PEB - Pacific Edge Ltd

[black knat]

Thanks guys - I missed you too...

[Minerbarejet]

Thanks guys - I missed you too...

Aw - shucks.
Good on you, mate
Any particular clarification on your enthusiastic VA assessment available?
Is there something we have missed?

Apart from you us and vice versa.

[MAC]

Those of us whom are content with the progress of the company and roll out, know that the intrinsic value being ever accumulated as each month passes will come to fore when ready.

There are three new molecular diagnostic companies which have been leap frogging each other over the last two years, these being EXAS, MDXH and PEB.

Each now have their first molecular biomarker test in the market place for colorectal, prostate and bladder cancers respectfully, and each appear to have the best performing clinical test for each respective cancer type.

EXAS and MDXH achieved Medicare coverage late last year, PEB could be any time now with adequate tests having been performed within the FY15 year, and with three pending papers and publications adding to their dossier of clinical utility.

EXAS MDXH PEB Two Year Chart

Exact Sciences (EXAS)
Colon cancer diagnostic test - Cologuard
$1.8M annual revenues
Market capitalisation $2.07B
Medicare coverage achieved - October 2014
Share price appreciation (last 2 years) 135%

MDxHealth (MDXH)
Prostate cancer diagnostic test - ConfirmMDx
$9.4M in annual revenues
Market capitalisation $180M
Medicare coverage achieved - September 2014
Share price appreciation (last 2 years) 130%

Pacific Edge Diagnostics (PEB)
Bladder cancer diagnostic test - Cxbladder
$3.2M estimated at FY15 in annual revenues
Market capitalisation $226M
Medicare coverage achieved - Soon
Share price appreciation (last 2 years) 5%

Attachment 7232

[Whipmoney]

Those of us whom are content with the progress of the company and roll out, know that the intrinsic value being ever accumulated as each month passes will come to fore when ready.

There are three new molecular diagnostic companies which have been leap frogging each other over the last two years, these being EXAS, MDXH and PEB.

Each now have their first molecular biomarker test in the market place for colorectal, prostate and bladder cancers respectfully, and each appear to have the best performing clinical test for each respective cancer type.

EXAS and MDXH achieved Medicare coverage late last year, PEB could be any time now with adequate tests having been performed within the FY15 year, and with three pending papers and publications adding to their dossier of clinical utility.

EXAS MDXH PEB Two Year Chart

Exact Sciences (EXAS)
Colon cancer diagnostic test - Cologuard
$1.8M annual revenues
Market capitalisation $2.07B
Medicare coverage achieved - October 2014
Share price appreciation (last 2 years) 135%

MDxHealth (MDXH)
Prostate cancer diagnostic test - ConfirmMDx
$9.4M in annual revenues
Market capitalisation $180M
Medicare coverage achieved - September 2014
Share price appreciation (last 2 years) 130%

Pacific Edge Diagnostics (PEB)
Bladder cancer diagnostic test - Cxbladder
$3.2M estimated at FY15 in annual revenues
Market capitalisation $226M
Medicare coverage achieved - Soon
Share price appreciation (last 2 years) 5%

Attachment 7232

How come MDxHealth (MDXH) has the smallest Market Cap, despite the highest revenues? Is this due to a smaller addressable market than the other two?

[skid]

Mac-why would you use any of the time before these companys got medicare coverage in your figures? (thats just smoke and mirrors)

You should start at the point when medicare cover started.In the case of MDXH the SP actually went down for 1 1/2 months before rising so one could argue that medicare was not necessarily the main factor

Exas went up, but its a big high profile co with the ear of big American stock news--without that it would be more like MDXH(with a similar market cap as PEB)

So when medicare coverage is achieved (did you mean Soon,as in the shiny new Christmas present you were looking for ?) some could argue there will be time to jump on board then,without dishing out dosh now, that could be better spent.

Its an interesting post but it could be interpreted in a number of ways

[MAC]

Not at all, that particular two year period is typically representative of the time between these products first leaving the lab, first commercial sales, and Medicare coverage being achieved.

During that period biotech companies increase their inherent value as they successfully complete clinical trials, commercially launch, and achieve coverage.

I'm comfortable with my $1.85 valuation on PEB, it hasn't changed over the last two years just due to the short term sentiment or squiggly line obsessions of others.

The intrinsic value within the company and within their products and pipeline increases more every month that ticks by, every patent adds value, as does every Cxbladder test processed as it add’s to the CMS clinical utility evidence dossier.

I do agree that the NASDAQ would probably have better recognised the value in PEB thus far in a less volatile way.

Biotech companies are not well understood in NZ, you can see that from many of the posts on this thread alone, but the value within the company remains all the same, who knows what catalyst will trigger that recognition on the NZX.

DISC: There’s lot’s of products in the queue behind this one in the pipeline, I'm a content long term holder, and happy to be so for a few years yet.

[Minerbarejet]

How come MDxHealth (MDXH) has the smallest Market Cap, despite the highest revenues? Is this due to a smaller addressable market than the other two?

Market Cap has nothing to do with revenues directly.
Market Cap is obtained by multiplying the number of outstanding shares by the current market price.
EXAS has 88.67 million shares, MDXH only has 37.68m , PEB has 318.62m.
Of course if the revenues are up then the share price may go up thereby increasing the Mcap indirectly.

[Whipmoney]

Market Cap has nothing to do with revenues directly.
Market Cap is obtained by multiplying the number of outstanding shares by the current market price.
EXAS has 88.67 million shares, MDXH only has 37.68m , PEB has 318.62m.
Of course if the revenues are up then the share price may go up thereby increasing the Mcap indirectly.

Really...??????

A company's Market Cap is essentially the equity valuation of a company, which in the case of bio-tech is directly related to their revenue, revenue growth, cost structure and other factors (e.g. competition, size of addressable market, quality of product, regulatory requirements etc).

Yes MCap is a function of share-price multiplied by the no. of shares outstanding, but the value of each specific share is a function of what I have outlined above.

[MAC]

Market cap over the long term is a recognition of the forward estimated free cashflows that the market determines a company will ultimately generate.

Short term moves in market cap over short term durations is entirely a recognition of market whims.

However, it all has little to do with very early stage biotech revenues, when those very early stage revenues are very small indeed compared to the magnitude of the long run free cashflows that the market may determine will ultimately value a company.

How was that Miner ?

[Whipmoney]

Market cap over the long term is a recognition of the forward estimated free cashflows that the market determines a company will ultimately generate.

Short term moves in market cap over short term durations is entirely a recognition of market whims.

However, it all has little to do with very early stage biotech revenues, when those very early stage revenues are very small indeed compared to the magnitude of the long run free cash-flows that the market may determine will ultimately value a company.

How was that Miner ?

Market cap over the long term is a recognition of the forward estimated free cash-flows that the market determines a company will ultimately generate. - This is theoretical. Whilst this may fit nicely within a corporate finance / DCF Analysis frame-work, not all market participants are fundamental investors/corporate finance type investors, and DCF is somewhat difficult to perform on biotech companies. In fact I would suspect that DCF analysis makes up a tiny component of PEB's MCap Valuation. Speculation and news-flow is likely to be the main driver.


Short term moves in market cap over short term durations is entirely a recognition of market whims. A Long-term investment horizon is simply the aggregate of many smaller short-term horizons.

However, it all has little to do with very early stage biotech revenues, when those very early stage revenues are very small indeed compared to the magnitude of the long run free cash-flows that the market may determine will ultimately value a company. Actually I believe it has a lot to do with early stage revenues as they are one of the best indicators of long-term revenues, and they also happen to demonstrate initial market penetration. It is exponentially harder to value a company using DCF analysis, when they have no revenue than when they have some revenue.

The problem with DCF analysis this particular company is that when you work out your FCFF's for the first 3,5,10 years you will be making invariably massive assumptions around where the revenue falls for each of these years (revenue being a key driver of FCFF). This kind of 'heuristic' modelling, whilst useful for demonstrating benchmark values, completely disregards the concept of 'probabilistic expectations'.