Thursday, 22 February 2018

Announcement

HALFYR: PEB: Interim Results - Half Year End 30 September 2017

29 Nov 2017 09:26NZX
Pacific Edge FY18 Interim Results

Results for the six months to 30 September 2017

Performance Snapshot

o 41% increase in Operating Revenue to $4.2m, compared to pcp
o Laboratory throughput up 26% on 1H17 to 7,107 tests
o Total operating expenses reduced to $13.5m, a reduction of 11% on
1H17
o Reported loss of $8.9m for the six months, a reduction of 23% on the
loss in 1H17

[please refer to the attachment for graphics]

Interim Results Commentary

Cancer diagnostics company, Pacific Edge Limited (NZX: PEB) has delivered a
strong first half, year on year increase in revenue as it continues to build
momentum and target large scale customers in the United States and other
markets.

Total revenue for 1H18 was up 27% on the prior comparative period to $4.9m,
and included operating revenue of $4.2m which was up 41% on 1H17. A strong
second half of the year is expected in line with normal trends.

Laboratory throughput, which includes both commercial sales and tests from
User Programmes, increased to 7,107 tests, up 26% on 1H17. This has had a
corresponding effect on receivables which have increased in line with the
higher test numbers.  Lab Throughput is an important metric for Pacific Edge
as it reflects the increasing trial and adoption of Cxbladder by key
urologists and healthcare providers.

Total operating expenses reduced to $13.5m, a reduction of 11% on 1H17 which
included expenses related to the winding up of the Employee Incentive Scheme.
Net operating cashflows remain in line with expectations and were $(10.2)m
for the six months (1H17: $9.1m).  Receipts in 1H18 reflect the number of
tests completed in 2H17 due to the time lag between completion of tests and
the receipt of payment from relevant US payers. This time to cash receipt
will improve when the company is included in the Centers for Medicare and
Medicaid Services (CMS) Local Coverage Determination (LCD).

In line with the conservative approach taken by Board at the end of the FY17
year, bad debts of $0.7m and doubtful debts of $0.8m have been recognised in
1H17, to account for additional long standing receivables. Pacific Edge is
striving to obtain the necessary insurance contract coverages to guarantee
terms of payment from insurance payers and will seek recovery of payments
that have been written off, once insurance coverage is obtained. Pacific Edge
is no longer accruing revenue for tests completed for CMS patients. CMS tests
account for approximately 50% of current Laboratory Throughput, indicating a
significant number of tests which will be added to the annual revenue when
the company receives its expected LCD.

For the six months ended 30 September 2017, Pacific Edge reported a net loss
of $8.9m, a reduction of 23% on the $11.6m reported in 1H17.

Pacific Edge had $4.0m in cash and cash equivalents at 30 September 2017 and,
following the completion of the recent capital raising on 10 November 2017,
has received the additional $21.3m of capital raised.

Pacific Edge''s primary focus remains on growing revenue by commercialising
large scale customers, including the Veterans Administration (VA), Kaiser
Permanente and the CMS in the US, as well as District Health Boards (DHBs) in
New Zealand and other large healthcare providers. While the administration
and clinical sign off for commercial use by these large organisations can be
long and time consuming, the scale and long term sales opportunity they
present is significant.

A Federal Supply Schedule was received in 2017, allowing access to the VA,
and early sales are starting to be seen from two of the initial five clinics
being targeted. The company''s focus has now expanded to include a number of
the larger VA centres.

Commercial negotiations are progressing positively with Kaiser Permanente,
following the compelling and positive results of the large scale evaluation
of Cxbladder User Programme in late 2016. Contemporaneously with this,
Pacific Edge has been working with Kaiser''s staff on the necessary business
elements to ensure that the start-up of commercial tests can occur
expediently following the completion and signing of the agreement.

In addition, Pacific Edge is continuing to work through the process required
to gain inclusion in the LCD from the CMS. Once this is received, it will
enable consistent and timely reimbursement for Medicare patients, on normal
CMS payment terms. The inclusion into the LCD and the commensurate pricing
negotiation will provide the catalyst for Pacific Edge to negotiate
agreements with other private payers which view the CMS pricing as a
benchmark, providing further certainty on price and payment terms for Pacific
Edge.

New Zealand urologists continue to lead the way globally in the adoption and
commercial use of Pacific Edge''s novel molecular diagnostic tests, with the
majority of the large DHBs now offering their patients access to Cxbladder.
The recent global first was the signing by Mid-Central DHB to make the full
suite of Cxbladder tests available to their patients. While a good
infrastructure is now in place in Australia, uptake has been slower than in
New Zealand and Pacific Edge is working closely with its distribution
partner, Tolmar Australia, to drive adoption. The investigations into South
East Asia continue to progress, with three User Programmes in large scale
hospitals now running in Singapore, of which one is expected to transition to
a commercial customer in the near future. Additional User Programmes are
expected to commence in the second half of the year.

Chairman of Pacific Edge, Chris Gallaher said: "We are working hard to
achieve our goal of being cash-flow positive. The rate that we progress is
entirely driven by the contribution to revenue from the large scale customers
that we are targeting and we are working hard to convert these
transformational customers into revenue and cash."

CEO of Pacific Edge, David Darling,  said: "There is no doubt that Cxbladder
is a breakthrough product - more and more urologists and healthcare providers
are now recognising this and are looking to adopt our products into clinical
use with some of the large public healthcare providers in New Zealand adding
Cxbladder to their standard of care.  Momentum is building and the full
efforts of everyone in the company are focused on transforming Pacific Edge
into a globally recognised and successful New Zealand business."

ENDS

For more information contact:

David Darling
Chief Executive Officer, Pacific Edge Ltd
P: +64 (3) 479 5800

OVERVIEW www.pacificedge.co.nz www.pacificedgedx.com
Pacific Edge Limited (NZX: PEB) is a New Zealand publicly listed, cancer
diagnostic company specialising in the discovery and commercialisation of
diagnostic and prognostic tests for better detection and management of
cancer. The company is developing and commercialising its range of Cxbladder
bladder cancer tests globally through its wholly owned central laboratories
in New Zealand and the USA. The company''s products have been tested and
validated in international multi-centre clinical studies.

Pacific Edge has three proprietary, novel, accurate, molecular diagnostic
products in-market providing actionable results, and better detection and
management of urothelial cancer. Cxbladder Detect and Cxbladder Triage are
available through the company''s dedicated CLIA certified laboratories for
customers in New Zealand, Australia and the USA. Cxbladder Monitor launched
in New Zealand in December 2015 and is anticipated being available in the US
in 2016.

ABOUT Cxbladder Triage www.cxbladder.com
Cxbladder Triage combines the power of the genomic biomarkers with additional
phenotypic and clinical risk factors to accurately identify patients with
haematuria who have a low probability of bladder cancer and may not require a
more extensive urological evaluation. Cxbladder Triage is a tool for use by
clinicians and physicians in primary evaluation of patients with haematuria
and is intended to reduce the need for an expensive and invasive work-up in
patients who have a low probability of having urothelial carcinoma.

ABOUT Cxbladder Detect www.cxbladder.com
Cxbladder Detect enables the non-invasive detection of bladder and other
urinary tract cancers from a small volume of a patients'' urine. Cxbladder
Detect was launched in 2013 in the USA and is commercially available in New
Zealand, Australia and the USA as a Laboratory Developed Test (LDT) from the
company''s CLIA certified laboratories. Cxbladder Detect provides clinicians
with a quick, cost effective and accurate measure of the presence of the
cancer as an effective adjunct to cystoscopy.

ABOUT Cxbladder Monitor www.cxbladder.com
Cxbladder Monitor, the third test in the Cxbladder portfolio for urologists,
is a proprietary, non-invasive, molecular diagnostic test that combines
genomic biomarkers measured from a small quantity of a patient''s urine, with
patient specific clinical factors to better monitor bladder cancer patients
for recurrence. Bladder cancer has a recurrence rate of 50-80% and requires
life-long surveillance. Cxbladder Monitor accurately identifies patients with
a prior history of urothelial cancer (UC) whose Cxbladder Monitor score shows
that they have a low probability of recurrent urothelial carcinoma. Cxbladder
Monitor is designed to be used as the preferred adjunct test to cystoscopy in
the management of patients for ongoing evaluation of recurrent bladder
cancer.

ABOUT Cxbladder Resolve www.cxbladder.com
Cxbladder Resolve is a proprietary, non-invasive, molecular diagnostic test
that combines genomic biomarkers measured from a small quantity of a
patient''s urine, with patient characteristics for the identification of
patients who are likely to have aggressive or more advanced bladder cancer.
Cxbladder Resolve, when used as part of the primary evaluation of haematuria
and/or in conjunction with other Cxbladder tests (Triage, Detect), is
designed to assist clinicians by accurately identifying patients with a high
probability of having high grade or late stage bladder cancer, for whom
alternative or expedited treatment options may be warranted, or who can be
prioritised for further investigation in high throughput settings.

Refer to www.cxbladder.com for more information.
End CA:00311131 For:PEB    Type:HALFYR     Time:2017-11-29 09:26:07
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