Pacific Edge Anticipating commercial growth

http://www.edisoninvestmentresearch.com/research/report/pacific-edge916522/full

Pacific Edge continues to make progress commercialising its suite of bladder cancer diagnostics products, with three tests currently available in the US market. An uplift in sales is expected as TRICARE and the Veterans Administration (VA) are under contract, although the exact timing of a sales ramp is unknown. In addition, the company’s discussions with Kaiser Permanente are nearing a final decision and progress has been made with achieving inclusion in the local coverage determination (LCD) by the US Centers for Medicare and Medicaid Services (CMS).

Our DCF-based valuation has been reduced to NZ$434m (NZ$0.93/share) from NZ$449m (NZ$1.12/share). This is mainly due to a more conservative view of the sales ramp for the Cxbladder franchise in the US, following a slower than expected first half of the year. We have also pushed back profitability to FY20 from FY19. Pacific Edge recently raised NZ$21.3m in an offering and we expect that no additional capital will be required to fund operations into forecast profitability.