Pacific Edge Limited [NZX: PEB] is experiencing a trading windfall today, jumping from 27c to 54c. This represents an eye-watering increase of 100%.
Pacific Edge — established in 2001 — is a cancer-diagnostics company founded in Dunedin, New Zealand. They specialise in genetic-biomarker testing known as CxBladder. This process is non-invasive and able to detect the presence of cancerous cells in urine.
Pacific Edge currently has a market capitalisation of $182.76 million.
Why has the [NZX: PEB] share price leaped today?
At 9:59am today, the company went into a brief trading halt. Anticipation was high as it geared up for a positive announcement.
- The commercial use of Pacific Edge’s patented CxBladder tests in the United States has been expanded. There is a new partnership with the Centers for Medicare and Medicaid Services (CMS), providing healthcare coverage for all Americans over the age of 65, as well as coverage for patients with low incomes.
- This represents 40% of Pacific Edge’s current tests in the United States. The company will now be pushing for additional reimbursement. More revenue could be on the way.
- This comes on the back of an existing partnership with US healthcare giant Kaiser Permanente, which was announced on 17 June.
- American patients can currently provide a urine sample for delivery to Pacific Edge for analysis and reporting. The ability for non-invasive, regular testing will benefit both patients and physicians in the long-run.
Pacific Edge CEO David Darling said:
‘This is a transformational milestone for Pacific Edge and the result of a number of years of hard work and effort from our teams in New Zealand and the USA. This long awaited outcome results from the generation of substantial clinical evidence, publication of numerous clinical papers demonstrating the compelling clinical utility and outperformance of Cxbladder, and growing commercial use of our tests by urologists in the USA and other markets.’
News of this partnership has boosted investor sentiment. As soon as the trading halt lifted at 11:16am, the response was quick and feverish. The Pacific Edge stock price rocketed as the enthusiasm spread.
Where could [NZX:PEB] go from here?
Today’s jump represents the second big leap in share price in two weeks.
While there’s much positivity for Pacific Edge’s long-term prospects in the American market, some caution is needed as well.
Our analysis indicates:
- Pacific Edge has a price-to-book ratio of 12.8x, which is higher than the 3.6x average usually seen in the biotech industry.
- It has a return on equity of –130.21%, which indicates that the company has a history of being unprofitable.
- In addition, the company has reported an after-tax net loss of $18.9 million for the year ended March 31.
This makes Pacific Edge a speculative investment with a potentially volatile share price. The future horizon is attractive — but can the company’s fundamentals support that wide-eyed optimism?
Discerning investors should approach this stock with caution.
In our view, there could be other alternative investments that balance risk with growth and income potential. You can discover these opportunities by subscribing to our Inner Circle Newsletter.
Contributor, Wealth Morning
(A big thank you to our reader Bob Stevens for giving us the heads-up on this exciting milestone!)