Pacific Edge in the red as shares take a tumble

Pacific Edge shares fell 9.4 per cent after the company stayed in the red and said commercial deals in the US were taking longer than expected, raising questions about whether its cash reserves are deep enough.

“Things seem to be moving quite slowly for the company, slower than what management thought,” said Grant Williamson, director at Christchurch-based Hamilton Hindin Greene.

Pacific Edge, which has a suite of four Cxbladder cancer diagnostics tests, had $16.2 million in cash and cash equivalents at March 31, including proceeds from the capital raise in November 2017.

Pacific Edge raised $21.3m in a deeply discounted rights issue, which it said would fund its goal to break even in the 2019 financial year.

Its operational cash outflow widened to $18.1m from $17.8 million.

“Cash is going to be a concern in several months time ... they need to generate more sales in order to reduce their cash burn which unfortunately, because of these slow negotiations, hasn’t eventuated at this stage.”

The shares dropped 3 cents to 29 cents and have fallen 18 per cent so far this year.

The Dunedin-based company reported a loss of $19.7m in the year to March 31, or 4.5 cents per share, versus a loss of $22.6m in the prior year, or 5.7 cents per share, after the prior year was restated in line with the NZ IFRS 15 revenue accounting standards.

Pacific Edge said while it has progressed commercial negotiations with targeted large-scale healthcare organisations in the US over the past 12 months, including Kaiser Permanente and the Centers for Medicare and Medicaid, both are taking longer than expected to complete.

“Pacific Edge has little to no control over the decision making processes and timings of these large organisations,” it said.

“The multi-billion dollar US healthcare market remains our most significant opportunity and we are seeking to position Cxbladder as the preferred diagnostic test of choice for physicians in a market that offers more than five million potential test opportunities per annum,” said chair Chris Gallaher.