Cash burn of well over $1million per month is becoming a critical issue for Pacific Edge, and was first raised almost a year ago by analysts.
While striving to expand its crucial beach-head operations in the US, its cash burn from operational costs was four times that of revenue; being $22million in costs last full financial year against $5million revenue.
After raising $55million between 2013 to 2015 from shareholders, Pacific Edge ended last financial year with $24million cash in hand, but by its half-year to last September that had declined to $14.6million, and stood at about $9million yesterday.
The decline from October to yesterday equates to a monthly cash burn of $1.24million.
Analysts last year estimated Pacific Edge's monthly cash burn was $1million-$1.3million, and that it was essentially spending $4 to make $1.
Pacific Edge yesterday confirmed an $8million share placement to institutional and other select investors had been completed, at an undiscounted 50c per share.
Pacific Edge's shares were up 10% at 55c following the announcement.
Pacific Edge's chief executive David Darling was contacted for comment and said the ''modest'' $8million raised was taken up ''willingly at market price [50c]'' by several institutional investors, and would cover operations through to 2018.
During interviews last year Mr Darling said Pacific Edge was not intending going back to shareholders for more capital.
''Yes. That was the intention, but we saw the time-line widen with Kaiser Permanente and Veterans Administration taking longer,'' he said of their respective product scrutiny before the large health providers moved toward signing up to contracts.
''We would like to go faster, like everyone wants us to go faster, but we are at those limits ...working through the process,'' with care providers VA, Tricare and Kaiser, he said.
While having products accepted by the health boards of Waitemata and Canterbury, the US' providers VA, Tricare and Kaiser Permanente represent tens of millions of potential patients.
Mr Darling had predicted in 2014 that Pacific Edge would be turning over $100million by full-year 2019.
''It [$100million] was a stake in the ground, and might take longer for us to get there,'' he said yesterday.
''Whether it's four, six or eight months, we just don't know [the time-line],'' Mr Darling said.
Pacific Edge's full-year to March is due to be reported at the end of June - last November's half-year $11.3million loss pushing consecutive losses beyond $84million since listing.
When asked about what update shareholders could expect on sales and costs, Mr Darling said sales were ''ramping up'' and ''progressing well''.
On the question of monthly cash burn of about $1.24million, Mr Darling expected costs to be around last year's full-year spend of $22million.
''We're going to manage costs at the same rate [as last year] and are not ramping them up significantly,'' he said. The three biggest costs were firstly ''human capital''; with 35 US employees, 23 in New Zealand and one each in Singapore and Australia, clinical study costs, then intellectual property costs.
There were no cuts this financial year to any of the three costs, which were otherwise ''going to plan'' he said.
Mr Darling said the company believed its existing infrastructure and resources were appropriate for its medium-term growth goals and anticipated its capital requirements for its 2017 growth strategy would be at a similar level to full-year 2016.
''The additional funds will be used to progress and expedite our commercial goal of getting to a cash flow positive position as fast as possible, with our focus squarely on the USA,'' Mr Darling said in a statement yesterday.
Pacific Edge has three bladder cancer products released in the US, with a fourth test just released in New Zealand, which offer fast, non-invasive and accurate testing at several levels of patient treatment.
Craigs Investment Partners broker Peter McIntyre predicted last year Pacific Edge would have to consider going back to its shareholders for a cash injection, given the cost demands of becoming established in the US.
He said yesterday the $8million raised, plus the remaining $9million cash in hand, provided Pacific Edge with certainty of cash for the next 12 months.
''It's getting to the cusp of having used its cash reserves to grow the company, so just needed the extra cash to get to cashflow positive,'' he said.
Forsyth Barr broker Lyn Howe calculated Pacific Edge's cash burn at $1.2million per month, or $5.6million since the end of September, and with the combined $17million cash in hand, equated to funding for the next 14 months.
''Maintaining liquidity is prudent, albeit would have been nice to come alongside a US milestone announcement,'' she said.
Mrs Howe noted no other details or updates were provided yesterday.
