Pacific Edge records loss again
DUNEDIN cancer diagnostic company Pacific Edge continues to grow its US laboratory testing and revenue stream, but again booked a loss, of $19.7 million for its year to March.
The loss was a 13% improvement on last year’s record loss of $22.6 million, which takes total accumulated losses since 2003 to about $115 million.
Pacific Edge chairman Chris Gallagher said he hoped the company would break even ‘‘as quickly as possible’’, with updated financial guidance to be supplied later this year.
Investors have ploughed $55 million into the company between 201315, a further $8.75 million in February last year, and $21.3 million in November.
While the US health market — with its large institutional health providers and tens of millions of potential patients — is still the company focus, uptake of the noninvasive, urine bladder cancer tests is gaining traction in several New Zealand district health boards.
Pacific Edge shares were down almost 11% following the announcement to 28.5c, and down almost 35% on a year ago. It has 466.3 million shares on issue.
Following November’s $21.3 million capital raising, Pacific Edge maintained $16.2 million cash and equivalents at March for its year ahead.
Chief executive David Darling believes the $16.2 million will be enough to see the company through the next year’s operation, noting forecasts are for 23,000 tests during full year 2019.
He was asked if a capital raising was being considered, to cover the annual cash burn, during the next 12 to 18 months.
Mr Darling said there ‘‘was a question mark’’ over going back to shareholders, but he believed the combined cash in hand and future test payments, especially from the US’ Kaiser Permanente and Centres for Medicare and Medicaid, made earlier breakeven predictions for full year 2019 ‘‘doable’’.
‘‘I don’t see the need for that, [capital raising] but you can never be categorical on the position,’’ he said.
He was particularly pleased that following October forecasts, lab throughput hit 91% of forecasts, revenue was 95% of that forecast and billable tests hit 96%.
Pacific Edge has changed its accounting policies and shows only cash paid for its US tests, as opposed to previously where cash owed was included in results, to give a clearer view of its cash revenues.
Mr Darling said laboratory throughput was the ‘‘cornerstone measure’’ of business growth, including both commercial sales and tests from user programmes, with overall lab throughput up 29% to 14,400 tests, of which 82% were paid.
Both Mr Gallagher and Mr Darling highlighted that commercial growth of key US customers had been slower than expected, with many of the test adoption processes outside Pacific Edge’s control.
Mr Darling said ‘‘We already have two of our four targeted, significant US customers under contract and while it is taking time to build scale in these organisations as expected, we are now starting to see a steady progression of repeat orders for tests coming through.’’
He noted the US reimbursement system was ‘‘complex’ and commercial agreements with US insurance payers were needed to allow payment ‘‘on a timely basis’’.
Payment for tests can take anywhere from one to 24 months to be received, as the majority involves payment by private or public insurance, with the bulk of cash receipts within a sevento12month period, the company said in its presentation yesterday.
Under the new accounting standards, total revenue grew from $4.7 million a year ago to $5 million, while operating expenses declined 10% from $27.3 million to $24.6 million.
Mr Darling reiterated the $1.2 billion US market was its biggest focus and while accounting for the ‘‘lion’s share’’ of revenue, the ‘‘burden of proof had been extensive’’ in having its CXbladder suite of tests accepted.
He said in gaining regulatory approval and undertaking ‘‘user programmes’’ (trials by prospective user organisations) could each take three to five years, which was ‘‘expensive and time consuming’’.
Mr Darling was upbeat about the increasing use of CXbladder by New Zealand district health boards, which accounted for 14% of all tests.
‘‘Canterbury tests are really rocketing,’’ Mr Darling said.
The health boards of Canterbury, Mid Central and Waitemata had signed up for CXbladder products, with Mr Darling highlighting that in Canterbury the CXbladder products had become the standard for testing.
‘‘Our tests fit their requirements . . . we’re achieving milestones and making good progress,’’ he said.