Pacific Edge revenue drops
by Tim Scott · Otago Daily Times Online NewsA Dunedin-based cancer diagnostics company says it is on the cusp of growth despite its annual revenue nearly halving after a crucial overseas funding decision.
Pacific Edge’s latest annual report, for the year to April, was released to the New Zealand stock exchange last week.
The 116-page document stated operating revenue was at $11.5 million — a 47.4% drop from $21.8m in the previous financial year.
Total revenue was $13.6m, down 44.7% from $24.6m.
Net loss after tax was $35.8m, compared to $29.9m in the previous period.
Pacific Edge chief executive Dr Peter Meintjes told the Otago Daily Times the financials did not paint the true picture, which was one of strategic success in the face of challenging conditions.
‘‘The financial milestones were not as good as we would have liked, but we know why that is and we have overcome those barriers so we’re quite focused on what FY27 can be.’’
Last year Novitas, which has jurisdiction for Pacific Edge’s United States laboratory, denied Medicare coverage for the cost of its Cxbladder tests in the US.
Cxbladder is a non-invasive test used for the detection of bladder cancer from a urine sample and the non-coverage decision ended reimbursement for the Triage, Detect and Monitor lines.
Pacific Edge attempted a judicial review but was unsuccessful and their Medicare coverage was officially halted in April last year.
Dr Meintjes said the drop in revenue could essentially be wholly attributed to Novitas’ decision.
The company initially forecasted an up to 70% blow to revenue because of this, but were able to mitigate it through gains made in the Asia-Pacific market and with private payers.
‘‘In that bizarre context, we’ve actually overachieved,’’ Dr Meintjes said.
‘‘We always knew we couldn’t mitigate all of that 70%, we needed Medicare back.
‘‘We pushed the team really, really hard and we’ve done reasonably well under this situation.’’
The company also raised a total of $36.1m almost entirely from existing investors, which was a fantastic result, Dr Meintjes said.
Pacific Edge submitted a reconsideration request for Cxbladder Triage after it was included in the American Urological Association’s guidelines for microhematuria, in February last year.
Last month, a draft determination was published that proposed Medicare coverage of Triage and Triage Plus as microhematuria evaluation products.
With Medicare coverage in sight again, ‘‘we stand on the cusp of an acceleration in growth’’, the report states.
Dr Meintjes expected a final determination would be published before the year ended and would be favourable to Pacific Edge.
Coverage of the Triage line could potentially be narrower than before, but substantially more margin per test could be made if more customers switched to Triage Plus.
Asked if the financial damage had already been done, Dr Meintjes said ‘‘everything is reversible’’.
‘‘There will clearly be some individuals, physicians, who will say to us: ‘this whole experience has left a bad taste in our mouths’.
‘‘We think many of them can set aside some of the past experience issues, particularly if we make all the right efforts, which we will be doing as a company, to ensure that they have a quality customer experience ...’’
In the report, Pacific Edge chairman Simon Flood said publication of the draft determination was a ‘‘defining milestone’’ that provided the company with a strong foundation from which to grow.
Triage and Triage Plus were the only biomarkers proposed to be reimbursable under the policy, as legacy tests and competing products were not covered due to insufficient supporting evidence.
Triage Plus — with a Medicare approved price of $US1328 ($NZ2354) — would assist in lifting revenue, margin and margin percentage per test, ‘‘creating a clearer path to profitability for the company’’, Mr Flood said.