Pacific Edge Announces $21.3 Million Capital Raising

Bladder cancer diagnostics company, Pacific Edge Limited (NZX: PEB) has today announced its intention to raise approximately $21.3 million through a fully underwritten 1 for 6 pro-rata Rights Offer (Offer).

The net proceeds of the Offer will be used by Pacific Edge to provide funding for its continued growth, particularly in the United States market, while it targets getting to a cashflow breakeven position as soon as possible. The company will continue to invest in its sales team as it works to contract with and then scale up the large transformational customers that it has identified. While timing is dependent on decision making processes within these very large organisations and is therefore outside of Pacific Edge’s control, the company currently anticipates reaching a cashflow breakeven position in the financial year ending 31 March 2019.

Pacific Edge is seeking to establish Cxbladder as the world's leading molecular diagnostic technology for the detection and management of bladder cancer with commercial operations in New Zealand, Australia, Singapore and the United States.

The United States is the company's primary market opportunity. It is the world's largest healthcare market and offers in excess of 3 million test opportunities per annum across the clinical pathways covered by Cxbladder. Pacific Edge has made significant progress with the validation of performance and clinical utility of its product portfolio and has contracts in place for two of the four large scale organisations it is targeting and good progress with the remaining two, all of which have the potential to be transformational for the company.

Pacific Edge confirms it will continue its drive to:

• Expand the number of Veterans Administration (VA) clinics it is targeting, following the signing of its Federal Supply Schedule agreement in 2016;
• Continue to focus on gaining a Local Coverage Determination which will enable Pacific Edge to recover revenue for tests for patients covered by the Centers for Medicare and Medicaid Services (CMS);
• Complete commercial negotiations with Kaiser Permanente and contemporaneously work with Kaiser’s staff on the necessary business elements to ensure that the start-up of commercial tests can occur shortly after the agreement is signed.
• Progress a review of its business processes to achieve any enhancements and improvements in operations, reporting and communications in its drive to achieve its cash flow positive position in FY19.

Pacific Edge Chairman, Chris Gallaher, commented: “We are making strong commercial progress and continue to focus on gaining traction in the US and our other targeted markets. We are expecting a step-up in the number of tests processed and revenue once we get underway with Kaiser Permanente and as our other targeted large scale organisations gain momentum."

Under the Offer, all eligible shareholders are entitled (but not obliged) to subscribe for 1 new share for every 6 existing shares held on the record date, at a subscription price of $0.32 per new share. This represents a 26.6% discount to the theoretical ex-rights price of $0.44 as at 10 October 2017. Pacific Edge has appointed First NZ Capital Securities Limited (Lead Manager) as lead manager of the capital raising, with the Offer fully underwritten by First NZ Capital Securities Limited.

Under the Offer, the rights will not be tradable on the NZX Main Board. Instead, new shares not taken up or attributable to ineligible shareholders will be offered to investors through a bookbuild run by the Lead Manager. Eligible shareholders are able to apply for the new shares which will be offered under the bookbuild in addition to their entitlement. The bookbuild price will be determined by the Board and the Lead Manager but will not be less than the subscription price or more than the closing price for Pacific Edge's shares on the NZX Main Board on the day prior to the bookbuild. Any premium achieved above the subscription price for the new shares in the bookbuild will be shared on a pro-rata basis between those shareholders who did not exercise their rights or who were ineligible to do so.

Key Dates

The key dates* for the Offer are:

*These dates are subject to change and are indicative only.

The terms of the Offer are summarised in the accompanying presentation and are fully disclosed in the offer document which will be provided to eligible shareholders next week.