Good day, welcome to the Pacific Edge Limited Half Year Financial Result Call. At this time, I would like to turn the conference over to Dr. Peter Meintjes, CEO. Please go ahead, sir.
Thank you, Operator, good morning, everybody. Welcome to the Pacific Edge Results Presentation for the H1 of FY 2023. Just as a reminder, please note that by participating on this call, you agree and understand all of the terms and conditions that are on this slide. Presenting with me today is Grant Gibson, and he will present on the financial results section later on. Yeah, a brief agenda here. We'll move through looking at the FY 2023 highlights, snapshot of the company, various updates on how we're delivering through the strategy that we announced in May, and then look at the financial results in some detail, and a slide outlining our outlook. The headline slide here for us is...
I'd like to direct you to the increase of 34% in our total testing volumes over the result we had in the first half of 2022. An increase of 35% in commercial test volumes on the first half in 2022. An increase of 62% in terms of growth in operating revenue and a net loss after tax of NZD 10.6 million. Pacific Edge remains with a strong balance sheet, NZD 93.5 million cash and cash equivalent. As we continue to deliver on our strategy, research and innovation, evidence, coverage and guidelines, adoption, retention and revenue generation. At a glance, Pacific Edge is the image to the left shows Pacific Edge's global presence, headquartered in Dunedin, with U.S. lab operations in Hershey.
We are focused on commercializing molecular diagnostics for bladder cancer as currently Cxbladder by developing IP into products, generating clinical evidence for publication in peer-reviewed publications, and establishing reimbursement with private and government payers, all for the benefit of our patient population. Again, as a reminder, we, Cxbladder has a number of different products for assisting physicians to make decisions in the patient care pathway. What I wanted to just draw your attention to here is the value propositions on the right-hand side. A reminder that Triage, which can be used in primary care and specialist care, is used to assist clinicians to safely de-intensify urinary evaluation for low-incidence population. Cxbladder Detect is for use by specialists.
It allows clinicians to adjudicate diagnostic dilemmas, including equivocal cystoscopy and atypical pathologies in any patient population. Cxbladder Monitor, for use by specialists in the surveillance setting, for the monitoring of urothelial cancer recurrence, intended to reduce the frequency of surveillance cystoscopy and to improve patient compliance. Bladder cancer is a global challenge, a significant one. Pacific Edge is predominantly focused on the U.S. market within that global context. The largest single market, with the largest single payer, Medicare, where we already have established reimbursement. The, the CMS as a payer, desires to be first with best-in-class innovation, and it often demonstrates this by offering higher pricing and higher reimbursement than other regions of the world. It has the most...
U.S. has the most advanced healthcare system, meaning that a greater percentage of the population will actually receive the gold standard of care, when introducing new products like Cxbladder. This slide is unchanged from when we presented it at the full year results for FY 2022. As a reminder of our priorities for our investment program. In the near term, we are focused on adoption, retention and revenue generation. In the medium term, we are focused on evidence coverage and guidelines. In the longer term, we're focused on product improvements through our research and innovation. Having a look at our commercial testing volumes. I'd like to direct you to the top right-hand side of the screen here, where global testing volumes have increased by 34%.
Global commercial testing volumes mirror that, with a 35% increase. The breakdown on the lower left of the product breakdown on the lower left of your screen highlights that we have seen. This is driven largely by Detect, which has increased from 56% to 61% between the first half of 2022 and the first half of 2023. Focusing on the U.S. We just wanted to remind you of the contracts that we have with some of the largest payers in the region. Of course, the Kaiser Health Plan covers 12.5 million members with more than 85% of those in California.
In a progress update, with respect to rolling out across Kaiser, 2 Kaiser accounts are among the top 20 accounts at Pacific Edge, as we are growing there. We have, during the reporting period, we had 11 Kaiser sites place an order with us. The EMR integration, which has been of interest to many investors, is on track, although we do not have an ETA for completion yet. We will advise the market when we do. We're also continuing to drive adoption at the Veterans Affairs, primarily at the clinical evidence generation stage, through the DRIVE study. We have enrolled 80% of our target patient enrollment target.
CMS easily our largest payer, covers $61.5 million U.S. citizens and people over 65, and we are a Medicare buyer market because of the age, the average age of the patient for patients presenting with hematuria and ultimately presenting with bladder cancer. This continues to be a very important element for us. Consistent with reporting on these metrics for the last six months, we wanted to show the growth in number of unique ordering clinicians for Cxbladder, which has risen 46% from FY 2021 to FY 2023.
We maintain that this is an early indicator of future growth prospects and continue to focus on attracting new physicians to adopt Cxbladder while simultaneously focusing on increasing the utilization of Cxbladder at accounts that are already familiar with our product on the patient population. Very much focused on the detection of bladder cancer in patients presenting with hematuria or surveillance patients with grades and six months post TURBT for recurrence of the disease. We wanted to update our investors regarding the hiring plan that we announced in May. We have increased headcounts in sales, marketing, medical affairs and market access and reimbursement. We have diversified the role.
It's not just about adding headcount, it's also about making sure we've got the diversity of roles that are needed to execute commercially. We've listed some of the diversity of roles as well as the areas in which we've hired those individuals. For us, it's a very, very important component that medical affairs and market access are both new activities to Pacific Edge, new areas of the business. We believe that these are high value, high value teams that will, that will make an impact, not just helping to generate clinical evidence, but helping to communicate that clinical evidence either to customers in the case of medical affairs or in the case of market access, to communicate that to government and private payers.
Expansion in our marketing presence has been another key focus over the last six months. We have made several announcements and updates to the market about our presence at AUA and shareholder updates about our presence at the BCAN think tank. That's the Bladder Cancer Advocacy Network think tank event, which is a very. An event that connects research and researchers with patients in a very patient-centric kind of event. The IBCN in Barcelona. IBCN is an event that alternates between the United States and Europe in terms of where it is hosted. We featured a standing room only session on our biomarkers for diagnosis and surveillance of bladder cancer there.
So really focusing on our clinical evidence generation program at these meetings is driving interest from physicians. The SUO meeting, which is a big meeting for Pacific Edge, will be next week. The Society for Urologic Oncology is again one of the marquee events in the calendar, very research-focused, where we have an opportunity to connect with the people who are using our products in clinical trials and find new advocates that want to either be part of our clinical evidence generation program or potentially perform investigator-initiated trials. I've got a little slide on that later on as well. Growth in the APAC market is unchanged at present.
We have made some progress, however, in moving another District Health Board to adopt Cxbladder at primary care, and we are hoping for that to have the appropriate increase in throughput during the next during the next half. We have added a dedicated resource in Southeast Asia in terms of a business development manager to be based out of Singapore. That individual has only recently joined the company and just completed their first their 90 days of onboarding.
We're expecting them to be more active over the coming quarter and half. We wanted to be, you know, to maintain our transparency with investors about the situation with the proposal from Novitas, proposed LCD from Novitas that was released on the 28th of July. Again, this is Novitas outlined a new methodology for covering elective biomarker tests. They did specifically in as in this release mentioned, Cxbladder and Monitor as uncovered tests if the proposal were accepted. We would've received 45 days notice of that effect. Importantly, because this is a proposal that may be withdrawn by Novitas at any time, or expire within 12 months.
A small correction to what we advised the market before, we now understand it's not from the date of comment, but from the date of proposal, that the 12-month clock starts ticking. We note that in the footnote at the bottom of the presentation here. Pacific Edge has provided our written comments to Novitas prior to the close of public comments, and we are yet to receive feedback from Novitas. Due to the nature of how they operate independently, we do not have a timeline yet for a response.
The key messages that we want investors to take away for this update is tests are going to remain the coverage tests by Novitas, and we have seen no reduction in demand as demonstrated by the results that we have presented here for you today. Cxbladder has not been singled out. There are other tests that are affected and we are working with the 21st Century Medicine Coalition and those other partners in our responses to Novitas. Importantly, there have been no adverse reporting events. And this is important because if there had been an adverse reporting event, it is appropriate for a Medicare-approved contractor to review the clinical evidence. However, that has not happened.
That's why we maintain that it would be highly unusual for Cxbladder to lose coverage without an adverse reporting event. Based on the advice from our lawyers and from other experts that we've consulted in the industry and within our own team, the proposed LCD contains inconsistencies, unintended consequences, and a methodology that may violate Medicare's own rules. While we maintain that this is a potentially high impact event, we maintain that it is a low probability event. The proposed LCD appears focused on a particular challenge that Novitas does have. There are a large number of these SNP-based personalized genomic tests for guiding therapeutic decisions after a confirmed diagnosis.
The way that it's currently written, the LCD would exclude any kind of diagnostic biomarker tests, which we maintain is an error. The LCD takes a highly unusual step of outsourcing coverage determinations to third-party databases, and there's not really a precedent for that. There's a requirement that Medicare sets for this, is that Medicare administrative contractors are required to review evidence themselves and not outsource it to third-party databases. Consequently, Pacific Edge has the leadership team and the relationships, the lawyers, the coalition partners, the lobbyists, and remembers the recommendations from professional societies, physicians, and patient advocacy groups to affect a positive outcome, which for us is to maintain coverage of our existing product and have a path to coverage for any future products.
We maintain our position that the proposed LCD is unlikely to survive in its current form and continue to responsibly plan for all eventualities given the uncertainty. This slide is again, largely unchanged from prior presentations. The most important guidelines groups for Pacific Edge are the American Urological Association, the European Association of Urology, and the National Comprehensive Cancer Network, NCCN.
I wanted to direct you to the fourth bullet under the NCCN, is that NCCN does have an annual review of clinical evidence that, provided Pacific Edge has generated new peer-reviewed published information, we will be able to submit an updated clinical dossier to NCCN for them to reconsider whether we are still in the 2B or could be elevated to the 2A category. The clinical dossier is something that I will talk about more over time. It is a compendium of all of the clinical evidence that has been peer reviewed that is assembled together and presented both to guidelines committees and to private payers.
Our medical affairs team and our market access team play significant roles in, one, assembling the clinical dossier, and two, communicating that clinical evidence to either, payers or guidelines groups as appropriate. We continue to generate clinical evidence. The U.S. primary study and Singapore study, as we've previously mentioned to investors, that is going to be a joint publication, and the publication is still pending. It has proceeded through author review and is currently under peer review, and we hope to advise the market when that publication has been accepted. This way we continue to invest in clinical clinical development for all of our products.
In this particular slide, you know, we're trying to highlight for our investors when we will have the last patient recruited to the best of our ability to estimate. That's always a challenge, but these are our targets. Whether or not there is a patient follow-up step included prior to us being able to publish. In some cases, we can actually publish on some things immediately after the patients have been recruited and the test results are back. In other cases, to demonstrate the utility, in a longer term sense, we may need to follow that patient, for a year or two years before we can report on whether that patient definitely did not have a recurrence of a tumor or definitely did not have a tumor.
That's just part of some of the weeds associated with it, but it's important in terms of understanding the timelines to publication of the peer-reviewed evidence that comes from our clinical evidence generation program. DUCT and MONSTER are the two remaining studies that are highlighted on this slide. Importantly, we MONSTER was one that we announced earlier in the year, we have seen a nice rate of enrollment from the two sites that we already have on board. It's going very nicely. We wanted to draw your attention also to investigator-initiated trials and highlight why these are different and why these are valuable to us as an organization and why we should support them.
obviously our core evidence generation program revolves around generating analytical validity, clinical validity, and clinical utility evidence through peer-reviewed publication. Investigator-initiated trials are ones where an investigator comes to us and proposes how they might use Cxbladder for a particular topic that's of interest to them. Then we choose to support that by offering them some free testing under a research framework and allow them to generate evidence on our behalf using our tests. On this track, you know, to the benefit of the evidence being independent of us as an organization, and typically this kind of modest utility evidence is useful for creating familiarity and confidence with Cxbladder for the individuals running the test.
Local development of local evidence development that might be useful for payer access in a local market on a country-by-country basis. Simply to just get the scientific word out there and in terms of publications, abstracts, and presentations. You can see an update of the types of studies that we have underway. We've bucketed them a little bit here for ease of digesting. Again, these are an important way to augment our core clinical evidence generation program. Finally, talking about research and innovation, you know, we continue to evaluate product concepts to address unmet clinical needs. We've added a couple of scientists to explore the market potential of various products. You know, this is necessarily vague.
We do have that R&D effort focused on prognostics and diagnostics in urology, and an interest in head and neck disease with molecular signaling in urine. The primary thing that we wanted to just update on is the MONSTER study, which again, was also announced earlier this year. MONSTER is focused on minimal residual disease, which is slightly different from the recurrence of disease. It's also something that is used. Well, it was an unmet need in a post-TURBT context. After a patient has received the transurethral resection of a bladder tumor, you might want to answer the question, did we actually get it all? Currently a set of products can't actually do that.
Inflammation causes the gene expression markers not to be reliable until 6 months after the TURBT. Within that 6-month window, we would like to give physicians insight into products there and so our partnership with University of Canterbury is aimed to see whether we are able to do that. Moving on to Grant, who'll talk us through some of the financial details.
Great. Thanks, Peter. As Peter mentioned, our operating revenue has seen strong growth, growing to NZD 8.7 million. That's up NZD 3.3 million on the same period last year, which is a 62% growth. Of that increase, NZD 2.4 million relates to the underlying commercial test volume increases. That's driven by the 42% increase in commercial volumes in the U.S. this fiscal, which makes up 95% of our revenue. The other $900,000 relates to the weakening New Zealand dollar against the U.S. dollar, and we'll talk about that when we look at our operating expenses as well and the impact that's had. On a constant currency, our revenue growth was 45%. Total revenue is up 102% to NZD 13.6 million.
The strong growth is in part to the EPIC grant that we've seen with the USD 3 million benefit related to that, and also increase in interest revenue. Operating expenses are up 54%, but as I mentioned, that's also been impacted by the weakening New Zealand dollar against the U.S. dollar. When comparing it in a like-for-like currency, the growth of expenses is up 43%. We have a strong balance sheet which positions us well for future growth. Cash and cash equivalents are NZD 93.5 million as at 30th of September, and that's down NZD 12 million on the 31st of March 2022 dollars. If we look at the operating costs, as we mentioned, they're up 54%, but on a like-for-like currency, up 43%.
Peter's discussed the investment in people as one of the key initiatives, and that's responsible for driving 56% of that increase. A large component of those people are focused on commercial. When you look at sales and marketing costs, which are up 84%, a high focus on people focused on selling increases the sales and marketing, which accounts for 60-61% of all expense outputs. Our labor operation costs are also up 45%, which is largely driven on volume, but also we're incurring some higher freight costs, which have been seen with other companies around the world. Research, as we mentioned, we've got a higher focus on central studies, and that's driven costs up by 44%, along with the addition of a couple of new.
Great. Thank you, Grant. In terms of outlook for Pacific Edge over the next six months, we have cautious optimism for the final four months of FY 2023 as we continue to implement the strategy that we outlined in May. Acknowledging that there is a proposal from Novitas around our proposed LCD, but also noting that it has not impacted commercial or clinical throughput at this time. Even in the event of an adverse result from LCD, Pacific Edge has a path to reestablish coverage, we've worked on those contingencies. We have a world-leading technology, a strong balance sheet, and we are building momentum in the world's most important markets for bladder cancer.
Thank you everyone. We will now open to operators. We'll now take questions, audio first, one question per person, and then we'll go into some of the questions that have come through in the chat. If you have additional questions, please feel free to ask them now. Thank you, operator.
Thank you. If you would like to ask a question, please signal by pressing star one on your telephone keypad. If you are using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. A voice prompt on the phone line will indicate when your line is open. Please state your name before posing your question. Again, press star one to ask a question. We'll take our first question. I'm sorry, we'll take our first question.
Hi there. This is Matt Montgomerie from Forsyth Barr. Just checking you can hear me okay.
It's a little soft, Matt, go for it.
Sorry. Is that a bit better now?
Little better. Thank you.
I'll try my best. Firstly, well done on a solid result and, you know, the ongoing transparency in terms of, you know, the clinical evidence pipeline, etc . I might just start, Pete, on the outlook. You know, I acknowledge the improved transparency to the market in terms of the clinical evidence pipeline, cost investment, where that's going, personnel, et c. However, when I turn to, you know, that slide and bullet point number 2, in particular, you state that you're delivering growth in line with expectations and investing prudently. I guess it's difficult for myself here to understand, you know, what that really means with no reference point to broader expectations. You know, you outlined the strategy in some detail to the market in May.
Notwithstanding, you know, the ongoing Novitas uncertainty, it would be great if you could, I guess, kindly share with us those expectations at a high level, just for us to get a greater understanding of what, I guess, you're referencing and, you know, the broader trajectory. You know, firstly, is that in the last few months or is it, you know, I guess over the next three or four years, et c? It's just hard for me to get a reference point, I guess.
Matt, if I can rephrase to just try to understand your question. You're essentially asking what are our internal milestones for whether or not we're on track and going to continue to hire in accordance with our plan?
Yeah, exactly. I mean, it's just hard for us to get a feel for that from the outside looking in.
Yeah.
Yeah.
Obviously we don't, you know. There's certain elements of this that we keep to ourselves, in terms of how, you know, what those expectations are. What we have committed to publicly, in the last presentation in terms of increase in headcount, I believe was a total of 36 account executives and up to four regional sales directors. That's a total of 40 in the direct selling team. Right now, I believe we are at 32. So there is still room to grow. Of course, we don't hire them all at once.
It's really, really important that as we hire them, we make sure that they become top performers or at least performing like our tenured reps do, before we consider whether or not we should hire all of them. That is. That's in line with what we, with what we proposed, six months ago.
Yeah. Okay. That's clear. I mean, it's just trying to get a feel for the trajectory internally. Like, is that sort of low double-digit sequential growth run rate that you're experiencing, you know, broadly consistent with what, you know, you're seeing today in this last quarter and therefore looking forward as the cost investment matures? You know, it's just hard to get a feel for it.
Well, we think the analysts are doing a reasonable job of estimating where we are, you know, at the moment, both in terms of the throughput, the revenue, and the cost base. Yeah, we can probably chat a little bit more in our one-on-one session about how else that equal detail there.
Thank you. If you find your question has been answered, you may remove yourself from the queue by pressing star two. We'll take our next question.
Yeah. Hi, guys. It's Christian Bell here from Jarden. Just checking you can hear me okay.
Yes, we can, Christian.
Before I just start, Once we've asked our 1 question, are we able to come back online, or do we have to type out further questions on the webcast?
You can ask additional questions once everybody else has had a go, yeah.
Okay, cool. My first question just relates to the NCCN review in April 2023. By that stage, Kevin, you know, it's only what, six months away, four or six months away. What evidence do you think you will be able to actually submit to that? Will it basically be the U.S. primary study that's still pending, or are you going to be able to include some of the other studies that are already underway, so, you know, STRATA and all that? Part B is from your experience, getting the 2B recommendation, do you think any dossier that you'll be able to provide would be able to satisfy the additional requirements to get to A?
A great question. Firstly, we did not submit in FY, well, sorry, in Calendar Year 2022. There is a number of new additions that we can target for submission in 2023. As we've recompiled the dossier. That's just anything that we that was published on the letter in Calendar Year 2021 or 2022 will be eligible to be included in the clinical dossier and was not included in a prior submission. There are a number there. I'm sorry I don't keep track of all of them in my head, but my team do.
But to your other, the other part of your question, your pay question, we are optimistic that we will be able to submit the U.S. primary, Singapore Primary Data as part of that as well. Of course, the timelines are not necessarily up to us. We do have to wait for the journal to get back to us on that. As soon as we do, we'll let the market know. If it is published, it will be added to the clinical dossier and submitted alongside the others. Then, you know, what is our expectation? You know, we do believe that the clinical study, clinical evidence we've generated to date is good clinical validity evidence.
As we increase the strength of that, with multiple publications, we can, we should be able to get greater and greater inclusion. The key will always be utility data. Again, in the spirit of full transparency, STRATA is the utility study, that generates the highest quality of information. We are more confident, when we can include the data from STRATA. We have, we will continue to attempt it with validity data and modest utility data from IITs and other things, because that can also be used in our submission. And that we can be included in Group 2A as a consequence of that.
You'd say a low chance in April 2023 then, given it's more clinical validity as opposed to utility?
I guess what I'll commit to is it's a higher chance when we have STRATA published. We will definitely attempt it. We do also have utility data out of New Zealand, and there may be additional utility data coming from New Zealand researchers that will give us some a chance, but we don't control those independent publications and their timeframes. It would be irresponsible of me to know for sure what's gonna be in the clinical dossier. We will always focus on trying to include as much utility data as we can, because that is how we'll get the best result from the TCM and any guideline for it.
Okay, cool. Thank you.
We'll take our next question.
Good morning. Tom Deacon from Macquarie here. Thanks for taking the question. Just wondering, in terms of your key messages for investors under the LCD coverage update, you know, the adverse reporting event, what is the typical timing that you would receive an adverse reporting event in the LCD process? Is it when they're about to, you know, signify the finalization of the LCD, or does it typically happen at the draft stage?
Yeah. No. It's actually the other way around. An adverse reporting event, Tom, would be, for example, if someone used our product in clinical practice, found out that the sensitivity and the specificity were not what we published they were, and if the actual sensitivity and specificity were lower, lowering the performance characteristics of our tests, and they published that. That would be an adverse reporting event. There is no such reporting event and so it's not a component of the evaluation process. An adverse reporting event would be a trigger for Novitas to review the evidence, including that publication that contained the adverse reporting event, and then say, "Hey, look, we should drop coverage as a test." None of that has happened here.
Sure. Given the way that the Novitas has framed the changes to the LCD as it currently stands, you wouldn't expect to receive an adverse reporting event, right? Under the scenario.
Yeah. There is no adverse reporting event that management is aware of.
Understood. Thank you.
We'll take our last question.
Morning, Peter. Morning, Grant. Can you hear me?
Yes.
Yes.
Sweet. Congratulations on, some good growth. Starting out on the cost, that was a pretty substantial step up. For the full year, how should I think about that in 2H? Can we expect that to continue at the same level in 2H or perhaps step up a little bit more?
We don't give formal guidance as you know. You know, we continue to believe that the factors driving our business, including, you know, the access to hospitals, resuming post-COVID, including, you know, the increased spend on marketing, the increased spend in medical affairs, resources, market access resources, and direct selling resources, will all be synergistic over time. We believe that we can continue growth and not for quite some time. If you're asking more about, you know, can we give you guidance on the rate of growth? That's something at the time we don't do. What I would say is the factors going into how you might predict it going forward are unchanged.
We believe that it will be consistent.
Okay. Thank you. One final one, if that's all right. From your cash flow from operations, it gives cash from customers, and if you do that as a percentage of operating revenue, that's gone down to, I don't know, like 84% from 100%. Could you comment on, first of all, is that to do with Novitas? I imagine not, right? What would cause that?
All right. Is this a set question? You're looking at-
Yeah.
Well, Rob, could you, could you give the question again? I don't think we caught all of that.
Sorry. In the financial statements under cash flow from operations, there's an item where it's.
Yeah.
-flow from cash receipts from customers. As a percentage of your, excuse me, sorry. As a percentage of your total operating revenue, that's decreased year on year. Could you tell me about the drivers of that?
Yeah. There's been, we've had a bit of a delay in some of the billings to go through, which has now gone through. It's just delayed slightly the receipt of the cash. There's been no fundamental change in the recoverability or any of the underlying business drivers of that. It's just a slight timing issue that'll be rectified at full year.
Cool. Thanks. I'll chuck that to Nick here.
No problem.
There are no further audio questions at this time, gentlemen.
Okay, great. Thank you.
Yeah. I'll read out. We have a number of questions been received by the business, which is fantastic. I'll just work from the order that they've come in. The first one is around the Veterans Administration. Could the process of completing the DRIVE clinical studies also result in VA urologists beginning to actively use Cysview in their clinical practices? I guess, before the DRIVE study is completed. Yes, in theory it can. We do view it as more of a change after. The purpose of completing the DRIVE study is to establish in the Veterans Association on a veteran cohort, the utility of the test.
When we do that, then we've established medical policy, in addition to the contract, the payment contract that we already have with the VA. It's a necessary step to complete the study and for, to have it reviewed internally, to drive the coverage, which is a synonym for medical policy in this sense, within the VA system. Generally speaking, any adoption prior to the completion of DRIVE within the VA would be modest.
Thanks, Andrew. The second part of your question is on slide 16, we state proposed LCD contains inconsistencies, unintended consequences, and a methodology that may violate Medicare rules. Does the comment relate to Cxbladder usage or other tests?
The comment relates to the LCD itself. The proposal of the new approach that they have proposed, which affects a number of other tests, and not just Cxbladder, is the thing at issue there. It relates to multiple products.
Thanks. Yeah. Alain's got a question: Is your R&D focused on new products or improvements to existing products?
We actually segment our R&D into those two areas, product improvement, and new products. We do both. I would elect not to comment on the proportion of each, but we are actively improving current products, and we are actively investing in new products.
Richard's got a question. Has thought been given to the price for Cxbladder Triage, a lower price might drive up adoption?
We constantly evaluate, the appropriate pricing scheme. But due to the nature of hospital contracting, we believe we actually have, an appropriate price, on our, on our products.
This is from Chris. What's driving the change in the LCD rules? Is it simple, desire to reduce costs or is it a lack of confidence in clinical performance?
That is actually a very, very complicated question because we cannot know for certain what is driving them. We can, we have inferred, as mentioned in the presentation, that we believe Novitas has a genuine challenge. That challenge is how do they determine whether or not they should pay for single SNP tests that are part of pharmacogenomics testing. That is when a patient already has a cancer diagnosis, and then you try to decide what therapeutic might work for them on the basis of their genetics. They have written some rules to help them address the deluge of these markers that are coming in. Incidentally, PEBB has got swept up in that process. Again, we have written as such in the comment period.
While we don't know, Novitas' views on our comments, you know, we do believe that we are on solid footing, that the rules that they have created were not intended to affect PEBB. Nonetheless they, the proposal as currently worded, does say that.
Thank you. Peter's got a question, which I can answer, around what % of Pacific Edge's revenue comes from CMS or Centers for Medicare and Medicaid. We don't disclose that publicly, but we have stated in the past that around two-thirds of our revenue comes from the U.S., comes from either Medicare or Medicare Advantage, which is Medicare Advantage is a form of Medicare that's provided by private insurers instead of the government-focused. On Medicare and Medicare Advantage, we're currently receiving a high % of reimbursement. We wouldn't say the publicly what %, but it is high. That should give you enough details to understand the importance of Medicare coverage to Pacific Edge. Another question from Alain. Do clinicians receive rebates or payments for using Cxbladder within their products?
The short answer to the question is no. That would actually be. Again, there are complicated reasons for this, that we are, Cxbladder is reimbursed under Medicare Part B, which is outpatient. It is third-party billing as a consequence of being outpatient, not bundled care, which is Part A. When you have Part B billing, often incentivizing the physician to order the test can land you in prison, because you are essentially, you may be incidentally incentivizing a physician to give, to order a non-medically necessary test. There are some very serious rules around that. It is different if the physician is actually running the test in their own lab.
What you're asking is for us to change, is do we have a business model in which we sell a product to a lab rather than a reference, a service to a lab? Right now, that's not something that we do.
This is from Ty. Is Cxbladder able to meet the requirements of the proposed LCD in its current form? Are there required changes?
Hopefully we've been clear. In its current form, the answer is no. We've not been advised either of changes to the LCD or of changes we would need to make to address that.
Thanks. New question, Jamie. Do we have feet on the ground in Europe?
No, we do not. We attend conferences in Europe, that may be of relevance, to the, to our international program, and our U.S. program.
Christian. Second question. I understand the investment hasn't had enough time to make an impact. So to give some forward indicators that could provide some confidence, can you give us an idea of perhaps the accounts that have been EMR integrated or some other KPIs you think will be useful to gain confidence in the quarters going forward?
Well, thanks. We kind of already do that, you know, releasing the throughputs, information on a quarterly basis. Also the throughputs per ordering clinician, and other data like that, which we think throughput is certainly the leading indicator of revenue. Both when it is as a clinical trial or as an evaluation by potential commercial customers. We think those are ones that you should rightfully be paying attention to.
I've got another question. Are you planning on getting FDA approval by team Trent?
The short answer to that question is no. That would be considered as it is not a requirement for operating an LDT. In fact, a CLIA-regulated LDT, it's not, it's not required for any part of our business in the United States.
Thank you. Dan, are you able to provide more details on expectations around the Kaiser ramp-up?
Not really is the answer. We are expecting that the EMR integration will make it easier for clinicians who are already familiar with the product to order the test. We will also have to engage in education of our customers within Kaiser who are not familiar with the test and leverage Kaiser resources and our own resources to do that. We do believe that the EMR integration will make it possible for everyone to initially the SoCal region to order the test easily. The interface itself will provide prompting as to when is the appropriate use of the test. I'll give you an example for that.
If a patient is being evaluated for hematuria, they have an ICD-10 code associated with that in their electronic medical record. The software, the EMR integration will recognize that ICD-10 code, and Cxbladder will be available in the dropdown list of available tests for that physician to order, possibly even as a recommended test or a required test to order on a patient presenting with hematuria. Those kinds of things we believe can have a significant, a significant impact. There is no substitute for the amount of effort we will have to do to educate physicians on Cxbladder within the Kaiser network, but with a combination of our resources and Kaiser's resources, once it is available.
Great. We have another question on the proposed LCD. It's focused on the comments that the LCD appears focused on SNP-based PG tests for guiding therapeutic decisions based on confirmed diagnosis, apparently excluding diagnostic biomarkers from clinical toolkits. Question is, does this relate to Cxbladder?
Again, hopefully we've actually made it clear. We don't think it relates to Cxbladder. Currently as proposed, Cxbladder is an affected test by the proposal. That is also why we believe that there are myriad ways this could be resolved for a positive outcome while acknowledging that there is uncertainty and if they don't listen to us and other affected companies, they could proceed. There is some risk. We view that it's low probability because the wording should not apply to diagnostic tests.
Great. Thank you. There's a question around that I can answer from Chris, which is what recovery is PEB made on tests that's processed prior to issuing an LCD codes? It's probably very clear at the full year last year that there is no expectation on any recovery and we have removed the note that was included in the accounts about that potential. That has become clear as time has moved on and there's no expectation of any recovery of those tests prior to LCD coverage. A couple more questions from Christian. You had said that you were trying to schedule meetings with Novitas and C21. How is this going?
Novitas have indicated to us they won't take a meeting until they have fully reviewed the comments, from all groups. However, we have had a meeting, facilitated by our partners with C21. That's the 21st Century Medicine Coalition, with CMS. CMS being the national organization, Novitas being the local Medicare administrative contractor. We have made them familiar with the issue. They, they were not familiar with the issue because it's a Novitas initiative, a Novitas proposal. Consequently, you know, they will, they will now, review that internally from their perspective as well.
I've probably got time for one more. This is in from Christian. Can you provide details on the initiatives and strategies that are being led by the medical affairs and virtual sales team to educate and grow the pipeline?
Yeah, I can give a little bit of color there. Again, a lot of this stuff happens at conferences, a lot of the stuff is just sort of BAU. Key opinion leader engagement is a very broad bucket that involves assembling speakers bureaus. That's people who will speak on behalf of our company as experts in Cxbladder. We build a kind of a group of them that will speak to other urologists on our behalf. We will, you know, at conferences we will have principal investigator meetings, which we are doing at the SUO meeting.
We will organize clinical advisory boards to guide us on the next phase of growth, and the appropriate clinical trial design for various utility studies. It was a combination of our medical affairs team and those experts on our clinical advisory board. We will also, you know, make medical affairs messaging and our clinical evidence generation or our clinical evidence, something that we communicate through medical communications on podiums at conferences. These are paid presentations where we bring speakers. There are some announcements I believe that are already on social media, and speakers will be speaking on our behalf at the Society of Urologic Oncology next week. So we promote those kinds of activities to customers.
Anything that is around the communication of clinical evidence to urologists, those are activities that the medical affairs team will be involved in and leading.
Great. Thank you, Peter.
I think our time is up. Yeah, thank you, operator. We can end the call.
Thank you. This does conclude today's conference. Thank you for your participation. You may now disconnect.