Pacific Edge Limited

Good morning, everybody, and welcome to the Pacific Edge 1H financial results presentation. I'm Pacific Edge's CEO, Dr. Peter Matius, and with me today is Grant Gibson, our CFO, and available online for questions is our chairman, Chris Gallagher. Just an important notice to take notice of when considering the information in today's presentation. So our financial results for this half are below our expectations. We ran fewer tests than we had desired. We ran fewer commercial tests than desired, and our operating revenue is down. However, we maintain that we are in the strongest strategic position yet, and despite a net loss of $19.1 billion and cash of $22.1 million in the bank, We want to highlight for investors the importance of the strategic milestones that we have managed to achieve through this hunt. And we've managed to do this maintaining a US market presence to position ourselves to successfully appeal Medicare tests and commercial tests. And so while there have been some challenges associated with non-coverage determination being the predominant feature of operating the market, and we have had to migrate our customers from triage to detect, Our US sales per FTE, you know, has maintained its... Our sales force efficiency has been maintained, and we are operating as well as we can under the circumstances. Most importantly, though, we have an expert contractor advisory committee, a CAC, or a CAC, that has been convened by Novitas for February 19 in 2026. And this acknowledges the weight of the evidence behind urine-based biomarkers for hematuria evaluation in general, of course driven by the evidence portfolio of CX bladder. We also in the half achieved an absolutely critical milestone with longer-term economics for TriagePlus being locked in at US$1,328 per test, a significant uplift from our previous US$760 per test for the prior generation. Given this market position, though, we are considering capital alternatives to meet longer than expected Medicare pre-coverage timeline. We wanted to remind all our investors of how Pacific Edge creates value and specifically with adoption, retention and revenue generation, evidence coverage and guidelines and research and development. Because while our adoption, revenue and retention and revenue generation is somewhat down, We continue to be market leading in the performance of our evidence coverage and guidelines, and we maintain our strength in development of new products within our research, development and innovation. In fact, we have the strongest position we have ever had. We are in the strongest position we have ever been in to drive Medicare policy change. The importance of the Contractor Advisory Committee cannot be understated. We currently have, since 2020, or between 2020 and April 2025, Pacific Edge had reliable reimbursement from Medicare, but no coverage policy with coverage policy language explicitly documented at Novitas. And while that was good for revenue growth in our business and the subsequent non-coverage determination has obviously been a challenging headwind for us to navigate, it will become a defining change for Pacific Edge to have positive coverage language and actual positive Medicare policy change as a consequence of the Contractor Advisory Committee. And so these contractor advisory committees are generally convened ahead of developing new or substantially revised Medicare medical policy, an LCD. And it's worth noting, given that our current status is non-covered, we expect that a substantially revised medical policy would lead to a medical coverage policy after considering all of the evidence. Of course, this has been precipitated by two things. One, the strength of our evidence from our strata study, but two, that the strata study has already been recognised as something sufficient to drive policy change with the AUA guidelines, and that allowed biomarkers for the first time to be used for micro-edematuria evaluation. The purpose of a CAC is us evidence for the use of urine-based biomarkers in patients with micro-aematuria. And given the recent published evidence for TriagePlus, we expect that TriagePlus will also be considered as part of that contractor advisory committee in February. The people who make up a contractor advisory committee, and I look forward to questions on this later, are healthcare professionals, beneficiary representatives, and representatives of medical organizations. And Pacific Edge has been given the opportunity by engaging with Novotax to nominate urologists that we believe are familiar with the latest evidence for urine-based biomarker testing for patients with hematuria, and among those are many of our clinical advisors who are familiar with CX Bladder specifically. The meeting date is set for the 19th of February at 6 p.m. East Coast time, which will be noon on Friday, February the 20th in New Zealand. So as we look to our evidence roadmap, the evidence generation roadmap, The top four studies have been highlighted. That highlight represents that these are all new publications that have not previously been considered by Novitas, and we expect that all of these can be considered firstly by the CAC in the creation of draft policy, but ultimately in the final policy as it is developed. One thing that has changed is we've historically reported in this view the study from Kaiser Permanente, but we have separated out the publication timelines for our core evidence that's internally developed and independent studies like the Kaiser study, and so you'll see that on a later slide in this presentation. Looking at the The following slide, this is one of key significance to many investors. This is management's best understanding of the timelines that Novitas is operating under, given the information that we have. Of course, acknowledging first that we have had a Medicare non-coverage determination for triage, monitor, detect, and triage plus since April 24 this year. But that was on an evidence review that was limited to evidence published prior to the 9th of September 2023, which at this stage is very stale evidence on which to have faced a decision. Positivage has submitted reconsideration requests of what's known as genetic testing for oncology-specific tests, L39365, for triage and for monitor. Pacific Edge has submitted a new LCD request for hematuria evaluation for triage and triage plus. This is important regardless of whether Novotas elects to make a change to 39365 or establish a new LCD. The critical distinction between prior reliable reimbursement with the absence of any positive policy and what we are trying to achieve through a CAC and articulated language that supports the appropriate use of non-invasive urine-based biomarkers, for example, Triage and Triage Plus, in the evaluation of hematuria patients. No prior policy exists for that, and that is one of the reasons that Novitas is following this robust approach in using a contractor advisory committee. So Novitas controls all the timings of these events, and while from our perspective, Announcing a CAC to convene on the 19th of February is a delay from our prior expectations. Given the robustness of the process, this is something that we see as tremendously positive because of the increased certainty in medical policy change that we expect to come from convening a CAC. Furthermore, evidence published after the Contractor Advisory Committee, they can also be submitted during the comment period. So those studies highlighted in yellow, that's not the limit of what can be considered for the coverage policy. That's just the limit of what can be considered during the Contractor Advisory Committee. Our independent studies also supplement our utility study of triage and micro hematuria patients at Kaiser Permanente. But we also wanted to highlight that some of our investigator-initiated trials that have been part of a program of work for the last two or three years, the first one of those is reaching maturity. It's going through peer review at the moment, and we are optimistic that it will publish in Q1 2026. This is evidence that is not necessarily, well, I'll retract that. In the first of these, the one from Kaiser Permanente is extremely relevant in the changing of medical policy for an organization like Novotans. The patient preference, for example, is less likely to sway organizations like Novotans that are extremely influential in helping physicians adopt our tests for our very clear that patients actually prefer to use our test when offered the alternative. And that is somewhat of a no-brainer. The difference between an invasive procedure and a non-invasive procedure, patients typically prefer non-invasive to actually show will be a first-of-kind study, and that has been developed under the banner of our investigator-initiated trials, and what you can see in the bullet points below, 74.2% preferred monitor versus cystoscopy. And comparable diagnostic performance is shown, and we expect this research to be published as an abstract for AUA 2026, and possibly before that will even come out in print. Importantly, our budget impact models continue to demonstrate the economic value for CX-GLADAR. We've updated this slide to highlight the value proposition when performing this, when running a budget impact model using TriagePlus. And so where with Triage, you were able to rule out, I believe, 78% of micro-inmateria patients, With TRIAC+, we're able to rule out 85% of hematuria patients. And the greater number of patients that you can rule out, the greater value you are creating for hospital systems that deploy this kind of testing across the patient population that they serve. Again, importantly, this is not the end of the road for Pacific Edge in terms of developing budget impact models, and we are targeting a publication for TriagePlus in FY27, and we are targeting a publication, or sorry, we are targeting commencing work for a budget impact model for SurveillancePlus in FY28. And also, Along the general theme of health economics and sustainability, there is also a publication that we are working on with collaborators at the Canterbury Health System in New Zealand about the carbon footprint impact of implementing CX bladder at primary care, and draft presentations of that at conferences have already been communicated. Talking about some of the numbers explicitly here, global commercial test volumes of 13,191 for 1H26 were down 10% on the 2H figures, amid the challenges of selling a test that is not covered by Medicare. The reduced reach of our sales force, as our sales force continues to shrink, but that has been partially offset by a 5.4% uplift in APAC. Our response to the Medicare non-coverage has been a very important focus for us in this half. See if that a detect is something that has not had new evidence generated for it for some time and is not included in the guidelines. Consequently, all the tech customers were migrated over to Triage. Accelerating a plan we had hoped to implement at the time of launching Triage Plus with coverage, and that has created some operational challenges as we do that. But nonetheless, that allows us to collect revenue on the Triage tests through the appeals process. The sales force continues to be focused on patients that are suitable for CF-bladder triage, which are younger patients with commercial insurance and typically with micro hematuria presentations. Our sales performance has been sustained from an efficiency standpoint in 1H26. The clinical commitment that we measure as tests per ordering clinician has fallen reflecting the disruption of transition from triage, sorry, the disruption to triage from detect and challenges of selling a test not covered by Medicare. But we are well ahead of the low point we had in Q3 2022 of 160, and we've largely been able to maintain our sales force efficiency at 403 for this quarter. Our sales FTE are down to an average of 12 in Q2 26 from greater than 30. As we continue to focus on cash conservation, we're proven. Importantly, foundations for growth. We have US cash elections and processes continue to improve. although it's a loss of Medicare coverage has impacted our testing volumes. Denied triage tests will be appealed to an administrative law judge, ALJ, and given the guideline inclusion, we expect we can successfully make the case that triage has been used in a medically reasonable and necessary fashion. Unfortunately, appealing takes time, but we are appealing over 2,000 tests to Medicare and commercial providers through external review. And for Medicare, it takes six to nine months. For commercial payers, it can take longer than that, in excess of a year. So Medicare tests completed in ways that have been denied for payment have had no revenue recognised in this half, but we expect to recognise some revenue in the second half when we have successfully appealed them. There are measures in place to mitigate the loss of Medicare coverage, including enhanced patient responsibility, increased utilization of appropriate patient types through EMR integration, and improving the medical necessity documentation to improve the payment success that we have during billing and appeals processes. And improved cash collections are typically permanent improvements, although we are in a situation with a non-coverage determination, so some of those things are challenging for the current half, but we expect a resumption of those improvements after we re-establish coverage. To consolidate in New Zealand and developing Australia and APAC, we continue to seek a national hematuria evaluation pathway in New Zealand, and we're working with local urologists and with Tafata Warren to effect that. In Australia and the Asia-Pacific regions, Southeast Asia is still in business development. We're planting early green shoots there. But we are also working on a number of contracting arrangements with Australian hospitals and we hope to have some non-material announcements about progress in that area in the coming months. We also continue to drive values for product innovation, and our next generation of tests is our major focus of the research, development, and innovation pillar, and specifically the development part of that. We've been working very hard on TriagePlus and SurveillancePlus. TriagePlus has been analytically validated and clinically validated for all hematuria patients, micro and gross hematuria patients. That's a broader indication than for triage and a broader indication than what the guidelines currently support. And this bodes well for an expanded patient population as and when TriagePlus complete, well, as and when we complete our credible study for the utility of TriagePlus. It also has a higher price. That price is still in draft, but it's expected to become final within the next few days and effective on January 1 next year. It is currently being run in early access with a select few customers, and we are leveraging the AUA guidelines for triage in appealing triage plus tests as well. With Surveillance Plus, we are looking at recurrent disease in non-muscle invasive bladder cancer patients. The product is still in development and is the improvement over the monitor product that we currently have. And SurveillancePlus has deviated from TriagePlus through the development process, and this is, of course, expected, that they serve a different patient population and different markers are informative, and the work that we've done internally has demonstrated to us that the DNA markers from the DD-PCR are more informative than the RNA markers that we historically used in CX-bladder monitor. to the point that we can actually exclude the RNA markers from the final product. And we have taken that product through a freedom to operate, which has been completed satisfactorily and gives us the freedom to operate. And we are taking it through a provisional patenting process. We are also seeking a technology crosswalk for Surveillance Plus to a test that has an $1,800 price point in the Medicare fee schedule and are hopeful for a claim-by-claim reimbursement because there is no non-coverage determination for Surveillance Plus. And so our expected path is to get it coded get it priced by crosswalk to the candidate mentioned here, and then to initiate claim-by-claim reimbursement until the local coverage determination incorporating Surveillance Plus is developed. That we expect to take a number of years. We have not put specific timings on that, but that is the future state that we imagine for our business, with triage plus for the risk stratification of hematuria patients. and Surveillance Plus for the surveillance of non-muscle invasive bladder cancer patients for occurrence. I wanted to also highlight the importance of the DRIVE study. So the DRIVE study has been, you know, referred to for a number of years. It was started as far back as 2019 and began enrolling and enrolled largely, well, entirely from the veterans population. And the study confirmed the superior performance characteristics in both grossing material and microdermaturia for TriagePlus over our existing tests. And it also works on a broader range of hematuria patients as established in the clinical validity. So hopefully we make clear in the diagram on the left that while the AUA guidelines recommends triage for a narrow patient population, and that's based on the strata evidence, the strata evidence itself actually covers patients that were in the low-risk group, intermediate-risk group, and the high-risk group And the STRATA study can be used to justify using triage in any of those risk categories for micro-hematuria. But the DRIVE study has validated CFS triage plus for all of the risk categories of micro-hematuria and the gross hematuria patients, so the broadest range of patients in hematuria evaluation. We remind our investors of the opportunity that we are chasing here. So with the increase of our test price to $13.28, we've increased our estimate of the term in the US while maintaining the terms for APAC and Europe. And it is a substantial TAM at full volume of 10.8 billion. And specifically, we are targeting the patients that are referred for clinical workup. That's how we determine our TAM. that using TriagePlus for the intended use at the point of being referred for clinical workup gets us the largest possible TAM, and the evidence we are generating is for that. We're also looking to expand our market opportunities with innovation at the product level. And for this, we have made clear for investors that we are pursuing an IBD product that is a simplified version of the assay that we currently run as a service. And over time, we will be able to simplify the service to the point of being able to put it in a kit and allow labs other than Pacific Edge in appropriate jurisdictions where we have sought. We've completed all the product registration and market access initiatives to be able to run that test in clinical routine. So the benefits of this approach are that IDEs can be run by any accredited lab partner in any geography, that customer-side logistics are easier, faster, and customer service is local. Land partners make a margin by running the IED test, which increases their enthusiasm and motivation for sales and marketing efforts in their territory. It is a decentralized deployment, which allows faster scalability, and we need to focus on scaling our logistics, but the clinical operations can be scaled very dramatically by working with established partners in the region as they focus on customer acquisition. So the work that we're doing, Pacific Edge is simplifying the tests and accelerating the development of an IBD called TRIAC Plus IBD. for decentralized app employment and international market expansion with the key objectives of, one, establishing an IBE regulatory framework for our next-generation tests that include Europe, FDA, and ISO 3485 for the rest of the world. And then we're targeting prototypes by the end of FY26, manufacture and commencement of clinical and analytical validation commencing in FY27. We'll now turn to Grant for our financial performance for the half. Great, thanks Peter. So the first half our operating revenue was down to $5.9 million from $10.9 million in the second half of 25. So all that reduction post-24th of April, have not been accrued or included in revenue, and will only recognise revenue if we're successful at the ARJ appeal level, which, as Peter noted, it's going to take six to nine months for us to be able to recognise those tests that we're successful. Audience have also been impacted by the disruption caused by the loss of coverage and transitioning clinicians from the previously dominant test in the US market to triage. We've also had reduced sales every year as we've looked to manage our costs through this time. So with the drop in the EUS revenue, APAC's contributed 15% of the revenue for the half, up from 8% in the second half with FY25. So we continue to maintain EUS positions for an affirmation of Medicaid coverage, where reducing operating expenses So in the second half of 25 we actually dropped our cost base by 5.9 in the first half of this year. As we continue to focus on expenses where we can reduce them where possible. Our operating cash flows of 19 mil were higher than 12.3 mil in the second half of 25, but we do note that cash outflow in the first half of the year was generally higher than the second half and we expect to receive revenue for tests that we performed in the first half, six to nine months after, as we take them through the ALJ field level. Cash at the end of the half was $22.1 million, and we did a capital raise of $20.7 million in August 2025. As Piers noted, though, with the delay of the re-coverage, we expect that we will need to complete capital initiatives and or reduce cash burial, and we're in the process of considering options Our operating expenses were down 5.9% on the second half. So of those, the lab costs were down approximately 10% based on low ITS volumes. Our research costs were also down 4.5%. Some of the clinical studies come to an end on the costs related to those start to reduce. Our sales and marketing were down 9% as we managed our FTE in the US market to Generally, admin costs are up 3.4%. We had some late legal fees relating to efforts to overturn the Medicare loss of coverage in late FY25 that come into this first half.

And I'll pass you back to Peter.

Thanks very much, Grant. As we look forward, From my perspective, it's extremely important for investors to understand that this is, you know, Pacific Edge is in the strongest strategic position that we ever have been. And my conviction is underpinned by a number of long-term value creation notes here, medium-term value creation, and near-term. And so in the long term, provides us with extraordinarily improved economics. And so as that test becomes our dominant test, when it has successfully achieved coverage, we are in a vastly different operating position than we are today and than we were when we had a $760 price with increased margin and margin percentage. Surveillance Plus, while in development, is also seeking a direct technology crosswalk to an $1,800 price point based on its final product configuration. And that, we think, is a very important long-term consideration for generating value for investors. So our continued investment in innovation and product development for IVE kits supports our ambitions to enter international markets and to adopt a decentralized deployment model, and that remains a focus of us in a sort of capacity, but is something we continue to try to activate. In the medium term, the draft publication provides the clinical validation of TriagePlus that we believe is sufficient for inclusion alongside other tests in the AUA guidelines and is sufficient for Novotas to make a positive coverage determination. So we are delighted that that has been published in time to be considered firstly by the CAC and secondly when Novotas begins to draft a policy. Our clinical evidence generation program is scheduled out for over four years to deliver strategic milestones that will deliver a sustained value creation for shareholders with multiple catalyzing events. And AUA guideline inclusion demonstrates that the success of this strategy can be repeated to expand the indications for existing products and establish new indications for new products. In short, we know what it takes to get a product included in guidelines, and we expect of ourselves to be able to do it again. Commercial headwinds. Acknowledging that there remain some commercial headwinds is important. There remains a non-coverage determination for Triage Detect, Monitor, and TriagePlus, and it creates challenges for our sales and marketing teams in their operating environment. and additional challenges for reimbursement. But we are doing everything that we can from an appeals standpoint and doing everything that we can to convince customers of the value of the test despite the Medicare not coverage determination given the AWA guideline inclusion. The convening of the Contract Advisory Committee is a major catalyst for forward-looking policy and specifically, as I mentioned before, it'll be the first time that there will be coverage policy language that would be proposed by Novitas, not just paying for our tests on a claim-by-claim basis. And that provides us with the greatest certainty of enduring coverage from Novitas, but also the greatest ability to... improve the success percentage of being paid on Medicare Advantage tests and for commercial payers. So the commercial catalysts for new term value creation, the AUM micro-inventory guidelines are an enabler of sales, marketing and reimbursement activities. But because of the language associated with triage, and the language associated with intermediate-risk patients. We have to re-educate our customer base, and that has proved to be challenging, at least initially, and we are continuing to work on that. We are continuing to seek payment from Medicare for all triage tests performed on Medicare patients through the Medicare appeals process relying on the AUA guideline, and we are doing the same through the external review process for commercial insurers. But we also expect, through the efforts that we've made in digital development, to increase the percentage of electronically ordered tests. And that, of course, is expected to lead to stickier customers and more reliable payment over time. We are, as mentioned earlier, CX Platter is under consideration by Te Whātua for a national pathway in New Zealand, and we're optimistic that we will learn something in FY27 about the status of implementing CX Platter in that national pathway. We thank you for your time, and we look forward to taking your questions.