Pacific Edge makes Cxbladder, a simple urine test for bladder cancer. Photo: Supplied.

Pacific Edge shares double after US Medicare and Medicaid approval for bladder test opens up market for US elderly and poor with bladder cancer

Happy days: Long suffering Pacific Edge shareholders finally had reason to celebrate on Friday as the company’s shares more than doubled following confirmation of acceptance, under a key US medical regulation, for its Cxbladder cancer test. The shares jumped as high as 68 cents from 27 cents on Thursday, closing at 55 cents, up 104 percent and valuing the company at NZ$379.3 million.

Revenue boost: The successful standard of care rating from the US Centres for Medicare and Medicaid Services will mean Pacific Edge will be reimbursed at a rate of US$760 per test from the start of this month. The CMS provides healthcare coverage for all US citizens over the age of 65 and assists coverage for low income earners, and is part of the Medicare and Medicaid systems. The decision will mean cash flow benefits of up to $10 million for the Dunedin-based bio-tech company.

Patience rewarded: CMS testing makes up about 40 percent of CXbladder testing in the US, the company said. CEO David Darling described the confirmation as a “transformational milestone” for the company, following many years of hard work from its New Zealand and US teams. It’s been a rollercoaster ride for investors with Pacific Edge shares peaking at $1.52 in 2014 before hitting a low of just 9c earlier this year.

Markets chipper: The NZX50 will start the week at 11,559, its highest level since the market bottom on 23 March. Last week the index gained 430 points or 3.9 percent and is now just over 500 points away from reclaiming its pre-Covid high of 12,073 set on 21 Feb. The US market was closed on Friday for Independence Day. The S&P500 ended the shortened trading week at 3130, up 4 percent for the week. In Australia, gains were more muted with the ASX200 advancing 2.6 percent last week to close at 6058. The NZ dollar is back above 65 US cents and will start the week at 65.33, up 1.7 percent for the week.

Uncertain outlook: Civil construction group Fulton Hogan has warned of “significant uncertainty” for major infrastructure projects on both sides of the Tasman, with many commercial contracts deferred and little visibility on public work. The privately-owned company told shareholders last week that its NZ business was largely back operating at pre-Covid levels, while in Australia some inter-state restrictions were still in place. While the company still had a “solid near-term workload,” chairman Dean Hamilton said in a letter to shareholders that he had noted “significant uncertainty” on both sides of the Tasman.

Governments under pressure: Hamilton said a number of commercial contracts have been cancelled or deferred, and local governments in both countries are facing lower budget incomes which meant some projects were being postponed. The company potentially stood to benefit from some of the more than 150 ‘shovel-ready’ projects approved in principle by the Government. The NZ Local Government Funding Agency had also last week lifted the debt ceiling for A-rated council borrowers to three times revenue for the next couple of years to free up capital for local authorities through the Covid crisis.

Vehicle sales dip: Those double cab utes that been so popular with tradies in recent years are on the wane. Commercial vehicle registrations in June, which are largely driven by the construction and trade sector, were down 21.2 percent at 4,103 vehicles while new car sales registrations fell 17.5 percent, compared to a year earlier, according to Motor Industry Association data.

Belts being tightened: Year to date, new registrations have slumped 29.1 percent, hit hard by the covid-19 response across both passenger and commercial vehicle sales. MIA chief executive David Crawford said the latest figures were further confirmation of “belt tightening” in a recession. However, pure electric vehicles continued a modest rate of monthly registrations at 131 units for June, with 54 PHEV’s and 590 hybrid vehicles sold for the month.

SME loans in demand: The popularity of the Government’s small business loan scheme being administered by the Inland Revenue Department has led to its extension. The government announced the scheme would continue until the end of the year in an attempt to continue to shore up business confidence in the wake of the Covid-19 pandemic. Applications for loans worth more than $1.51 billion have already been made by 90,485 small and medium-sized businesses as of last Friday.

IRD more popular than banks: The scheme involves minimal due diligence, which has made it by far the more popular option for small businesses seeking emergency working capital. By comparison, the Business Finance Guarantee Scheme administered by the main trading banks, which lets them lend up to $6.25 billion with an 80 percent government guarantee, has only managed to lend $86 million, although banks said they had deferred repayments for 55,406 consumers to the value of $19.5 billion. But the amount is still well short of the IRD-administered scheme which is interest-free for the first 12 months, rising to 3 percent thereafter for a maximum loan period of five years.

Sacré bleu: Air France has become the latest international carrier to slash jobs announcing that it plans to shed 7,600 jobs, or 17.5 percent of its current workforce, over the next few years. Its subsidiary HOP!, a regional French operator, will cut 1,020 jobs over the next three years, nearly halving its work force.

Pas bon: At the height of the Covid-19 crisis in recent months the company said it was losing €15 million (NZ$25.8 million) per day. The global airline industry is expected to lose a record US$84 billion (NZ$129 billion) this year, according to the International Air Transport Association, which is not expecting a return to profitability in 2021, even if there is a sharp rebound in global economic activity.

Andrew Patterson is Newsroom's Markets Editor and has worked for decades as a financial journalist, radio presenter and editor with Australia's ABC, Radio Live and NBR.

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