Diagnostic device provider Akers Biosciences Inc. AKER, which completed its initial public offering (IPO) in Jan 2014, recently reported its full-year 2014 results. Revenues surged 24% year over year to $4.4 million. Loss stood at 66 cents per share in 2014, narrower than the loss of 96 cents per share in 2013.
Revenue Details
Sales of Particle ImmunoFiltration Assay (PIFA Heparin/PF4), the company’s flagship rapid test, more than doubled (up 110%) to $2.2 million. Notably, PIFA Heparin/PF4 is the only rapid test to detect Heparin Induced Thrombocytopenia, (HIT). Akers estimates that an average U.S. hospital can save well over $1 million annually by using this rapid test.
The year-over-year robust growth in PIFA Heparin/PF4 sales was driven by an improvement in 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.
Akers started selling PIFA Heparin/PF4 in China in the fourth quarter, after it received initial order worth $1 million (45% of total PIFA Heparin/PF4 sales in 2014) from Chinese distributor NovoTek Therapeutics. The company believes that China will be the second biggest potential market for PIFA Heparin/PF4 tests after the U.S.
Akers also entered into a substantial joint venture agreement for the marketing and distribution of all rapid tests – excluding PIFA Heparin/PF4 – in China in 2014. The company also signed product distribution agreements in countries like India, the Middle East, Australia, Singapore, France, Belgium, the Netherlands, Luxembourg, Switzerland and Lichtenstein.
Except for these bullish factors, the full-year revenues were driven by higher sales from the Rapid Enzymatic Assay (REA) product, which the company launched in 2014. Akers received an initial order valued at $864,000 for rapid cholesterol tests in Australia, Singapore and the Middle East.
However, the positive results from PIFA Heparin/PF4 and REA were partially offset by a 51% decline in MicroParticle Catalyzed Biosensor (MPC) revenues. The year-over-year downside in MPC revenues can be primarily attributed to declining orders from global distributor ChubeWorkx Guernsey Limited.
Operational Details
Gross margin was 71% at the end of 2014 as compared with 37% in 2013 owing to favorable product mix.
General & administrative expenses surged 161% on a year-over-year basis, driven by higher personnel costs, professional services, stock market and investor services, traveling allowances and the issuance of stock options.
Sales & marketing expenses soared 90% year over year in 2014. However, research & development expenses declined 9% from 2013.
Akers expects to continue to incur losses from operations in the near term owing to higher operating expenses related to product development and clinical and regulatory activities.
Our Take
Akers’ cost-effective rapid result providing diagnostic tests are sure to gain market traction going forward. The company has an innovative product pipeline that includes rapid test products for Lung cancer, Asthma, Chronic Obstructive Pulmonary Disease, Diabetes and Heart attack.
Akers 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 Asia Pacific region. The company also plans to accelerate sales of PIFA Heparin/PF4 in the U.S. as well as expand in the overseas market through new distribution partnerships.
However, significant competition in the InVitro Diagnostics (IVD) market and Akers’ limited product portfolio are major headwinds for the near term.
Stocks to Consider
LeMaitre Vascular LMAT and SurModics SRDX are better-ranked stocks in the sector with a Zacks Rank #1 (Strong Buy).
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