New Zealand Professional Investment Services Firm

Forsyth Barr

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Forsyth Barr is a foundation New Zealand Exchange firm (NZX) and accredited market participant. We have been confirmed by the Financial Markets Authority as a Qualifying Financial Entity (QFE).

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New Zealand Professional Investment Services Firm, Forsyth Barr

Equity Bottom-Up

Pacific Edge Capital Raise

RESTRICTED
Pacific Edge (PEB) has announced a capital raise, totalling up to NZ$80m, to accelerate execution of its growth plans. The presentation provides a snapshot of the business and summary of recently achieved key milestones. There is limited new information aside from that it “continues to deliver month on month increases in revenue and test numbers”. As previously signalled, PEB is dual listing on the ASX — with trading to commence on Monday, 27 September 2021. Our rating is RESTRICTED.


Key points



The offer:&nbsp;Consists of (1) an&nbsp;NZ$60m&nbsp;Placement, and (2) a Retail Offer of up to NZ$20m. Neither part is underwritten&nbsp;and PEB reserves the right to increase the size at its discretion.&nbsp;The Placement price will be determined via a&nbsp;bookbuild&nbsp;process, with the Retail Offer to be priced at the lower of the Placement price or five day VWAP (during the last five days of the Retail Offer period).
Use of proceeds:&nbsp;To accelerate US market penetration (40–50% of funds raised), initiate &amp; develop a commercial business in South East Asia (10–20%), further leverage first mover advantage in bladder cancer (20-30%) and for balance sheet flexibility (20–30%).
Cash position:&nbsp;PEB reported a net cash position of NZ$16.2m at 31 August 2021. Assuming the full NZ$80m is raised, it will take PEB’s cash position to ~NZ$96m. Using historic burn rates provided by PEB (average cash burn of NZ$1.36m/month in the last 12 months), this equates to almost 6 years of cash on hand. However, future cash burn will be materially impacted by the revenue ramp-up path and cost investment decisions.



Who is PEB?


PEB is a biotech company with four commercially available products focussed on bladder cancer — Cxbladder Monitor, Triage, Detect and Resolve. These are non-invasive urine tests, designed to meet clinical needs of urologists at various decision nodes in the&nbsp;management and detection of bladder cancer, with strong efficacy and rationale for use.&nbsp;Its tests have strong clinical&nbsp;utility and analytical validity, far superior to the current gold standard, supported by a growing body of clinical evidence.
Commercialisation of a new technology in&nbsp;healthcare&nbsp;is a long journey, including development, clinical evidence and building&nbsp;utilisation in-market.&nbsp;PEB first launched&nbsp;Cxbladder&nbsp;in the large US market in 2013. The company estimates the annual addressable market for its tests in the US is more than US$3.5bn. FY21 was a year of a number of key commercial milestones, including a positive coverage decision from US public health insurer, CMS, and a commercial agreement with&nbsp;Kaiser Permanente.


Pacific Edge

Pacific Edge: Capital Raise