PEB - Pacific Edge Ltd

[850man]

So a negative result requires no Cystoscopy and a positive result does??????

Yes, to identify what type of cancer, where it is and to what extent it has developed.

The benefit of CXBT in the diagnosis process is that many people who have symptoms that might be bladder cancer (e.g. micro hematuria) are reluctant to have a cystoscopy as it's an unpleasant procedure and frequently negative for cancer. Accordingly some positive cases are not detected early when treatment would be more successful. CXBT with it 99% NPV gives a patient peace of mind that their symptoms are not bladder cancer.

[snigmac]

Here's to hoping that we get some strong comments or addtional information from PEB next Tuesday about the Novitas LCD.

[jonu]

Here's to hoping that we get some strong comments or addtional information from PEB next Tuesday about the Novitas LCD.

It would be nice, as a minimum, to have some feedback from the AUA conference. I wouldn't be anticipating any startling new info in the results. Anything material should be immediately released.

[winner69]

CASH BURN SLOWS Coverage Catalysts in Focus

Another big loss taking Accumulated Losses to $246m …that’s a big number

One day things might be positive

Good luck to PEB getting the approvals they are after


http://nzx-prod-s7fsd7f98s.s3-websit...369/418809.pdf

[jonu]

CASH BURN SLOWS Coverage Catalysts in Focus

Another big loss taking Accumulated Losses to $246m …that’s a big number

One day things might be positive

Good luck to PEB getting the approvals they are after


http://nzx-prod-s7fsd7f98s.s3-websit...369/418809.pdf

This bit is encouraging

"End of period cash and cash equivalents of $50.3 million down from $62.2 million in
September 2023; a runway expected to be sufficient to support the company through to
regaining coverage in the event of a Medicare non-coverage determination."

Discl: holding

[whatsup]

CASH BURN SLOWS Coverage Catalysts in Focus

Another big loss taking Accumulated Losses to $246m …that’s a big number

One day things might be positive

Good luck to PEB getting the approvals they are after


http://nzx-prod-s7fsd7f98s.s3-websit...369/418809.pdf

Under the circumstances I think a reasonable result, points to keep in mind July 26 ann, cash burn, cash runway but on the whole the fish heads have done a very good job.

[snigmac]

Alot of promising and indicative words used in the presentation re guideline inclusion. Good to see that Novitas has been provided with a copy of the Strata Cxbladder research. I'm not sure how Novitas can say no to PEB, they could surely come up with something but reading between the lines, PEB are showing alot of confidence that they will get there eventually, it doesn't make sense to pull the rug if PEB will get their eventually...

[Greekwatchdog]

For Bars Review of the result
NEUTRAL


Pacific Edge's (PEB) FY24 result had no material surprises. Net cash of ~NZ$50m was slightly ahead of our expectations. The continued improvement in revenue per billable test (helped by a solid Kaiser contribution) was a small positive which offset slightly higher opex. We retain our NEUTRAL rating given the LCD outcome is binary and therefore high-risk, lab throughput is subdued, and under any scenario the risk of an equity raise within the next two years is elevated.

What's changed?
Earnings: FY25/FY26/FY27 EBITDA +NZ$0.7m/+NZ$3.0m/+NZ$1.6m with lower revenue offset by lower costs.
Target price: Increased to NZ$0.12 from NZ$0.11 given the modest earnings upgrades.
Pricing growth a positive in 2H24
A positive surprise was the continued strength in revenue per billable test, up +18% in 2H24 versus 2H23 and +6% sequentially. The two drivers are: (1) improved Kaiser performance — we estimate FY24 Kaiser revenue more than doubled versus FY23 to ~NZ$3.5m, and (2) an increase in proportion of tests paid for outside of CMS and Kaiser. At FY24 we estimate PEB's Southern California Kaiser population penetration is 0.05% (Southern California is ~37% of Kaiser's population) versus NZ at 0.08%. PEB's commentary suggested all 15 Kaiser Southern California sites volumes are increasing steadily, albeit it was conservative on the roll-out speed into other jurisdictions near term. Northern California is the likely next step, where its share of Kaiser's population is only modestly below Southern California. We had been sceptical of the patient pay strategy but early signs are positive, and we take comfort that the pricing uptick provides some insulation against the possible loss of CMS revenue (CMS was ~NZ$17m of revenue in FY24).


Solid opex control in 2H24


2H24 opex declined -NZ$4.8m sequentially to NZ$27.0m, with sales & marketing declining -NZ$3.0m, and G&A -NZ$2.4m. While this was less than we expected, PEB continues to accelerate the clinical research development which is the right strategy. For the time being, we see the 2H24 opex run rate as an appropriate base, but note PEB has levers to pull should the LCD decision require it.


Asymmetric upsides in the event of a favourable LCD outcome, but the uncertainty is very high
There were no new updates on the LCD decision which is due before 26 July 2024. PEB currently trades on ~1x EV/12 month forward sales. On a EV/sales multiple basis broadly consistent with biotech peers (5–6x), should the LCD decision be favourable, we derive a ~NZ25-30cps price. More comparable genomic peers, which have meaningfully lower revenue growth trade on ~3.2x EV/sales. Our discounted cash flow valuation scenario that assumes CMS coverage continues is NZ$0.24. We acknowledge PEB was trading between NZ$0.40 and NZ$0.50 prior to the recent unfavourable decision, but given the net cash deterioration and soft lab throughput trends, the share price may not recover to these levels (at least in the near term).

Earnings changes
We make minor earnings changes across our forecast horizon. We again downgrade our revenue expectations with lower CMS and ‘other US’ volumes slightly offset by higher Kaiser volumes and stronger pricing (combination of stronger Kaiser volumes and a higher share of US volumes, ex CMS and Kaiser paid for).


Our presented forecasts use our scenario that CMS coverage remains.


Our target price increases to NZ$0.12 (from NZ$0.11) reflecting the modest earnings upgrades. Our target price methodology is a probability weighted DCF scenario of: (1) no change to CMS coverage (PEB continues to be covered), (2) coverage resumes in FY27, and (3) coverage resumes in FY29. We acknowledge a tail risk that coverage isn't achieved at all, but we see this as very unlikely. Our valuation scenario that assumes CMS coverage continues is NZ$0.24.

[snigmac]

It is interesting that For Bars set out that "We acknowledge a tail risk that coverage isn't achieved at all, but we see this as very unlikely". In a world where the business will get there or is very likely to get there to meet requirements, why would Novitas cut funding when there are cost savings provided by PEB :o

[850man]

It is interesting that For Bars set out that "We acknowledge a tail risk that coverage isn't achieved at all, but we see this as very unlikely". In a world where the business will get there or is very likely to get there to meet requirements, why would Novitas cut funding when there are cost savings provided by PEB :o

My concern is with Novitas' ego. They cocked up the initial funding removal because they failed to follow process. This second round is really about following process. Do they want egg on their faces if it also shows they made a bad call 1st time to cut funding? As a supplier to the US government, I'd say not.