Pacific Edge posts 22% increase in revenue

Cxbladder test samples produced by Pacific Edge. PHOTO: ODT FILES
Cxbladder test samples produced by Pacific Edge. PHOTO: ODT FILES
Pacific Edge has continued to grow test volumes and revenue through the first half of the 2024 financial year despite the ongoing uncertainty over Medicare coverage of Cxbladder in the United States.

The Dunedin-based listed cancer diagnostic company posted a 50% rise in operating revenue to $13.1million for the six months to September 30. Total revenue rose 22% to $16.6m, lifted by a 28% rise in commercial Cxbladder test volumes in the US market.

Total laboratory throughput of Cxbladder tests increased 22% to 18,229 tests and commercial tests increased to 15,401 tests. US ordering clinicians grew to 1147, up 17.3% from the 978 at the end of the second quarter of 2023.

The net loss for the half year of $15.1m was up from a $10.2m loss in the same period in the prior year. Restructuring and capital preservation initiatives implemented late in Q2 24 were not yet evident in first-half 2024 operating expenditure, which still reflected the company’s prior orientation towards revenue growth. The company had also incurred extra costs defending its coverage by Medicare, it said.

The company said it had a strong balance sheet with cash and cash equivalents of $62.2m. In the event of a Medicare non-coverage determination, it expected the available cash to be sufficient to support the company through to regaining coverage, a process that might take up to four years.

Chairman Chris Gallaher said the company would manage its capital reserves to weather a Medicare non-coverage decision, the most adverse outcome among the range of present possibilities.

Chief executive Dr Pete Meintjes said the finalisation of the "local coverage determination" was the single biggest determinant of the company’s prospects in the coming 12 months, with a decision due by July 26 next year.

"Uncertainty does play a major role in our current narrative."

A non-coverage determination was likely to impact US volumes and the company was considering processes that would result in Medicare patients assuming responsibility for the payment for Cxbladder.

"Under such a scenario, Pacific Edge, supported by its strong balance sheet, would continue to work towards regaining coverage within four years, with attempts made for re-coverage with every piece of new clinical evidence.

"Conversely, an affirmation of our status as covered by Medicare will be a catalyst for our US commercial operations, supported by a sales force that is now firmly focused on the Cxbladder proposition," he said.

The company believed it had responded appropriately to the uncertainty, managing its cash and restructuring in ways to ensure its territories were profitable, and that came with some initial headwinds.

Pacific Edge had a meeting with the Centres for Medicare and Medicaid Services next week to draw attention to the challenges it saw if there was an adverse Medicare determination.

The company’s priorities, with or without Medicare, did not change and its long-term vision was providing tests that improved the standard of care for bladder cancer patients, he said.

Irrespective of the Medicare outcome, Pacific Edge continued to expect an increase in volume from Kaiser Permanente from its US laboratory and APAC business serviced from its New Zealand laboratory.

It was continuing to work towards a national contract with Te Whatu Ora — Health New Zealand and to grow international testing volume in the medium-term from its distribution agreements and growth markets in Australia, Latin America, Israel and Southeast Asia.

This week, the team was celebrating the launch of the integration of Cxbladder tests within the Electronic Medical Records (EMR) system of Kaiser Permanente.

The integration had gone live and Dr Meintjes described it as a milestone for the partnership, and one Pacific Edge had been working towards for a long time. While it would still take time to achieve its full potential, it was a new phase for the company.