The diagnostic market is vast and with trends moving toward personalized medicine it is even growing faster. These trends have placed huge burdens on labs and have and are quickly effecting the quality of healthcare. Hospital and primary point of care labs are overburdened and have to outsource to larger labs. Akers Biosciences Inc (NASDAQ: AKER) is uniquely positioned at the front line of the diagnostics market to provide doctors with actionable data when they need it. Rapid diagnostics tests save lives and provide nearly real time data that is reliable and actionable for doctors allowing them to facilitate diagnosis. Low cost diagnostics that are easy to administer at the point of care are essential to meet the challenging environment in healthcare today. Fast testing with high sensitivity and low infrastructure costs enables more frequent testing and leads to better patient outcomes. Rapid diagnostics in short improve overall healthcare. AKER has a battery of rapid tests that target the healthcare and wellness industries and growth is coming from the supply constrained laboratory market.
Lab Capacity Utilization is Reaching Limits
There is a reason for the explosion of lab kits out there from DNA testing to Cologuard cancer screenings by Exact Sciences (EXAS). The global in vitro diagnostics market was $61.1 billion in 2016 and expects to grow to $84.6 billion by 2023 with a CAGR of 4.6% over that period. Immunodiagnostics are capturing the highest market share as the demand increases for personalized medicine. Cancer patients in particular have to take many tests to see if their therapy will work on their disease. Healthcare providers are reticent to allow treatment for a targeted treatment if the patient’s disease doesn’t express the target receptor. Although the FDA doesn’t require PD-L1 biomarker testing for Keytruda, tests are administered before treatment because providers don’t want to spend over $100K + treating cancer where the odd of successfully treating the disease are not good. This is a very expensive example of how costs are driving healthcare decisions but this is the reason the diagnostics market is booming and why this effects is filtering down to the rapid diagnostics market which is likely to see explosive growth as the capacity of traditional labs will not be able to compete with a rapid diagnostic.
Allied Market Research
Akers Biosciences Inc (NASDAQ: AKER) Particle Immuno-Filtration Assay (PIFA) is a patented platform technology which rapidly and accurately detects the target antigens or antibodies. Antigens and antibodies prevalent in the blood stream are associated with allergic reactions. The PIFA Heparin/PF4 and PIFA Puss/PF4 rapid assay test for an allergic reaction to Heparin. Heparin is a very common blood thinner used to treat blood clots from many medical conditions and it also used before surgery to reduce the chance of blood clots. Many don’t realize but 2-3% of people treated with Heparin get Heparin-induced Thrombocytopenia (HIT). This is where the patient’s immune system makes antibodies in response to the Heparin and these antibodies bind to the platelets in our blood and activate them at the wrong time or place to form clots in our body. In response to this the platelets are eventually removed by the body which leads to a very low platelet count known as thrombocytopenia. AKER’s PIFA test quickly and accurately diagnosis this preventing complications. AKER is growing its market presence for these products and educating the marketplace and doing additional studies to educate physicians on the risks associated with HIT. The company is also using the same platform to launch the Chlamydia rapid assay.
– Diagnostic labs constrained by capacity
– Rapid diagnostic tests becoming cost effective
– Strategic options for distribution and pipeline enhancement
Portable Alcohol Detectors
Driving under the influence is a big deal and not only risks the individual but also the lives of others. Portable breathalyzers are clunky and the size of a walkie takie. AKER came up with a better solution that allows friends to check themselves to see if they are okay after having a couple of drinks. Its FDA approved and gets results in 2 min. It is also military grade and used by the armed forces. It’s branded as Breath Scan Alcohol Detector.
Business Development and Strategic Alternatives
The company is adding states and distributors on a consistent basis. In July 2018 they picked up an additional 12 dates through Appleton Medical. The key to their success is high volume distributor relationships with medical suppliers. They are going after the high margin products like Herparin which require a fast test in a hospital setting almost every time it’s used. Other markets under consideration are the infectious disease tests. The last press release discussed that they are pursing “strategic alternatives.” The logical course of action is to buy distribution because if they get a better market penetration they can use that distribution channel to launch more rapid tests. Another approach might be to buy more rapid tests in the infectious disease area.
The target markets are:
– Clinical Labs
– Physician’s Offices and Urgent Care Clinics
– Nutraceutical Suppliers
– Health and Fitness
Third quarter earnings could be the catalyst that breaks the company out of its trading range. Investors want to see revenue growth and increasing sales year over year. With the addition of 12 states from the Appleton Medical deal the results should improve because the company has a backlog of orders and added distribution through Appleton Medical. Profitability is also going to be a key metric that is directly affected by volume due to significant overhead costs. If the company was able to increase sales it will fix the profitability. The company also has to work out its production issues with its suppliers to get yields of antibodies back to historical levels. If it increases sales levels and its production issues are worked out profitability will not be far behind and investors should expect a nice run in price as the stock resets to a profitability model going forward.
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