Monday 18th March 2013
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Dunedin-based bladder cancer detection test inventor Pacific Edge believes it could be turning over $100 million a year in the United States within five years, following the registration of its own diagnostic laboratory in Pennsylvania.
The closely held, NZX-listed company announced the registration milestone today, saying its Hershey, Pennsylvania laboratory had received CLIA (Clinical Labour Improvement Amendment) registration, allowing it to start using its patented Cxbladder test to diagnose bladder tumours.
The company has published research showing the non-invasive Cxbladder procedure is more successful than current, more costly and invasive methods such as cystoscopy.
CLIA registration is essential for operations in the US, which Pacific Edge has elected to establish as a wholly owned subsidiary rather than cede most of the potential revenue from the business to third party diagnostic laboratories.
The go-it-alone stance also requires the company to establish sales and marketing presence in the US, a process it has already begun and will ramp up in coming months. As well as targeting returned armed services organisations, Pacific Edge is dealing with so-called Large Urology Groups (LUG's), which account for about 15 percent of the total US urology market.
The Pennsylvania site adjoins a research hospital and was chosen for its proximity to the so-called BOSNYWash cities of the north-eastern United States, and because the state government paid for "the lion's share" of the lab fit-out, said New Zealand chief executive David Darling.
A US CEO was also appointed in April last year to lead development of the market.
The CLIA registration and consequent US commercial sales potential comes after 10 years and some $28 million of capital investment on Cxbladder and a range of other diagnostic tests to be rolled out in the future.
Some 60 percent of the register is held by about 20 high net worth individuals, including the family of investor Peter Masfen, Warehouse founder Sir Stephen Tindall, and Dunedin sharebroker Eion Edgar.
The investment to date was equivalent to one or two years' typical cash burn in the US for a medical start-up, said Darling.
"The capability to build this business opportunity in the US off the back of the New Zealand business has been a significant factor in enabling this market channel to be delivered quickly and very cost-effectively."
The test is already available in Australia and New Zealand and will be launched soon in Spain, which has the highest global incidence of bladder cancer.
Pacific Edge intends to have its Dunedin laboratory CLIA-registered shortly, to take overflow work. It has already been used in the registration phase to test American urine samples, with courier arrangements between Dunedin and Pennsylvania still allowing the company to keep its promise of diagnosis within three to five days.
Pacific Edge shares were off 4 percent in mid-afternoon NZX trading, at 73 cents, but have still gained 15.2 percent in the last week and are up 85.4 percent over the last three months.
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