Pacific Edge’s shares went into a trading halt yesterday as the listed company considers the implications of an unfavourable Local Coverage Determination (LCD) detailing the proposed ceasing of reimbursement of its Cxbladder test by Medicare in the United States.
Since last year, the Dunedin-based cancer diagnostic company has had uncertainty hanging over Cxbladder’s continued coverage by Medicare, with an unfavourable final version having the potential to significantly reduce revenue from patients with Medicare and Medicare Advantage insurance plans.
Late last month, Pacific Edge chief executive Peter Meintjes said with advice and feedback it had received from its legal advisers, industry academics and clinicians and following "numerous" representations to Novitas, it remained optimistic Cxbladder would retain coverage.
But last weekend, the LCD from Medicare contractor Novitas noted Cxbladder tests Triage, Detect, Monitor, Resolve and Detect + were "not considered medically reasonable and necessary" — the threshold required for coverage under the US Social Security Act.
Yesterday, Pacific Edge requested and was granted the trading halts on the NZX and ASX to provide the company time to better understand the implications of the LCD and consult with its US legal advisers and other industry participants before providing an update to all stakeholders.
It expected to provide the announcement before trading opened today and would host a conference call on the announcement later in the morning, it said in a note to the NZX. A note from Forsyth Barr at the weekend said the final LCD effective date, when it appeared reimbursement for the Cxbladder tests would cease, was July 17.
Industry feedback from the US suggested anyone could request revision at any time but the probability of a change in the near-term was "low" and "seems unlikely".
Last month, Pacific Edge posted a hefty 71% increase in operating revenue for the year ended March 31, buoyed by Cxbladder test sales and favourable currency movements.
At that time, chairman Chris Gallaher said the company was well positioned — with cash reserves of $77.8 million — to execute on the significant oportunities it saw, whatever the LCD outcome.
