Sales boost marred by record loss
DUNEDIN cancer diagnostic company Pacific Edge’s revenue during the past year is up 33%, but the sales boost is overshadowed by its record $21 million loss.
Combined revenues grew by 33% from $7.19 million a year ago to $9.53 million, but total operating expenses for the period also grew by 33%, from $22.8 million to $30.5 million.
While Pacific Edge has established a United States beachhead and laboratory and clinched crucial contracts with large health providers, representing tens of millions of potential customers, it is now up to urology clinics to make use of the three types of noninvasive bladder tests on offer in the US.
Pacific Edge’s cash position, stood at $14.6 million at the end of March, having raised $55 million from investors between 201315 and a further $8.75 million in February this year.
Pacific Edge’s shares were down 1c to 56c following the announcement.
When including bad and doubtful debts, and the oneoff $2.9 million noncash cost of winding up an employee incentive scheme, its loss for the year rose from $14.8 million to $21 million; having been a $15.4 million loss last year.
Pacific Edge’s consecutive losses since listing have now hit $93.7 million.
Pacific Edge’s chief executive, David Darling, said ‘‘strong commercial progress’’ was made during the year, with revenue growth and more investment in staff, products and technology.
Pacific Edge is now contracted with the Veterans Administration and Tricare health plan network and is in negotiations with giant healthcare insurer and provider Kaiser Permanente, following successful product trials by Kaiser.
‘‘We’re seeing increasing demand and uptake from both private and public healthcare providers and expect to see a rampup in sales from new and existing customers in fullyear 2018,’’ Mr Darling said.
While Pacific Edge’s monthly cash burn had been running at $1 million$1.3 million, its 2017 cash burn, after deducting revenue from expenses, runs in at $1.75 million a month.
Forsyth Barr calculated Pacific Edge’s current $14.5 million cash on hand, equated to fund ing for about 10 months, at $1.48 million per month.
Forsyth Barr broker Lyn Howe said Pacific Edge’s cash burn during the year was ‘‘modestly ahead of our expectations’’.
Craigs Investment Partners broker Peter McIntyre said while operating revenue had improved, it had been off a low base and the next two years remained ‘‘critical’’ to improve revenue.
‘‘There are concerns that future cash from the operating revenue getting there to offset those [expenses],’’ Mr McIntyre said.
He estimated the current monthly cash burn equated to about six months’ trading.
Mrs Howe urged investors remain patient, given the large US market was ‘‘complex and challenging’’ for Pacific Edge to secure reimbursement.
‘‘There are clear signs of progress and market awareness, albeit a stepchange in revenues is reliant on further progress in reimbursement,’’ she said.
She said organisations such as Centre for Medicare and Medicaid and Kaiser could be ‘‘transformational customers’’ to change revenues quickly, though it remained difficult to pinpoint the timing, she said.
Pacific Edge’s suite of CXbladder treatments; covering early diagnostic tests through to treatment, launched a fourth product in New Zealand during the year.
Mr Darling said clinical recognition of the high performance of CXbladder products had strengthened following several peer review publications and industry recognition during the past year.
For the first time, Pacific Edge has posted its actual test numbers, which were up 35% from a year ago to 11,246 bladder cancer tests during the year to March.
It has a laboratory in Dunedin and purposebuilt facility in Pennsylvania.