Akers Biosciences Reports Earnings For Q1 2016
THOROFARE, NJ--(Marketwired - May 12, 2016) -
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- Product Revenue for Q1 was $738,023 (Q1 2015: $411,714) -- representing an increase of 79% over the corresponding quarter last year
- Flagship PIFA Heparin/PF4 Rapid Assay products driving growth, with $635,173 worth of sales in Q1 (Q1 2015: $338,361) -- almost entirely to US hospitals -- representing an increase of 88% over the corresponding quarter last year
- Demand for PIFA Heparin/PF4 Rapid Assay withstood the new increased pricing schedule implemented in Q1, reflecting clinical dependence on the test from existing customers
- We believe that the new sales strategy of targeting hospital networks should now begin to accelerate growth in volumes as well as price
- BreathScan Alcohol Breathalyzers sales ticking up with $64,785 generated in Q1 (Q1 2015: $41,361) -- with some sales coming from new markets including the UK and South Africa
- Received $2,500,000 order for PIFA Heparin/PF4 Rapid Assay products from China during Q1 -- $250,000 already fulfilled in Q2 -- balance to ship at various intervals from now through December 31, 2016
- Gross profit for Q1 was $537,995 (Q1 2015: $283,706) -- representing an increase of 90% over the corresponding quarter last year
- Loss before income tax was $1,508,929 (Q1 2015: loss of $1,321,799) -- representing an increase of 14% arising mainly from non-recurring costs and costs associated with the re-organization of the sales and marketing staff and programs
- Cash and marketable securities at March 31, 2016 was $2,622,857 (at December 31, 2015: $4,427,163) -- reflecting several significant non-recurring expenditures
- An operational cost rationalization program was initiated in Q1 -- benefits expected to start flowing through late in Q2 and be fully realized in Q3 thereby accelerating path to profitability
Raymond F. Akers, Jr. PhD, Co-founder and Chief Scientific Director, commented:
"During Q1, a new commercial team focused on driving sales of our flagship test for Heparin-induced thrombocytopenia (HIT) to US hospital Integrated Delivery Networks was put in place and a restructuring of our sales organization was initiated. An evidence based outcome proposition was implemented with our customers and distribution partners to improve our value expressed in price. The results are noteworthy.
Domestic demand for this flagship test continues to grow, with $635,173 worth of sales recorded in Q1, coming almost entirely from US hospitals. This represents an increase of 88% over the corresponding quarter last year. It is encouraging to note that this sales growth is currently expressed mainly in the increase in the price of the products. This provides us with increasing confidence that, as the benefits of the sales strategy to focus on hospital networks begins to flow through, we are well placed to benefit from an accelerated increase in unit sales growth as well as price.
The attractive growth in demand in the US for PIFA Heparin/PF4 Rapid Assay products is mirrored in China. In March, 2015 we announced a $2,500,000 order for PIFA Heparin/PF4 Rapid Assay products from our exclusive distributor for the tests in China, NovoTek Therapeutics Inc. A nominal amount from this order was fulfilled in Q1. $250,000 has already been fulfilled in Q2 and the substantial balance will be shipped at various intervals from now through December 31, 2016. The US and China business for PIFA Heparin/PF4 Rapid Assay is strongly underpinning the anticipated significant growth in revenues for this year, compared to last year.
Another product showing signs of improvement in the current year is BreathScan Alcohol Breathalyzers. Whilst recording only a modest $64,785 in Q1 it should be noted that this includes initial sales to new customers in the UK and South Africa which may in time provide an increasing and recurring flow of revenues.
We continue to advance the marketing and distribution strategy for new breath tests designed for the health and wellness industry via our Akers Wellness line. These include the consumer-focused METRON®, as well as the BreathScan OxiChek™ and BreathScan KetoChek™ tests which work with a new bluetooth-enabled reading device, BreathScan Lync™ and its associated Akers Wellness™ mobile app, to enable consumers and professional users to monitor trends in health via a mobile device. We believe that having the ability to generate near-instant health information is 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. We hope to see sales contributions from these tests towards the end of the current year as customer interest begins to translate into orders.
The Company's gross margin improved significantly in Q1, rising to 73% as the benefits of price increases in our core product began to flow through, together with reduced costs associated with product manufacturing. This enabled the Company to achieve a gross profit of $537,995 -- a 90% increase on the corresponding quarter in 2015. Administrative, sales and marketing and R&D costs -- together with amortization of non-current assets -- turned this into a net loss of $1,516,958 for the quarter, an increase of 14%, arising mainly from non-recurring costs and the costs associated with the re-organization of the sales and marketing staff and programs.
Early indicators of the Company's performance for 2016 are encouraging with US sales of PIFA Heparin/PF4 Rapid Assay products trending upwards, enhanced by a healthy order book for the shipment of these products into China. Furthermore, we believe our material reductions in overheads by the year end will accelerate our path to profitability.
These factors alone -- regardless of any anticipated contribution from other products such as our breath based suite of tests -- underpin the Board's confidence that the Company will materially outperform 2015 in fiscal 2016."
Summary of Statements of Operations for the Three Months Ended March 31, 2016
Akers Bio's revenue for the three months ended March 31, 2016 totalled $738,023, a 45% increase from the three months ended March 31, 2015. Product revenue increased by 79%, primarily a result of sales of our PIFA Heparin/PF4 Rapid Assay products. The elimination of license fee revenue following the cancellation of the License and Supply Agreement with ChubeWorkx Guernsey Limited in May, 2015 reduced the net revenue improvement year-over-year.
The table below summarizes our revenue by product line for the three months ended March 31, 2016 and 2015 as well as the percentage of change year-over-year:
3 Months 3 Months Ended Ended Percent Product Lines March 31, 2016 March 31, 2015 Change ---------------------------------- -------------- -------------- ------- MicroParticle Catalyzed Biosensor ("MPC") $ 64,785 $ 41,361 57% Particle ImmunoFiltration Assay ("PIFA") 635,173 338,361 88% Other 38,065 31,992 19% -------------- -------------- Product Revenue Total $ 738,023 $ 411,714 79% License Fees - 98,333 (100)% -------------- -------------- Total Revenue $ 738,023 $ 510,047 45% -------------- --------------
The Company's MPC product sales increased 57% during the three months ended March 31, 2016 over the same period of 2015. The increase is associated to sales of the Company's BreathScan Alcohol Breathalyzer products in Great Britain and increased domestic demand for the product which represents 53% of the Company's MPC product revenue.
While all the MPC product sales in the three months ended March 31, 2016 came from BreathScan Alcohol Breathalyzers, we expect to begin generating sales of other MPC products within our health and wellness line, including the METRON disposable breath test for ketones and the BreathScan Lync products later in 2016.
Domestic sales of the Company's PIFA Heparin/PF4 Rapid Assay products increased 80% during the three months ended March 31, 2016, primarily reflecting the new pricing schedule implemented during the period. Demand for the PIFA PF/4 Classic and PIFA PF/4 PLUSS products has remained steady, regardless of the increased pricing and we believe demand will increase with the implementation of the new sales and marketing strategy targeting hospital networks. The Company has restructured its sales and marketing staff, replacing the senior management team, reducing the number of Area Business Directors ("ABD") to five and implementing a highly targeted program to enhance the ABD's ability to expand market share through direct sales and by supporting the sales representatives of Akers' US distribution partners, Cardinal Health, Fisher HealthCare and Typenex Medical.
The Company received a $2.5 million order for our PIFA Heparin/PF4 Rapid Assay products from Novotek, our exclusive distributor in the Peoples Republic of China on February 29, 2016. The Company received an initial payment of $250,000 on April 29, 2016 for the first scheduled product shipment, per the terms of sale. The remaining products will be scheduled to ship at various points throughout the current fiscal year with revenue being recognized when the criteria for the recognition of revenue is met. The Company also received a specialized order for PIFA Heparin/PF4 from Novotek, totaling $27,600 during the three months ended March 31, 2016.
Other operating revenue increased due to a rise in miscellaneous component sales and shipping and handling fees.
The Company's gross margin improved significantly, rising to 73% (2015: 56%) for the three months ended March 31, 2016.
Cost of sales for the three months ended March 31, 2016 decreased by 12% to $200,028 (2015: $226,341). Direct cost of sales decreased to 11% of product revenue while other cost of sales decreased to 16% for the three months ended March 31, 2016 as compared to 12% and 43% respectively for the same period in 2015.
General and Administrative Expenses
General and administrative expenses for the three months ended March 31, 2016, totaled $923,560, which was a 32% increase as compared to $698,434 for the three months ended March 31, 2015.
The increase in personnel costs for the three months ended March 31, 2016 is associated with the addition of a staff accountant in June 2015 and the Company's new Chief Executive Officer in November 2015.
Professional service costs increased for the three months ended March 31, 2016. A significant increase in accounting and legal fees ($230,115 (2015: $75,775)) was offset by decreases in personnel recruiting and general consulting fees ($19,733 (2015: $90,942)).
Increases in general consulting, stock exchange and transfer agent fees ($55,286 (2015: $34,065)) were offset by a significant decline in investor relations fees ($61,754 (2015: $95,454)) during the three months ended March 31, 2016 accounting for the decline in stock market and investor relations costs.
Sales and Marketing Expenses
Sales and marketing expenses for the three months ended March 31, 2016 totaled $725,324, which was a 26% increase as compared to $575,252 for the three months ended March 31, 2015.
Research and Development
Research and development expenses for the three months ended March 31, 2016 totaled $363,292, which was a 19% increase as compared to $305,574 for the three months ended March 31, 2015.
Other Income and Expense
Other income and expenses for the three months ended March 31, 2016 totaled $8,029, which was a 79% decrease as compared to $38,398 for the three months ended March 31, 2015.
Liquidity and Capital Resources
For the three months ended March 31, 2016 and 2015, the Company generated a net loss attributable to shareholders of $1,508,929 and $1,321,799, respectively. As of March 31, 2016 and December 31, 2015, the Company has an accumulated deficit of $95,684,928 and $94,175,999 and had cash and marketable securities totaling $2,622,857 and $4,427,163, respectively.
Conference Call Information:
Thursday, May 12, 2016 at 9:00 a.m. Eastern Time
Conference ID: 2299421
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.
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, contact:
Akers Biosciences, Inc.
Raymond F. Akers, Jr. PhD
Co-founder and Chief Scientific Director
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 (Corporate Finance)
Steve Norcross (Broking)
Tel. +44 (0)20 7220 0500
Vigo Communications (Public Relations)
Ben Simons / Fiona Henson
Tel. +44 (0)20 7830 9700