Akers Biosciences Announces Q2 2017 Earnings

THOROFARE, NJ--(Marketwired - August 15, 2017) -

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 three months and six months ended June 30, 2017. The Form 10-Q containing the full financial statements for the three months and six months ended June 30, 2017 is available for viewing on the Company’s website at www.akersbio.com or at www.sec.gov.

Q2 Financial Highlights:

• Total revenues up 25% for Q2 2017 to $1,197,862 (Q2 2016: $954,486)

• Sales of flagship PIFA Heparin/PF4 Rapid Assay products and associated components account for 77% of total revenues and include sales to all key geographic regions: the U.S., China and Rest of World

• Gross margin improved to 78% (Q2 2016: 71%)

• Gross profit up 37% to $933,631 (Q2 2016: $679,638)

• Loss before income tax reduced by 34% to $(666,647) (Q2 2016: $(1,008,932))

• Cash and marketable securities at June 30, 2017 of $1,208,800

• Further reductions of 5% in aggregate across in all key areas of expense
  • General and Administrative expenses increased slightly by 2% to $829,929 (Q2 2016: $816,244)
  • Sales and Marketing expenses reduced by 19% to $416,391 (Q2 2016: $513,430)
  • Research and Development expenses reduced by 3% to $313,835 (Q2 2016: $321,989)

Q2 Operational & Corporate Highlights

• Significantly advanced commercialization of a key product of the future: BreathScan OxiCheck™ -- a rapid breath test for oxidative stress
  
  • Ongoing discussions with large organizations operating within the nutraceutical sector with regards to significant potential commercial partnerships
    
  • 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™
    

  • Major television marketing campaign initiated 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

• Ongoing manufacturing of initial order for rapid cholesterol self-test from First Check Diagnostics, LLC, the exclusive distributor for this product in the U.S., 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 -- initial shipment now due September 2017

• Extensive sales and marketing efforts undertaken to increase awareness of PIFA Heparin/PF4 Rapid Assay products amongst prospective large integrated delivery network customers in the U.S.

• 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

• Following successful clinical trials, the Company submitted its PIFA Chlamydia Rapid Assay -- the first rapid blood test for this highly prevalent sexually transmitted disease -- to the U.S. Food and Drug Administration for review

• New directors elected with diverse and relevant skills to steer Akers Bio through next phase of growth and product commercialization
  
  • 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
    
  • John J. Gormally, the Company’s CEO, elected to the Board of Directors -- 30+ years of experience in the healthcare industry
    

Commentary from John J. Gormally, Chief Executive Officer and Raymond F. Akers Jr, PhD., Chief Scientific Director:

We are pleased to report growth of 25% in total revenues for the second quarter of 2017 to approximately $1.2 million; and 10% for the first half to approximately $1.9 million. The significant majority of these revenues continued to be generated from sales of our current flagship test -- or associated components thereof -- for an allergy to the widely-used blood thinner, heparin. It is encouraging to note that sales of these products or components in the second quarter were made in each of our core geographic regions of the U.S., China and Rest of World.

A great deal of sales and marketing emphasis in the first half and second quarter of 2017 has been placed on BreathScan OxiCheck™ -- an Akers Wellness™ breath test which we believe will become a major contributor of profitable growth in the years ahead. This rapid breath test for oxidative stress -- a good indicator of general health and wellbeing -- works in conjunction with our BreathScan Lync™ bluetooth-enabled reading device which allows users to track the results of OxiChek™ via their mobile device, now including iOS devices.

We have already begun recording small sales of OxiChek™ to the anti-aging, functional and integrative health and wellness treatment practitioner market in the U.S. as part of our strategy to gain initial acceptance of the product from professionals.

We are also particularly excited by the discussions ongoing with large organizations operating within the nutraceutical product sector with regards to significant potential commercial partnerships with OxiChek™.

Furthermore, we have recently broadened the distribution of OxiChek™ to target the extensive U.S. chiropractic market where we have established a contractual relationship with a respected authority and key opinion leader to represent and promote the product.

A major television marketing campaign for OxiChek™ was initiated in April 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. The interest generated from this campaign has been highly encouraging.

We commenced production during the second quarter to fulfil the initial order for rapid cholesterol self-tests from First Check Diagnostics, LLC, the exclusive distributor for this product in the U.S., 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. Initial shipments are due September 2017 and we remain very excited about this over-the-counter opportunity.

We would finally like to note the elections, following the Company’s annual shareholder meeting in Philadelphia, PA last week, of three very experienced non-executive directors. We are delighted to welcome Bill J. White, Richard C. Tarbox III and Christopher C. Schreiber who joined the Board of Directors -- along with myself -- last week. Each of them bears very relevant experience to help steer Akers Bio through its next phase of commercial growth, including profitability, as we seek to draw on their respective areas of expertise in financial management, medical devices and capital markets.

Outlook

We are especially encouraged by the 25% increase in revenue in Q2 year-over-year; and the 1.8-fold increase over Q1 2017.

We are continuing to advance our sales strategy for PIFA Heparin/PF4 Rapid Assay products in the U.S. of focusing on integrated delivery networks and group purchasing organizations. Extensive work was undertaken in the first half and second quarter to educate prospective large customers on the value proposition of our PIFA Heparin/PF4 Rapid Assay products and we believe this groundwork will translate into material commercial growth in domestic sales in 2018 and beyond.

In addition, we are encouraged by the increase in non-US PIFA Heparin/PF4 Rapid Assay product sales. We continue to believe that, once additional regulatory hurdles in China are complete, China will become a very significant non-U.S. revenue stream for PIFA Heparin/PF4 Rapid Assay products; and our confidence is reflected in the distributor’s placement of orders for components of the tests in the second quarter in anticipation of such regulatory hurdles completing.

Finally, we look forward to further commercial progress with the Company’s OxiChek™ oxidative stress test which we believe can be a major driver of Akers Bio’s profitable growth in the future.

Conference call information:

Tuesday, August 15, 2017 at 2.00 p.m. BST (9:00 a.m. Eastern Time)
US: 1-800-210-9006
International: 1-719-457-2602
Conference ID: 7353698
Webcast: http://public.viavid.com/index.php?id=125855

Summary of Statements of Operations for the Three Months Ended June 30, 2017 and 2016

Revenue

Akers’ revenue for the three months ended June 30, 2017 totaled $1,197,862, a 25% increase from the same period in 2016. The tables below summarize our revenue by product line and geographic region for the three months ended June 30, 2017 and 2016 as well as the percentage of change year-over-year:

 3 Months 3 Months Ended Ended Percent Product Lines June 30, 2017 June 30, 2016 Change ------------------------------------- ------------- ------------- -------- Particle ImmunoFiltration Assay (“PIFA”) $ 426,747 $ 879,081 (51)% MicroParticle Catalyzed Biosensor (“MPC”) 191,816 44,918 327% Other 579,299 32,487 1,683% ------------- ------------- Total Revenue $ 1,197,862 $ 956,486 25% ============= ============= 3 Months 3 Months Ended Ended Percent Geographic Region June 30, 2017 June 30, 2016 Change ------------------------------------- ------------- ------------- -------- United States $ 512,395 $ 452,756 13% People’s Republic of China 603,068 473,853 27% Rest of World 82,399 29,877 176% ------------- ------------- Total Revenue $ 1,197,862 $ 956,486 25% ============= ============= 

Revenue from the Company’s PIFA Heparin/PF4 Rapid Assay products decreased 51% during the three months ended June 30, 2017 over the same period of 2016. During the three months ended June 30, 2016 the Company recognized approximately $474,000 (2017: $-) in PIFA revenue from the Company’s distribution partner in the People’s Republic of China (“PRC”). The distributor continues to work 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. Revenue from PIFA related components, totaling $500,000, during the three months ended June 30, 2017, is included in other revenue.

Total unit sales volumes for PIFA Classic and PIFA PLUSS in the United States remained steady, however; the ratio of each product sold 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”). The PIFA Classic product is being actively marketed in Great Britain and a clinical trial is scheduled in Italy.

MPC revenue increased 327% during the three months ended June 30, 2017 over the same period of 2016. Domestic and International sales of the BreathScan Breath Alcohol tests which accounted for the majority of the improvement.

The Company signed an amendment to the exclusive distribution agreement for the PIFA Heparin/PF4 products with NovoTek Pharmaceuticals Limited (“NovoTek”) to expand their geographic region to include Poland, include other PIFA Heparin/PF4 products and allow NovoTek to assemble the products at its facilities in the PRC or Poland from components acquired from the Company.

Other revenue increased 1,683% during the three months ended June 30, 2017 as compared to the same period of 2016. The significant increase resulted from an initial order for manufacturing components from NovoTek totaling $500,000. 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 gross margin improved to 78% (2016: 71%) for the three months ended June 30, 2017. Generally, costs associated with production declined across the board; however, the Company was able to sell a large quantity of raw materials associated with a previously discontinued product that had been removed from inventory and, as such, had no book value. The Company expects the gross margin to return to the 65% to 68% range in the near-term.

Cost of sales for the three months ended June 30, 2017 totaled $264,231 (2016: $276,848). Direct cost of sales decreased to 10% of revenue while other cost of sales decreased to 12% for the three months ended June 30, 2017 as compared to 14% and 15% respectively for the same period in 2016.

Direct cost of sales for the three-month period ended June 30, 2017 were $117,184 (2016: $135,298). Other cost of sales for the three months ended June 30, 2017 were $147,047 (2016: $141,550).

General and Administrative Expenses

General and administrative expenses for the three months ended June 30, 2017, totaled $829,929, which was a 2% increase as compared to $816,244 for the three months ended June 30, 2016.

Sales and Marketing Expenses

Sales and marketing expenses for the three months ended June 30, 2017 totaled $416,391 which was a 19% decrease as compared to $513,430 for the three months ended June 30, 2016.

Research and Development

Research and development expenses for the three months ended June 30, 2017 totaled $313,835, which was a 3% decrease as compared to $321,989 for the three months ended June 30, 2016.

Other Income and Expense

Other income, net of expense for the three months ended June 30, 2017 totaled $2,653, which was a 55% decrease as compared to $5,870 for the three months ended June 30, 2016.

Summary of Statements of Operations for the Six Months Ended June 30, 2017 and 2016

Revenue

Akers’ revenue for the six months ended June 30, 2017 totaled $1,865,112, a 10% increase from the same period in 2016. The tables below summarize our revenue by product line and by geographic region for the six months ended June 30, 2017 and 2016 as well as the percentage of change year-over-year:

 6 Months 6 Months Ended Ended Percent Product Lines June 30, 2017 June 30, 2016 Change ------------------------------------- ------------- ------------- -------- Particle ImmunoFiltration Assay (“PIFA”) $ 987,668 $ 1,514,255 (35)% MicroParticle Catalyzed Biosensor (“MPC”) 277,475 109,703 153% Other 599,969 70,552 750% ------------- ------------- Total Revenue $ 1,865,112 $ 1,694,510 10% ============= ============= 6 Months 6 Months Ended Ended Percent Geographic Region June 30, 2017 June 30, 2016 Change ------------------------------------- ------------- ------------- -------- United States $ 1,129,619 $ 1,118,961 1% People’s Republic of China 627,132 506,398 24% Rest of World 108,361 69,151 57% ------------- ------------- Total Revenue $ 1,865,112 $ 1,694,510 10% ============= ============= 

Revenue from the Company’s PIFA Heparin/PF4 Rapid Assay products decreased 35% during the six months ended June 30, 2017 over the same period of 2016. During the six months ended June 30, 2016 the Company recognized approximately $474,000 (2017: $-) in PIFA revenue from the Company’s distribution partner in the People’s Republic of China (“PRC”). The distributor continues to work 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. Revenue from PIFA related components, totaling $500,000, during the six months ended June 30, 2017, is included in other revenue.

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”). The PIFA Classic products have shipped to Great Britain and India and is being actively marketed in the European Union and a clinical trial is scheduled in Italy.

MPC revenue increased 153% during the six months ended June 30, 2017 over the same period of 2016. Domestic and International sales of the BreathScan Breath Alcohol tests and domestic sales of the BreathScan Lync™ and OxiChek™ products accounted for the majority of the improvement.

The Company signed an amendment to the exclusive distribution agreement for the PIFA Heparin/PF4 products with NovoTek Pharmaceuticals Limited (“NovoTek”) to expand their geographic region to include Poland, include other PIFA Heparin/PF4 products and allow NovoTek to assemble the products at its facilities in the PRC or Poland from components acquired from the Company.

Other revenue increased 750% during the six months ended June 30, 2017 as compared to the same period of 2016. The significant increase resulted from an initial order for manufacturing components from NovoTek totaling $500,000. 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 gross margin was 72% (2016: 72%) for the six months ended June 30, 2017. The Company’s use of sub-contractors for assembly and packaging services increased to $119,072 (2016: $10,506) and increases in warehousing costs ($39,770 (2016: $7,662)) were offset by smaller declines in several expense categories. Additionally, the Company was able to sell its stock of raw materials associated with a previously discontinued product that had been removed from inventory and, as such, had no book value. The Company expects the gross margin to return to the 65% to 68% range in the near-term.

Cost of sales for the six months ended June 30, 2017 totaled $522,952 (2016: $476,876). Direct cost of sales decreased to 12% of revenue while other cost of sales increased to 16% for the six months ended June 30, 2017 as compared to 13% and 15% respectively for the same period in 2016.

Direct cost of sales for the six months ended June 30, 2017 were $223,313 (2016: $216,087). Other cost of sales for the six months ended June 30, 2017 were $299,639 (2016: $260,789).

General and Administrative Expenses

General and administrative expenses for the six months ended June 30, 2017, totaled $1,620,457, which was a 7% decrease as compared to $1,739,806 for the six months ended June 30, 2016.

Sales and Marketing Expenses

Sales and marketing expenses for the six months ended June 30, 2017 totaled $1,005,326 which was a 19% decrease as compared to $1,238,754 for the six months ended June 30, 2016.

Research and Development

Research and development expenses for the six months ended June 30, 2017 totaled $662,277, which was a 3% decrease as compared to $685,280 for the six months ended June 30, 2016.

Other Income and Expense

Other income, net of expense for the six months ended June 30, 2017 totaled $15,536, which was a 12% increase as compared to $13,899 for the six months ended June 30, 2016.

Liquidity and Capital Resources

For the six months ended June 30, 2017 and 2016, the Company generated a net loss of $2,015,918 and $2,517,861, respectively. As of June 30, 2017 and December 31, 2016, the Company has an accumulated deficit of $99,495,455 and $97,479,537 and had cash and marketable securities totaling $1,208,800 and $122,701, respectively.

During the six months ended June 30, 2017, the Company raised $1,652,994 in net proceeds from a public offering of 1,789,500 shares of common stock, $1,760,317 in net proceeds from a private placement of 1,448,400 shares of common stock and $301,200 from the exercise of warrants for 200,800 shares of common stock.

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.