Pacific Edge share price surges after US deal but still no sign of a profit

Pictured in 2013 are (L to R) Pacific Edge CEO David Darling, senior scientist Justin Harvey and then-chairman Chris Swann. Picture / ODT

Pacific Edge saw a dramatic surge in its share price after the cancer diagnostics company signed a deal with US healthcare provider Kaiser Permanente, but it still can't predict when it expects to make a profit.

Chairman Chris Gallagher, in response to questions at today's annual meeting, said it was too early to forecast when the company would report its first-ever profit.

"We are very early in this journey with Kaiser and it would be very unwise to start predicting, but once we get through the establishment and get our customers up and running, we will get a much better sense of sustainable sales and cash flow," he said.

The company reported net loss of $18.8m in its last financial year, up from a $17.9m loss a year earlier. The company's revenue was steady at $5.2m.

Pacific Edge shares have been on a tear since it announced on June 17 that it had struck a deal with Kaiser Permanente for the commercial use of Pacific Edge's Cxbladder tests, hoisting it from 13c to a record high of 77c late last month.

Pacific Edge now has a market capitalisation of $528.6m.

The company's technology allows urine samples to be provided through a specialised sample system with buffers that protect the genetic material while it is sent to one of the company's two labs for diagnosis from anywhere in the world.

On arrival, the Pacific Edge lab can gauge a range of clinical information. Billing for the test is through the patient's health insurer.

It's been a long time since the company listed on the NZX in 2003 but chief executive David Darling said the time taken to bring the company to this stage was not unusual for highly specialised, tech-based companies like Pacific Edge.

"It's taken us 18 years to get here and we only started commercial activity in 2013," he told the Herald in an interview following the meeting.

He said getting Kaiser Permanente was "a huge breakthrough".

Kaiser Permanente is one of the largest non-profit healthcare providers in the US, with over 12 million members. It operates 39 hospitals and employs about 23,000 physicians.

Gallagher told the annual meeting the other major milestone was receiving inclusion in a Local Coverage Determination (LCD) which was the final step needed to gain national reimbursement in the United States.

"Securing a significant proportion of these funds is important to Pacific Edge and our shareholders as it will provide us with additional capital to support the execution of our US commercial plans, and develop the next horizons [of] growth for your company," Gallagher said.

The Kaiser Permanente and LCD milestones were the triggers for ANZ Investments to approach the company and offer to invest $22m at a 14 per cent premium to the prevailing share price, which he said was a vote of confidence in the company.

"The market's response to these three recent events has been very encouraging for the board and management," he said.

Gallagher said the company's focus was very much on the huge US healthcare market.
Pacific Edge had also been included in the US's National Comprehensive Cancer Network bladder cancer guidelines.

The guidelines were widely recognised and used as the standard for clinical policy and practice in oncology by clinicians and payers in the United States.

In addition, commercial growth had continued and an increasing number of urologists and customers were using its tests, particularly in the US and in New Zealand.