Good morning, everybody. My name is Peter Meintjes, Chief Executive Officer at Pacific Edge, and welcome to our FY 2024 financial results. On the call and in the room with me is my CFO, Grant Gibson, and remotely available for questions, our chairman, Chris Gallagher, and Director Sarah Park. Please take note of the disclaimer, as everything we say today is subject to this important notice and disclaimer. So we're gonna walk through a quick agenda here, look through some of the highlights of FY 2024. We're gonna look at what we've been doing from a strategic delivery standpoint, our financial performance, ESG and outlook, and number five, we'll take some questions at the end.
So, starting with the highlights, over the last year, we have seen a 3% increase in global testing volumes. We have seen an increase of 22% in the operating revenue over FY 2023. This has resulted in a net loss after tax of NZD 29.5 million. But importantly, we want to highlight for investors that the first half and the second half were dramatically different, as we have responded to the uncertainty from Novitas, and that there has been a drop in monthly cash burn in the second half compared to the first half of 24%, leaving us with NZD 50.3 million cash and cash equivalents.
As we've gone through the year, we have refocused the business on the clinical development of Detect+ and Monitor+. We'll talk about that in more detail through the deck. We have recently published the clinical utility of Cxbladder Triage from the STRATA study that we were running in the Journal of Urology, and presented in a paradigm shifting session at the AUA 2024. In August, we did restructure our commercial operations. We focused on profitable territories and on non-Medicare revenue streams, and we have reduced the average monthly cash burn by 24%. We have improved cash collections, and this is something we've provided more detail of to investors than we have previously, with an average sales price increasing by 18% in the current half over the second half in 2023.
We have adjusted our sales messaging, with renewed focus on the clinical and economic value of Cxbladder, and we are well prepared for all outcomes, awaiting a decision on Medicare coverage. Just as a brief reminder to all of our investors of how we create value. So we are focused on adoption, retention, and revenue generation in the immediate and short term. Longer term, we are focused on evidence generation, coverage, and guidelines, and long term, we are focused on research, development, and innovation to drive value for investors. Our results have shown that growth has slowed in the second half amid the draft proposed by Medicare.
But overall, there is a 3% increase to a 32,633 tests, though for the total laboratory throughput for the year. And we show here how that has changed between FY 2020 and FY 2024. You know, being relatively flat, the 3% growth. We've also broken it down by test type to show the breakdown between triage, detect, and monitor. And we've also shown not just the total tests, but also the commercial tests, which are the ones that we're able to bill for. The second half has been characterized by capital preservation and looking for new revenue sources, and this has provided us with some level of resilience.
So we've demonstrated that we are committed to maintaining a strong balance sheet, and we are continuing to manage cash carefully. We also have had a strategic response to the, you know, to the proposal from Novitas to the draft, and we introduced what's called the Enhanced Patient Responsibility, where we've asked patients to pay for some fraction of the test in the situation where their insurer declines to pay for the coverage. We've also had a deeper focus on value-based and institutional accounts, most notably, of course, Kaiser. We've refocused our clinical evidence development program to, you know, to deliver on the outputs and the endpoints that are needed for coverage and guidelines, to ultimately establish coverage certainty.
The best example being the rapid acceleration of STRATA. We continue to look for ex-U.S. opportunities, though we do advise investors that these are still in business development and are relatively small, whether they are in the Middle East and Israel, the Latin American countries, or indeed through our operations in Southeast Asia, where we are largely working through distributors. So, the foundations for growth are through our U.S. sales, and we have through the course of the second half, firstly, we reduced our sales force in August, but subsequently we adopted a policy of not backfilling sales reps as we looked to conserve cash, because it takes a while to train new sales staff.
With the uncertainty, the length of time it takes to train new sales staff, the trade-off, rather, was not there. So we adopted a position of not backfilling, which has resulted in the sales force actually becoming more efficient on a test per headcount basis. There are some other consequences associated with that. Sales territories are larger and more challenging for our reps. But our focus has been on the larger and more reliable accounts, and scaling volume within those accounts. We've also, again, echoing my point from earlier, we've focused very strongly on communicating the clinical value and the economic value associated with risk stratifying patients to reduce the number of cystoscopies. So this slide includes some new information, or relatively new information.
The top sales force efficiency graph was published in the quarterly shareholder report in April. But what we're showing here is, as the number of sales FTEs have been reduced, and we continue to focus on cash preservation, that we're actually able to demonstrate a form of sales force efficiency. And that is actually up 59% over the same period. So we anticipate that given this is a novel analysis shared with investors, that there may be some questions on this, but we view this as an overall positive given the situation that we are navigating. Another important metric that we direct investor attention to is the improvement in the average sales price. You know, as you know, we collect revenue from insurers.
In many cases, the insurance companies pay, and they are reliable, and in other situations, they do decline, and we have to appeal to get paid for our tests. In some cases, when the appeals have been exhausted, we now are electing to bill patients through an Enhanced Patient Responsibility. And that manifests in an increased average sales price. We've also increased the utilization of appropriate patient types from the Kaiser Permanente population, which increases the proportion of Kaiser in our overall mix, which positively affects the ASP. And we have received Medicare reimbursement for triage since January 2023, which improves that as well.
In terms of appealing, when denied, by typically Medicare Advantage payers, having medical necessity documentation and improving that element of our business operation, also has been paying dividends. While overall throughput and overall revenue is down, the efficiency of our operations, as demonstrated through ASP, has been improving. When we talk about selling the value, the, the clinical and economic value of Cxbladder, we're really wanting to highlight, you know, one critical thing, and that's that, for 100 patients that may present, to their physician with microhematuria, only 5% of those are likely to actually have cancer. And as a consequence, there's a large number of cystoscopies that are being done on patients that are, that don't have cancer, and, in most cases, these can be safely avoided.
However, the current guidelines do say that all of those patients should receive a cystoscopy. By integrating Cxbladder, you can reduce the number of cystoscopies to find the same number of patients. And so only performing 22 cystoscopies to find the same five cancer, based on the rule-out rate published for the detect test. What this results in, from an economic standpoint, is that there's an average of $500 of savings to the payer component or to the hospital system of $500 per test using national average data, as published in our budget impact model. Again, something that we are quite proud of. We continue to drive activity in the Asia Pacific, and we continue to consolidate in New Zealand.
One of the trends that's pleasing here, in our effort to be to operate more profitably and with a longer-term view, we've reduced the number of evaluations and spent quite a bit of time migrating our customer base over from either free evaluations or medium-term trials over to commercial volume. So you can actually see an uptick there from the first half to the second half, increasing the commercial tests, and of course, the percentage of commercial tests out of the total number of tests. We continue to strengthen our operations from the inside, while you know, while there are these external forces that we can't control. We have focused on electronic medical record integration, specifically at Kaiser.
We are developing a customer portal, which we hope to be able to deploy to customers in the next couple of quarters. We've improved our internal lab operations and customer service teams with a range of performance excellence programs that specifically look at a highly detailed KPIs that we manage them to in an effort to improve the systems across the board. The most important digital achievement, I think, of the last year was, of course, our EMR integration at Kaiser. And that did go live in November, and we have continued to update the market in modest ways about that, about the progress and about what that change means.
We think it's very important that we don't distill out for investors, you know, the performance of a single customer. So we take an approach that we won't break down the specific throughput of revenue associated with Kaiser Permanente. However, we do also think it is important for investors to understand qualitatively that this has been a highly meaningful change inside the Kaiser system. Instead of patients receiving a kit in their own home from using the in-home sampling system, they now provide a urine sample when they visit a Kaiser physician. Kaiser manages the inventory across the 15 sites for us, which we consider to be a great operational improvement. All 15 sites across Southern California are now ordering, and the volumes are increasing at all of those sites.
There are regular meetings of the chiefs of those sites, where Cxbladder adoption is a key discussion point. In something of a unique opportunity within the context of the Kaiser system, Pacific Edge staff have been included on some of those calls to help answer questions for any of the sites that may be adopting more slowly. So the opportunity overall for Southern California is quite significant. You know, Southern California represents about 37% of the 12.6 members covered by Kaiser Permanente. We are continuing to work with the regional chiefs of Northern California, Mid-Atlantic, and all of the other regions within Kaiser to grow beyond this.
But we are not yet ready to inform the market of timeframes for those rollouts. We believe that the best evidence that we can provide to the remaining sites of the Kaiser system is a successful rollout in Southern California that delivers the value that we have proposed, and that the folks at Kaiser that implemented have established with their institution. So as we demonstrate that to them with their own data, that's gonna be the strongest and most expedient path forward to other Kaiser locations. From a research development and innovation standpoint, you know, we have offered products in hematuria evaluation and in surveillance for quite some time. These products have served us well, but we have continued to invest in better performing products.
The first publication on Detect+ was back in, I think December of 2022, where we highlighted improved performance. In fact, we highlighted that the performance was so good, it would replace the value proposition of Triage, 'cause it is the best rule-out test, has the highest NPV, and it would be the best detect test, which has the highest sensitivity and highest PPV. So, we've reduced the need, we've reduced the confusion, and we need only a single product for hematuria evaluation, that we will be able to use with our customers, for that value proposition. While we haven't commented publicly about the roadmap for Monitor+, we will be extending those DNA markers to the Monitor product.
And taking, you know, and developing a Monitor+ product that we also expect to have some improved performance, and as and when we achieve those milestones, we'll advise the market. So another really important element of our future for Detect+ is the price that Medicare may pay for this test. As you know, we currently enjoy a price of $760 for our RNA-only test, and as we've added the DNA markers, we've got Detect+, a new code. And we will be attending the pricing meeting on June 25 to establish a new price for Detect+. In the last quarterly update, we gave a description as to what that process looks like inside Medicare.
It's largely a mechanical process, where they look at the resource utilization required to run the first test. They look at the resource utilization to run the DNA component of the test, and we are expecting that they will add those two together to determine the new price of a test. We're not yet able to guess for the market what that price will be. But we are anticipating that we will enjoy a higher higher price and a higher margin for that test. And we will know sometime in the next, or sometime within three months of that meeting, the market is typically advised of the results of that meeting.
Of course, the question I have received most regularly over the last two years relates to our coverage position with Novitas. And importantly, Pacific Edge has, well, Cxbladder has remained a covered test in all forms over the last two years since the proposals and drafts for a genetic testing for oncology have been around from Novitas. We have, you know, we have continued to keep investors informed through the quarterly shareholder reports. But the most important things that we can communicate here is that there has been very strong opposition from our community, and very strong support for us as a company and diagnostic, sorry, urine-based diagnostic tests in general.
We have been able to channel that support into the appropriate feedback mechanisms, after getting the draft—sorry, the final version turned into a draft again in July, going through an appropriate notice and comment period. We've undertaken additional meetings with Novitas and with Medicare. So in November, we met with Medicare, and Medicare requested that Novitas meet with us in January, and Medicare were part of that call as well. And Medicare asked us, or sorry, asked Novitas to consider those meetings and the associated presentations to be part of the official comment record, which again does not guarantee any result, but does guarantee that we are being taken seriously.
We have, I think the note is on a different slide, but we have, as a consequence of publishing STRATA, and even though it is outside of the comment period window, we have informed Novitas that of the STRATA clinical trial, so they are aware of that information as well. Either way, we expect to know a result by the 26th of July this year. And if we do not hear from Novitas a final decision, the proposal will expire, and the status quo will continue. So our strategic responses to the Medicare determination.
Look, if we get an affirmation of coverage, we have plans in place for all outcomes, but we need to look at the specific text, what it means for our current products, what it means for our future products, and look at the, you know, the appropriate way to grow again. Pacific Edge is a growth story, and so we would expect to return to growth on affirmation of coverage, and we would make those decisions following a strategic review of plans that are already in place. In the loss of coverage, we would explore all of our legal options. We would extend our Enhanced Patient Responsibility to patients who have Medicare Advantage and Medicare.
We would further review the structure of our operations and to reduce our cash burn and preserve capital in line with existing claims we have made to the market. We would continue to explore all of the other strategic alternatives that could support the company through to regaining Medicare coverage and advancing the commercialization of Cxbladder globally. Long term, it's important to remember that our focus is on clinical evidence generation. We do continue to work towards AUA guidelines inclusion for all of our products. NCCN only has post-diagnosis guidelines, so Monitor is the only appropriate product there. But we continue to work for Monitor being included in NCCN guidelines as well.
We continue to invest in medical affairs and the digitalization initiatives that will enable clinicians who continue to order Cxbladder to follow clinical pathways on all appropriate patient types. So we wanted to highlight for investors, we've used this slide a number of times before, but about the process that the AUA and the NCCN and EAU follow. So NCCN and EAU have annual revisions to their guidelines, and with NCCN, we make a submission based on new evidence, and we ask them to revise their guidelines. Again, because they don't cover hematuria evaluation, we don't expect that they will accept the evidence from the STRATA clinical trial that's recently been published. But future evidence for Monitor, we expect to submit in that forum.
The EAU do their own work without submission, and they publish guidelines around March every year. There have been some updates to the guidelines that say that biomarkers may have value in the initial evaluation of hematuria, which is new. They have previously only said that biomarkers may have value in the surveillance setting. So that is, you know, while the EAU is not generally recognized in the United States, it is obviously recognized in Europe, and while we don't currently operate in Europe, it is still important to understand progress that we are making in those guidelines. The one that matters the most for us, the most consequential, of course, is the American Urological Association.
We want to highlight for investors that the AUA have made amendments to non-muscle invasive bladder cancer guidelines, where they in January, after reviewing the literature, and they gave Cxbladder a mention by name in the future directions section. So that is not the guidelines inclusion, but it is a promising technology to watch. And we view that as generally a positive sign that when we are able to publish more information on monitor that the guidelines committee at AUA will be looking to see whether they can adopt. So, Strata was published. The paper itself went live during the session that is shown here on screen featuring Dr. Lotan.
But I wanted to just give a small digression, because it's not just about the result that we've achieved here today, or that we have achieved, that we can now go and talk about. It's also about how, the Pacific Edge team created this result. And this result, involved, the clinical research associates spend for 6 weeks, traveling pretty much nonstop, around the United States to pick up all the CRFs that were necessary to accelerate, this timeline. Because, the AUA notified us in January to say, "Hey, if you can turn your abstract into a full manuscript," that they would put it on a path for expedited review.
To be able to accelerate a study by nine months is an extraordinary feat, and one that I'm delighted that my Chief Medical Officer, Tamer Aboushwareb, spearheaded. But he got the entire clinical science team and medical affairs team to work above and beyond in terms of number of hours per week, days spent away from one's family to deliver this result in a time frame that was really quite close to impossible. Nonetheless, we did it, and we managed to get a manuscript ready for the peer review process by the twenty-ninth of February, and then we had to wait until that was ultimately published and accepted. So moving on to what the result actually was.
So we have demonstrated for the first time in a randomized clinical trial that a Cxbladder product, specifically Triage, can safely reduce cystoscopies by up to 59% when that Triage result is shown to a physician. That is a tremendous result that responds to any question when we ask a physician, you know, "Would you, you know, would you defer a cystoscopy or avoid a cystoscopy for this patient?" And they respond back, "You know, where is the evidence for that?" And so the evidence is now here. It's unequivocal, and that overcomes a major sales objection, and we are very proud of that achievement. Nonetheless, but the result itself is fantastic. As noted on an earlier slide, we have submitted that publication through Novitas.
We have included this in our clinical dossier, which we have, which we use to discuss with hospitals and strategic accounts and payers. And we are also using the data that was brought in quickly. We are able to use data from Strata to further improve the Detect+ algorithm for the clinical launch when it is ready. Our first opportunity to promote the Strata paper was at the AUA, and we had a great brand presence there. We have largely cut back on marketing expenses, but we also wanted to share with investors that where we can take innovative approaches to getting Cxbladder in front of the eyeballs of urologists, we do so.
And we have very high-quality marketing, and we leverage the opportunity to advertise on elevators, in the main hotels associated with the conference in both of them. We also had the opportunity to present at a Veterans Association specific meeting, sub-meeting, and we have a number of micro meetings in meeting rooms with key accounts, folks who are doing clinical studies with us, and other business development opportunities, maximizing the away from booth value of being at a conference as well. One of the narratives that we have been very very keen to foster is around our catalysts for coverage certainty.
Here we have listed, obviously, you know, this, all of the publications that we see coming and, to the best of our ability, you know, when we expect they will be published, and of course, what type of evidence they are. As a consequence of what type of evidence they are, you can then make your own assessments about our ability to secure coverage on those bases. So STRATA is clinical utility evidence of Triage. Clinical utility evidence is obviously something that is critical to guidelines committee.
Historically, clinical utility has not been critical for the purposes of coverage, but the one of the important features of the STRATA study is that it also validates the performance characteristics of Cxbladder Triage in a novel population compared to all prior studies. And so I won't go through all of the individual studies here, but this is to highlight that we have a roadmap of key events that can catalyze us to either a more robust version of coverage or re-coverage in the event that we do lose coverage from Novitas. Importantly, I wanna point out the Kaiser Permanente real-world evidence publication. So we work very closely with Kaiser.
We do not govern this time frame, but because of our close partnership, and their desire to be seen as leaders in this area, we have a reasonable degree of confidence that that publication can be used for a reconsideration request in Q2 2025. We also wanted to highlight just a high-level theme in our industry is that the FDA has published its final rule to regulate lab-developed tests, and also that Pacific Edge is prepared for all of this. So the final rule was published on April 29, asserting that they have the right to regulate Cxbladder and other medical, or, and other LDTs as medical devices under the act from 1976.
What that final rule proposed was that there is enforcement discretion for pre-market approval for currently marketed tests that and those that are New York State accredited. So we are a currently marketed test, and we are New York State accredited, meaning that we expect to receive enforcement discretion. Any new Cxbladder tests may be required to follow the steps of the phase out, but currently pose no risk to our Detect+ launch plans. And while we welcome regulation, we actually do believe that this proposal from the FDA is wrong, that it does not foster the right approach for laboratory-developed tests.
We prefer that the FDA finds a path to creating the regulatory framework that it needs to regulate the LDT industry through an act of Congress. Regardless of our position, we are prepared, and we are already adapting. I think it's important to kind of establish you know how much more does Pacific Edge need to do to meet the requirements of the FDA? And because I think the immediate reaction from a number of investors is that oh that there's quite a considerable increase, and the reality is that's not the case. We work in a highly regulated environment already, where we are compliant with CLIA, CAP, New York State.
We are already underway with introducing ISO 13485, which is an IVD standard, for our urine sampling system, our collection device, in the New Zealand lab. It is an incremental gain to add new requirements to an existing quality management system that we have. We believe we are prepared, and we will continue to comply with any FDA changes. We do believe that the FDA will face some legal challenges, though, that those have not eventuated yet, and we do expect that some of these timelines will be adjusted. But we are actively resourcing all of our departments to be able to comply with all of these regulations, and will continue to do so.
So as we ready for the, for the launch of, our new Detect, the launch for Monitor is further away. We need to ensure that we have the digital and lab operations that can support that. We also are working to simplify Cxbladder, and that is an aim. There's several aims associated with Cxbladder simplification, but to reduce technician time, lower cost of goods, lower turnaround time, and to be able to increase throughput and increase automation. Which we can measure through internal KPIs of how, how much throughput we have in the lab compared to the number of staff that we have in there. We aim to create an IVD-ready, kittable version of Cxbladder. First centralized deployment, that, the timelines that have not been established, but that will support our international market expansion opportunities.
We have recently completed the analytical validation of an automated end-to-end lab workflow for RNA and DNA. We will actually publish that analytical validation. It's one of the coverage catalysts on an automated Cxbladder for Triage, Detect, and Monitor, targeting publication in Q3 2024. Moving on to Grant for the financial performance.
Great. Thanks, Peter. I'll just take you quickly through the high points of the financials for the financial year ending thirty-first of March, 2024. So revenue was up 22% year-on-year, and that was driven by the increased volumes, and more importantly, an 18% increase in the average sales price that we saw in U.S. tests. The restructure of the sales operations late in the second quarter of the year, to focus on profitable territories, saw the second half revenue decline 17% half-on-half. While that said, the average sales per FTE in the last quarter dropped 51% on the same period last year. The positive news, even though it's still reasonably small volumes, APAC revenue grew 62% year-on-year, to contribute NZD 1.4 million to the revenue line, and now contributes 5% of the overall group revenue.
This is a key metric for us, the second half cash burn. So we focused predominantly in the second half to try and reduce that cash burn while increasing investments and strategic imperatives. So we successfully reduced that cash burn 24% half-on-half, from NZD 15.6 million down to NZD 11.9 million. Cash on hand at NZD 50.3 million at the end of March 2024 is expected to be sufficient to regain coverage in the event of a non-coverage determination. If we look at the high-level numbers, year-on-year is what is normally focused on, but I don't think that comparison actually tells the full story. So we'll look at half-on-half as well. Revenue was up 22% year-on-year, but down 17% half-on-half, as we talked about.
However, the reduction in revenue was more than matched by the reduction in expenses, which were down 15% half-on-half, and that resulted in a reduced net loss in the second half. More importantly, the operating cash burn, while up 1% year-on-year, was pleasingly down 28% half-on-half. Looking at that reduction in expense, the operating expenses were down 15% half-on-half, despite increasing the investment in research. Research expenses were up 42% year-on-year and up 20% half-on-half, as the group focused on clinical evidence as catalyst for coverage certainty, in turn, with product development focused on Detect+ and Monitor+. Our lab operations were down 9% half-on-half, driven by volume, and sales and marketing, as we discussed earlier with the Quarter 2 restructure, dropped 22% half-on-half as the group concentrated on profitable territories. I'll hand back to Peter.
Thank you, Grant. So we wanted to just end with a couple of slides here, reminding our investors where perhaps no reminding is necessary, that Pacific Edge is founded on improving social outcomes. We have a mission to help improve people's lives and patient outcomes by providing leading solutions for the early detection and management of cancer. Because we envisage a world where the early diagnosis and better treatment of cancer is within reach of everyone. And so Cxbladder delivers actionable information that can be used to advance the standard of care that physicians offer to patients, improve patient experience, quality of life, and healthcare outcomes, reduce the total cost of care for value-based or capitated healthcare systems, and deliver healthcare equity to poorer and/or rural communities.
Some of the evidence for this is the improved access due to availability in primary care across New Zealand as we've moved from secondary care to primary care. In Te Whatu Ora, Canterbury, it's already been published that urological waiting lists fell by 25% without compromising care. Patients can receive a kit delivered to their home within home sampling, meaning that we can provide nationally the same kind of service that you would find in any city. And so this is gonna be our first year of ESG reporting, and we wanted to highlight a couple of social, environmental, and governance goals that we have been advancing.
So our culture is one where high levels of staff engagement and participation in development opportunities is important and acted on. So we have an active program of diversity, inclusion, and fair remuneration. And the staff engagement hopefully highlighted for you earlier in terms of how our team banded together for accelerating the STRATA study. We've reviewed all major suppliers for compliance with modern slavery and human rights policies. And our health and safety record has that we have zero lost time due to injuries. That we have a very regimented and effective health and safety process at Pacific Edge.
On the environmental side, this is our first year of mandatory reporting under the Aotearoa New Zealand Climate Standards, delivered with FY 2024 as a baseline year. Our environmentally sustainable procurement policy was introduced reflecting new sustainable purchasing requirements. From a governance side, we use an FMEA mechanism, risk management framework embedded across the business, with routine reporting to our board. And we maintain a sophisticated compliance regimen with regulatory quality, health and safety, and manufacturing standards in every country in which we operate. On the governance side, we are delivering stability for investors, as we have announced some changes to directors with Chris Gallagher and Mark Green announcing retirements.
So Chris, who was appointed in July, is set to retire as the Chair, following the appointment of a successor and a structured handover later this year. He's available on the call to answer any questions related to that, or anything else. Mark Green, appointed in May 2021, is electing not to seek re-election, and will retire at the ASM meeting in September, as previously announced. The Board's nomination committee has commenced a process to appoint a new Chair and consider the recruitment of new independent directors. So, in summary and outlook, we are ready for all outcomes.
We have taken the necessary steps to manage cash already, and we will expect to manage cash reserves if Medicare coverage is retained or until recoverage in the event of a negative determination. We will continue to focus our business on the clinical development of Detect+ and Monitor+ for guidelines inclusion, and increased coverage certainty to secure the future of our business. We are gonna be focusing on the commercial operations on profitable territories, non-Medicare revenue streams, and on cash collections. And we showed that existing focus through the improvement of ASP already. We're gonna emphasize the clinical and economic value of Cxbladder in our sales messaging.
In terms of the possible headwinds, we think most of our investors are aware of this, but of course, there remains the specter of a possible non-coverage determination from Novitas on a new, from the new proposed LCD, and there is also possible negative physician and patient reaction to the Enhanced Patient Responsibility, when we pass that on to the patients, when insurance commercial insurance denies the claim. However, we want to focus investors on the fact that there are more catalysts than there were a year ago when we were having the same conversation. So there is a possible re-coverage determination or an affirmation of coverage from Novitas, after they follow the proper procedure.
There we, we have discussed the possibility of Detect+ pricing using a crosswalk process, from the 25th June meeting, with CMS. A range of new clinical evidence for driving coverage certainty. It is also just going to be a focal point for us as a business, is everything related to preparing for a product launch. Again, the date of which is not announced, but we are preparing aggressively internally. You know, has... is a tremendous catalyst and motivator within the business, to get to bring Detect+ to market.
Another potential catalyst is in the event of a negative scenario, and in the event that we elect to pursue litigation, success from that channel would also act as a catalyst for investors to take notice of. So with that, I will end, and we will open the line for questions.
Thank you. And as a reminder, to ask a question, please press star one on your phone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. In the interest of time today, we do request a limit of two questions per person. If you are called upon to ask a question and are listening via loudspeaker on your device, please pick up your handset and ensure that your phone is not on mute when asking your question. And your first question comes from the line of Matt Montgomerie from Forsyth Barr. Your line is open.
Thank you. Good morning. I might just start on what was quite a positive piece in the result, is just price per test, essentially. I'd just be keen for you to, I guess, talk through the run rate through the second half in terms of the evolution of that and potentially where you were at the end of the last quarter. Which then flows into, to, I guess, the trajectory or outlook in terms of continuing to improve that percentage of tests paid for. And then within that, I'd be keen for you just to specifically expand on, I guess, the test mix within that, by product.
Thanks for the test, Matt. So yeah, the run rate, of course, has a, it would follow a diminishing returns curve. Like, once we've made all the possible gains, it becomes increasingly difficult to have any more. These were off the back of specific initiatives, though. And while we have quantified them internally, we're not going to quantify them externally. You know, it comes off the back of a concerted effort to improve our documentation, specifically for the purposes of primary claims and appeals to Medicare Advantage payers. It comes off the back of special projects with payers who may have, you know, a high denial rate or have initiated clawbacks with us, which also happens.
So we establish a special project, and then we go in and we negotiate with them, and we say, "Hey, you know, why is this actually happening? Here's all our evidence." And sometimes we have to take that through an appeals process, through the ALJ, up to the ALJ level within the Medicare appeals process. It is also something that is affected by the patient responsibility. So we have got more revenue coming in from patient responsibility. The increasing component of Kaiser in our payer mix also increases the ASP. So all of those things are elements that increase that have allowed us to get that 18% gain over the last year. It is very difficult to predict how much more we can get.
However, the gain is baked in, and that's the key thing that we want to inform shareholders of. We want to make sure that you understand that once, you know, this is not something that we expect to go back the other way again. Of course, the Novitas decision would completely change that landscape, but assuming a continuation of coverage, this is something that our ASP has, to a greater or lesser extent, permanently increased to a higher bar.
That's good color. Appreciate it. Then just on, on Kaiser, I suppose, given within Southern California, I'd be keen to hear your thoughts, around how you're thinking about the ability to penetrate on a per population basis relative to New Zealand. Not acknowledging you're well below where you are in New Zealand today, but, you know, you, you've-- there's a period of time now where you've got more familiar, familiarity with, Kaiser's usage, et cetera. So I'd be keen for any comments there.
Yeah, look, it's
Talking volume.
Probably the most, the most honest way to answer that question is this, you know, we had the step change as that comes as a consequence of implementing the EMR, and we're now in the incremental growth phase. And as we advise investors and analysts, I think, you know, all the time, that even a step change is going to be a modest one.
So what I'm trying to, trying to foreshadow here, is that the hard work is still ahead of us to continue to grow within the Kaiser system, but that all the indicators are blinking green lights saying, you know, "Please go ahead." There's, you know, there are the leadership of Kaiser is very happy with the way that the rollout has gone so far. There are individual urology folks, some I met at the AUA inside Kaiser system, some I, you know, people I don't know by name that came up to me and said, "This is, this has been absolutely revolutionary, revolutionary in my practice.
I'm the chief at XYZ location, and I am really pushing all of my team to adopt this, because I can see the value that this is delivering for me personally." So there are anecdotal stories like that. So there's still plenty of room to grow in Southern California. And as I've mentioned before, we've got to get—we've got to treat Southern California like the blueprint for the rest of California. And we think we're on track for that. It is difficult to talk about timing for that. And it is also possible that the remaining Kaiser locations could make a single decision, right?
That, that is an option that's available to us, but that is more difficult for us, and, and we think it is more responsible to, you know, to just forecast growth within Kaiser more uniformly.
Perfect. Thank you very much.
Thanks, Matt.
Your next question comes from the line of Rob Morrison. Please go ahead.
Hi, Rob.
Hey, morning, Peter and Grant. Can you hear me?
Morning.
Yes.
Cool. So first of all, really good job on managing the cash burn. It's really pleasing to see that improvement in collectibility. And also, a real good job to the clinical team who managed to get that study out so quickly. Super impressive. So starting off, I just want to clarify something, right. So, you know, requirements, if Novitas's proposal to rescind your coverage were to go through, one of the requirements they have is that you get into NCCN guidelines. But so... And you've just released Strata, right? Which seems to have been well-received by the AUA. So if Strata enabled favorable Cxbladder inclusion in AUA guidelines, do you reckon Novitas would still be able to remove coverage?
So, that's a great question. So, it is a slight oddity in the way, in the approach that Novitas took by specifically calling out NCCN by name. Because, NCCN actually encompasses a range of different, you know, oncology disciplines that all treat their discipline differently. And I'll just give you a quick example: so prostate cancer, for example, does have early detection guidelines because they wanted them. The bladder cancer with a group within NCCN does not want early detection guidelines, and so there aren't any. And that's just, so there is no option for triage and detect to receive NCCN guidelines inclusion.
But, Novitas did in their final version from June 2 last year, they did provide what they call an alternative path to re-coverage, and so you can apply for a reconsideration request on the LCD, if you don't fall into any of the, you know, ClinGen, OncoKB, and NCCN biomarker databases. And that's one of the reasons why they did the evidentiary review at that time, which we believe they did a poor job of that, and have rebutted it. But the point is, there is a path to reconsideration that is outside of those three databases, and one of the most compelling things that they would need to reconsider is, or they would use in any reconsideration, is guidelines inclusion.
So, what I'm trying to say is that if for early detection, i.e. hematuria evaluation, detect and/or triage, were to receive a favorable mention in an AUA guideline or guideline amendment, that that could be used to facilitate a reconsideration request with Novitas under the current or future LCD. And that that would be considered highly compelling evidence, that they should, that they should cover the test.
Okay, that's super clear. Thank you. So I think your your run rate for year-on-year volume decline in Q4 was negative 19%. I'm just wondering if you can comment on what that was, you know, the exit run rate was. So, you know what I mean, did that deteriorate over the half, or?
Sorry, I just confirmed with Grant. It doesn't look like we have that number to hand. So, Rob, maybe that's one we can discuss later.
Yeah, it is always a wee bit-
Yeah, no trouble. Yep, I might-
Sorry, go ahead.
I'll slip another one then, and then, if that's okay.
Sure, yeah.
Cool, thanks. Just wondering if you're hearing about competitor tests, either from your sales force or just people you're talking to in the industry.
Yeah. So, look, we think it's really important to put a lot of qualifiers around competitors. So, there are and have been for some time, tests that are urine samples that detect either DNA or RNA or protein. So they use some kind of biomarker in urine that makes some claim relating to bladder cancer. Typically, when those are published, they have published analytical validation or developmental data that has no clinical significance, and they are looking at it, it's really just a scientific publication. But not all of them. Some of them do actually do clinical studies. Then it's also important to understand: what is the level of evidence?
Have they used samples from a freezer where they know the paired biopsy result, and they can calibrate their algorithms accordingly to massively inflate the performance characteristics? So that has happened, too. And so there are products that make competing claims, and there are products that use technology that, broadly speaking, competes with us. But there are no other current products that are actually that are covered. And there is one other company that is making a claim that they are covered, but if you actually do your diligence, we believe that they are not. Specifically because they're in the MolDX region, and MolDX agreed to now look at proteins.
And so because MolDX has changed from being DNA and RNA only to also include proteins in their purview, we believe that the claim that this company is covered is false. But they have received. They, the most likely scenario is that they have received a paid claim from Medicare, which, again, just as an anecdote, is something that can actually even happen by accident. And we think that that is the basis for their claim, so. The most important things regarding competition are: Do you have gold-class quality evidence? And that is why we focus on clinical evidence generation, and we have the strongest evidence of all of the companies in this space. And the second best way to put a moat around your business is execution.
And that is something that, again, while we have seen a drop-off in our ability to execute as a consequence of cash conservation over the last year, we are still, by far, the most well-known brand in this space. And pending certainty from Novitas, we think we can double down on that already strong brand recognition. And we believe we're extremely well positioned to out-compete any competitor.
Yep, agree. That makes perfect sense. Well, thank you guys very much, and best of luck for the Novitas decision.
Thank you, Rob. Awesome. Thank you.
Your next question comes from the line of Christian Bell from Jarden. Please go ahead.
Yeah, good morning, team. First question from me, so is related to Novitas. The last meeting you had with them was January, which you mentioned would be included as part of the review and comment, per re-review and sort of comment section per Medicare orders. Are you able to just give an overview of that discussion, and then as best as possible, translate that into feel, how you're sort of feeling more positive or negative about their final decision? And did they also provide any confirmation they would include the STRATA data that you submitted in April, given it sort of missed the window of opportunity?
I'll answer the last one first. They have not provided confirmation that they will consider it. We believe it is likely, given the level of scrutiny, but we cannot confirm that they will consider it. However, if they don't, that is another opportunity for us to use it for reconsideration immediately in the event of a negative decision. So, so that can sort of self-correct. In terms of the, you know, the meeting from January, the broad outline... We've maintained all along that, you know, Novitas are not necessarily a bad guy here, right? They have problems that they are trying to solve. And so they've made a proposed LCD, and we think they've got it wrong.
Part of the reason that they get it wrong is, like, you know, they are tasked with the same people inside Novitas are tasked with approving every therapeutic in that area, within their geography. Every medical device and every diagnostic test, whether it is, you know, for oncology or some other purpose. That's an enormous remit, and there's absolutely no way that they can be experts in everything. So when you understand that, it's really important, you know, to be combative second, but to wear the white hat first. And that means going in and educating them and say, "Hey, we know that you may not be experts in the standard of care in urology and the standard of care specifically for bladder cancer, but here is how it really works.
Here is the role that our test plays in enhancing the standard of care in bladder cancer." Educating them on hematuria evaluation, educating them on surveillance. And when you take that education approach, again, we think that is the path to greatest success. We also believe that it is important to highlight to them, because we don't think that they were paying attention to all of the nuances associated with Pacific Edge. We are a tiny component of the things that Novitas looks at. So we have to make sure that we are, you know, in double bold font and right in front of their faces with all of the key information.
So we outlined the timeline by which we were initially because, you know, prior to 2020, there were several reconsideration requests that did not result in coverage. It was only in 2020 that it did result in coverage. So we outlined that timeline for them. We walked them through it. Then we outlined the issues that we believe are posed by the draft and the issues that we experienced in the evidentiary review. And then we also included, and we think this is very important, we also included potential legal arguments.
Those were not the focus of the presentation, but because they are now officially part of the comment record, Novitas will have to respond to some of those legal arguments that are a bit more challenging nature, rather than the you know wearing the white hat and being educational in our approach. So we went in with both approaches.
Yeah, because I was just going to say, I guess, from the evidentiary review, they were quite, obviously quite critical, going all the way back to the sort of ground initial evidence from 2008 or 2010, I think it was. So do you think they kind of came away from that discussion with a slightly different mindset? Like, do you think it kind of worked, or do you... What was your kind of sense of how did you read the room type of?
Yeah. So look, that's a great question. But we believe that they were specifically trying to play everything with a straight face and a straight bat, so, and they did a good job of that. The only thing they asked us for was, and it was not Dr. Mann who asked the question, it was Dr. Graves, who was a newly appointed medical director with prior experience at MolDX and Noridian. But she asked if there was any new evidence, and that's one of the reasons why we believe it was important to get a copy of STRATA in their hands, because that was new evidence for them to consider.
Okay, cool. Thanks. That's great context. And then just, just on my secondly, on the sort of Kaiser rollout, you're obviously quite well progressed in Southern California, as you've mentioned. Are you able just give a sense of how well penetrated you are within that region compared to where you think you can be? And then just what were some of the key feedback for the APPs stuff in those meetings, where they were in attendance from some of those lower, users?
Yeah, we don't want to get into sort of specific comments of penetration there, but I would say that there is still plenty of room to grow. And just in terms of those discussions that we've been a part of, you can just think of it as, you know, there are 15 sites. Some of them were actually almost fully utilized, you know, even prior to, you know, to the EMR integration, 'cause they just like the test so much, or some physicians were using it at maximum. So it's all about, it's all about becoming more and more systematized. And so I'll give another piece of color here.
One of the things that we've noticed over the last six months since the integration is that it's not always the physicians that are placing the order for the test. And what we know is that that typically correlates with the... When the physician has made a decision and said, "I want you to send a Cxbladder test on all patients that meet a certain set of eligibility criteria." When the APPs and the nurse practitioners, and the physician assistants, and the other folks in the office start placing the orders for the test, that's when we know that it has, it has really started to penetrate within that account. And so we see more and more accounts adopting that kind of ordering paradigm, but it is by no means all of them.
There is plenty of work ahead of us, even in Southern California, to drive utilization.
Great. Thank you, guys. That's awesome.
Great. Thanks. There's four online questions. I'll just jump to them. Okay, the first one comes from Andrew. So thank you, Andrew. And he asked if we're able to outline any of the editorial comments that were on the STRATA paper, and what was the reception of the paper by clinicians at the AUA?
Yeah. So, there are actually some editorial comments that that are available online. I probably have the links in my email, but they should be publicly findable and publicly searchable. The comments were generally positive, although I think one of the commenters made some comment around screening, and say it's not ready for screening. But we make no claims about screening, so they showed sort of a partial ignorance on that particular topic. But otherwise, we believe that the commentary that is published is largely favorable, particularly towards the end. But I encourage you to Google for that and find it for yourself.
Though we will, we will make an effort to try to communicate that to investors if it is difficult to find, so please send us an email. I feel like there was another part to your question,
How was it received by clinicians?
Yeah, look, so in the early days, the best way to answer that question, again, is with an anecdote, but it's one that I believe is indicative of where we are. So we've talked about the messaging pivot for quite some time, you know, that we facilitated that after the reduction in force we did last year and at our national sales meeting in September last year. That was where we really refocused on the value. And so my experience when I went in the field with my team shortly after that in October was that everyone we talked to would ask, you know, "So where is your evidence for this?
That sounds, it sounds a little risky, but, you know, maybe we'll give it a shot." The conversation has pivoted, and that's testament to the work that our sales team have done in pushing that message. It's testament to our medical affairs team, who have done educating people on the value of the clinical pathways. But most importantly, we now have the evidence, so that if someone says, "Where is your evidence?" We can, we can show it to them. So they have been primed for the message in STRATA for the last 6-8 months. And so, my view is that everyone that we have shown the STRATA data to has reacted positively, but they were primed to react positively, because of work we had done upfront.
And so, that's now, you know, it's essentially confirming and affirming.
... Thanks, Pete. This question comes from Jason, which I think has actually been asked about the timeline for inclusion in AUA guidelines. I think you covered that thoroughly.
Yeah, yeah. And look, we don't, we don't have a timeline for inclusion in AUA guidelines. And we did talk about it on the slide, like, AUA, they have, they control the cycle for when they do full guidelines updates and when they do amendments to the guidelines. We do know that they have amended the muscle-invasive bladder cancer guidelines, which is unrelated to any Cxbladder product, and they have updated the non-muscle invasive bladder cancer guidelines, which is related to Monitor, and it was mentioned as a future direction. We do not know if they will or if they are updating the hematuria evaluation guidelines with respect to urine biomarkers.
Great. Thank you. Question from Timothy, who's a foundation, Pacific Edge shareholder. I think you've covered this one as well. Specifically, calls out Oncuria, a competitive product, and also wants to know about the sensitivity and specificity, and I think you've covered that, but also talks about the reimbursement, which you also touched on.
Yeah. So I mean, just regarding the competitive stuff, it is a very complex landscape in the sense that how the clinical studies were run, whether they were analytical validation, clinical validation, what the patient types were, whether they used freezer samples or prospectively enrolled. All of those kinds of things matter when determining the quality of clinical evidence. We are not aware that Oncuria has... And also, sorry, the size of the clinical studies in terms of the number of samples also matters a lot. So we don't believe that what Oncuria has published, and we are complete- we are acutely aware of them as a business. We are not aware that they have the same quality of evidence that we do.
And we do believe that they fall under the MolDX jurisdiction, and they do not have a Z-Code, and they do not have coverage, and they do not have the ability to be ordered from their website. So, we think that a lot of what you may be reading, they are not yet commercially viable, and so in that sense, they're not competitive.
Great, thank you.
That may change, but at this time, yeah, that's correct.
All right. And then last question relates to what's the potential impact of FDA's new regulation on the reimbursement of Cxbladder?
So the impact of what the FDA is doing now, it has absolutely nothing to do with it at all. However, if and when we are FDA compliant, either within the medical device framework of 1976 or some new proposed framework that results as an act of Congress, that will have a positive impact on guidelines inclusion. It would have a positive impact on coverage with Medicare. It would have a positive impact for coverage with private payers.
Something I have not talked much about, but we do follow internally, is that it would also have a positive impact in terms of appealing denials by private payers using what are known as state biomarker laws, which are a relatively new construct that are being promoted by the American Cancer Society, and are of unknown and unproven legal value at this time, but may provide an avenue for improved coverage in the future.
Great. That, that wraps up the questions.
Excellent. Thank you, Grant. Thank you to everyone for listening in today, and thank you for your questions. Talk to you in six months.