PEB Investor Update – May 2019

EXECUTIVE UPDATE
David Darling, Chief Executive Officer
We have now commenced our new financial year and we
continue to work hard to progress our commercial journey to
becoming a profitable company. We remain confident in the
opportunities for our company, with millions of people
around the world being tested for bladder cancer and those
testing positive then requiring ongoing monitoring for
recurrence.
As we have said previously, launching a new commercial
diagnostic test is a massive challenge, particularly for a small
company building a foothold in the global healthcare market.
It involves years of research and development, generation of
an extensive array of clinical evidence through multiple peer-
reviewed studies, extensive processes and compliance to gain
reimbursement, establishing commercial operations and
gaining adoption.
We are making good progress – adoption is growing, we are
in negotiation with some very large healthcare providers, we
are well down the track with reimbursement processes and
we have a growing library of clinical validation and evidence
for our Cxbladder tests.
Whilst a small market, New Zealand is an example of what we
can achieve. Our coverage is growing at a very encouraging
rate with more than 3 million New Zealanders (over 60% of
New Zealand’s population) currently having access to
Cxbladder through Pacific Edge’s contracts with public
healthcare providers.
Following the success with Cxbladder in New Zealand, we
have increased our focus on institutional healthcare
organisations in the USA and other markets.
The impact our technology makes for these large healthcare
providers, who have burgeoning patient needs, finite
resources and need to show value changes for their clinical
services, is becoming clear to all and there is growing interest in our products. As we have successfully
shown in New Zealand, while these larger institutional customers can take longer to bring to completion,
once commercial agreement is reached they can provide significant volume, lower sales maintenance and
more sustainable, longer term growth opportunities for our business.
septemberSeptember 2018

CONTENTS
•Executive Update
•FY19 Highlights
•Urofair Singapore 2019
•John Hopkins Medicine:
Commercial Evaluation
•The US Healthcare Market: MACRA
Act
•Understanding Our Business: The
USA Reimbursement Process
•Introducing Tony Lough
•Stay in Touch
MAY 2019

Pacific Edge Limited Investor Update May 2019

In the US, along with Kaiser Permanente and Johns Hopkins, we are in discussions with a number of other
large, institutional healthcare organisations. While we are just one of hundreds of suppliers they
negotiate with every year, and with multiple decision makers and challenging product roll-out
requirements, we are working hard to achieve all we can to conclude formal commercial agreements.
We also remain focused on attaining the Local Coverage Determination (LCD), which will allow for
reimbursement from the Centers for Medicare and Medicaid (CMS). You can read more about the US
reimbursement process and our progress in this newsletter.
We would like to thank shareholders for their continued support with the successful capital raise which
was successfully completed earlier this year. This saw a number of new local and international investors
join Pacific Edge’s register and reflects the growing interest in our company from institutional investors
and fund managers. Approximately $12 million was raised, at the top end of our indicative range. The
funds will provide additional capital resource as we progress our commercial objectives with the goal to
become cash flow positive as soon as possible.
We have the right people, fantastic products and sales of our tests continue to grow, and we are working
hard to achieve our goals.
David Darling
Chief Executive Officer

FY19 HIGHLIGHTS
• Continuing growth in sales and adoption of Cxbladder by leading healthcare organisations and
urologists, in Pacific Edge’s targeted markets of New Zealand, Australia, Singapore and the USA.
• Increased focus on institutional healthcare organisations in all markets is providing commercial
traction.
• High levels of commercial adoption of Cxbladder in Pacific Edge’s home market of New Zealand. Total
contract coverage of New Zealand’s population now more than 60% (more than 3 million people).
• Continuing commercial negotiations and start-up processes with targeted institutional customers in
the USA, including Kaiser Permanente.
• Completion of two of the three milestones required for US CMS reimbursement, being receipt of
national, product specific codes (issued by the American Medical Association (AMA)) and notification
of a national price (US$760 per test). Progress continues to be made with the third of these
cornerstones, which is to have Cxbladder included in the LCD.
• Commencement of commercial evaluation with Johns Hopkins Medicine, a US$8 billion integrated
global health enterprise and one of the leading health care systems in the USA.
• User Programmes underway with five targeted hospitals in Singapore and some of these are
expected to progress on to a commercial relationship in FY20.
• Taken over the sales and distribution of Cxbladder in Australia, building on the successful practices in
the New Zealand market.
• Investment of $2.6m by US private investment fund, Manchester Management Company, which
specialises in biotech and life sciences investments.
• Successful capital raise of approximately $12 million providing the capital to grow the business and
deliver on our objective of becoming a profitable company

Pacific Edge Limited Investor Update May 2019

UROFAIR SINGAPORE 2019










Cxbladder performance was reviewed by more than 500 urological attendees at the prestigious South
East Asian Urofair conference (www.urofair.com)
Held in Singapore on 4 to 6 April 2019, this is the premier annual scientific conference organised by the
Singapore Urological Association. The conference was attended by 500+ Urologists and medical
practitioners from across Asia and further afield and presented a unique opportunity to further raise the
profile of Cxbladder with this key audience.
The theme for the conference was ‘Best Practices and Emerging Trends in Urology’ and featured
presentations on Cxbladder from two internationally recognised Urologists:
1. Urine biomarkers for the detection of urothelial carcinoma: Dr Sia Daneshmand (Associate
Professor of Urology and Director of Urologic Oncology, Keck Medical Center of the University of
Southern California).
2. An evaluation of the real world use of Cxbladder and clinical utility in New Zealand: Dr
Madhusudan Koya (Clinical Director of Urology at the Waitemata DHB and President of the New
Zealand Section of the Urological Society of Australia and New Zealand).
These presentations at the Urofair conference were another successful step in further raising the profile
of both Pacific Edge and Cxbladder in Southeast Asia.
As previously highlighted, our growth strategy in Southeast Asia is currently focused on firstly,
transitioning customers completing User Programmes on Cxbladder in Singapore into commercial
customers and, secondly, progressing our ongoing discussions with potential strategic partners in this
region.

NOTABLE COMMERCIAL EVALUATION IN USA
Johns Hopkins Medicine Commercial Evaluation of Cxbladder
Johns Hopkins Medicine is an $8 billion integrated global health enterprise and one of the leading health
care systems in the United States. It operates six academic and community hospitals (including John
Hopkins Hospital which is ranked in the top 3 in the US for 22 years), four suburban healthcare and
surgery centers, and 40 primary and specialty care outpatient sites.

Pacific Edge Limited Investor Update May 2019

An initial group of Johns Hopkins urologists are using Cxbladder for patients requiring investigation of
haematuria (blood in the urine) for the presence of bladder cancer. Payment will be received by Pacific
Edge for these tests. The commercial evaluation allows Johns Hopkins’ urologists to evaluate and
determine the best fit for Cxbladder within their clinical practice and provide data specific to their
organisation and patients.
This is a significant achievement to have
Cxbladder considered for use by one of
the most respected medical
organisations in the USA. It is extremely
difficult for small companies to gain
access to organisations such as Johns
Hopkins Medicine and this commercial
evaluation is a major accomplishment for
our company.


THE USA HEALTHCARE MARKET: MACRA ACT
The Medicare Access and CHIP Reauthorization Act
(MACRA 2015) aims to shift those physicians who
provide services to the CMS from fee-for-service
billing to value based service provisions.
2019 marks the introduction of the Merit-Based
Incentive Payment (MIPS) whereby physicians are
paid based on the quality and effectiveness of care
they provide. High value care will be defined by
measures of quality and efficiency and providers
earn more or less depending on their performance
against those measures.
What does this mean for Pacific Edge?
The MACRA Act 2015 is expected to be good news for Pacific Edge. Under the outcomes-based payment
model, physicians are looking for products and services that demonstrate additional value. This value
based heathcare approach is more closely aligned to the public healthcare framework in New Zealand
where New Zealand physicians are required to replace an existing technology with a new technology to
add value. This was seen in the recent adoption of Cxbladder by the Canterbury public healthcare
provider, where Cxbladder and imaging have become the new guidleines for evaluation of all patients
who present with haematuria for evaluation of urothelial carcinoma, and all other procedures have been
removed from the guidelines.
Cxbladder provides additional value through its non-invasive nature and its ability to outperform most of
the existing procedures. Clinical studies have shown that the use of Cxbladder significantly changes
physician behaviour and decision making, with fewer total tests and invasive procedures for patients,
leading to reduced costs and less potential for treatment related harm.
Compliance with treatment regimes and monitoring for recurrence of disease is also an important part of
demonstrating value. Cxbladder’s non-invasive format makes it easier for patients to comply with the
monitoring programme required for bladder cancer where patients currently only have 40% compliance
with physician and guidelines recommendations.

Pacific Edge Limited Investor Update May 2019

THE USA REIMBURSEMENT PROCESS

The reimbursement system in the USA is lengthy and complex. Healthcare is provided by many
organisations, both private and public. Healthcare insurance coverage is essential to successful
commercial outcomes and is provided to people through private and public insurers. For example, public
insurance providers include Medicare and Medicaid and the Veterans Health Administration, and private
providers are insurance companies such as United Healthcare and AETNA. Many insurers also have their
own networks of facilities and providers, such as Kaiser Permanente.
To enable consistent reimbursement, Pacific Edge must negotiate with individual private insurance
providers to gain contracted reimbursement for its Cxbladder products. In addition, Pacific Edge must
follow the regulated processes to be accepted for coverage by public insurance providers, such as the
Veterans Administration and the CMS. While physicians can use Cxbladder if it is not specifically covered
by contract, the reimbursement level and process is more challenging.
There are three critical factors which aid in the national public reimbursement process in the USA and
also help facilitate a more rapid reimbursement from private payers (insurance):
1. Having product specific CPT Codes - which are issued by the American Medical Association for tests
that have entered the mainstream with strong clinical evidence and where the volume of tests used
by physicians has been shown to be indicative of significant adoption;
2. Receiving CPT Code pricing - which sets the price for test sales to the CMS once the LCD inclusion is
received and also provides a basis for Pacific Edge to negotiate with private payers and funders in the
USA. Pacific Edge received CPT Code pricing of US$760 per test in October 2018, which was effective
from 1 January 2019.
3. The third step is inclusion the Local Coverage Decision (LCD) which allows for reimbursement by the
CMS. This takes five years on average and requires a significant amount of published clinical and
product validation. Inclusion in the LCD remains a priority focus for Pacific Edge and we continue to
make steady progress in meeting the evidence needs of the CMS.

Pacific Edge Limited Investor Update May 2019

INTRODUCING OUR TEAM
Tony Lough: Vice President of Clinical Science and Product Performance
Evidence based decision making in the medical world drives adoption
and uptake of novel and often very disruptive medical products such
as Cxbladder. My job is to identify, plan and capture the evidence we
need for successful representation of our products, either with
clinicians, regulators or insurers.
We look to answer questions such as how useful the Cxbladder
products are in the clinic, in what specific clinical applications and how
might Cxbladder be improved for other applications. Mostly it’s about
generating the product performance evidence for the commercial
adoption of Cxbladder. Day to day activities include designing the
studies to collect the data, running effective in-country processes to
generate high quality patient data and then curating and managing the data so that we can analyse it and
publish it in peer reviewed scientific and clinical journals.
Designing and implementing international studies can be very challenging, for instance working with very
busy physicians, obtaining consent from medical ethics boards, finding and training the medical support
staff who consent patients and ensuring collection of high quality raw data.
Pacific Edge has a data library, collected from custom designed, international studies on more than 5,000
patients. This data is used to draft the many publications that form the basis of the peer reviewed
published evidence, that is the currency in the medical world for adoption of new products.
I find it very satisfying to have my work wrapped up into an end product, such as peer-reviewed
publications, performance data for a new product or a new research site. Above all, high quality data and
evidence is ultimately reflected directly in revenue for the company. Part of my role is working out the
nature of what is required for strategic objectives, such as providing a sufficient body of evidence
supporting reimbursement from payers. To accommodate this, we’ve published three new peer reviewed
scientific and clinical papers over the last 18 months, with more to come!

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KEY DATES CONTACT US
FY19 Financial Year End: 31 March 2019 87 St David Street
P O Box 56, Dunedin, New Zealand
T +64 3 479 5800
E enquiries@pelnz.com
www.pacificedgedx.com
2019 Results Announcement: 29 May 2019
2019 Annual Report: By end-June 2019
2019 Annual Shareholders’ Meeting: 31 July 2019