Pacific Edge : FY24 Full Year Results Presentation

Pacific Edge

FY 24 FINANCIAL RESULTS

INVESTOR PRESENTATION

Dr Peter Meintjes

Chief Executive Officer

Grant Gibson

Chief Financial Officer

21 May 2024

Pacific Edge's ordinary shares trade on the NZX and the ASX under the ticker code: PEB

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Financial data

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2

AGENDA

1. FY 24 HIGHLIGHTS
2. STRATEGIC DELIVERY
3. FINANCIAL PERFORMANCE
4. ESG & OUTLOOK
5. QUESTIONS

FY 24 HIGHLIGHTS: PREPARED FOR ALL OUTCOMES AS WE REDUCE CASH BURN

3%1		($29.5M)	24%	$50.3M
GLOBAL TESTING	GROWTH IN	DROP IN MONTHLY
VOLUMES	OPERATING	NET LOSS AFTER	CASH BURN3 IN 2H	CASH, CASH
(TLT2) on FY 23	REVENUE on	TAX	24 VS 1H 24	EQUIVALENTS3
	FY 23

Global TLT of 32,633; global	Operating revenue $23.9M	Increase from ($27.0M) on	Cash and Cash Equivalents	Balance sheet is expected to
Total revenue of $29.3M up	FY 23 lifted by increased	decreased $11.9M in 2H 24	provide sufficient runway to
commercial volumes rise 2%
12% on FY 23. FX gains of	investment in clinical	vs $15.6M in 1H 24 after	regain Medicare coverage
to 27,347
$0.6m vs $2.3m FY23	evidence	reorganization in Q2 24	(if withdrawn)

• Refocused the business on clinical development for Detect+ and Monitor+
• Published Clinical Utility for Triage from STRATA in The Journal of Urology and presented in paradigm shifting session at AUA 2024
• Restructured our commercial operations on profitable territories and non-Medicare revenue streams
• Reduced average monthly cash burn by 24% from $2,603k in 1H 24 to $1,985k in 2H 24
• Improved US cash collections by 18% with average sales price (ASP) increasing from US$519 2H 23 to US$613 in 2H 24
• Adjusted sales messaging to the clinical and economic value of Cxbladder
• Well prepared for all outcomes; awaiting decision on Medicare coverage

1. All comparisons are to the same period in the prior year unless otherwise stated

2.	TLT is the Total Laboratory Throughput including commercial, pre-commercial and clinical studies testing	4
3.	Cash, cash equivalents and short-term deposits

VALUE CREATION THROUGH THREE PILLARS

INPUTS			ADOPTION,					OUTPUTS
							EXCELLENT PATIENT EXPERIENCE
OUR PEOPLE			RETENTION AND
		REVENUE				AND ACCURATE RESULTS
			GENERATION
OUR PROCESSES									EARLY DETECTION AND
								CLINICALLY ACTIONABLE CARE
OUR IP, KNOWLEDGE									INNOVATION PIPELINE FOR
AND EXPERIENCE									CLINICAL APPLICATIONS
					EVIDENCE,
OUR CLINICAL STUDIES	RESEARCH			INCLUSIVE WORKPLACE
PARTNER SITES	AND	COVERAGE AND		DRIVEN BY OUTCOMES
	INNOVATION		GUIDELINES
OUR INVESTORS									INCREASED LONG-TERM
								SHAREHOLDER VALUE

A VALUES-DRIVEN, DIVERSE, RESULTS-FOCUSED CULTURE

SCALABLE PROCESSES, AUTOMATED OPERATIONS, CONTINUOUS IMPROVEMENT DIGITALIZED ARCHITECTURE, SEAMLESS VIRTUAL COLLABORATION, REAL-TIMEANALYSIS

GROWTH SLOWED AMID MEDICARE DRAFT

FY 24 TOTAL LAB THROUGHPUT (TLT*)

• Global TLT increased 3% to 32,633 with test demand moderating amid proposed Medicare coverage changes & sales force reductions.
• Global Commercial test volumes increased 2%. Global TLT is driven by US growth in the US (predominantly Detect).
• Risk stratification during hematuria evaluation using Triage & Detect is the largest market opportunity & reflected in current volume mix.

TEST VOLUMES BY TYPE (TLT*)

22%22%

57%	FY 24	61%	FY 23

21%	17%

GLOBAL TOTAL TEST VOLUMES (TLT*)

	35,000				31,565	32,633
					1H
	30,000
					2H
				23,086
	25,000			16,645	14,393
	20,000
TESTS	16,861	15,814	11,950
15,000
	8,714
	10,000	8,950			18,240
				14,920
	5,000	8,147		11,136
	6,864
	-
	FY 20	FY 21	FY 22	FY 23	FY 24

TESTS

GLOBAL COMMERCIAL TEST VOLUMES (TLT*)

30,000				26,691	27,347
25,000						1H
20,000			19,196		11,946	2H
		14,269
15,000	13,627	12,976	10,004
10,000	7,054	7,385			15,401
5,000				12,422
		9,192
6,573	5,591
-
FY 20	FY 21	FY 22	FY 23	FY 24

*TLT is the Total Laboratory Throughput including commercial, pre-commercial and clinical studies testing	6

CAPITAL PRESERVATION AND NEW REVENUE SOURCES DELIVERS RESILIENCE

COMMITTED TO MAINTAINING A STRONG BALANCE SHEET

• Pacific Edge continues to manage its cash reserves so - in the event of an adverse Medicare coverage decision - we have a cash runway to regain coverage.
• Cash reserves of $50.3m; cash burn of $11.9m in 2H 24 vs $15.6m in 1H24.

STRATEGIC RESPONSE TO MEDICARE DELIVERING GAINS

• Restructured US sales operations and introduced patient responsibility.
• Deeper focus on larger or value-based institutional accounts and capitated systems (pop: ~13.2m patients).
• Refocused clinical evidence development, coverage and guidelines for coverage certainty.
• Ex-USopportunities through distributors: ProGenetics (Israel) and SouthGenetics (multiple LATAM countries).
• Considering alternative Medicare Administrative Contractor, LCD Challenge & new LCDs.

APAC & HEAD OFFICE STRATEGY SHIFT COMPLETE

• Cash burn is now driven almost entirely by long-term strategic imperatives.
• Development of growth markets in Australia and Asia.
• Distribution agreements Transviet (Vietnam), Hi-Precision (Philippines) and WellSpring (Malaysia) and Emmed (Brunei) delivering small but increasing volumes.

EXTENDING OUR REACH THROUGH DISTRIBUTION AGREEMENTS

7

FOUNDATIONS FOR GROWTH - US TEST VOLUMES STABILISE

SMALLER SALES TEAM REDUCES TOP LINE THROUGHPUT

• Throughput has reduced by 22% from 7,816 test/quarter in Q4 23 to 6,099 in Q4 24 as the average sales team for the quarter has reduced by 51%.
• Most-recentQoQ throughput volume is steady (6,099 in Q4 24 over 6,041 in Q3 24) despite further reduction in sales FTEs.
• Sales territories are larger and more challenging for sales reps, but focus has been on larger, more reliable accounts.
• Messaging has focused on communicating the clinical value of Cxbladder for risk stratification to reduce cystoscopies and the associated economics of adopting on all appropriate patients.

US TOTAL TEST VOLUME*

	9,000
	8,000									8,627
	7,000								7,816		7,335
VOLUMES	6,000					6,073	6,699	6,629				6,041	6,099
5,000
			5,290
		4,706
4,000	4,277	4,591
TEST
3,000
	2,000
	1,000
	-	Q1 22	Q2 22	Q3 22	Q4 22	Q1 23	Q2 23	Q3 23	Q4 23	Q1 24	Q2 24	Q3 24	Q4 24

* Total Laboratory Throughput in the US including commercial, pre-commercial and clinical studies testing	8

FOUNDATIONS FOR GROWTH - SALES TEAM PERFORMANCE IMPROVES

SALES TEAM FOCUSED ON KEY PERFORMANCE INDICATORS

• Sales FTE down to an average of 16.0 in Q4 24 from 32.7 in Q4 23 as we focused on cash conservation.
• • Sales FTEs were reduced by restructure in late Q2 24.
  • Sales FTEs have continued to leave the business and not currently backfilled due to focus on cash preservation.
• Sales force efficiency (total tests/average FTE) up 59% from Q4
  23 to 381:

US SALES FORCE EFFICIENCY

	60.0											381
FTE	50.0									288	265	292
40.0						226		239
SALES	200	202			222	201
	187
30.0	160
					33.0	32.7
AVERAGE					29.7	30.0
			28.7	28.3	27.3	27.7
20.0	21.3	23.3			20.7
	10.0
											16.0

-

400
350	FTE
300
250	/SALES
200
150	TESTS*
100
50
0

• • More effective core sales team.
  • Focus on the most profitable territories/accounts.
• Tests/US ordering clinician stable, but ordering clinicians fall reflecting:
• • Change in clinical mix in favor of clinicians that understand the clinical utility of Cxbladder.
  • Reduced reach of the direct sales team.
• Direct sales team have achieved operational break even.

Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 US TEST VOLUME/SALES FTE (RHS)

US CLINICAL COMMITMENT

ORDERINGUSCLINICIANS	1,600	6.5	6.8	6.2	6.7	6.8	6.8		6.8	7.0	6.4		6.7	8.0	TEST*/ORDERINGCLINICIAN
200				1.0
	1,400						6.1			5.9		7.0
	1,200									1,232				6.0
	1,000						978	1,082	1,150	1,147	1,016		5.0
	800					895					915	4.0
				789
	600	657	690	741									3.0
	400											2.0
	-													-

Q1 22 Q2 22 Q3 22 Q4 22 Q1 23 Q2 23 Q3 23 Q4 23 Q1 24 Q2 24 Q3 24 Q4 24 TESTS/ORDERING CLINICIAN (RHS)

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FOUNDATIONS FOR GROWTH - US CASH COLLECTIONS IMPROVE

REIMBURSEMENT & CASH COLLECTIONS - A CORE COMPETENCY

US COMMERCIAL TEST VOLUMES AND ASP* (US$)

• Average Sales Price (ASP) per test increased 18% to US$613 in
  2H 24 from US$519 in 2H 23 lifted by:

	•	Enhanced Patient Responsibility - patients with non-		16,000
		contracted private insurance (i.e. non-Kaiser) sign		14,000				$519	$562
		patient responsibility notice agreeing to pay if their				$493
				$472		13,550
				$470
		insurer does not.		12,000		12,450
		VOLUME
	•	Increased utilization of appropriate patient types from	10,000			10,622
		Kaiser Permanente after EMR integration.	8,000
	•	Medicare reimbursement of Triage since Jan 2023.	TEEST		8,276
		7,476
	6,000
	•	Improved medical necessity documentation to improve
		4,000
		billing and appeals processes for Medicare Advantage.
•	Improved cash collections are typically permanent		2,000
	improvements that we expect to maintain as we scale.		-
				1H 22	2H 22	1H 23	2H 23	1H 24
							US AVERAGE SALES PRICE (RHS)

$613

9,956

2H 24

$700

$600

$500

$400

$300

$200

$100

$-

AVERAGE US SALES PRICE (US$)

* ASP: US Operating Revenue in USD / US Commercial Test Volumes	10