THOROFARE, NJ -- (Marketwired) -- 05/16/17 -- 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 first quarter ended March 31, 2017.
Q1 Financial Highlights:
- Total revenue $667,250 (Q1 2016: $738,023)
- Revenue from flagship PIFA Heparin PF/4 Rapid Assay products $560,921 -- up slightly on the prior quarter (Q4 2016: $548,068) (Q1 2016: 635,173 -- Q1 2016 sales included higher rebates which were renegotiated April 1, 2016 -- the gross profit per test remained consistent in Q1 2017 despite lower revenues)
- Gross profit margin 61% (2015: 73%) resulting in gross income of $408,529 (Q1 2016: $537,995)
- Significant reductions in major expense areas:
- General and Administrative expenses reduced by 14% to $790,529 (Q1 2016: $923,560)
- Sales and Marketing expenses reduced by 19% to $588,934 (Q1 2016: $725,324)
- Research and Development expenses reduced by 4% to $348,442 (Q1 2016: $363,292)
- Reduced net loss attributable to shareholders by 11% to $1,349,270 (Q1 2016: $1,508,929)
- Cash and marketable securities at March 31, 2017 of $2,242,557 following successful raises 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
Q1 Operational Highlights:
- Significant advancements in the commercialization of BreathScan OxiChek™ from the Akers Wellness™ line
- 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
- OxiChek™ is now fully commercialized and selling through the Company's distributor, Aero-Med, to anti-aging, functional and integrative health and wellness treatment practitioners in the US -- OxiChek™ contributed to sales in Q1 2017
- Participation in large trade shows targeting naturopaths, wellness coaches, anti-aging practitioners, nutritionists and chiropractors
- Major television marketing campaign initiated through the popular Balancing Act national television show on the Lifetime network. Balancing Act is America's premier morning show that introduces positive solutions to busy, on-the-go modern women
- Received initial order for rapid cholesterol self-test from First Check Diagnostics, LLC, the exclusive distributor for this product in the United States, 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 -- revenues expected to commence in Q2 and beyond
- Began marketing rapid test for heparin-induced thrombocytopenia to the large number of hospital facilities in Puerto Rico as an extension of strategy to accelerate U.S. sales of this flagship product
- Puerto Rico represents a large new market opportunity which is closely aligned to the U.S. and has more than 60 potential hospital targets
Chief Executive Officer's Remarks:
The positive momentum continued in Q1 2017 with domestic US sales of PIFA Heparin PF/4 Rapid Assay products up on the prior quarter by approximately 2.3%. We are poised for growth from these products through the remainder of the year, both domestically and from renewed buying from international markets in Europe and Asia. Our refocused sales strategy in the U.S. has resulted in a significant increase in sales per sales consultant.
Rigorous cost management continued in Q1 and the results of this are evident in the major reductions in all key areas of expense: General and Administrative expenses reduced by 14% to $790,529 (Q1 2016: $923,560); Sales and Marketing expenses reduced by 19% to $588,934 (Q1 2016: $725,324); and Research and Development expenses reduced by 4% to $348,442 (Q1 2016: $363,292). This resulted in an 11% reduction in the net loss attributable to shareholders to $1,349,270 (Q1 2016: $1,508,929) -- and we continue to strive towards cash flow breakeven.
The Company undertook several initiatives to accelerate the commercialization of BreathScan OxiChek™, the first commercialized Akers Wellness™ breath test which rapidly determines levels of oxidative stress in the body by measuring the levels of certain abundant free radicals. Unlike current laboratory testing methods that test only a few free radicals using an invasive blood draw -- and have a turnaround time of 7 to 10 days -- Akers Bio's rapid OxiChek™ test detects a broad spectrum of free radicals contained in a person's exhaled breath in just a few minutes. Frequent use of OxiChek™ may help health practitioners to monitor and adjust their clients' regimen of nutritional supplementation, diet and exercise in order to manage oxidative stress -- an indicator of the overall health and wellbeing of a person.
During the quarter, the 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 including iOS devices.
OxiChek™ is now fully commercialized and selling through the Company's distributor, Aero-Med, to anti-aging, functional and integrative health and wellness treatment practitioners in the US. We continued to participate in large trade shows targeting naturopaths, wellness coaches, anti-aging practitioners, nutritionists and chiropractors and initiated a major television marketing campaign through the popular Balancing Act national television show on the Lifetime network. Balancing Act is America's premier morning show that introduces positive solutions to busy, on-the-go modern women.
These initiatives are beginning to translate into sales of BreathScan Lync™ and OxiChek™ and such sales are included in the revenues for Q1 2017. We expect to see the contribution from Akers Wellness™ products grow through the remainder of the year.
During the quarter, the Company received an initial order for our rapid cholesterol self-test from First Check Diagnostics, LLC, the exclusive distributor for this product in the United States, 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. We expect to record sales for this product in the second quarter and beyond.
Akers Bio also began marketing its flagship rapid test for heparin-induced thrombocytopenia to the large number of hospital facilities in Puerto Rico as an extension of strategy to accelerate U.S. sales of this flagship product. Puerto Rico represents a large new market opportunity which is closely aligned to the U.S. and has more than 60 potential hospital targets.
Outlook
Looking ahead through the remainder of 2017, we expect to see growth in our flagship PIFA Heparin PF/4 Rapid Assay product line, as well as sales of our rapid cholesterol test direct to consumers through major U.S. retailers under the "First Check" brand, growing sales from OxiChek™, and the launch into the market of the first breath test for nutritional ketosis or fat burning, and, subject to regulatory approvals, the launch of the first rapid blood test for chlamydia and a. We will continue to manage our costs rigorously as we move closer towards breakeven.
John J. Gormally
Chief Executive Officer
Summary of Statements of Operations for the Three Months Ended March 31, 2017
Revenue
Akers' revenue for the three months ended March 31, 2017 totaled $667,250, a 10% decrease from the same period in 2016. The table below summarizes our revenue by product line for the three months ended March 31, 2017 and 2016 as well as the percentage of change year-over-year:
3 Months 3 Months
Ended Ended
March 31, March 31, Percent
Product Lines 2017 2016 Change
------------ ------------ -------------
Particle ImmunoFiltration Assay
("PIFA") $ 560,921 $ 635,173 (12)%
MicroParticle Catalyzed Biosensor
("MPC") 85,659 64,785 32%
Other 20,670 38,065 (46)%
------------ ------------
Product Revenue Total $ 667,250 $ 738,023 (10)%
Total Revenue - - -%
------------ ------------
Total Revenue $ 667,250 $ 738,023 (10)%
------------ ------------
Revenue from the Company's PIFA Heparin/PF4 Rapid Assay products decreased 12% during the three months ended March 31, 2017 over the same period of 2016. The decrease is due primarily to two events; first, the implementation, effective April 1, 2016, of revisions to the contract terms, conditions and rebate programs with our distribution partners that impacted revenue for the product group by approximately $54,000. This one time anomaly was necessary for the Company to implement its 'value expressed in price' strategy and the effect of these changes on the year-over-year comparatives will only be apparent for the three months ended March 31, 2017 versus the same period of 2016.
Secondly, during the three months ended March 31, 2016 the Company recognized approximately $28,000 in PIFA revenue from the Company's distribution partner in the People's Republic of China ("PRC"). No revenue was recognized during the same period of 2017. The distributor is patiently working with the various provincial governments in the PRC to finalize reimbursement rates for the providers. Once these rates are established, the distributor expects strong demand for the PIFA products.
Total unit sales volumes for PIFA Classic and PIFA PLUSS in the United States remained steady, however; the sales mix changed slightly year-over-year. The Company experienced renewed interest in Western Europe and the Far East for the products after reviving the Conformité Européene Mark ("CE Mark") PIFA Classic product and has begun shipping PIFA into Great Britain and India.
Excluding sales to the People's Republic of China, the Company has realized small, but consistent growth in the sales of the PIFA Heparin/PF4 products since the second quarter of 2016. The graph below illustrates this performance:
MPC revenue increased 32% during the three months ended March 31, 2017 over the same period of 2016. Domestic and International sales of the new BreathScan Lync™ and OxiChek™ products accounted for the majority of the improvement.
Other operating revenue decreased to $20,670 (2016: $38,065) during the three months ended March 31, 2017. The category is made up of the sales of miscellaneous raw material components or sub-assembled products that are not normally available for sale, for example, unlabeled BreathScan Alcohol tubes in bulk for private labeling by the distributor. The category also includes fees collected for shipping and handling charges.
The Company's gross margin declined to 61% (2016: 73%) for the three months ended March 31, 2017. Higher costs for manufacturing supplies ($21,742 (2016: $7,591)) and services provided by sub-contractors for material preparation, assembly and packaging ($113,761 (2016: $8,092)) were offset by the transfer of production costs to inventory for sub-assemblies and finished goods ($133,111 (2016: $82,958)). Part of these increased costs are associated with the introduction of new products and, as such, are not expected to be recurring. The Company expects the gross margin rate to return to the 65% to 68% range in the near-term.
Cost of sales for the three months ended March 31, 2017 totaled $258,721 (2016: $200,028). Direct cost of sales increased to 16% of product revenue while other cost of sales increased to 23% for the three months ended March 31, 2017 as compared to 11% and 16% respectively for the same period in 2016.
Direct cost of sales for the three-month period ended March 31, 2017 were $106,129 (2016: $80,789). Other cost of sales for the three months ended March 31, 2017 were $152,593 (2016: $119,240).
General and Administrative Expenses
General and administrative expenses for the three months ended March 31, 2017, totaled $790,529, which was a 14% decrease as compared to $923,560 for the three months ended March 31, 2016.
Sales and Marketing Expenses
Sales and marketing expenses for the three months ended March 31, 2017 totaled $588,934 which was a 19% decrease as compared to $725,324 for the three months ended March 31, 2016.
Research and Development
Research and development expenses for the three months ended March 31, 2017 totaled $348,442, which was a 4% decrease as compared to $363,292 for the three months ended March 31, 2016.
Liquidity and Capital Resources
For the three months ended March 31, 2017 and 2016, the Company generated a net loss attributable to shareholders of $1,349,270 and $1,508,929, respectively. As of March 31, 2017 and December 31, 2016, the Company has an accumulated deficit of $98,828,807 and $97,479,537 and had cash and marketable securities totaling $2,242,557 and $122,701, respectively.
During the three months ended March 31, 2017, the Company raised $1,692,044 in net proceeds from a public offering of 1,789,500 shares of common stock, $1,760,817 in net proceeds from a private placement of 1,448,400 shares of common stock and $244,950 from the exercise of warrants for 163,300 shares of common stock.
Conference Call Information:
Tuesday, May 16, 2017 at 9:00 a.m. Eastern Time
US callers: 1-877-545-1409
International callers: 1-719-325-4825
Conference ID: 3478083
Webcast: http://public.viavid.com/index.php?id=124510
A recording of the call will be available in the Investor Center of the Company's website at http://www.akersbio.com/investor-center.
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.
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 9704
Email: akers@vigocomms.com
