Dunedin cancer diagnostic company Pacific Edge is gaining sales traction in its crucial US target market, but posted an expanded full-year after-tax loss of $15.7million yesterday, as expected.
However, the extent of Pacific Edge's annual cash burn has some brokers asking whether it needs to go back to shareholders for another capital top-up.
Overall sales across all countries rose and hit $5million. The US market rose from $1.8million sales last year to $4.6million for the year to March.
Total revenue was up 74% to $7.19million, including grants and other income and the majority of revenue was US-generated.
Pacific Edge chief executive David Darling said he expected "cash burn'' for full-year 2017 would be "largely in line'' with the past year.
While not providing any near-term financial guidance, Mr Darling reiterated Pacific Edge remained committed to achieving its $100million revenue target by full-year 2019.
Pacific Edge shares traded down after the announcement, from 64c to 60c.
Craigs Investment Partners broker Peter McIntyre said a "quantum shift'' in sales was needed to attain the $100million revenue target.
"The [US] sales at $4.6million are not exciting, and that needs to be addressed. They're essentially spending $4 to make $1,'' Mr McIntyre said of annual operating costs which had risen from $16million a year ago to $22million, to make this year's $5million total sales.
He questioned how long the $24million cash in hand could fund operations, suggesting the next 12 to 18 months.
"At that cash-burn rate, they might have to return to the market if they can't become cash-flow positive,'' he said.
Forsyth Barr broker Lyn Howe said while the loss was larger than expected, she remained positive on the long-term outlook, describing the cash burn as "modestly'' ahead of expectations.
"The key US market delivered a meaningful lift in product sales to $4.6million,'' she said.
The full-year loss was the largest in 13 years at $15.45million, compared with last year's $12.32million, taking total losses since listing to $73.5million.
However, last July's successful capital-raising of $35.3million left cash in hand at year-end of $24.16million, which Pacific Edge will continue to use to fund its growth strategy.
Operating revenue was up by 162% to $4.98million and there was a corresponding 114% year-on-year lift in annual laboratory test throughput, which includes both commercial sales and its "user programmes'', the latter being initial trial programmes with large health organisations.
Mr Darling had three "key highlights'' for the past year, the main one being registering on the Federal Supply Schedule in the US, meaning Pacific Edge's suite of bladder cancer products had "open access'' to the Veterans Association (VA), which has millions of veterans and their families on its books.
Similarly, Pacific Edge was near completion of a user programme with Kaiser Permanente, one of the US' largest not-for-profit health insurers and providers, and discussions were progressing with the Centre for Medicine and Medicaid Services.
"Along with the VA, these organisations could be transformational for our company,'' Mr Darling said.
He said during the year Pacific Edge had expanded its sales force to 18 executives in 19 sales regions, covering the majority of its potential US market.
