Full Press Release Details
Biosciences Announces Q3 2018 Earnings
of Flagship PIFA Heparin PF/4 Rapid Assay Products Up 16% over Q3 2017; Company Continuing to Evaluate Strategic Alternatives
to Maximize Shareholder Value
N.J., November 15, 2018 (GLOBE NEWSWIRE) - 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
and nine months ended September 30, 2018. A Form 10-Q containing the full financial statements is available for viewing on the
Company's website at www.akersbio.com or www.sec.gov.
| o | Revenue from flagship PIFA Heparin PF/4 Rapid Assay products increased by 16% to $567,262 (Q3 2017: $490,058), with the increase principally on account of filling open backorders | |
| o | Revenue from breathalyzer product sales utilizing MPC Biosensor technology decreased by 118% to $(18,798) (Q3 2017: $104,094), on account of our settlement with Pulse, and a decline in the sales of Breath Alcohol products |
| Q3 gross profit margin declined to 14% (Q3 2017: 52%), principally on account of the Pulse litigation settlement which resulted in a write off of BreathScan OxiChek products in the aggregate amount of $218,799 | ||
| Q3 operating expenses increased by 109% |
| o | Administrative expenses increased by 108% to $1,706,651 (Q3 2017: $819,565) | |
| o | Sales and Marketing expenses decreased by 3% to $364,641 (Q3 2017: $377,091) | |
| o | Research and Development expenses decreased by 45% to $160,867 (Q3 2017: $290,447) | |
| o | Litigation Settlement Expenses incurred of $930,000 |
| Q3 net loss attributable to shareholders $3,083,949 (Q3 2017: $1,177,644) | ||
| Cash and marketable securities at September 30, 2018 of $6,167,451 (31 December 2017: $5,450,039) |
Operational Summary:
| Agreements signed with multiple additional Independent Sales Representative (ISR) organizations to further expand US sales and marketing capabilities for the Company's rapid test for heparin-induced thrombocytopenia (HIT) - since the start of 2018, Akers Bio has developed sales and marketing coverage through ISRs in 39 of the 50 United States, covering more than 75 per cent of the country's total population | ||
| During Q3, antigen yields in the process of extracting antigen from the platelets used to produce our PIFA Heparin PF/4 Rapid Assay products improved, and the Company was able to fill all of its backorders. The Company's engineers and representatives from its supplier continue to work together to adjust processes in order to restore the yield to appropriate levels, the results of which are not yet determined. Furthermore, the Company is evaluating and testing a resolution that may involve one or more alternative antigen suppliers and processes that may provide a path to restoring yield levels for this product. For each of these potential solutions, the Company will be conducting production validation and stability testing | ||
| The Company reached an amicable resolution by way of a settlement agreement and release with Pulse Health, LLC. Pursuant to the settlement, the Company paid $930,000 to Pulse and agreed to a permanent injunction and will not make, use, sell or offer to sell the BreathScan OxiChek product |
R. Yeaton, Chief Executive Officer and interim Chief Financial Officer, commented:
am pleased to report growth in revenues of our core PIFA Heparin PF/4 Rapid Assay products over the corresponding quarter of 2017,
with the increase principally on account of filling open backorders. The considerable efforts to improve the antigen yields in
the process of manufacturing these products has resulted in improved yields, enabling us to fill all backorders. Our dedicated
technical sales account executives continue to work with our distribution partners and Independent Sales Representatives to drive
awareness and sales of these products.
new leadership's review of the Company's commercial and product development strategies, the Company moved into the
fourth quarter of the year as a more focused organization, working primarily on the commercialization of our Particle Immuno-Filtration
Assay (PIFA ) Technology platform.
Board of Directors and officers of the Company are committed to identifying the best pathway to maximizing value for our shareholders.
An offering of common stock and warrants for gross proceeds of $2 million last month has boosted the Company's balance sheet,
and I believe this helps to place the Company in a strong position to evaluate strategic alternatives to maximize shareholder
value. This process is considering a range of potential strategic alternatives including possible business combinations, while
simultaneously supporting the management and employees in the execution of the Company's current business activities. I
look forward to reporting further on this process when appropriate."
of Statements of Operations for the Three Months Ended September 30, 2018 and 2017
revenue for the three months ended September 30, 2018 totaled $557,089, an 18% decrease from the same period in 2017. The table
below summarizes our revenue by product line for the three months ended September 30, 2018 and 2017 as well as the percentage
of change year-over-year:
| For the Three Months Ended September 30, | ||||||||||||
| Product Lines | 2018 | 2017 | Percent Change | |||||||||
| Particle ImmunoFiltration Assay ("PIFA") | $ | 567,262 | $ | 490,058 | 16 | % | ||||||
| MicroParticle Catalyzed Biosensor ("MPC") | (18,798 | ) | 104,094 | (118 | )% | |||||||
| Rapid Enzymatic Assay ("REA") | - | 27,500 | (100 | )% | ||||||||
| Other | 8,625 | 16,679 | (48 | )% | ||||||||
| Product Revenue Total | 557,089 | 638,331 | (13 | )% | ||||||||
| License Fees | - | 37,500 | (100 | )% | ||||||||
| Total Revenue | $ | 557,089 | $ | 675,831 | (18 | )% |
from the Company's PIFA Heparin/PF4 Rapid Assay products increased 16% to $567,262 (2017: $490,058) during the three months
ended September 30, 2018, over the same period of 2017, with the increase principally on account of filling open backorders.
the six months ended June 30, 2018, we experienced lower yields in the process of extracting antigen from the platelets used to
produce our PIFA Heparin product. At these yield levels, our production of this product was under target levels, resulting in
backorders. During the three months ended September 30, 2018, our antigen yields improved, and we were able to fill all of our
backorders. Our engineers and representatives from our supplier continue to work together to adjust our processes in order to
restore the yield to appropriate levels, the results of which are not yet determined.
we are evaluating and testing a resolution that may involve one or more alternative antigen suppliers and processes that may provide
a path to restoring yield levels for this product. For each of these potential solutions, we will be conducting production validation
and stability testing.
Company's dedicated technical sales account executives are supporting over 300 sales representatives of Akers' U.S.
distribution partners, Cardinal Health, Thermo Fisher Scientific and Diagnostica Stago, and the Company's ISRs. Domestic
sales for the three months ended September 30, 2018, of our distributors, Cardinal Health, Thermo Fisher Scientific and Diagnostica
Stago, accounted for $529,860 of the total PIFA Heparin/PF4 Rapid Assay related product sales as compared to $441,676 for the
same period of 2017.
Company's MPC product sales decreased by 118% to $(18,798) (2017: $104,094) during the three months ended September 30,
2018. On account of our settlement with Pulse (as discussed in Note 10 of the footnotes within this Quarterly Report), we repurchased
from our U.S. distributor their remaining inventory in the amount of $33,600 for the OxiChek products. In addition, we saw a decline
in sales of the Breath Alcohol products.
Company's REA products generated $0 (2017: $27,500) during the three months ended September 30, 2018.
revenue decreased to $8,625 (2017: $16,679) during the three months ended September 30, 2018 primarily due to a decline in shipping/handling
revenue. The category is made up of the sales of miscellaneous raw material components, sub-assembled products and fees billed
for shipping and handling charges.
Company's gross margin declined to 14% (2017: 52%) for the three months ended September 30, 2018, principally on account
of the Pulse litigation settlement which resulted in a write off of OxiChek products in the aggregate amount of $218,799. Fixed
costs within product cost of sales consisted principally of direct personnel costs, manufacturing and warehousing space and depreciation
of equipment. Within these fixed costs, direct personnel costs decreased during the period to $76,254 (2017: $88,903). This decrease
was a result of fewer personnel being utilized in production related activities.
of sales for the three months ended September 30, 2018 increased to $476,453 (2017: $323,526). The increase was principally attributable
to the write off of $218,799 of OxiChek product. Direct cost of sales decreased to 22% of product revenue while other cost of
sales increased to 64% for the three months ended September 30, 2018 as compared to 31% and 20% respectively for the same period
in 2017 as described above.
cost of sales for the three months ended September 30, 2018 were $122,545 (2017: $196,866). Other cost of sales for the three
months ended September 30, 2018 were $353,908 (2017: $126,660).
and Administrative Expenses
and administrative expenses for the three months ended September 30, 2018, totaled $2,636,651, which was a 222% increase as compared
to $819,565 for the three months ended September 30, 2017.
table below summarizes our general and administrative expenses for the three months ended September 30, 2018 and 2017 as well
as the percentage of change year-over-year:
| For the Three Months Ended September 30, | ||||||||||||
| Description | 2018 | 2017 | Percent Change | |||||||||
| Personnel Costs | $ | 287,054 | $ | 223,361 | 29 | % | ||||||
| Professional Service Costs | 727,069 | 320,081 | 127 | % | ||||||||
| Stock Market & Investor Relations Costs | 122,214 | 120,807 | 1 | % | ||||||||
| Other General and Administrative Costs | 1,500,314 | 155,316 | 866 | % | ||||||||
| Total General and Administrative Expense | $ | 2,636,651 | $ | 819,565 | 222 | % |
expenses increased by 29% for the three months ended September 30, 2018 as compared to the same period of 2017. An increase in
salaries, wages and bonuses to $249,445 (2017: $172,587) was offset by a decline in employee benefit expenses of $14,723 (2017:
service costs increased 127% for the three months ended September 30, 2018 as compared to the same period of 2017. A significant
increase in legal fees ($394,067 (2017: $258,026)) and accounting and audit expenses ($206,374 (2017: $36,130)) resulted in the
change. The increase in the legal and accounting fees were principally in connection with our Board's recent investigation
and the resulting restatement of our previously issued financials, as well as in connection with litigation matters. Configuration
and implementation expenses for the planned NetSuite Financial System also contributed to the increased accounting service costs.
market and investor fees increased 1% for the three months ended September 30, 2018. The fees included costs associated with the
Company's nominated advisor, stock transfer agents, investor relations team and stock exchange fees.
general and administrative expenses increased by 866%. During the three months ended September 30, 2018, the Company made a lump
sum compensation payment of $100,000 to each of the independent directors. In addition, the Board approved the settlement of the
Pulse Litigation which resulted in a one-time charge of $930,000. Increases in other general and administrative expenses were
also attributable to business insurance costs, totaled $137,256 (2017: $39,902) and computer expenses $58,502 (2017: $7,688) related
to the licensing and implementation of the NetSuite Financial System impacted the higher costs.
and Marketing Expenses
and marketing expenses for the three months ended September 30, 2018 totaled $364,641 which was a 3% decrease compared to $377,091
for the three months ended September 30, 2017.
table below summarizes our sales and marketing expenses for the three months ended September 30, 2018 and 2017 as well as the
percentage of change year-over-year:
| For the Three Months Ended September 30, | ||||||||||||
| Description | 2018 | 2017 | Percent Change | |||||||||
| Personnel Costs | $ | 209,029 | $ | 184,835 | 13 | % | ||||||
| Professional Service Costs | 41,147 | 67,111 | (39 | )% | ||||||||
| Royalties and Outside Commission Costs | 68,017 | 43,635 | 56 | % | ||||||||
| Other Sales and Marketing Costs | 46,448 | 81,510 | (43 | )% | ||||||||
| Total Sales and Marketing Expenses | $ | 364,641 | $ | 377,091 | (3 | )% |
U.S. market has been divided into two regional zones, each with a business director that is responsible for recruiting and supporting
Independent Sales Representatives ("ISRs") to target large integrated delivery networks and individual facilities.
This strategy requires more experienced and technically knowledgeable sales personnel to interact with surgeons, executive management,
laboratory and medical directors. The Company has increased its sales and marketing staff from 4 members on September 30, 2017
to 5 as of September 30, 2018.
costs increased in the three months ended September 30, 2018 as compared to the same period of 2017, the results of an increase
in compensation, commissions and benefit costs to $175,296 (2017: $155,488).