Pacific Edge out to raise further $12m

Pacific Edge managing director David Darling. PHOTO: SUPPLIED
Pacific Edge managing director David Darling. PHOTO: SUPPLIED
Dunedin cancer diagnostic company Pacific Edge is again going back to longsuffering shareholders to raise capital - possibly up to $12million.

The company's crucial monthly "cash-burn" appears to be creeping up.

Pacific Edge released its result for the half year to September yesterday, booking an $8.71million loss, which takes its overall consecutive losses to more than $122million since listing in early 2003.

Pacific Edge's cash burn for operational expenses has been estimated to be about $1million per month, and many tranches of shareholder top-ups have been sought in recent years.

Pacific Edge has said recently it hopes to break even by full-year 2019, adding yesterday it wanted to become cash-flow positive "as soon as possible".

While having established itself in its target US market and having signed up with several large health and insurance organisations, Pacific Edge has been forced to play a waiting game in overcoming complex regulatory hurdles, crimping its ability to bill for services and generate much-needed positive cash flows.

Investors ploughed $55million into the company between 2013 and 2015, a further $8.75million in February 2016, and $21.3million in November last year, plus in July a US med-tech company paid $2.6million for a 1.75% stake in the company.

Revenue for the half was up 43% at $2.03million, while operating expenses fell 6% to $11.3million, with its loss down 13% from a year ago at $8.71million.

Pacific Edge said it had completed two of three milestones required for national reimbursement in the US - the receipt of product codes and notification of a national price of $US760 ($NZ1109) per test.

Pacific Edge wants to raise $7million with the issue of new shares, at 35c per share, followed by a $5million share purchase plan for shareholders, at no more than 35c.

Its shares were put on a trading halt yesterday, the 40c price being up 8% on a year ago.

As at the end of March Pacific Edge had $16.2million cash in hand and at the end of September $10million, which implied a monthly cash burn of $1.03million.

However, Craigs Investment Partners broker Peter McIntyre said actual operating expenses for the six months to September amounted to $11.35 million - equating to almost $1.9million a month.

"Shareholders have supported them in the past, so to get to break-even they will again need to get the support of shareholders," he said.

Customer receipts for the period were up from $1.65million to more than $2million.

He said the $371,000 improvement was welcome, but noted sales and marketing for the period amounted to $4.4million.

Mr McIntyre said if the total $12million was raised, that, plus the about $10 million cash in hand, would mean Pacific Edge was fully funded for the next 12 months.

The company has 474.7 million shares on issue at present.

Mr Mcintyre said raising the full $12million would have a dilutionary effect on shares, but this was not new as Pacific Edge had repeatedly issued more shares to raise cash.

On the company's outlook, chairman Chris Gallaher said the board remained committed to the company's strategy and to achieving the key milestone of cash-flow break-even.

"The impact Cxbladder makes for the large healthcare providers that have burgeoning patient needs, few resources and need to show value changes for their clinical services is very clear," he said in a statement.

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