Pacific Edge Limited (PEB) Earnings Call Transcript & Summary

Okay. Ladies and gentlemen, good afternoon. I'm Simon Flood, and I'd like to welcome you all to Pacific Edge's 2026 Annual Shareholders Meeting. I'm a recent member of the Board and also assumed the position of Chair in December last year. You would have -- for those of you who are regular attendees at this meeting, my predecessor, Chris Gallaher, who had chaired the business for, I think, 9 years, Tony but if you -- I just want to thank him for his service to the company and to the contribution that he made to it during his time here. Before getting underway, I need to draw your attention to an important notice, which is apparently right. Do you need time to read that? Or can we just -- we'll take it as read. And given that it's now 2:00, I can and we have a quorum, I can declare the meeting open. I'll provide further instructions as we go through the meeting. But if you're joining us online, there is a virtual meeting guide or you can use the help line provided by our friends at MUFG. For those of you who are here in person, there are a couple of housekeeping points that we need to cover off. First is if you have a mobile phone, could you please put it on silent. The restroom facility is down the hall and to the left. And if a fire alarm goes off, the staff will tell you how to get out of here safely. I would like to introduce our directors Anatole Masfen, who is here to my right, who chairs our Capital Committee; Anna Stove who's to Anna Stove's left, who is Chair of People and Culture Committee. Bryan Williams, who is up there on the far left, is there. There is Bryan there. That's a surprise. Anyway, lovely to see you, Bryan. Bryan has got a new beard since I saw him last but he's currently in the outback of Australia. So he's beaming into us, and Bryan is Deputy Chair of the business. Sarah Park, to my right, and Sarah sits on a number of our committees. And [ Tony Barclay ], who you'll be hearing more of later, chairs our Audit and Financial Risk Committee. We also have members of our senior management team. I'm sure all of you will know Pete Meintjes, and Grant Gibson, our CFO, is sitting down the back there. Auditors, I think [ Nathan Wiley ] is online. Is that right? Yes. And we have 2 representatives from Harmos Horton and Lusk, Nathanael and Tim. Nice to see you guys. Thank you for being here. So the meeting agenda. This is the meeting's agenda. We've got the Chairman's address, which is me. I'm going to start with some comments, then Peter will give his Chief Executive's address. And then we will take questions before moving on to the resolutions of the day where we have 6 resolutions. After that, for those of you who can give us some more time. There will be an opportunity for us to mingle and enjoy some refreshments out the back. Now I've received 2 apologies. The first is from [ Rosemary Stephen ] and second is from Richard Solomon. Are there any other apologies that should be recorded in the minutes. Okay. Now the minutes of the previous Annual Shareholders Meeting are available for inspection on request they're also on the company's website. So look, let's go to the first slide. And because I wanted to spend a few moments putting Pacific Edge's current position in context, where we've been, the opportunity we have in front of us and why we are positive about the future. I want to clearly set out what we need to do to realize what we believe is to be a significant opportunity ahead of us. Now when I joined Pacific Edge late last year. I did so because what I saw in very simple terms was a company that has assembled something that is actually quite rare. And exciting in a sector that I have strong affinity with, patented, noninvasive tests with proven clinical utility a substantial and expanding evidence base, a recognized patient and health care system need and a meaningful global opportunity. I also believe that there's been a lot talked about the Medicare process that while challenging would ultimately recognize the value that Pacific Edge's Cxbladder products offer and that is also recognized by the urologist community, both here and in the U.S. Now the draft local coverage determination, and we'll refer to that as an LCD was published by the Medicare Administrative Contractor [ Novitas ] in May. And that proposes that Medicare coverage for both Cxbladder Triage and the successor product, Triage Plus. Now our test for the evaluation of patients presenting with hematuria or blood in the urine. Now importantly, those are the only biomarkers proposed to be reimbursable under this policy. And that gives us a tremendous opportunity relative to our competition. Now this is a company-defining milestone and a significant validation of our evidence led strategy. And it's a major step forward to an opportunity worth in revenue terms, and you'll see up there in the top left of that chart, USD 10.2 billion. Now the draft LCD is good to have. It's a huge step forward, and it's a hard one recognition for the years of work put in by our team led by Peter. But it is a draft and disciplined execution remains essential as we wait for the confirmation of a final LCD, which we hope to receive before the end of this year. The difference that the draft LCD makes is that it gives Pacific Edge a clear reimbursement pathway and a legitimacy that confirms Cxbladder as the leader in its field. And that's a great place for us to start rebuilding our sales momentum. Bladder cancer diagnosis often begins with the evaluation of the causes of hematuria and there are millions of hematuria valuations carried out each year in the U.S. Cxbladder is designed to help identify hematuria patients at a low risk of cancer. Now properly used, it will ensure that patients are able to receive an accurate diagnosis that was previously only available if the patient underwent a cystoscopy. And that's a procedure that many have chosen to avoid because it's invasive, it's uncomfortable and at times, quite painful. Now the risk stratification of patients by clinicians also ensures that the higher-risk patients continue through the appropriate pathway which has then been freed up by the redirection of those low risk and intermediate risk patients, which is where Triage and Triage Plus come in. That delineation of care is valuable for patients, it's valuable for clinicians, and it saves money for the health care system as a whole. As a company, Pacific Edge is now better positioned to pursue that opportunity than it was 12 months ago when you may have been meeting here with the Board and management. The draft LCD deepens the commercial and scientific mode around the business and the inclusion of the successor product, Triage Plus also introduces the potential for improved economics. Growing the commercial payer support in the U.S. from what effectively amounts to a validation of our products by the draft LCD will, in turn, support growth in other markets, such as the Asia Pacific, which often look to the U.S. for direction. And we continue to see good progress in the Asia Pacific. So we just jump to the next slide, and I'm not -- you'll be pleased to know, I'm going to go through all of it for you, but bring you up to date with the far right. Now Pacific Edge's progress has been the result of a long and deliberate journey, building evidence, establishing diagnostic operations in New Zealand and the U.S. launching the Cxbladder products, securing early commercial use and working over many years to embed our tests into clinical practice. For a diagnostics company, adoption is earned through evidence, demonstrated clinical utility, better patient pathways and the confidence of clinicians and payers. That hard work has been done. The achievements of the last 2 years have been significant markers on that journey, and they include the groundbreaking STRATA study that established the clinical utility of Cxbladder Triage. The inclusion of that test in the American Urological Association guideline in 2025, the resounding support for the test expressed by the Contractor Advisory Committee, which was convened by [ Novitas ] in February of this year. And now the draft LCD. Together, they have endorsed our strategy of placing thoroughly researched and validated clinical evidence at the heart of value creation. Those elements also give us a highly credible pathway to convert market access into growth and overtime profitability. Now as shareholders will be well aware the journey has not been linear. The Medicare noncoverage period was a serious challenge for the business. And I want to thank our shareholders for sticking with us through those challenging times. But the long-term direction of travel is clear. The company has continued to build evidence, protect its intellectual property and develop products with the potential to improve the standard of care in bladder cancer diagnostics. That was also the basis for my own conviction. I am aligned with shareholders, not only as Chair, but as someone who chose to invest in the company. I have done so alongside my fellow directors and the management and the broader team because we believe that the opportunity is real. The evidence is increasingly recognized and the company now has a pathway to create a shareholder and stakeholder value. So let's move to the next slide. The financial results reflect the impact of the Medicare noncoverage. Commercial test volumes and operating revenue were down, and the company recorded a large net loss. Still, as I've highlighted, FY '26 was a year of strategic delivery. Pacific Edge preserved its core assets, it managed its cost carefully. It reduced cash burn in the second half and completed a capital raise to support the next phase of strategy, which is all about delivery and growth. Now most importantly, FY '26 delivered the draft LCD. The company also built the commercial payer momentum in the States, while Asia Pacific has continued to advance through clinical pathway adoption and commercial progress. These developments broaden the opportunity beyond Medicare alone. Triage Plus also improves the outlook and it was gratifying to see Triage Plus include alongside triage in the draft LCD. It has higher performance and the Medicare price creates the potential to improve revenue per reimbursed test, improved margins and the company's path to profitability. Surveillance Plus remains an important future opportunity with further clinical validation and reimbursement steps ahead. So we are in a materially different and stronger position than we were a year ago. So look, the message I wanted to leave shareholders with is this. Pacific Edge has been through a difficult period. But while it has been navigating those choppy waters, it is not so still. It is protected and strengthened the foundations of the business. And as Chair and as a member of the Board, I am and we are excited about the future of the business. I'm also realistic about the execution required. We will continue to be measured, disciplined and transparent. And I believe that the company can now convert its first mover position, clinical evidence and product innovation into meaningful value for patients, the health care system and shareholders. So as I said before, look, I want to thank you. I'm an investor by training. I know what it's like being in a company where the share price is volatility is volatile. So I want to thank you for your ongoing patience and support. The Pacific, I also want to thank the Pacific Edge team led by Peter for their commitment. Our professional advisers, HHL, who are here today. And the clinical community whose engagement has helped us bring the company to this important point. I'm now going to hand over to Peter, who's going to speak in more detail about the company's operational progress commercial priorities and outlook.

Thank you, Simon, and thank you to all of you for coming this afternoon. I'm Dr. Pete Meintjes, and I will be talking about all those priorities Simon just mentioned. Next slide. So I wanted to start, though, by reminding everybody about how we create value for shareholders. And we create value in 3 pillars. Our top pillar is adoption, retention and revenue generation, which are the activities that we're focused on in the near term to drive shareholder value. A core discipline of Pacific Edge is our evidence coverage and guidelines. This is our second pillar. And we generate fantastic clinical evidence through a rigorous evidence generation program as part of Pillar 2, so that we can develop coverage, medical policy and guidelines off the back of the strength of that evidence. And our third pillar is research, development and innovation. This is -- these are the activities that we undertake to drive shareholder value over the long term. Next slide. So how have we advanced various priorities against those 3 pillars of value over the last year? And in our view, Strong execution on evidence pillar has underpinned our future commercial success. We have a draft LCD, as Simon has talked about, supporting Medicare coverage of Triage and Triage Plus that we are expecting will be final and effective before the end of this year. Our clinical evidence generation program is something that is ongoing. And we're -- the focus of that evidence generation program right now is to extend the thresholds between intermediate risk and high-risk patients so that we can have more inclusion of more patients eligible for Cxbladder testing to deliver our tests to a larger serviceable market. As we think about the near term with adoption, retention and revenue generation, our U.S. commercial testing has stabilized, and you'll see some data on that in the coming slide. But we are expecting that off the back of the work that we have already done with the draft coverage in place and with the final coming towards the end of the year that our expectations are set to rise. In the meantime, though, we have pushed ahead on multiple fronts, including medical policy wins with U.S. commercial payers, which have been increasing through this year. And we now have over 10.5 million lives covered with commercial medical policy for Cxbladder Triage. And in the APAC region, we've been focusing towards operating profitably on a direct cost basis. And it has been really pleasing to see test throughput increase. the proportion of commercial tests of total tests increasing. The average sales price increasing and most recently since the launch of Triage Plus, the product mix shifting towards increasing levels of Triage Plus which creates a greater margin and margin percentage for our business. And in the long term, we're driving long-term enterprise value with product improvements and new products through our research, development and innovation. The most recent milestone for that came last year with $1,328 price established for Triage Plus. And as we look towards the future, we are targeting a $1,800 price for Surveillance Plus. When we achieve these milestones, the value delivered by research development and innovation will improve the unit economics that we can focus on in our first pillar as we drive revenue. Next slide. So a little bit more detail on what [ Novitas ] has actually proposed. And again, I'm more than happy to take a range of questions on this at the end of the session. The finalized LCD is expected to accelerate our path to profitability because we didn't have one before. And importantly, Triage and Triage Plus have both been proposed for Medicare coverage and as Simon also highlighted, there are no other urine-based biomarker tests that have been proposed for Medicare coverage. Final and effective coverage is expected before the end of the year and move forward, I think. And final, LCD expected to catalyze reimbursement and testing volume. And if you can complete the slide. Thank you. And our immediate focus as a business is to improve the unit economics of operating a frontline sales team. And so what does that mean? That means making sure that the number of tests that one sales rep is able to reliably generate for our business increases from where it is today in ways that start to pay back the costs to the business, giving us operating leverage for the future. We want to shift our customer base from Triage to Triage Plus because we get paid more per test because it is at a higher margin with a higher margin percentage, but also because this is the most accurate test and it is what's best for physicians and it's what's best for patients. Importantly, we are seeking to ensure payment success on more than 80% on commercial tests by operating only in the areas where we have a reliable history of commercial success or existing medical policy and in the future, contracting. Next slide. So a reminder of the total market that we're chasing here. The market opportunity is substantial. $10.2 billion at full global TAM. We're currently focused on the U.S. market. And of course, this is -- that total global TAM figure is driven by the $6.4 billion in the U.S. market, where we have a higher test price and a substantial testing volume. And specifically, we're targeting the low, the intermediate, the high risk and the gross hematuria with our Triage Plus product. And in the Surveillance setting for non-muscle invasive bladder cancer patients, with an $1,800 price for Surveillance Plus, we'll be targeting the 750,000 patients that are annually on a Surveillance protocol. And we expect to -- that those patients will be surveilled 1 to 2x per year using a tool like Surveillance plus to drive that TAM. Now what we also know is that our current indication is only for intermediate risk. And so right now, our serviceable market is smaller than our TAM, but we expect to expand that over time, and that is one of the near-term focuses of the business. Next slide. So how are we doing that? We're driving the expansion of the indications that we have through our clinical evidence generation program. The studies in yellow that you can see here these are the studies that have already been published. The studies in green are the important upcoming studies that will drive the expansion of the market from intermediate risk to low, intermediate and high risk. The way we will do that is through a series of subanalyses on the different populations within the micro hematuria patients and include gross hematuria patients. And with that, we will be able to -- we will be able to publish convincing clinical evidence that the serviceable market should be expanded to include all risk micro-hematuria patients. So to summarize there, collectively, these studies are expected to redefine the AUA risk categories for a greater serviceable market. Next slide. Other parts of our Evidence Generation System but not part of our core Evidence Generation Program are the independent studies that supplement our Evidence portfolio. These are a great way to do to keep ourselves in the headlines. These are high-impact research at low cost, driven by the customers that we work most closely with. While any one of these studies has been published, and there's been a few delays behind the second one, we're optimistic that the first ever patient preference and patient satisfaction study of biomarkers versus cystoscopy will be published within the next quarter, it has been submitted. And this is in partnership with excellent researchers at Mayo Clinic in the United States. So investigator-initiated trials across the spectrum here are targeted at extending the evidence portfolio and keeping Pacific Edge in the news at conferences and they are an important part of our key opinion leader engagement program and why we -- and how and why our key opinion leaders support Pacific Edge in return. Next slide. So having a quick look at our commercial performance over the last year. And it is simply a fact our performance in terms of test throughput has declined over the year. However, over the last 3 quarters, we have observed that it has stabilized, and we are delighted with that achievement. As our sales force has declined, this means that we have been able to improve the sales force efficiency as the number of FTEs in our sales force is lowered, while maintaining the same level of throughput. The next steps from here are focused on the lower graph. So what you can already see is that we were able to successfully change our -- the ordering behavior of our physicians from using [ Detect ] to using Triage. And that transition is no small feat. But we have another one and a more important one coming up. That one was done under DRS. The next one is planned, and we are planning to shift all of our customers from using Triage to using Triage Plus. And that won't be immediate. Some of our customers are contracted to use Triage and we'll be using it for some period of time. Some states like New York State, we do not yet have approval for Triage Plus. It requires a separate approval. But overall, we are transitioning our customers from Triage to Triage Plus, and you will see it manifest here in the product mix. And this is how you will know we will have an increasing ASP. We will be driving up our margins and we'll be driving up our margin percentage for greater commercial success. Next slide. So just to talk through what is our near-term commercial strategy with draft Medicare coverage. We do believe that draft Medicare coverage is a fantastic milestone, final obviously being more important but what are we doing while we have draft and before we have final. It's important that we have to look at the words of the draft, and we have to focus on Triage Plus and we have to focus on intermediate risk micro-hematuria patients. So we are configuring our sales operations around the intermediate risk patients. What does this mean? As we look to try to reduce our cash burn, we've got to be able to identify the call points with high numbers of intermediate risk patients and migrate customers to Triage Plus. If you could just go forward all through the slide, thank you. Targeting -- we're going to be targeting the intermediate-risk micro-hematuria patients. because many of them -- many of those patients are female. And in the bottom right corner, you can see that the vast majority of low-risk patients are female. The vast majority of the intermediate risk patients are female. And as a consequence, we need to find those female-specific call points, and many of those are women's health providers. And examples of those women's health providers are URPS, urogyns, OBGYNs and [ FPMRS ], we have helpfully included expansions of all those acronyms down the bottom in the footnote, but those are all important subspecialties of urology that see more women. Other important targets are the systems that are integrated between primary care and secondary care, something that here in New Zealand, we may take for granted. Nearly all of our care is integrated and -- but not so in the United States, but there are a number of what are called integrated delivery networks that where primary care and secondary care are integrated, and that is a defining feature of IDNs. Another important element to this is that urologists frequently triage, the intermediate risk micro hematuria patients using people that are not the treating physician. So support teams in the office, the advanced practice providers, the nurse practitioners and the physician's assistance, these are all people who might see the patient when they are lower risk before a physician would actually see them and consequently they need to know about our test, and we need to be actively targeting them. So our commercial team, the sales teams are focused on concentrations of demand in integrated delivery works which are hospital systems, academic institutions and the Veterans Association. And Pacific Edge is making selective investments, as Simon also highlighted, aimed at growing Triage Plus volume ordered on intermediate risk micro-hematuria patients that have the highest chance of reimbursement success and delivering consistent revenue. Next slide. So what does the breakdown of the market look like when you think about these IDNs and these private practice the private practice urology groups. So private practice, if we actually start at the bottom here, those basically become in large and small. Large urology group practices also called [ Lupus ] often a private equity back. They're very cost driven, and they're very procedure revenue driven. Similarly, for community urology, but community urology is practiced on a much smaller scale, that's typically 1 and 2 doctor practices. And those make up around 40% of the market of private practice. And our account executives are the ones that are going to be responsible for calling on continue to be responsible for calling on these private practice accounts and converting them from ordering on all micro-hematuria patients to ordering on the intermediate risk micro-hematuria patients. However, the larger share of the 1.14 million micro-hematuria patients -- sorry, intermediate risk patients are seen in an integrated environment in one of the types of IDNs, which as I mentioned, our hospital networks, academic centers, Veterans Administration. And one particular example of an IDN is where we are already operating, which is [ Kaiser Permanente ]. And -- so around the country, there are around 1,000 of these strategic accounts, including 130 academic centers, 170 VA medical centers nested within 18 visions, which is how the Veterans Administration is broken up. These are typically characterized by, one, the integration between primary care and secondary care; two, capitated system of managing patients for -- and three, the adoption of clinical pathways. And is this opportunity of clinical pathways and pathway-based medicine that allows us to pivot our sales process from selling tests to physicians to selling pathways to institutions. And while this is a longer sales cycle, the upside is clear. When you have implemented a protocol at an institution, your revenue is stickier. And patients and physicians are able to more clearly adhere to that pathway than with individual decision-making on its own. Next slide. Another important component is not where the ordering happens, but who's going to pay for it? So we have multiple customers, which is often different -- difficult to explain, multiple customers for a given test. There's the person who orders the test, which is the physician. There's the patient who receives the test or the person who receives a test, which is the patient. And then there's the person who pays for the test, which is the insurance company. These are called commercial payers. And with Medicare policy, we are expecting that there are fewer barriers to adoption by the commercial payers and commercial payers are actually the larger market opportunity because there are 223 million lives insured by commercial payers contrasted with only 66 million lives insured by Medicare across the system. So commercial payers cover almost 4x more lives in Medicare. Intermediate-risk micro-hematuria patients skew younger, female, and importantly, commercially insured. Final coverage from Medicare is expected to unlock revenue from commercial payers by removing a key reason to deny reimbursement. Currently, commercial payers might look at a test and say, it's not covered by Medicare. I don't have to cover you either. That is changing, and that is powerful. Providing additional evidence to overturn denials on appeal is another thing that we can do. If a commercial payer does choose to deny us, we can provide additional evidence in the form of Medicare draft policy to improve our appeal success. And because these are written documents published online, private payers can go and read those policies. Their medical policy teams can, if they're efficient, cut and paste the existing policy, modify it to suit their specific needs, but they're able to leverage that existing language in their own policies. And then finally, there has been an initiative through the American Cancer Society for many years to create what I call state biomarker laws and although state biomarker laws are in their infancy, state biomarker laws do say that if Medicare covers your test, commercial payers are expected to pay for that test. And that provides us with extra legal avenues to pursue commercial payers in certain states that are respecting those state biomarker laws. Next slide, please. A little bit on APAC. So we're quite buoyed by our progress in APAC. It is small, but it is significant. We haven't faced the same level of headwinds and we are showing that we can chart a path to profitability. So if we look, the volumes are smaller than they are in the U.S., but we have been able to see quarter-on-quarter growth for the last 5 quarters, which is really fantastic. But the thing that I'm most -- the thing that I'm actually most excited about in APAC is the same thing that I was talking about on the U.S. slides. It's about the transition to new products where the test price is higher, the margin is higher, the margin percentage is higher. And what we can already see is that where we haven't faced market headwinds that we have shifted from 0 to 1% adoption for Triage Plus. We have shifted to 7.6% over a quarter, and that is just the immediate impact since launch. Nearly all of that is around [ 60% ] of that 7.6% is ex New Zealand showing that, that is an increasingly important segment of our market from a from a geographic standpoint as well. So APAC proves the Rest of the World concept. And we can replicate this in other markets where we do not currently operate but we're proving the model. We can replicate it in the Middle East, the U.K., Europe, but we do need to continue our path for RUO and IVD development. Next slide. All right. I wanted to talk a little bit about our third pillar and how we generate value with research, development and innovation over the long term. Because our next-generation products, we've been working on them for a long time, but they are already delivering strategic value. And I've talked a bit about the headline here, of course, it's about revenue, margin, margin percentage. And Triage, Plus is the future of our hematuria evaluation. For Triage Plus, we have analytical validation complete, clinical validation complete a price of $1,328 per test for Medicare. Draft coverage proposed by Novitas, and we are seeking over the next several months, more likely time frame is mid-2027. we are seeking to have Triage Plus added the AUA guidelines and to expand the definition of AUA guidelines themselves. This builds a substantial moat around our hematuria valuation business. Surveillance Plus is in a slightly earlier stage of development. The markets have been validated, and we are working simultaneously on publishing our analytical validation and our clinical validation which we expect to publish early in FY '28. Surveillance Plus has completed its freedom to operate, and provisional patenting is in process. We are targeting to make submissions for Surveillance plus mid next year with a view of being paid and generating early revenue from 2028. That is a 6-month delay over what we previously announced to the market. But this does allow us to have additional revenue coming into the business during FY '28 while seeking the crosswalk price and while seeking coverage on an LCD from Novitas. In parallel to those activities for our U.S. testing services, we are also advancing IVD development for international markets. And while these programs are in a prototype phase and a plan is in place to be ready to implement subject to budget approval, the opportunity is real. Our international markets, we can build one kit that by differentiating the labeling and working with different suppliers in each -- or different partners in each of those markets, we can access all of those markets simultaneously. Of course, we choose to do them one by one and on a prioritized basis but the opportunity that we have to enter those markets is based on a single product line differentiated by labels. So Pacific Edge is simplifying its test to create a Triage Plus IVD product. And that will allow us to go into these international markets with a decentralized lab deployment approach for international market expansion. It is worth noting that this is in contrast with the United States, that is lower margin and lower revenue per test. But it is also a substantial untapped and nascent market for us as a global diagnostics company where it is important for us to establish a footprint. So our key objectives are establishing IVD regulatory framework. This is deeper than the cap clear LDT framework that we currently operate in the United States and involves IVDR, FDA and ISO 13485 requirements. And we have already dipped our toes into that quality system by making sure our urine sampling system, the jar that our patients in that has already gone through the approval process to be an IVD. Next slide, please. So -- and next one. So look, thank you very much. I just want to talk a little bit about the outlook. We are at an important point. And as Simon has already thanked to you, I would like to do so myself, you as investors have kept the company going through many challenging years. Your support is deeply appreciated. We are positioned to unlock the value of that investment through upcoming commercial, clinical and innovation milestones. In the near term, we are still pushing for case-by-case reimbursement for Triage and Triage Plus under the draft LCD. We are awaiting the final LCD published by the end of 2026. Our U.S. customers adopting Triage at $1,328 per test and building commercial payer and a commercial payer medical policy momentum as we speak. We are still waiting for explicit news from [ TofatoWara ], Health New Zealand about a national pathway but we continue to answer their questions and respond in a formal capacity there. In the medium term, we are going to continue with our Evidence Generation Program for the sustained strategic value that underpins our ability to commercialize. Our U.S. commercial payer policy for Triage and Triage Plus will fundamentally drive test adoption. We're focused on the opening of the AUA guidelines sometime after the middle of 2027 and it might stay open until as late as 2028, and that is expected to expand our serviceable market. And we continue to use investigator-initiated trials to generate novel evidence for new indications. In the long term, Triage and Triage Plus deliver better patient outcomes at higher margin and improved unit economics for Pacific Edge. Surveillance Plus targeting June next year for launch and claim by claim revenue -- sorry, June next year for coding submission and claim-by-claim revenue from the 1st of January, seeking a higher price than we have now and then focused on the IVD kitted products for international markets. Thank you very much for your time. I look forward to taking your questions.

Thanks, Pete. Okay. How are we doing? It's kind of warm in here, isn't it? Folks, we now go, before we move to the formal resolutions, I just wanted to give you and the people who are watching online the opportunity to ask questions. These are questions as they relate the business that you've heard about from me and from Peter, there are no questions related to the resolutions. When we get to the resolutions, then you'll have an opportunity to ask questions about the resolutions.

So the only people apparently entitled to ask questions of shareholders and their proxies or representatives of the shareholders. For anyone here in the room, if you have a question, please just raise your hand. My friend at the back here will bring you a microphone. If you could then state your name, whether you're a shareholder or a proxy holder or a corporate representative and then we will answer your question. For the shareholders attending online, you can submit questions through ask a question function on the virtual meeting platform. So does anyone start in the room? Does anyone have any questions of the Board, of Peter of Grant, who is sitting down the bank, but he can still answer questions.

So thank you. Before I ask my question, I'd just like to record my thanks to the Board for the fantastic work that's been done over the last year, it would appear that the company has never been better positioned in terms of its commercial opportunities. And I recognize the incredible work that's been done by the Board and by the staff, by the senior leadership team to deliver a company that's vastly better positioned than it has been that I can recall in the last few years. My first question relates to something that I read by a prominent American commentator called Dr. [ Bruce Quinn ], who made a point that commercial payers and Medicare contractors are more interested in clinical utility than clinical validity is a tool for unlocking our coverage and payment pathways. And I guess I'd just like to ask, do you think the Pacific Edge has been able to unlock clinical utility as the key part of the equation for commercial success? And then I have a second question after that.

Pete, do you want to answer that, but for everybody listening, do you want to explain the difference between clinical utility? Yes?

Yes, sure. So this one is working. So thank you, Aaron, for your question. [ Bruce Quinn ] is spot on, and there's kind of a long and a short answer to this. But to acknowledge Simon's question, so we generate multiple different kinds of clinical evidence. The first is analytical validation, which essentially just shows is your test repeatable, reproducible in a laboratory. Those are the classical measures of clinical performance. Clinical validation answers a slightly different question. You use the test in a population in which population of patients that were not part of the development test to prove that this -- that the performance characteristics you've seen are not just an artifact of the patients you developed it on or samples you developed it on and that it works for other patients. Clinical utility involves typically in its gold standard form a randomized controlled trial, which is comparing the test arm, which is what you want -- which includes your new product to a control arm, which is the standard of care to show that there is a difference in outcomes between the control arm and the test arm, and that shows that your test has clinical utility. And that clinical utility, the pathway, the protocol that you follow then provides a way for saying how and when a physician should use the test, not just that the test works. So how and when does the test work? And what is -- what can you do with the outcome? So [ Bruce Quinn ] is 100% correct that, that is what drives payer policy, long-term value, but you have to do all of the steps to get to clinical utility. And even then another form of clinical utility is called real-world evidence. And we also have this in the form of the Kaiser study. So just relating it back to Pacific Edge. For Triage, we have the whole portfolio. For Triage Plus, we are building that whole portfolio. We have -- for Triage, we have a real-world evidence study from [ Kaiser Permanente ]. We have the clinical utility trial, which was STRATA, and we have all the AV and CV work necessary for maximizing that market. For Triage Plus, we have the AV and the CV, we do not yet have the clinical utility study that is credible but the policy for urine-based biomarkers has already been established by the clinical utility study done by STRATA. Now -- and maybe I will stop there. But there is nuance to it that relates to what's called the 21st Century Cures Act, which also mandates that if you have a valid test that is medically reasonable and necessary. And medically reasonable and necessary is not a direct one-to-one translation from [ AVC, VCU ]. Medicare is expected to cover that test. But if you don't have clinical utility, how can you improve medical necessity. So there are ways that you can and there are situations that you can get paid. The gold standard way to make sure you get paid is a clinical utility study is a randomized controlled trial.

And if I may ask my second question, Mr. Chairman. It would appear that Pacific Edge has something of an 18- to 24-month moat over competing products and demonstrating clinical utility for that to draft LCD. I was just wondering whether there's any color that you might add about the competitive landscape and the moat that you believe that Pacific Edge has.

Yes. Look, happy to answer that one as well. And so there's a number of different -- there are a number of different companies and always have been that have made competing claims that they are urine-based biomarkers for the evaluation of micro hematuria or for use in non-muscle invasive bladder cancer patients. And so there are some legacy technologies like [ NMP 2]2, like cytology, like fish, and there are companies like [ Visaka Health ] that has a sure MDx product that was recently acquired by [ Photocure ]. There's another one called [ Oncure ] and there's another one called, I think, bladder detect and another one out of Israel and blanking on the name right now. [indiscernible] No, we, I'm not sure much about the [ Cepheid ] test if that's really much of a competitive -- but yes, there was one on that platform as well at one point. But what's important to recognize here is that while they might have a product that can be used in those patients, the medical policy that Medicare has established, that Novitas has established makes absolutely clear for the utility of use in a hematuria patient when the goal is to omit cystoscopy. There are only 2 technologies that can be used, and they are Triage and Triage Plus. And so that's where you can have -- there are a number of different technologies that the work in these patients, but the ones for that utility that are validated for that utility are only Cxbladder products. Whether there's an 18- to 24-month time horizon for somebody else to produce equivalent evidence is something that is for up to them. We'll see whether they can hit their deadlines. I am aware that one of those companies has made announcements and expects to have a last patient in, in their study in mid-2027, which is roughly 12 months from now. And if they are able to quickly write that up and publish it, it could be 6 to 12 months from that point. So yes, competition is possible. But competition is also a validation that what we're doing is important and valued by our customers. If they think there's a spot for somebody second in the market, you can be damn certain as a spot for us at first, and we should look to dominate.

So I think -- but you might want to sort of comment on that is the perspective of the American Urological Association and the product that they recommend.

Yes. Thank you, Simon. The AUA, it always helps me to remember the specifics. It's Table 5 in Section 13 of the micro hematuria AUA guidelines, and it has 8 entries in it. Of those 2 are Pacific Edge entries, Triage and RESOLVE, which is surprising that RESOLVED was included. But there -- while there were a couple of other tests included only Triage had Grade A clinical evidence supporting it. So again, the clinical utility is what drives the A recommendation versus the C which is what was recommended for all the competing tests and legacy tests.

Any other questions? Grant, do we have some questions online?

We do. All right. We'll start at the top. So the first one is from Andrew. Thanks, Andrew. The 2026 capital raise, you raised an additional $12.1 million over what the amount that you targeted. Will this now enable you to continue with the development of our kit-based IVD test, which you previously said would be temporarily put on hold. And are you able to provide any color on how your plans are now being altered given the additional capital.

Why don't I start off with that and I'll get Pete to sort of follow up with the specifics on the IVD. Look, the capital raise was probably more successful than we had thought going into it. Obviously spurred by the issuing of the draft LCD right in the middle of the raise. And that was sort of both good news and bad news because we had sort of a story of 2 halves. But what we had was we had a successful raise of circa $36 million. That's great. We are still in cash burn as a business. And one of the things that the Board and I particularly Tony, with his audit and risk hat on, work very closely with Pete and Grant on is the level of our cash burn and the length of our runway. What we're doing as a business is we're making selective investments to support management in growing our sales both in the U.S. and in Asia because we recognize from the question from Aaron before in terms of competition never sleeps. We have been afforded an advantage by the draft LCD, and we need to capitalize on that. So we need to invest to get ourselves in a position to build sales momentum when that draft LCD is confirmed. And that's something that we have no control over. So one thing, my dad had an expression that he would -- he'd rather be mean than poor. And basically, that meant he has short arms and deep pockets. And I have inherited similar genes. So we want to make sure that the money that we are spending has a direct connection to sales, yes. Recognize that cash is finite, shareholder cash is very, very important to us and how we spend it is something that we spend a lot of time thinking about. But what I'd like to believe is that shareholders have invested in us and entrusted the Board and management to make this company grow. And last year was a strategically very significant year in the history of this business, and it sets us up well competitively and scientifically to actually drive sales once the LCD goes from a draft to confirmed LCD. So we are looking at that product strategy, is something that will figure in that, but also is sort of geographic representation, how we work with the commercial payers, Medicare, the Veterans Association, how we roll out in Asia. It's -- it's a complicated jigsaw and IVD is one of the things that we talk about. And Pete, you might want to put a little more color on that.

Yes, sure. Happy to do so. So look, what I think is just important to also characterize for investors is even though we took over subscriptions from the original intent, that isn't there is not a one-to-one mapping between that and turning on some of the programs that we turned off. As Simon has articulated and I have also articulated, we are going through a process of selective investments, which is which of -- and reevaluating which of those things turn on. So just because we raise more capital, it doesn't mean we turn on all the things we turned off. That we want to make clear. But in terms of the priorities of IVDs, they are a topic of active discussion. We like per the slides that I had, we have a prototype and we have it -- have a developmental plan that we are ready to execute and we also have a forum agreed between board and management about how we will bring proposals from management to Board, discuss them and approve them. And we are scheduled to discuss things in more detail IVD being among the highest priorities at a strategy session that we will have during October. So I probably wouldn't elaborate beyond that.

I'll let you just do a follow-up question to that from [ Kash Patel ]. So they have asked what the current cash burn rate, and we cannot confirm what that is. We cannot state what that is at the moment for disclosure reasons. But they wanted to know whether we're going to come back to the market for additional capital.

I'm not sure how you answer that in a -- there's certainly no plans at the moment to come back to the market for additional capital. We had a successful cash raise. We have enough money in the bank to sustain operations and make selective opportunities. And as you sort of build sales momentum, you build more cash in the business. And at the moment, we're all equity financed. Equity as I'm speaking as an investor, is an expensive way of thinking about running a business. So as we become more mature, as we get a bigger top line, we can review the way that we finance the business. I would not rule out capital raise at some point in time in the future. But at the moment, it is not under active discussion.

Great. Thank you. This question comes from Stephen Maine. It's a bit of a change of focus. Could the new Chair Simon Flood, please comment on the biggest changes in board process delegations, reporting lines or governance that is implemented since taking over each here in December. And then following that, could CEO, Pete Meintjes's also comment as to whether Simon is more or less hands on then is a predecessor. So putting you both on the spot.

You better be careful how you answer that, yes. And I'm not sure what the right answer is. Look, I inherited and I said at the beginning, Chris, as is being recruited, I got to know Chris a little bit. And I was obviously, I'm thrilled to be appointed to the Board. But I suppose one of my disappointments in that was that as I stepped on, Chris stepped off. And he had made a great contribution to the business. In the moment that I had to get to know him, I thoroughly enjoyed his company and his professionalism. We all have sort of different approaches. I am reasonably hands-on. I'm trained as an investor and an analyst. So I like to open doors pull out draws I'm not sure I can extend that analogy. I like to ask a lot of questions. Yes which Chris obviously didn't need to do because he knew the business much better than I did after 9 years as Chair. So I ask a lot of questions. I have been very focused on cash burn, how we invest our cash, how we spend our money. I also am a strong believer in communications, and Pete and the team have been doing a good job. I hope you think they're doing a good job in terms of communicating with our shareholders. I have a very, very good and experienced Board who have provided me with guidance. So it's sort of -- I would say an answer to the question that it's been a process of just gentle evolution, what I inherited was very good, and that's why we are in the position that we are in today because of the work that has gone before. Pete, am I more or less hands on than the previous year?

So perhaps before I answer that, I mean, when Simon took over in December it was less than 30 days. I think before Simon joined me in Dunedin, for a 3-day director induction program. This is something that management had been preparing for Chris to retire from Pacific Edge and for a new chair or a new director to come in for some time. So we were quite well prepared with various documents. And much like an onboarding of someone who comes on to my executive team, we had a different style of onboarding that we had put together for Simon in which he met all of my C-suite and some of the team and the middle management he had the opportunity to address the company and he had the opportunity to observe me giving my I do 4 town hall presentations to the company per year talking about things on the inside and had the opportunity to observe that. So I think he was given a thorough introduction, and he could induction sorry to the company's operations quite early on in his tenure, putting him in a good position to be successful as chair. That's part of the responsibility that myself on behalf of management and the directors all share whenever a new director comes on board. And I'll decline to answer -- I mean the specifics of that question, but of course, there are differences in styles between chairs.

I mean just to give you an insight into that. I speak to Pete probably a couple of times a week. We have scheduled meetings where we go through what's going on in the business and any priorities that the Board has and then we catch up on an [ EDLP ] basis as we need to. Nick, you had a question? Gentleman was just going to bring you a microphone.

My name is Nick [indiscernible]. I'm a Professor Knowledge Engineering and AI at IoT previously with University of [indiscernible]. And I just have a comment. I just want to congratulate the leadership of the company for taking the company through a very difficult period last 2 years and to show a very promising plan for the future. Thank you. And one small comment. I saw on the diagram of the history of Pacific Edge that the first year that is shown is 2011. Of course, that was the start in commercial. But let me say that as one of the cofounders of Pacific, we founded that in 2001, and I would like to see this here as well, along with the [indiscernible]. And I'm sure Professor [indiscernible], [ Tony Reef and Mike Sullivan ], who are also co-founders, will be happy to see that. Thank you.

Okay. Thank you Nick, it's nice to see you again. I think when I first took the job, I'm 100% to blame for that. The -- we do have a variant of the slide that does go all the way back to the founding of 2001 and has the photo of yourselves in the stairwell of the of the innovation center, but for the purposes of focusing on commercialization, that's the variant that we've used today.

We talk a lot about America and how it's funded America. But it has -- how is the rest were going? And how is the rest of the world funding like in New Zealand, are we as insurance companies funding at or in Southeast Asia? How is it funded over there?

I think what we'll do. It's a good question. Pete had a slide. Can we just go back, there was a slide that showed Medicare, commercial payers, and that will give you an insight. And I'm going to get Peter talked sorry, you've gone to far, keep going, keep going, that one. So Pete, why don't we talk to that in terms of the model, that's what you're asking about the model. And this is the U.S. And this is the U.S. model, and then we'll come to Asia.

Yes. sorry, I think I understand the question, and this probably isn't the right slide to look at while I'm answering. But you're essentially asking about commercial payer coverage in countries that are not the United States. And so let's look at New Zealand, Southern Cross, what do they pay for the test, NOK they don't. I believe one of the other smaller ones, and you'll have to forgive because I don't know the smaller insurance companies by name, but I believe one of the other ones does. But from the businesses perspective, we -- it's not really an incredibly relevant path for us to go down. The relevant path is for us to have these contracts with the DHBs historically, which then became the Tefatoora regions, which are now all under the party. That allows us to get all of the New Zealand patients covered for that indication. But let's expand that to Australia. So let's say, what are we doing in Australia? Well, we already know, and it is on some slides that I do have in other decks. We admitted it for simplicity today. But in Australia, we know that we cannot get federal reimbursement unless we run the test in Australia. So how do we run the test in Australia? Well, that's our RUO/IVD path? We need to complete that work. We need to have that test run by [ Sonic ] or some other testing service in Australia and say that it's a totally different business model, but we can absolutely do that. And then we would be eligible for federal reimbursement. And there's an enormous amount of work to show concordance between the test we have and the box we make with the other tests that gets run in Australia. But assuming we do all that, we should be able to have a reimbursement path in Australia. And that's the point at which you can get it in every other country. Right now, we operate what's called a send-out testing model, and we can contract directly with hospitals. We can contract with governments. We can contract with individuals, which is cash pay kind of thing. So the business development that we are doing through the Asia Pacific is limited and is largely not going to be covered by reimbursement. Singapore might be an exception to that just because of the way that it works. People have health savings accounts that are owned by the individual. So from their perspective, it's cash pay, but it's coming out of something that they were taxed into a health savings account for -- so they are probably fine to just pay for the test that way. So every market is different. Those are the ones I know something about. There's plenty that I don't, and I will need expertise to help us go into those markets. But it comes at a time for the business when we go in with the IVDs and we do that on a targeted and prioritized basis. But we can, in theory, go to any country at that point, differentiated by labeling and various approval processes that we go through.

I arrived a little late, so you might have covered this already. But if the Medicare decision is as favorable as you expect, do you have a calculated amount that the company will receive retroactively from Medicare for the period of time that it wasn't covered? And then if you know that figure, what -- how will that affect the cash burn rate?

So unfortunately, it doesn't work that way. And that's why the -- one of the other things that I did talk about is so important. [ Novitas ] has offered us an opportunity to get paid on claim by claim coverage with a draft, but we will only get paid on the -- when the LCD is finalized from 45 days after the test is -- sorry, the policy is finalized. So if it finalizes 1st of November, we'll get paid from 15th of December kind of thing because it's based on data service and that is how that works. However, what they have given us is the opportunity to appeal with documentation using the draft coverage as evidence that these patients are eligible and that's something that we can do for Novitas. And we -- that's the thing that I mentioned we are yet to be successful because the process involves us getting denied and then going back for what's called a redetermination. Different parts of the organization don't talk to each other as well as they should but we have no reason to believe that there is a problem with that process. We're just yet to actually make it complete. And so there is -- and kind of put a number on that. Unfortunately, that would be irresponsible of me at this time. But internally, we are doing everything we can to make that number as big as possible.

Okay. Grant?

Great. Another couple of questions from online. So this is from [indiscernible] Chan. The draft LCD sets have a list of patient eligibility criteria that must be met before the test qualifies for coverage. For example, the patient has not undergone the same or a similar test within the previous 6 months. Do these criteria align with how [indiscernible] expanded products are actually or should be used in clinical practice? And would that restrict the use cases comparing to the previous LCD.

The short answer is, while we have some comments into Novitas about some of those specific eligibility criteria, by and large, Triage, which is what this affects is a single use diagnostic test at a point in time. And so for a clinically separate bout of hematuria. We expect to be able to use the test again. And so -- but if it was -- if we were -- we could not use it repeatedly, but we actually -- that's not the intended use of our test. So for us, we meet that requirement and have no major issue with it.

My name is [indiscernible]. I'm a shareholder. My question is to Peter. With the AUA guideline change in 2025 and this new Novitas LCD that's setting new policy. Could you please give an indication as to the dynamics with which the practicing clinicians would align themselves to that guideline? Do they -- would you expect to do that quickly? Or was that something that they will slowly or eventually convert to.

That is a great question. And this is where there's a little bit of devil in the details a little bit of nuance. So it is important to remember that even though there are now -- we have established for the first time biomarker policy for use in micro-hematuria patients, and it is for intermediate risk patients. But it is also important -- and so that is a huge milestone, and we don't want to take anything away from that. It is also important to know that front line, they basically say, for appropriately counseled intermediate risk patients. The recommendation from the AUA is still to use a cystoscopy, but this makes it medically reasonable and necessary if they choose an alternative. That's the power of the guideline. So many urologists may still say I'm just going to keep doing what I was doing. And so we are at the early stages of changing clinician practice, those that are most familiar with the test and familiar with the value and recognize actually that it's in their own interest economically to not waste time on the patients who are unlikely to have disease right? Until they've really been educated on all of the points they're going to continue -- they may continue with the old standard of care. But it is our job to change that. There's a whole lot ahead of us to do so. But at the moment, there -- it is not a hard requirement to change as dictated by guidelines, so you would expect adoption to be more based on our effort than on guidelines being directive.