1.75% stake boosts Pacific Edge

Pacific Edge managing director David Darling. PHOTO: SUPPLIED
Pacific Edge managing director David Darling. PHOTO: SUPPLIED
Dunedin cancer diagnostic company Pacific Edge's cash reserves have been boosted to the tune of $2.6million, after a private US med-tech fund purchased a 1.75% stake.

Pacific Edge's share price bounded up more than 5% on the news.

The US fund Manchester Management Company, which specialises in biotech and life sciences investment, purchased 8.19million Pacific Edge shares for 32c; an almost 25% premium above the share price during the five days leading up to July 27.

As at year-end March, Pacific Edge had $16.2million cash in hand, having just booked a $19.7million loss, which followed the previous year's record $22.6million loss.

While revenue from paid-for tests is rising in the target US market, and the $16.2million has been considered enough to cover the current year's operations, the extent of its monthly cash burn is critical to the company's year ahead.

Forsyth Barr broker Lyn Howe said the $2.6million Manchester stake would provide an additional one to two months cash ``at current burn rates''.

She estimated with the Manchester cash, Pacific Edge had post-March cash on hand for operational expenses of $12million-$13million, or eight to nine months' operations.

However, she noted the up to $13million excluded $5.1million owed by private insurance, plus costs of tests owed by one group, CMS, which is awaiting a regulatory decision to allow payments to go ahead.

``The cash balance remains tight, but things can change quickly,'' she said.

She noted there was ``no new insight'' into key commercial milestone progress from the company, in yesterday's announcement.

Pacific Edge chief executive David Darling was contacted, and said he welcomed the investment, especially with the confidence that came from specialist investor Manchester Management Company; including its having paid an almost 25% premium.

He said the CMS group of patients represented about half of US patients, which would eventually make a ``sizeable contribution'' to revenue.

He would not be drawn on how long it might be for the determination to be made, saying only it was ``in process'' and other regulatory decisions had taken up to two years.

Pacific Edge shares are more than 40% down on a year ago, but lifted 5c yesterday to 29c.

Pacific Edge's chairman Chris Gallaher said having the US fund on board added further depth to the company's share register and reflected growing international investor interest.

``Our ability to attract new investment from specialist investors is testament to our innovative product offer, the traction we're gaining in our commercial journey in the USA and the potential Pacific Edge has to gain a strong share of the multibillion-dollar bladder cancer diagnostics market.''

To March, annual revenue was up 6% to $5million, with a 28% lift in laboratory throughput, 82% of that billable.

simon.hartley@odt.co.nz

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