
While not yet generating significant revenue, the Company has developed and introduced three transformational breath tests designed for the health and wellness industry and consumers during 2015. These include the consumer-focused METRON®, as well as the BreathScan OxiChek™ ("OxiChek") and BreathScan KetoChek™ ("KetoChek") tests which work with a new bluetooth-enabled reading device, BreathScan Lync™ and its associated BreathScan™ mobile app, to enable consumers and professional users to monitor trends in health via a mobile device. Being able to generate near-instant health information is, I believe, key to the future of medicine. With our Akers Wellness tests, clinicians, suppliers of nutritional supplements and diet plans, health coaches or even consumers themselves, can now monitor their -- or their clients' -- health over time by utilizing Akers Wellness products.
With the development for the Akers Wellness line now largely completed, the focus has turned to marketing and sales execution, and we look forward to reporting on progress in these areas later this year.
In February, the Company's Management System was certified to ISO 13485. The certification is a requirement in certain countries to enable regulatory approval of medical devices, so it an extremely important asset when seeking accelerated product clearance in certain countries.
Another regulatory milestone achieved in 2015 was the European Patent Office's issuance of a patent surrounding the Company's novel blood separator technology and method of separating a fluid fraction from whole blood. We now have patent protection both in the US and Europe enabling Akers to incorporate the technology into certain of our blood-based assays where the speed of our test is paramount to clinical decision making. It may also enable the Company in the future to offer the technology under license to third parties seeking to accelerate their own testing procedures by facilitating the blood cell separation process as a component of their test.
Multiple new distribution agreements outside of the US were signed in 2015 giving the Company access to every major diagnostic market in the world. The primary drivers of this distribution network are the Company's flagship rapid heparin allergy tests, and we are supporting our distribution partners' efforts to introduce these tests in their respective territories. Additionally, the Company's BreathScan® Alcohol Detector continues to generate interest through our international distribution network with sales to the EU and South Africa contributing to revenues in 2015.
Towards the end of last year I was delighted to welcome a new CEO to focus entirely on product and technology commercialization. The commercial team is being further strengthened with a number of new senior hires and the improved execution of our US heparin allergy test sales strategy has led to encouraging early sales indicators from the first twelve weeks of this year. I am very excited about the team we are building at Akers Bio.
Looking ahead through 2016, we have had a tremendous start to the year with the receipt of over $2.5 million worth of orders from China (with initial sales expected imminently) and approximately $600,000 worth of sales of tests into US hospitals already recorded in Q1 -- an increase of 70% over the same quarter in 2015. We hope to see a continuing upward trajectory in the US heparin allergy test business and look forward to seeing meaningful contributions beginning to flow through again from our alcohol breathalyzers and from the newly launched Akers Wellness line.
Raymond F. Akers, Jr. PhD, Co-founder and Executive Chairman
March 30, 2016
Summary of Results of Operations
The Company's total revenue for the year ended December 31, 2015 was $2,115,050, a 52% decrease compared to the same period in 2014.
This decline in product revenue is associated with three significance transactions that occurred during the year ended December 31, 2014, which were not repeated in 2015. These transactions (ChubeWorkx (MPC: $766,379), NovoTek (PIFA: $1,000,000) and 36S (REA: $864,000)) are further described below.
The Company's MPC product sales declined during the year ended December 31, 2015. This reflects that during the same period of 2014, the Company received its last order from ChubeWorkx ($766,379) for the Company's alcohol breathalyzer product. Three new distributors began placing orders for the alcohol breathalyzer products during the year, two in the European Union ("EU") and one in South Africa which generated revenue of $189,889 for the year ended December 31, 2015.
The Company's total PIFA sales declined during the year ended December 31, 2015; however, the domestic sales of the PIFA Heparin/PF4 Rapid Assay products increased by 12% to $1,391,017 (2014: $1,241,406). The Company's dedicated technical sales account executives are supporting over 300 sales representatives of Akers' US distribution partners, Cardinal Health ("Cardinal Health"), Fisher HealthCare ("Fisher Healthcare"), Typenex Medical, LLC ("Typenex") and Medline Industries, Inc. ("Medline"). The Company's relationship-building initiative with our partners has already delivered a measureable increase in product trials and adoptions. Domestic sales for the year ended December 31, 2015 of our distributors, Cardinal Health and Fisher Health, accounted for $1,161,199 of the total PIFA Heparin/PF4 Rapid Assay as compared to $1,064,733 for the same period of 2014 and individually represented 55% and 28% of such sales.
The Company did not generate any international sales of its PIFA Heparin/PF4 Rapid Assay products during the year ended December 31, 2015 (2014: $1,000,000) primarily the result of pending regulatory approvals. The recent approval of the product in China is expected to stimulate minimum purchase requirements with our distributor, NovaTek Therapeutics Inc. ("NovaTek") beginning in 2016.
There were no sales in the year ended December 31, 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, a related party, to distribute the tests in Australia, Singapore, the United Arab Emirates and Oman.
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 $320,556 (2014: $343,333). 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, 2015 decreased by 19% to $950,792 (2014: $1,175,232). The reduction is primarily reflective of the decrease in revenue during the year ended December 31, 2015. Direct cost of sales increased to 29% (2014: 18%) and indirect cost of sales increased to 24% (2014: 11%) of product revenue for year ended December 31, 2015. Overall, cost of sales, as a percentage of product revenue, was 53% and 29% for the years ended December 31, 2015 and 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 was completed during the fourth quarter, significantly higher shipping costs associated with an increase in international shipments and an increase in the cost of consumable supplies related to production. 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 year ended December 31, 2015 as compared to 73% in 2014.
General and Administrative Expenses
General and administrative expenses in the year ended December 31, 2015 totaled $6,193,125, which was a 56% increase as compared to $3,979,079 for the year ended December 31, 2014.
Professional services included significant increases in recruiting services and legal fees during the year ended December 31, 2015. The increase in recruiting fees is related to the expansion of the sales and marketing staff and the recruitment of the Company's Chief Executive Officer. The increase in 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 year ended December 31, 2014.
The Company established an allowance for doubtful accounts of $864,000 for a trade receivable -- related party that was due June 30, 2015 after receiving communications from the customer that indicated a high level of risk of collectability. In addition, the Company also 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.
Sales and Marketing Expenses
Sales and marketing expenses in the year ended December 31, 2015 totaled $2,543,286, which was a 95% increase as compared to $1,302,103 for the year ended 2014.
Personnel costs increased in the year ended December 31, 2015 due to the expansion of the sales and marketing department from 5 employees at December 31, 2014 to 10 employees as of December 31, 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.
Travel expenses are a result of the increased size of the sales force and make up the most significant component of the other sales and marketing costs.
Research and Development
Research and development expenses in the year ended December 31, 2015 totaled $1,406,895, which was a 54% increase as compared to $916,308 for the year ended 2014.
Clinical trial costs, professional service costs and other research and development costs have increased in the year ended December 31, 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.
Other Income and Expense
Other income and expense increased for the year ended December 31, 2015 to $370,317 from $61,161 for the same period in 2014.
The increase is the result of interest and dividend earning on the marketable securities and note receivable -- related party and the sale of the Company's New Jersey Net Operating Losses.
During 2015, the Company was approved by the State of New Jersey to sell a portion of its state tax benefits that existed as of December 31, 2014, pursuant to the Technology Tax Certificate Transfer Program. The Company received net proceeds of $269,344 for the year ended December 31, 2015 (2014: $-) as a result of the sale of the tax benefits.
Liquidity and Capital Resources
For the years ended December 31, 2015 and 2014, the Company generated a net loss attributable to shareholders of $9,311,913 and $3,142,960, respectively. As of December 31, 2015 and 2014, the Company has an accumulated deficit of $94,175,999 and $84,864,086 and had cash and cash equivalents totaling $402,059 and $455,841, respectively (although the Company had additional marketable securities of $4,025,104 and $9,264,961 available as of December 31, 2015 and 2014).
The Company's net cash consumed by operating activities in the year ended December 31, 2015 totaled $5,132,343, which was a 32% increase as compared to $3,883,929 for the year ended 2014.
Conference Call Information:
Wednesday, March 30, 2016 at 09:00 a.m. Eastern Time
US callers: 1-888-364-3109
International callers: 1-719-457-1035
Conference ID: 4375738
For more information:
Akers Biosciences, Inc.
Raymond F. Akers, Jr. PhD
Tel. +1 856 848 8698
Taglich Brothers, Inc. (Investor Relations)
Tel. +1 917 445 6207
finnCap (UK Nominated Adviser and Broker)
Adrian Hargrave / Scott Mathieson
Tel. +44 (0)20 7220 0500
Vigo Communications (Public Relations)
Ben Simons / Fiona Henson
Tel. +44 (0)20 7830 9700