Pacific Edge Financial Results for the Six Months Ended 30 September 2015
Pacific Edge Continues To Execute Growth Strategy in USA and Build Sales
- 238% increase in commercial sales to $1.80 million (HY15: $0.53m), almost equal to full year commercial sales revenue achieved in FY15 (FY15: $1.90m)
- 68% increase in total revenue to $2.69 million (HY15: $1.60m)
- Investment in accelerated rollout of USA sales strategy and continued investment into people and protection of intellectual property reflected in Net Loss of $6.42 million (HY15: $4.73m)
- Cash on hand, cash equivalents and short term deposits of $32.72 million (HY15: $14.71m), including proceeds from successful $35.3 million capital raising completed in July 2015
Cancer diagnostics company, Pacific Edge Limited (NZX:PEB), has reported continuing growth in its commercial sales as it progresses its USA sales strategy and builds customer numbers in North America and other markets.
The company reported commercial sales revenue of $1.80 million for the six month period, primarily driven by growing sales in the USA.
Investment into People, Product Development, Market Expansion and the protection of Intellectual Property remain the largest areas of expenditure for Pacific Edge, and along with the rollout in the USA, formed the majority of $6.42 million loss for the six month period.
North America remains the primary growth opportunity for Pacific Edge, with more than 10,000 urologists and millions of potential clinical opportunities for the use of Cxbladder tests. An additional four out of a planned six sales people were recruited in the half year period, growing the sales team to 16 specialists targeting 19 sales regions. Pacific Edge has identified these regions as covering 60% of its potential market in the USA.
User Programmes remain an essential part of building awareness and acceptance of Cxbladder tests and numbers are expected to increase as momentum builds.
One of the largest User Programmes to date is with Kaiser Permanente in Southern California, one of America’s leading health care providers, which provides services to 9.5 million people. The recent introduction of a new electronic recruiting platform is expected to boost the number of patients recruited, after a slower than anticipated start following the commencement of the Programme in late June 2015. Once the User Programme is completed, Pacific Edge will be working to transition Kaiser Permanente into a large scale commercial customer.
Progress is also being made in discussions to gain registration on the Federal Supply Schedule that will then enable Pacific Edge to sell directly to the Veterans Administration (VA). Completion of this will provide Pacific Edge with access to market and sell its Cxbladder products to the VA’s clinicians and health providers who provide care for 8.8 million US veterans and their families.
The company is also looking to conclude the process with the Centre for Medicaid and Medicare Services (CMS) in the near future. This will allow Pacific Edge to claim reimbursement for Cxbladder tests for the elderly and low income people who use Cxbladder tests and are covered under Medicare and Medicaid.
We are continuing to build out our other markets. Australia is an important market, albeit much smaller than the USA. Discussions are currently being finalised with a new commercial partner to market and sell Cxbladder tests. In New Zealand, sales remain steady, as early adopters transition from User Programmes to commercial customers.
The company is also investigating the market opportunity in South East Asia, signing a leading hospital in Singapore to a User Program Study earlier in the half year. Discussions are continuing with several other leading hospitals and clinics to allow them to evaluate Cxbladder products in their own clinical settings.
Pacific Edge continues to develop its new product pipeline as it works towards building a ‘one stop shop’ of bladder cancer diagnostic tests. The USA launch of the second product in the suite, Cxbladder Triage, started in July and is due to complete in December 2015, with a number of leading urologists currently trialling Cxbladder Triage in their clinical settings.
A third product, Cxbladder Monitor, is due to launch in New Zealand by the end of 2015 and into the USA in 2016. This test provides urologists with a ‘Rule-Out’ diagnosis for patients who are being monitored for the recurrence of bladder cancer
Conclusion and Outlook
CEO of Pacific Edge, David Darling
Pacific Edge is a young company, delivering exciting medical products, into a large, complex and changing international healthcare market.
We are firmly focused on growth and providing urologists with high performance tests that provide the potential to significantly improve patient treatment and outcomes.
We have a number of milestones to complete in the second half of the financial year, including the commercial launch of Cxbladder Triage into the United States and the launch of our third product, Cxbladder Monitor, in New Zealand.
The Veterans Administration and the Centre for Medicaid and Medicare Services offer significant opportunities and we are working hard to finalise discussions with them. Along with Kaiser Permanente, these organisations offer access to very large target populations and revenue potential which could be transformational for our company.
We are focused on driving growth in the second half of the 2016 financial year and expect commercial revenue to continue to rise as we execute our growth strategy, particularly in the USA.
Operational Highlights and Key Events
Further investment into key people including expanding the USA sales team and increasing the commercial and product development teams in New Zealand
- Publication of research demonstrating that Cxbladder outperforms other non-invasive bladder cancer diagnostics, including the UroVysion® FISH assay that is widely used in the United States
- Successful $35.3 million capital raising completed in June 2015, providing funds to accelerate the growth strategy in the USA and investigate the market opportunity in South East Asia
- Announced first User Programme in South East Asia, with a leading Hospital in Singapore
- Commenced recruitment of patients for the Kaiser Permanente Southern California User Programme, with a target of 2,000 patients
- Pacific Edge’s New Zealand laboratory received CLIA regulatory approval to process new test Cxbladder Triage for USA patients
- Announced the termination of the commercial arrangement with Healthscope in Australia, with a new commercial partner currently being finalised
- Announced sponsorship of online patient community, bladdercancer.me, providing resources for bladder cancer patients and their families, due to go live end-December 2015