Shares of diagnostic device maker Akers Biosciences Inc. (AKER) surged 8.7% (40 cents) to close at $5 on Apr 13, after the company announced distribution agreements that will expand its international footprint. The shares increased another 4% (20 cents) in after-hours trading.
Akers announced that it has added six distributors to sell Particle ImmunoFiltration Assay (PIFA Heparin/PF4) in nine countries. PIFA Heparin/PF4 Rapid Assay is the only approved rapid test (both in the U.S. and Europe) that quickly determines if a patient being treated with the blood thinner heparin may be developing a drug allergy or heparin-induced thrombocytopenia (HIT).
In the U.S. alone, approximately 12 million patients are exposed to heparin annually and 1% to 5% of those patients receive HIT diagnosis. Akers estimates that an average U.S. hospital can save well over $1 million patients annually by using this rapid test. Most recently, Akers signed a distribution agreement with ADS Inc. to supply its rapid diagnostic kits to the U.S. government agencies and departments.
In 2014, sales of PIFA Heparin/PF4 more than doubled (up 110%) to $2.2 million driven by new distribution relationship with Cardinal Health CAH and Fisher HealthCare in the U.S. The addition of Medline Industries and Typenex Medical as distribution partners during the year also drove product trials and adoptions.
In December, the company entered into its first European distribution agreement with Cryopep SARL, covering France, Belgium, the Netherlands and Luxembourg; and DiaLine AG, covering Switzerland and Lichtenstein.
The recent distribution agreement with LabPro d.o.o expands Akers’ footprint into Serbia, Montenegro, Macedonia, and Bosnia and Herzegovina. The company also partnered with Pathway Diagnostics for Great Britain; ACCUSCIENCE Ireland for Ireland and Northern Ireland and AVL Sofia Ltd for Bulgaria.
Apart from Europe, Akers is also looking to expand into the Middle East, Africa and Asia-Pacific that expands its total addressable market. The company’s latest deal with Tokra Medikal Tic Ltd Sti and MASTERLAB SARL covers Turkey and Morocco. Also, in 2014, the company signed product distribution agreements in countries like India, Australia and Singapore.
Akers started selling PIFA Heparin/PF4 in China in late 2014, after it received an initial order worth $1 million (45% of total PIFA Heparin/PF4 sales in 2014) from Chinese distributor NovoTek Therapeutics. Akers believe that China will be the second-largest potential market for PIFA Heparin/PF4 tests after the U.S.
Our Take
Akers has an innovative product pipeline that includes rapid test products for lung cancer, asthma, Chronic Obstructive Pulmonary Disease, diabetes and heart attack. The company plans to commercialize rapid tests for chlamydia, malaria and dengue fever in 2015, which will be a key growth catalyst particularly in countries of the Middle-East and the Asia-Pacific region.
However, significant competition in the InVitro Diagnostics (IVD) market and Akers’ limited product portfolio are major headwinds in the near term.
Stocks to Consider
Some other players from the sector that warrant a look are LeMaitre Vascular LMAT and SurModics SRDX. Both these stocks sport a Zacks Rank #1 (Strong Buy).
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