PEB - Pacific Edge Ltd

[barney]

As MAC has always alluded to the training of the Cxbladder sales people takes months; I did not necessarily agree with that, but I was wrong. The advertisements for PEDUSA seemed to be looking for well qualified people with a diagnostics background and I thought they would have just had a bit of a refresher! (a couple of weeks)

They are very selective, so obviously there is a big investment there (sales team). This is good, I really only want credibility in the sales team. (first impressions and all that)

The first salesperson was on the ground in July and 3 others were recruited over the next 4 months (July to November) so with getting to grips with their sales territories and the necessary training (then Christmas period) didn’t leave much in the way of selling time. (Compressed time frame > ramp).

Yes, Pacific Edge are proposing an update for investors, I hope for early June.

The uptake from ‘User Program’ to commercial relationship is very successful; but the typical urologist doesn’t just abandon his practices of years and the product is typically introduced progressively – there is a ‘test drive’ period as they get their head around the test and what it can really do for them. It is not instantly adopted into the full clinical pathway and may be used in different parts of the pathway depending on the urologist’s initial requirements.

The marketing strategy involves 'User Programs' of smaller sizes than originally set-up, I like this idea because the recipient benefits from a financial and intellectual commitment by Pacific Edge to their business, they are not just hocking off the test.

Thanks Hancocks. It's good to see some sanity return to the thread, after it seems to me, to have developed into something akin to talkback radio.

[simla]

I dont think many investors would be keen to follow PEB down that road

I'm absolutely sure they wouldn't! It's been a very tough road as a shareholder of BLT. But what virtually nobody seems to have noticed is that it was the shareholders themselves that made this very tough. If everyone hadn't been avoiding BLT like the plague - because it wasn't going to make a profit in the next 12 to 24 months - then the share price would not have plummeted, and capital raising would have been at a high price and not very diluting either. The company would also have had more cash and would be advancing more quickly.

BLT itself has actually only been set back by a couple of years in it's plans (post new CEO) which really isn't big bickies to me, and shouldn't be for PEB now either. But too many shareholders didn't like that any more than they are currently reacting to PEB just now.

My "favourite" illustration of this is Botry Zen. August 2010: "Last December, for the second time in 15 months, Botry Zen's long-suffering shareholders refused to inject $1.5 million of new capital into the cash-strapped venture, prompting its board to ask financier BNZ to appoint a receiver. " http://www.odt.co.nz/news/business/1...-owner-zentech

Oh, but wait. Botry Zen is doing fine. http://www.botryzen.co.nz/ The shareholders created their own misfortune by not standing behind the company when it needed them. But they lost, not the enterprise itself.

I'm not trying to be critical of people. I'm just saying that the NZ share market seems to be relatively ignorant of the need for long term views on new companies, and really, really short of people willing to invest on that basis. I am so very grateful to the small number of shareholders in BLT who, like me, have stood the pressure over the years. That willingness to stand our ground looks likely to be rewarded fairly soon. Sure hope so! And it really is a great feeling to have helped with the birth of an enduring enterprise (as I hope BLT is about to be.)

I don't see any reason why PEB won't prosper too. But it probably isn't going to be next week, and I feel that shareholders might be doing themselves a favour by standing their ground here too. I'm not sure how many PEB shareholders are of that frame of mind, however.

It goes without saying (maybe) that most of the famous investors have a "buy and hold" strategy. So it can actually pay off too.

Disc: I have interests in PEB via a fund, but not directly, not quite my sort of company.

[nextbigthing]

I guess a positive that can be taken from this is that it would appear they're taking their time and doing it properly (proper training etc) rather than just rushing in and blowing their chances. That deserves credit. However what's the financial cost of this? It'd be great to be self sustaining before they burn $20 mil. Hopefully all will be cleared up soon.

[MAC]

There’s a big picture view too;

It's a top down approach, PEB have told us thus in there presentations, first the network providers must be on board, then the HMO's and insurers associated with those network providers, then some academic and procedural policy support from the LUG's, then sales folk making direct approaches to urologist practices, and then GP approaches.

This whole process has 12 to 24 months written on it to me, and we are only 7 months or so into it

The commercials and pricing contracts must be in place first, there is no point banging on a urologists door just to hear the same thing over again "great tech, absolutely want to use it, but my patients can't yet claim for it, but they can claim for cytology and/or NMP22".

A few weeks back I went to the dentist for an extraction, needed a filling too while I was about it, the dentist suggested amalgam rather than a composite filling as the insurers don't cover composite. And, they were right, my insurer didn’t cover it, $405 thanks very much.

Once the insurers start to demand their one third reduction in work up costs, and urologists can use cxbladder knowing patient costs are covered, or mostly covered, this is the time PEB sales will take off in earnest.

It’s negotiation stage right now and will be for a few months, all negotiations seem to be running in parallel at present, Medicare, HMO’s, insurers, and user programme roll overs. These contracts may well start to come to fruition all at a similar time also.

In this context, from a long term investors perspective, noting traders see matters differently, sales figures at this early stage are relatively unimportant in the big picture.

It’s the strategic roll sequence and schedule that is important. I’m focused more on this for now as an investor, and there is some evidence of a slide which I’m watching, I’m not overly concerned just yet, but I would like some more information.

Looking forward to the AGM now, question time will be interesting.

[Dentie]

Dentie, I would argue that to an extent, through lack of sales the fundamentals have changed. I think it's an excellent product, but if people aren't going to use it then.....
You still seem quite bullish on the stock. What is your explanation for what is a very poor uptake on such a great product? The low uptake given the amount spent on promotion concerns me. Perhaps they're not going to change the status quo. Anyone who has read my previous posts will know I think this is/was an amazing product and a great investment (ethically and financially) however as Hancocks has alluded to, they still need to justify themselves. The lows sales, high spend (with more to come) and lack of information hasn't done it for me.
Interested to hear your thoughts as to why you're not concerned and whether you're confident it's because xyz reason etc or whether you're just hoping they'll get there based on a great product.

Cheers, NBT

Hi NBT... other long termers have already posted extensively so don't want to duplicate but ... I am sure it is not a case of people not going to use the PEB product/s. They will but just takes time.

I have experienced this first hand and understand exactly what PEB are experiencing.... with certainly no intention of self promotion - but only to illustrate my point, I also started my humble business from a square wheel 5 years ago. It is now worth well over $1m and provides unrivalled value to its market. However, despite radio saturation etc, there are still people who say to me - "if only I had known about you 3 or 4 years ago" ... you could have saved me big $$$!!!! Well...I'm doing everything I can to make them aware...the fact is, potential customers "have to be in that space at the right time" - or they rely on others who are in that space to inform them. For PEB (& others) it is no different....those poor buggers with blood in their urine are relying on their professional advisors (eg - urologists) to inform them. It is clear PEB are working hard to not only make the Urologists aware, but also making it easier for the product to be paid for (eg - CMS). I've also been round long enough to know that professional advisors want to maximise what they can get $$$$ wise and unfortunately they put this requirement before their customer. So, to speed up this process, there is normally "inducements" that have to be offered. This is the part that I detest - but I bet if PEB were to offer Urologists some sort of backhander (as opposed to Urologists marking up the product), the uptake process would no longer be sloth like. (I could be wrong, but I am led to believe XRO offers an inducement to Accountants in order for them to recommend XRO product to their clients - happy to be corrected here though). But that is a solid reason for quick uptake - not whether the product is great or not. Another reason for slow uptake is people's natural sense of doing nothing is easier. Let me explain briefly...

I have just come back from visiting my 86 y/old father. We waited 2 years to get him into a RYM village (for all the normal reasons one would expect) and when the time came he signed up. In the following week, he had time to think about it and ended up cancelling out because "it is going to mean too big a change to my life etc etc". In other words, it is a lot easier to do nothing and stick to what you are comfortable with. So, he goes back onto the waiting list for god knows how long more. Two months later (ie - last Thursday), he has a mild stroke. Rather than pressing the St John's alarm thing and getting help - he takes a couple of aspro's and goes to lay down. Research has told me it is only a matter of time before a bigger stroke occurs... The point is, if people don't want to be made aware - they'll pay the price. It is no different than PEB and CxBladder!

In regards to PEB's performance...get up a 2 year chart and draw a line starting at the SP in October 2012 all the way through to the current SP. Then compare that with the performance of some blue chippers (& other well established companies) ...RYM, FBU, TEL, AIR etc etc. Even with more drop in PEB's SP to come, it is still doing very well. The large sudden increases in SP - caused by drooling traders trying for that quick buck - were, to my mind, sexy distractions to the main event. It has been the same traders who have driven the price back down again - the fear factor of shoal dwellers.

The big picture is intact - PEB are gaining sales traction (maybe not quick enough for some!!) - but I feel it will carry on in a good trajectory until they get momentum then it will go exponentially. The only threat that I can see is a very large competitor with better science - or a large takeover merchant. Yes, until I see something to the contrary, I am still very bullish on the long term success of PEB. Hopefully as they also start opening up the stable of other runners, she will continue to go....Of course, there could also be surprises that they have no control over ...so what - that's life!

Sorry - starting to ramble, but that's what you get when you have passion...

[geo]

There’s a big picture view too;

It's a top down approach, PEB have told us thus in there presentations, first the network providers must be on board, then the HMO's and insurers associated with those network providers, then some academic and procedural policy support from the LUG's, then sales folk making direct approaches to urologist practices, and then GP approaches.

This whole process has 12 to 24 months written on it to me, and we are only 7 months or so into it

The commercials and pricing contracts must be in place first, there is no point banging on a urologists door just to hear the same thing over again "great tech, absolutely want to use it, but my patients can't yet claim for it, but they can claim for cytology and/or NMP22".

A few weeks back I went to the dentist for an extraction, needed a filling too while I was about it, the dentist suggested amalgam rather than a composite filling as the insurers don't cover composite. And, they were right, my insurer didn’t cover it, $405 thanks very much.

Once the insurers start to demand their one third reduction in work up costs, and urologists can use cxbladder knowing patient costs are covered, or mostly covered, this is the time PEB sales will take off in earnest.

It’s negotiation stage right now and will be for a few months, all negotiations seem to be running in parallel at present, Medicare, HMO’s, insurers, and user programme roll overs. These contracts may well start to come to fruition all at a similar time also.

In this context, from a long term investors perspective, noting traders see matters differently, sales figures at this early stage are relatively unimportant in the big picture.

It’s the strategic roll sequence and schedule that is important. I’m focused more on this for now as an investor, and there is some evidence of a slide which I’m watching, I’m not overly concerned just yet, but I would like some more information.

Looking forward to the AGM now, question time will be interesting.

Hey Mac. What valuation do you see now you have some firm numbers to work with?

[MAC]

Hey Mac. What valuation do you see now you have some firm numbers to work with?

Hi Geo,

I was intending to post another valuation after the FY report, but I'm thinking now after the AGM, I've a couple of questions to nail down a little on the five year goal, preferably from CS, I'm finding DD’s commentary a little all over the place on this one.

All FA's must have some basis on which to value and if the company goals are not clear it can broaden the range of possible valuations.

It will be very interesting indeed to see Edison's valuation report in a few week’s time as they will have had direct access to both Pacific Edge and to specific US market analysis.

I would not be surprised if Edison is far from $1.70 or possibly a little higher. Hope I’m proven correct.

kind regards, Mac

[Goldstein]

Thanks for sharing Hancocks. I think you and MAC are doing more for investor relations than anybody at PEB at the moment.

I guess without having the insurers on board yet, it lends some credence to the rhetoric in the FY report. I.e., there can be strong support/interest in CX-Bladder without this being reflected in the sales figures.

Disc: I've just gone past my stop-loss with PEB, but haven't sold.

[blackcap]

[QUOTE=MAC;483921

It will be very interesting indeed to see Edison's valuation report in a few week’s time as they will have had direct access to both Pacific Edge and to specific US market analysis.

I would not be surprised if Edison is far from $1.70 or possibly a little higher. Hope I’m proven correct.

[/QUOTE]

That would not bode well for PEB holders. Edison also values CRP at around the $1.70 mark. CRP share price is languishing at about 25 cents.

[geo]

Hi Geo,

I was intending to post another valuation after the FY report, but I'm thinking now after the AGM, I've a couple of questions to nail down a little on the five year goal, preferably from CS, I'm finding DD’s commentary a little all over the place on this on

All FA's must have some basis on which to value and if the company goals are not clear it can broaden the range of possible valuations.

It will be very interesting indeed to see Edison's valuation report in a few week’s time as they will have had direct access to both Pacific Edge and to specific US market analysis.

I would not be surprised if Edison is far from $1.70 or possibly a little higher. Hope I’m proven correct.

kind regards, Mac

Thank's for that Mac. Now a question 9. Comments By Directors. The majority of this net loss is the investment in the Companies business rollout in the US. clinical trials. product development and intellectual property as is expensed.

The Company is now investing significant funds in the set up and running of the commercial laboratory and development of the US strategy in this Financial Year. [ I thought all that was done 12 months ago great fan fair lab setup ready for tests .am I missing something here] We seem to be getting confusing reporting here?