Pacific Edge's shares fell 14 per cent, despite reporting a smaller full year net loss as more people adopted its Cxbladder cancer diagnostics tests.
The shares dropped to 18.5 cents after the Dunedin-based company reported a loss of $17.9 million in the year to March 31, versus a loss of $19.7m in the prior year. Operating revenue from test sales was up 12 per cent to $3.8m while total revenue was up 3 per cent to $5.1m.
The company has developed non-invasive, accurate and simple-to-use molecular diagnostic tests for the detection and management of bladder cancer. Total laboratory throughput, which includes commercial sales as well as tests from user programmes, grew to 15,697 tests in the year to March 31, up 9 per cent on the year.
Pacific Edge cut total expenses by 7 per cent to $23m and said its net operating cash outflow was $17.5m for the year, a 3 per cent improvement on the prior period.
Investors, however, were disappointed.
"There is just not a lot of growth there and a company like that should be reporting a pretty impressive growth rate," said Grant Williamson, a director of Hamilton Hindin Greene. While the company had cash, cash equivalents and short term deposits of $12.9m as at March 31, Williamson said investors may be jittery there will be another cash issue over the next 12 to 24 months.
"It's still very much a work in progress," he said.
Pacific Edge was upbeat about its New Zealand business and said the majority of New Zealand's national healthcare providers or district health boards have now added Cxbladder into the standard of care and, in some cases, into clinical guidelines. More than 3 million people - over 60 per cent of New Zealand's population - are now covered under contract with these DHBs.
"Based on current sales and projected demand, the New Zealand business is expected to reach a cashflow positive position in FY20," it said.
Given the success in New Zealand with the commercial contracting of public healthcare providers, Pacific Edge has increased its focus on large institutional healthcare organisations in the US, South East Asia and Australasian markets, it said.
The US remains its priority market and management is focused on completing agreements and building sales, the company said. Targets include Kaiser Permanente, Johns Hopkins Medicine, veterans healthcare groups VA and Tricare, and Medicare administrative organisation CMS.
Pacific Edge said two of the three milestones required for US national public reimbursement were completed during the year to March 31 and progress continues to be made with the third and final reimbursement milestone, which is to have Cxbladder included in a "local coverage determination". This allows for reimbursement of tests used by patients covered by the CMS. The CMS currently accounts for approximately 50 per cent of Pacific Edge's total laboratory throughput in the US.
"Adoption of Cxbladder is growing and commercial sales are increasing. We remain focused on further accelerating the adoption of Cxbladder by large healthcare organisations in New Zealand and internationally. Gaining inclusion in the Local Coverage Determination remains a priority," said chief executive David Darling.
Chairman Chris Gallaher said the board is committed to achieving the key milestone of cashflow breakeven for the group.
"The barriers to entry for medical devices are high and Pacific Edge remains the only company in the world to have bought a new diagnostic for urothelial cancer to market in the last 17 years. Clinical evidence published in top-tier journals is facilitating test adoption, coverage and reimbursement and we expect to see a continued uplift in adoption and sales in FY20," it said.