PEB-Pacific Edge

[LoungeLizard]

Finally a bit of good news for long suffering PEB holders. This decision from Novitas to go through the LCD process again, is an acknowledgment that they got it badly wrong in the first place and possibly the process and decision were legally unsound. Not to mention the potential negative ramifications for the whole biotech industry.
There will be no apology coming let alone compensation for the financial damage, but at least PEB can continue their strategy instead of throwing time and resources fighting a rearguard action.
Glad I added to my position at the bottom of the sell-sell action. 

[Left Field]

Interesting that the decision has not come from Novitas, but rather from US Department of Health and Human Services Associate General Counsel Janice L Hoffman.

Clearly the US Dept of Health is not happy with the Novitas process (and decision.)


Looking v good for PEB holders IMO.

[KW]

Those who bought "when there was blood on the streets" have done well.

Only if you sell up and https://www.youtube.com/watch?v=UDfAdHBtK_Q

[LoungeLizard]

Interesting that the decision has not come from Novitas, but rather from US Department of Health and Human Services Associate General Counsel Janice L Hoffman.

Clearly the US Dept of Health is not happy with the Novitas process (and decision.)


Looking v good for PEB holders IMO.

Quite right - US DOH have had to intervene and I suspect they will have had some strong words for Novitas. Medicare/Aid may also be unhappy as it reflects badly on them and affects patient relationships.

There's been a big sell-down and it remains to be seen whether there will be sufficient buyer pressure to get the SP back up to where it was before the decision (50c). Might take a while, as unfortunately the whole saga has added more uncertainty in the minds of investors. In my mind there's still an opportunity at the current price, given where the price was just a month ago. 

I can't see the negative Novitas decision being re-instated and no new time frame has been released.

If PEB can continue to lift operating revenue and lab throughput at the sort of rate they did in their last report - 71% and 40% respectively - then there may yet be a happy ending for PEB investors. 

[Left Field]

A readable explanation for the Novitas LCD review is covered in this helpful Blog, which also helps explain where Novitas went wrong. https://www.discoveriesinhealthpolicy.com/2023/06/novitas-releases-anxiously-awaited.html

Interestingly it seems that part of the reason for the Novitas review is/was that there are a lot of shonky lab tests out there for a lot of different issues..... the blog notes; "Novitas has paid out a billion dollars in the last couple years for Tier 2 codes, at least a good part of which, to labs indicted or pled guilty in court. "

While the recent messy Novitas LCD review saga is relegated to history (albeit with scope for a possible re-examination,) the FDA is seemingly moving ahead with possible regulations to cover lab tests ( such as PEB and  myriads of others.)

https://www.propublica.org/article/fda-moves-to-regulate-lab-developed-tests

Whether this is a problem for PEB, or an opportunity remains to be seen. 

[Basil]

https://www.nzherald.co.nz/business/best-worst-nz-stocks-in-2023-so-far/BPRBWJVHKNHJRHGNJL4GBTGZWQ/?utm_source=ST&utm_medium=email&utm_campaign=ShareTrader+AM+Update+for+Saturday+8+July+2023

[LoungeLizard]

Swings and roundabouts -  pretty much sums up PEB as an investment.
 No doubt PEB has been the worst performer of the year, but then again it was the best performer in the year that they were first given Medicare/Aid coverage. If it retains coverage and it then continues to increase market penetration and revenue, then it could be on the best performer list for 2024. Two big "ifs" there!
PEB has been one of my very few "flutters" and has lived up to that name with the number of heart palpitations it has given me over the years.
Might stick to my lane in future!

[Shareguy]

Have just stepped off Alaska cruise with no internet and have a very pleasing surprise with this announcement. Now in the green . What to do?

[Left Field]

Have just stepped off Alaska cruise with no internet and have a very pleasing surprise with this announcement. Now in the green . What to do?

Nice problem to have.

[Shareguy]

After reading all available info decided to hold...

Craigs latest say

We value PEB at a probability weighted TP of $0.26, based on a 20% probability of retaining Medicare coverage (upside case: $0.57 - our TP before coverage appeared to be lost in June), 40% probability of losing coverage and regaining it in FY26 (base case: $0.21) and 40% probability of losing coverage and regaining it in FY28 (downside case: $0.17).
Also, we see our estimate of the trade sale value of the Kaiser contract ($0.14) and net cash per share ($0.09) as providing some support.

[Shareguy]

Craigs latest

Even if lost, Medicare coverage could be re-instated by 2026
Even if Novitas finalises the withdrawal of Cxbladder insurance coverage with substantially the same requirements as those outlined last month, we think PEB's best option is to focus on regaining Medicare coverage through Novitas. Reinstatement of coverage would require PEB to achieve two things:
1. Inclusion in clinical guidelines: Novitas' previous draft policy required inclusion in NCCN (oncologist industry body) guidelines with at least a 2A evidence recommendation. PEB could apply for this designation annually every August with new evidence generated from clinical studies. Given Novitas' prior complaints, these studies would need to demonstrate clinical utility - we think PEB's best shot at this is the Strata study, with publication expected around the first calendar quarter of 2025. Cxbladder could be included in the NCCN guidelines as early as August 2025.
2. Alteration to policy test requirements: Novitas' previous draft policy stated that Cxbladder could only be used after the clinician had seen "evidence to create a suspicion of cancer", which was then defined as abnormal results from cell or tissue testing. As stated, this requirement effectively precluded the key economic and clinical use case for Cxbladder: why use PEB's test, designed to be used before or in tandem with gold standard tissue testing, when a gold standard and invasive tissue test has already effectively diagnosed a patient with bladder cancer? We think the best course would be to lobby for a change in the definition of "evidence" to include bloody urine. Most clinicians do indeed consider this to be evidence to create a suspicion of cancer, and we believe Novitas could see this perspective if PEB demonstrates good utility data in clinical trials.
As a base case we think PEB could achieve required guideline inclusion by late 2025 which could allow submission for reinstatement of coverage by the last quarter of FY26. The key swing factor which could delay resumption of Medicare coverage would be the time required to achieve point #2 above. Although demonstration of Cxbladder's clinical utility from Strata could justify this, it is possible further evidence is required which will take more time - thus as a downside case we assume PEB will achieve reinstatement of Medicare coverage in FY28.
PEB has stated that future clinical studies and guideline inclusion efforts would focus on their new Detect+ test. Detect+ is effectively able to undertake the function of both the Detect and Triage tests - that is both (i) identify patients with bladder cancer and (ii) identify patients without bladder cancer with higher accuracy than the prior generation of tests.
We have yet to find a historical example of a test which lost Medicare coverage before regaining it. However, we note that in most observed cases of coverage rescission there were clear cases of (i) fraud or (ii) a lack of accuracy. We don't think Cxbladder fits the bill here, and expect that even if Medicare coverage is lost, it can still eventually be regained, given:
Kaiser Permanente, the USA's largest integrated healthcare provider and insurer serving 12.6m patients, plans to integrate Cxbladder into their standard of care based on internal health economics testing (this data has yet to be released). Kaiser is a sophisticated insurer/healthcare provider, focused on minimisation of costs, and our interviews with company management, and their decision to insure and roll out the Cxbladder portfolio across their network gives us confidence that the health utility and economics of Cxbladder stack up and are NPV positive.
Cxbladder has strong accuracy metrics (sensitivity: 97% and specificity of 90%), similar to the gold standard cystoscopy test (sensitivity: c.100%, specificity: c.97%) and superior to the commonly used cytology test (sensitivity: c.63%, specificity: c.96%). Cytology remains under Medicare coverage - having been invented over 100 years ago, healthcare providers see it as tried and true despite its low sensitivity and high false negative rate.
Urologists like Cxbladder - in our proprietary survey of 11 urologists, 80% of those using Cxbladder said they planned to increase their usage in the next year. Although test usage per urologist has been low, 8% of the 14,000 urologists in the US ordered a Cxbladder test in the first quarter of 2023, a number which has increased consistently over the past 3 years.

[Basil]

I hope you enjoyed your cruise Shareguy.

I am sure management and the brokers will be very pleased this company now has some case to stay on life support for as long as possible and brokers will be thrilled if they can milk many millions more in underwriting and placement fees and hopefully find enough punters to do half a dozen more capital raisings and keep this going another 20 years.  Management taking high salaries without ever having the realistic prospect of a profit.  Very questionable ethics in my opinion.  Don't forget this is almost certainly going to get booted out of the NZX50 in due course so plenty of downwards price pressure to come from that.
Good luck.

[Shareguy]

I hope you enjoyed your cruise Shareguy.

I am sure management and the brokers will be very pleased this company now has some case to stay on life support for as long as possible and brokers will be thrilled if they can milk many millions more in underwriting and placement fees and hopefully find enough punters to do half a dozen more capital raisings and keep this going another 20 years.  Management taking high salaries without ever having the realistic prospect of a profit.  Very questionable ethics in my opinion.  Don't forget this is almost certainly going to get booted out of the NZX50 in due course so plenty of downwards price pressure to come from that.
Good luck.

Thanks Basil.  Cruise was fantastic. Now enjoying Canada for a few weeks.

Your points are valid in my opinion. It's a high risk punt. At current pricing still huge upside so prepared to take the risk.

[Left Field]

Latest shareholder update out......... (if there are any shareholders left?)

https://www.pacificedgedx.com/assets/Investor-Files/PEB-Quarterly-Investor-Update-Q1-FY24.pdf

Pacific Edge has today released its Shareholder Update showing test volumes processed in its laboratories rising to a new record in the first quarter of the 2024 financial year (Q1 24) of 9,706. The figure represents a 9% rise on the 8,877 tests in the prior quarter (Q4 23).

The volume processed in Q1 24 also represents a 38% increase on the 7,056 tests processed in the same quarter of the prior year (Q1 23). US volumes led the growth rising to 8,627 in Q1 24, a 10% increase on the 7,816 tests in Q4 23. The figure also represents a 42% increase on the 6,073 tests processed in Q1 23.

The continued growth in test volumes comes despite Novitas'2 June 2023 release of the latest iteration of the 'Genetic Testing for Oncology' Local Coverage Determination (LCD, L39365) and its subsequent stay earlier this month. The still to be finalized LCD has the potential to end Medicare coverage of Cxbladder in the US.     

The number of unique ordering clinicians in the US has continued to grow through the quarter to 1,232 at the end of Q1 24, a figure that represents more than 10% of the 12,2533 actively practicing urologists in the US. The figure is, up 7% on the 1,150 ordering in Q4 23 and up 38% on the 895 clinicians who ordered tests in Q1 23.

The update contains more information on the Novitas issue.


NOVITAS SAYS: Populations of patients in Pacific Edge trials that were tested included a strong bias towards male patients of European ancestry and were not vetted in the context of Medicare patients.

WE SAY: Novitas appears not to understand the basic demographics of bladder cancer. Males are three times more likely than women to present with the disease, patients with European ancestry also have higher incidence when compared with other ethnicities and these demographics are therefore present in greater numbers in our clinical trials. Our evidence is relevant to Medicare patients since the average age of bladder cancer patients is over 70 and Medicare eligibility is for patients over the age of 65.

NOVITAS SAYS: Cxbladder delivers a high number of false positive results, and this leads to patient anxiety and distress.

WE SAY: Novitas appears to misunderstand how Cxbladder is used by clinicians. Cxbladder's proposition relies on its high Negative Predictive Value (NPV) i.e., a negative result allows urologists to reduce unnecessary tests and procedures confidently and safely in patients at a low risk of having bladder cancer but are required to be investigated by the current standard of care. In the event of a positive Cxbladder result, clinicians should continue the evaluation of the patient for any other cause of disease, including upper urinary tract assessment.

..........a much needed update IMO.

[winner (n)]

Leftie ...you got to put some cool charts in to highlight how good they are