Earnings Call: H2 2021

May 26, 2021

Good day, ladies and gentlemen, and welcome to the Pacific Age Full Year Financial Results and Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to David Darling, CEO of Pacific Edge. Please go ahead. Good morning, everyone, and thank you for joining us today. With me on our call is our CFO, Grant Gibson and Chris Gallagher, our Chairman of the Board of Directors. If we can start please at slide 4 of the results presentation, which was provided to the NZX this morning and will now be on the screen in front of you. Pacific Edge has delivered a strong financial result in FY 2021 with a lift in momentum in all our targeted markets despite the negative impact that COVID-nineteen has had on our business throughout the year. We achieved a number of important milestones during the year including gaining coverage from the Centers for Medicare and Medicaid Services for CX bladder monitor and detect at the national price of US7.60 dollars per test completing a commercial agreement with Kaiser Permanente, one of the largest integrated health care organizations in the U. S. And an important opinion leader publishing additional clinical evidence highlighting the clinical utility of CX bladder scaling up our commercial operations in the U. S. To leverage these milestones and accelerate our revenue growth. To be included in the NZX 50 Index ranked 38 and financially delivering strong growth in operating revenue, a significant increase in cash reimbursement, reduction in net loss and a strengthened balance sheet. COVID-nineteen had a material impact on test volumes during the year, particularly in April May as the pandemic was first escalating around the world and patients were unable to access medical centers for testing and care. By the end of May, our test volumes were down 43% for these 1st 2 months. Restrictions started easing from June in New Zealand and we started seeing a recovery in test volumes. However, the U. S. Market was dealing with successive waves of COVID outbreaks and ongoing stay at home restrictions impacting access to medical centers throughout the year. Increasing use of telehealth and the unique advantage of our in home sampling system helped to mitigate some of the disruption to patients during this time. A lowering of the FDA hurdle around encryption enabled patients to interact with physicians seamlessly by cell phone. This coupled with an increase in the reimbursement rate by the CMS in the United States helped to drive strong adoption of telemedicine. Combined with our announced coverage of CXplater by the CMS, the increased use of telehealth helped to drive strong growth in our operating revenue and cash reimbursement, all of which has supported the commercial adoption of CX bladder by large healthcare institutions. The benefits of telehealth and home sampling have become clear and consistent in the U. S. And we expect this to continue even once the pandemic is resolved. The expected passing of the proposed Connect bill in the U. S. Is also expected to drive a big push in telehealth. We were very pleased to conclude our commercial agreement with Kaiser Permanente in June with the subsequent start to their commercial use by their urologists late last year. Pest usage is growing, however, at a slower pace than we initially anticipated due to these COVID related restrictions in the U. S. And KP's internal challenges as they complete the electronic ordering process and electronic referral by their physicians, both of which impact on physicians' user experience and payment of CX bladder. We expect their commercial use to continue to grow and their move to use more than 1 CX bladder product to occur as restrictions ease, patient access improves and their internal systems are updated. On the back of these 2 significant commercial events, CS Better's CMS coverage and a commercial event with KP, we started the planned scale up of our commercial operations in the U. S. To drive further growth. This has seen an increase in our on ground sales representatives who call on urologists and run these new virtual selling processes, up from 16 sales representatives to 22 by the end of FY 2021. Our goal in FY 2022 will be to continue the increase in sales reps to the planned 25 by the end of Q1. Positive results from this investment started to be seen in late Q4 of FY 2021 with record test volumes and U. S. Cash receipts recorded in March of FY 2021 April FY 2022. The FY 2021 result includes a 9 month contribution from the CMS. We delivered improvements in all key financial metrics with a small increase in operating expenses as expected. This was a pleasing outcome and a challenging that has crippled many companies. Total laboratory throughput recovered from the initial COVID-nineteen impacts over the second half of FY twenty twenty one. It closed down 6% for the full year, a significant improvement from the 16% fall in the first half of the year. Almost 60% of our test throughput was in the second half of the year with volumes up 30% on 1H21 and 3% on PCP prior comparative period, which was a strong result achieved in an environment where many COVID-nineteen restrictions were still in place in the U. S. Being Pacific Edge's largest market. We've seen test volumes start to ramp up in recent months and we had a record month in March with lab throughput being 69% higher than the previous 11 month average and 30 7 percent higher in prior comparative periods. FY 2022 has continued this positive trend with total lab throughput significantly above FY 2021 averages. Positive 21% growth in New Zealand was offset by the lower volumes in the U. S. Commercial test volumes finished down 5% for the full year for the group. CMS coverage is having a positive impact with Medicare tests accounting for 42% of total U. S. Volumes. Medicare and Medicare Advantage combined increases the percentage of CMS related tests in the U. S. To 68% of Pacific Edge's commercial tests. So you can see that achieving CMS reimbursement coverage is a very important commercial achievement for us both in terms of revenue and the positive ongoing leverage for other institutional accounts to increase their commercial use of zinc bladder. The U. S. Market provided 75% of Pacific Edge's total lab throughput during the year with the rest of the world being mainly New Zealand test volumes with some throughput related to user programs in Singapore and Australia. Pacific Edge enjoys a global first mover advantage as there have been no new diagnostic tests successfully launched commercially in 19 years. This combined with our suite of 4 CX bladder products continues to strengthen our competitive advantage. The ability of our tests to be used across the entire clinical pathway, the multiple tests, the consistent performance and the ease of transfer of urine samples from the patient to the lab provides us with a significant competitive advantage. Volumes of each of our products processed in each market annually are relative to the time when they were launched first into their specific market. As you would expect, our first product to launch in the U. S, CX Bladder still represents the largest volume of tests with growing use of CX Bladder Monitor and CX Bladder Triage. In the New Zealand market, CX Bladder Triage followed closely by CX Bladder Monitor. Variances in the customers' product preferences reflects their specific clinical issues and enables us to provide a product matched to their specific needs. I'll now hand over to our CFO, Grant Gibson to talk to the financials in more detail. Grant, across to you. Great. Thanks, David. Operating revenue grew strongly and was up 76 percent to $7,700,000 This included 9 months of cash contribution from CMS, this as well as NZD1 1,000,000 accrual for tests, which have been performed but not yet paid as of 31st March. As of the 1st July, our CX bladder detect and CX bladder monitor tests recovered by the CMS and paid at the national price of US7.60 dollars per test. These two tests made up 95% of all U. S. Commercial test volume in the financial year 2021, with 68% of these being for Medicare and Medicare Advantage patients. Strong second half test revenue result, up 110% from the prior corresponding period, reflected the easing of COVID restrictions, aggressive commercial adoption of CX bladder and growing reimbursement of CMS tests from the 1st July 2020 onwards. Total revenue increased by 101 percent to $10,400,000 and includes grant revenue, research rebates and COVID support. U. S. Operating revenue was up 82% to $6,900,000 with multiple consecutive months of record revenue achieved. Growth was primarily driven by CMS reimbursement, but also increasing adoption by large healthcare organizations and increasing demand from Kaiser Permanente from late Q4. As David outlined, we remain very positive about the progression of the uptake of Kaiser Permanente. However, our expectations on the timing for this growth has been pushed out due to the COVID pandemic related issues as outlined. Rest of the world revenue is from New Zealand and was up 37% to $800,000 This growth was driven by in the post COVID-nineteen window with the increase in adoption of multiple CX bladder products of several large public health care providers and the overall commercial growth in New Zealand. Operating expenses increased 2% from the prior corresponding period to $24,700,000 Expenses in the first half were lower than normal because of the COVID-nineteen related downward impact on levels of business activity in all of our markets. In the second half of financial year 'twenty one, these increased as expected as we expanded the U. S. Sales team and increased our marketing activity. Vulfillso invested in research and development with expenses increasing 17% in the prior corresponding period to $4,600,000 As a result of our ongoing investment in clinical studies to support CX bladder's commercial customer uptake, inclusion in the U. S. Guidelines and wider adoption. We expect total operating expenses to increase marginally in financial year 'twenty two as we continue to invest in scaling up our U. S. Commercial operations to take advantage of our growth opportunities. One of the major benefits of the CMS coverage has been the reduction in time to payment. The CMS payments are now received in approximately 30 days in comparison with most of the other U. S. Customers averaging up to 3 months of their payments. Cash receipts from customers increased 52% on the prior corresponding period to $6,700,000 Net operating cash flow improved 12% to a net outflow of $13,600,000 We received strong cash receipts in the second half of the year, which were up 64% on the 1st 6 months of the year and 102% from the prior corresponding period. As expected, this trend has continued into the first half of the financial year 'twenty two. Positive impact of cash reimbursement from the CMS on 1st July 2020 saw the average monthly cash burn reduced by 10% on the prior corresponding period. Company's balance sheet has significantly strengthened following the $22,000,000 placement of AMD New Zealand Investments in July 2020. We concluded financial year 2021 with net cash and cash equivalents and short term deposits of $23,100,000 from $14,800,000 in the prior cost funding period. I'll now hand you back to David Darling, CEO, for his comments on the outlook. Thanks, Grant. We maintain our strong growth outlook for FY 2022 and beyond. Well positioned to capitalize on the opportunities available to the company with a strong balance sheet, a proven team of people and a very strong competitive advantage from our fully validated suite of CX Bladder products. Throughout CX Bladder's formative years, we were focused on matching customer needs to a single CX Bladder product. However, the COVID-nineteen pandemic has shown us the value of our strategy of having a one stop shop, of highly accurate CX bladder products that can be used across the entire clinical pathway. There are a number of catalysts that we believe will drive our growth, particularly in the next few years, including a scaled up U. S. Sales team and back office support, ramp up in demand from Kaiser Permanente, new and existing customers of scale adopting a more than one of more than one CX better product, including commercial agreements with other large scale healthcare institutions such as the recently announced coverage by UnitedHealthcare, expansion of reimbursement coverage with other private payers in the U. S, gaining commercial traction in Southeast Asia and continuing our drive to make CX bladder available to primary care physicians following the successful New Zealand model. Further peer reviewed publication of clinical evidence will remain the cornerstone to our commercial adoption, additional U. S. Guideline inclusion, better inclusion language for the NCCM guidelines that we are currently included in and the U. S. Commercial launch of CX bladder Resolve our 4th test in the suite of products. The U. S. Market offers an addressable market size of more than US3.5 billion dollars and remains our primary focus. Focus for FY 2022 is on growing the commercial adoption of CX bladder by Kaiser Permanente and other large healthcare organizations, shifting existing customers to use more than one CX bladder product, further increasing reimbursement coverage from private payers like UnitedHealthcare and increased U. S. Guideline inclusion following the publication of new clinical evidence that are supporting the clinical utility of CX bladder. During the last quarter of FY 2021, we scaled up our U. S. Commercial operations to provide the capacity and resource to drive growth opportunities. We also strengthened our executive team in both New Zealand and the U. S. To support Pacific Edge's global growth aspirations. Positive results from this investment are now starting to be seen. We've now added an extra 6 sales representatives in new territories, taking our U. S. Sales team to 22. We expect to conclude the appointment of a further 3 sales reps to take the total to a planned 25 sales reps by the end of Q1 FY 2022. We have also bolstered our clinical and customer liaison resources and have a dedicated team of reimbursement specialists to carry out negotiations with the targeted private payers to gain further coverage and reimbursement where needed. Our U. S. Laboratory has the capacity to process 260,000 tests per annum, which is sufficient to support the expected increase in test demand for some time yet. We recently achieved reimbursement coverage under UnitedHealthcare for all of their Medicare Advantage policies. This is a great demonstration of the progress we're making and validation of our products and strategy. UnitedHealthcare is the largest private health insurer in the United States and has over 50,000,000 members with more than 5,700,000 Medicare Advantage members. Coverage is from 1 April 2021 is for the CX bladder tests and have CPT codes which is currently CX bladder detect and CX bladder monitor at the rate of US7.60 dollars per test. The rest of the world. In New Zealand, we are looking to bring the remaining public health care providers into contract and extend the use of 6 beta tests by the existing customers. This is mostly now an administrative and budget related issue for New Zealand's large public health care providers. Believe we are well positioned for use by physicians as a preferred bladder cancer diagnostic tool in the proposed new single nationwide health service of NZ. Focus in FY 2022 for Australia and Southeast Asia is to transition the public health care providers in healthcare providers in their clinical studies to a commercial customer model, as well as progress discussions with potential strategic partners in Southeast Asia to take advantage of the very large primary care physician market. Published results from the clinical trials in Singapore form the basis of Pacific Edge's planned commercial rollout in Southeast Asia, which is expected to become a market of scale to see Xpater over time with an accessible commercial population of equivalents to the U. S. Recent progress in commercial achievements in FY 2021 underpin our future growth. We are now seeing the commercial benefits benefits and resources that have gone into the development and commercialization of our CX bladder technology. This technology continues to grow. Our people, products, business model and strategy are well proven. We have a first mover advantage. We believe this is just the start of a strong growth trajectory for our company as we exploit this first mover advantage in the markets of scale. We've identified scale opportunities for growth in each of our targeted markets and have deployed our resources to capitalize on them. It's pleasing to see our innovative solutions and commercial progression in these markets in such tough commercial conditions as has been dictated by the COVID-nineteen pandemic. Increasing number of commercial tests from the CMS, Hozapiminante and armscaled payers such as UnitedHealthcare are expected to underpin strong revenue and operating cash flow growth in FY 2022 and beyond. New Zealand market remains the global leader for the adoption of this very disruptive technology and the growth of the use of tests commercially to provide coverage for all of New Zealand's population will be very important to the company. Will be our focus to conclude the evolution for New Zealand Healthcare Providers to adopt more than 1 CX bladder product mainstream commercial use. And we saw the beginning of this during the COVID-nineteen pandemic in New Zealand. Both Southeast Asia and Australia are at an earlier stage in a commercial journey. Our goal being to transition the large scale public health care providers from clinical trials to a commercial customer model. We've had some very early success in contracting with private healthcare providers such as the Raffles Medical Group in Singapore. We will be moving to consolidate at this early start to grow the opportunity to other private healthcare providers of scale, many of whom commercial businesses across Southeast Asia. We're focused on building scale as quickly as possible to deliver revenue growth and value creation for our shareholders in FY 2022 and beyond. I'd like to take this opportunity to thank Pacific Edge shareholders for their continued support in the Pacific Edge team and the Board of Directors across the globe for all of their hard work in delivering us such positive results despite the challenges and headwinds provided from COVID-nineteen. Thank you all. We'll now move to the questions. I've received some questions online. So we'll address some of those first. Okay. First question is from Warren, which reads, with the company at such an exciting stage of its development, is now an appropriate time to start giving quarterly updates? Thanks, Grant. This is a recurring question that we get. As you know, we provide quarterly updates to shareholders in between the major announcements. So we'll continue to evaluate that as we progress and we hope you're enjoying those informative quarterly updates. Thank you, Warren. Another question here from Stanley. Where is the list of 20 largest equity security shareholders? You could find that in the annual report. Each of the back copies of the annual report. Those are online on Pacific Edge's website. Singapore clinical trials, are you able to advise potential timing of when the white paper could be published with the results of the trial? Thank you, Andrew. Yes, we've closed out the analysis of that study and we're just looking at when and where we can bring that to bear and through a published channel. So it will be we expect that will be in FY 2022 for sure, Andrew. We have another question here from Graham Edwards. Hi, Graham. What progress has been made in the collection of old invoices issued prior to Medicaid approval? So we have a backlog of 22,000 tests prior to the CMS' coverage of CS bladder. This is usually and will for us be a long negotiation. And there is no we have not made any allowance in any of our financial accounts for any of those tests being paid. We expect we hope to be successful in at least some of those tests. So it's an ongoing negotiation that we're having with both Novitas, our the contractor for in our region for the CMS and with the CMS National Office. Okay. Given the current ransomware attacks around the world, have you insured Pacific Edge's intellectual property is well protected? Yes. We are very aware of the risks around that. We've got good security systems and we do take them very seriously and they do receive the appropriate attention that they do deserve. So we are confident that we have controls in place to mitigate that risk as much as possible And we're continuing to keep that as a priority. Okay. I've got another question from Aaron. Thank you, Aaron. If COVID-nineteen a material impact, are you able to suggest what revenue might have potentially been if the pandemic had not been an issue? Extremely difficult to predict that. If you look at last year's results, we started to have good momentum into the back end of last financial year. COVID, obviously, as we've discussed at length, seriously impacted the test numbers coming through this financial year, but we're now recovering that. And in fact, as we mentioned, the second half has been stronger than what we saw last year. So it has been a hiccup. We've recovered well and the momentum is now progressing well. So I can't put a figure on it. It'd be difficult to do that. How much percentage of revenue was contracted from the test done for KP? Ming Chen. Thank you very much, Ming Yang. We haven't split that out. That's early days for Kaiser Permanente. So you'll see that come through in the next round of financial reporting. Pfizer paper, any update to the potential timing of KP publishing the results of its own trial? Andrew, we can confirm that there is a publication that contains the Kaiser data with Kaiser office and that's in your review right now. So don't be too far away. What are the average days to payments, particularly for those CMS related tests or pass it to Grant? Earlier in the slideshow, we had a gave an illustrative example. Medicare is paying within 30 days generally. So we're getting prompt payment. Other payers cause it's a more convoluted system with going through individual private payers does take a bit longer. Generally, it's between 1 3 months we receive payment. So the payment average time has improved significantly this financial year. Question from Brian. When do you expect the demand from Kaiser Permanente to hit its straps? That's a good question, Brian. So that's a continued demand from Kaiser to build through the CX beta monitor test that they started with. And it will move across into CX beta Triage and potentially CX beta detect relatively quickly. So it will continue to climb. What the specific curve looks like will be anybody's guess, but it's a customer of significance and will continue to grow throughout FY 2022 and on and up. We've had a couple of questions around when we expect to be cash flow positive. We won't give a specific time on that. We're focusing on growth, and we're investing with additional account executives and research and development to accelerate that. There's a couple of key milestones that will shorten that time frame considerably. But yes, we won't be putting a time period on when we expect. We are growing strong. There's good momentum. So we're improving on that measure. Guys, we'd like to switch now to the questions to come in by phone and we'll pass back to the moderator to help us with that. Thank you. Sure. Thank you. We'll now take our first question. It's Chelsea here from Forsyth Bar. I guess just kicking off with Kaiser again. I'm just interested in understanding a little bit more about some of the comments in the presentation around uptake and delays, etcetera. I mean, obviously, understanding what's happened with COVID in the U. S, but can you just give us a bit more context around the last couple of months and what you are seeing from the experience there? I mean, particularly interested in how are they rolling this out? Is it just one clinic at this stage? Is it broader than that? Is it one area? Just some anything you can provide around experience and context so far? Yes. Thanks, Chelsea. That's great question. So what we're seeing with Kaiser is they have a targeted group of prime users. And it looks like there's about 15 clinics that they've started with. And they have, when Southern Kaiser Group around 100 odd clinics that they'll progressively wind this product out. So in a big organization like Kaiser, I guess, we kind of struggle to understand the challenges that these big organizations have in rolling out new technology. And we found that these guys are having to run an entirely manual system. So we've disrupted the ordering process, the referrals, sign off by the doctors and the subsequent receipt of results in the punching into their EMR system. So it's become cumbersome and long winded. So Kaiser are progressing through a number of electronic interface changes and that process got significantly disrupted by COVID. They pulled resources across to fix other things that they deem to be of greater demand. So I hope that helps. But yes, I mean, the demand, the desire is very clearly there and they're doing well. And we're looking forward to them progressing to further products, further CX better products, which they are very keen to do. So just to be clear, Dave, is that by using it in 15 clinics now? And I guess from the experience of the past couple of months, are the urologists there adapting quickly or is it taking a better time? Yes. No, they are. Use the number of clinics is growing daily. So there's no static number. And yes, the urologists are using the test well. They're getting great results. The expected rule out from the test identifying those people who are returning to clinic or monitoring for recurrence are not coming not being returned to clinic. They're actioning the positive patients. One of the concerns they had was making sure that any positive patients identified or patients that test positive by sex better were able to carry through and into the Kaiser system to be seen. Obviously, it was a challenge during COVID. So that was a big concern in their rollout. Lots of moving parts, big organization and yes, and hence a little slower than we expected and entirely driven by the internal demand of Kaiser Resources in this COVID setting. Okay. And kind of second area of question, if I may, just one more. In terms of lab throughput, so you've given us some context around March 2021 and what that looks like. Can you help us out with April? Has it improved month on month versus March? It has Chelsea. And obviously that's early days for us because it's the first month of the new financial year, but we just wanted to give a flavor of how the new financial year was rolling out. We're very pleased with the progress and onward and upward. Okay. Thank you. Thank you. We'll now take our next question. At the tone, please state your name and company before posing your question. Your line is open. Please go ahead. Hi, Dave, Grant and Chris. It's Christian here from Janan. Just on Caesars again, are you able to give a sense of where you thought you would have been by now compared to where you are? Really hard. Thanks, Christian. Thanks for coming online and very good question. So it's really hard. We had expectations based on the fact that we knew they had a backlog of patients. And we figured that they would move really quickly to scuttle that backlog. There was certainly some of the urologists had certainly that goal in mind. But the guys that are responsible for rolling this technology out internally had a focus on ensuring that the technology rolled out smoothly and cleanly as opposed to just cleaning up a backlog. So I guess that's where the difference in expectation came about. So yes, we have lots of different expectations around these sorts of things, Christian, as you know. And it's always a little hard to kind of those validate it. Even the people internally inside Kaiser have their own conflicting expectations around how new technology gets driven into the organization. One thing is for sure, this is a customer of SKYY and it's going to be outstanding to get these new products into there. So you're starting to work through that backlog now? Yes. All those patients are backlog patients. The patients we're dealing with are backlog patients, but there's a lot of backlog patients we're not getting to see because they're just dragging them in. And there'll be a threshold in there. We don't actually spend any time talking to Kaiser out. We spend more time talking to them about making sure that the user experience from the urologist perspective is where we would expect it to be and where they expect it to be. So we try to dodge the issues around the administration and the rollout stuff because all that does is potentially provide a drag to the user experience. And for us, the most important thing is the user experience. We know the test result is going to give them what they need. That's been proven. So that's and from our perspective, just want to make sure that these urologists have a great experience and come back for a repeat time. Remember, this is kind of a this is a company that has salaried urologists. So these guys are conforming to a corporate move to a new technology. But like all medicals, they do have a say in how that technology gets adopted. And each and every urologist has their own risk profile and things that they like to see. So really, very, very hard to try and predict what that looks like as you know. It will pick up pace and certainly pick up pace as they move to adopt more than one product. Thanks, Christian. So I guess the key message is that it's purely at this point being logistical disruption compounded by the fact that they've sort of diverted resources to other areas where they have needed attention? Yes. That's absolutely correct. The all the electronic stuff we had, all of our software coders, about 10 of their software coders and most of the software was drafted just before Christmas. However, internally, they just haven't been able to conclude that last stage that all the resources were pulled for COVID related issues. So it can't be too far away, but we keep the pressure on as you can imagine. Cool. And then just sort of building off Chelsea's question just before. You mentioned that April was up on March. So those numbers now where you thought they would be, like how far off is April now compared to where you thought you would have been in a similar vein? Yes. We try not to do that because of the background in which those numbers sit. What we're really looking for is this we're looking for acceleration on a month by month basis. That's how we think about the market, Christian. And so how many of the roadblocks that you sort of came across during COVID, to the most to what sort of degree have these cleared now? Have you got a clear path from here or? No. The U. S. Sales reps still run virtual selling programs. These are effective, but we believe that the market will lift when all of those customers open up. So some of those customers are still closed. They can't get in. And they open and close on a regular basis depending on the any surges that they see in COVID cases. So yes, if you look forward and you see when would you think that we might be able to travel to the U. S. And everyone will have a different opinion on that. It will be the same sort of thing for an opinion on the internal disruption of companies and health care providers in the U. S. Some are litigiously adamant that they are not going to open until they have all of their staff and all of the patients in the area at the large degree have received their vaccine inoculations then they won't open. And we see this variable response across the United States and we're continuing to deal with it, but it's easing recently. So we're seeing a lift. Okay. That's cool. Thank you. And then so just in the preso on what sustained the catalyst to drive growth, you said that there's commercial agreements completed with other health care institutions of scale. Is that do you by that, do you have you actually done anything? Or is that just what we're looking for in FY 'twenty two? No. We're the implication for that statement was that that's what we wish to do. If we had concluded any other agreement statements, it would be passed at all over NZX. Yes. All of those stuff. And so actually just where are the negotiations with Graflinger and Intermountain at the moment? They continue to progress, yes. Just like Pfizer, they can wander around a little bit for a while. You've got to identify who the key people are to make decisions. You've got to bring on board a whole raft of different people and their needs. And yes, some go faster than others and they slow up. It's a challenging environment, but we're getting there. But when, for sure. And in terms of your digital marketing Sorry, we have another question. Visual marketing, yes. Yes, Christian, visual marketing is a very, very important part of our program. We can reach a lot of people. Patient pull is a significant opportunity for us in the United States. And you address that by reaching them through these digital marketing routes, social medias, online communities, chat rooms. They will help drive customers to the awareness. And so the overarching opportunity here in the United States is that United States has the most mobile patients of anywhere in the world. They own that insurance policy and they often go out and get 2, 3, 4, 5 evaluations of the health care needs and issues and then they select a health care provider. You can see online that there are health care providers, doctors, physicians who have and there are these sites you can go to where they provide continual performance appraisal of these people. It must be a horrendous place to work, however they make a choice. And so if you can influence the patient to demand the test then that will create a huge opportunity. And we saw an easing in the guideline language in the EAU this year where with the most recent announcement where the EAU has opened the door to better cancer biomarker tests by enabling people to substitute cystoscopies for bladder cancer tests biomarker tests when the patient doesn't want the cystoscopy or the cystoscopy is not available. And that's a great door opening for tests such as CX bladder. And if you can just I would expect that it wouldn't be too much to convince people that you'd be better off to have a P and the cup test than the probed with a probe. Yes. Sorry, I hadn't actually finished asking a question. What I was sort of more wondering to know is the result of your digital marketing. So are you seeing like fruits coming out of it in terms of more demand from the general population increasing awareness? Have you got any ways to measure that today? Yes. Yes, we do. Yes, we have a whole page of metrics on our digital marketing. We monitor it real time and we're seeing positive shifts in trends. That's how we drive that whole digital marketing space just like any company is doing with digital marketing. Yes, good response there, Christian. Very good growth. Thanks, Christian. We have some questions online. Where are we? How far along the track do you consider PEB is towards its stated aim to become a $100,000,000 gross income company? If Dylan? Jeff, thank you very much for your question. The $100,000,000 gross income was an internal stake in the sand we put out some time ago to provide a goalpost for the company to target its efforts. And of course, we progress towards that. We don't do those forward forecasts to determine when that's going to be and we have no forward forecast in the market. Thanks, Jeff. Are you looking to expand Seq's data programs into other countries? Dom Patel. Thank you, Dom. Yes, I mean, we obviously have targeted markets. We have New Zealand, Australia, Southeast Asia, which consists of a number of key countries. And then obviously, the United States, which right now is the kind of the number one market for us. We don't opt to go to Europe because Europe consists of approximately 9 countries and they all have different reimbursement requirements and they're all very poor. So the average reimbursement for a test of this type will not return the margins that will in Southeast Asia and in the United States. So it defines where we want to go next and how we want to do that. And so saying customers who exist in those countries who wish to participate in the use of CX data can become a customer. We have full regulatory approval to run CX bladder in Europe. We have full regulatory approval for Australia and Southeast Asia and the United States. So that's a big thing. One of the market opportunities in Southeast Asia has been the medical tourist and that's obviously fallen off with COVID. But I'm sure for a country the size of Singapore with 5,500,000 people, they were enjoying around $1,100,000 of medical 1,100,000 medical tourists per annum, most of those people coming out of the Middle East. So a huge opportunity where, for example, 6 better urine sampling systems could be seen to people at home in the Middle East. And the test result would be in the Southeast Asian country and hospital health care provider of their choice when they arrived there for their risk workup. I hope that helps. Thank you very much for the question. We've got someone else online who can pick that call up moderator. Thank you very much. Sure. We'll do. Thank you. We'll now take our next question. Your line is open. Please go ahead. Yes. Hi. It's Philip Prior. Dave, just wanting to know when is the next guidance update due? The next guidance update, what sort of guidance you're talking about there, Phil? Thanks for the question. Well, it's obviously, this guidance is given to urologists in terms of what they can and can't do. And we had the guidance update in June last year, I think it was. Yes, yes, yes. So the thanks, Phil. The peer reviewed publications provide the urologists with their cornerstone data, if you like, in order to support their practice. But then it comes down to the individual urologists to go about their business. So in New Zealand, we've moved to a really unique stage where we're in the standard of care. We're in local guidelines and the urology directors have signed off on CX bladder to be included in a new algorithm, which is CX bladder triage and some form of imaging. And so on their website, they provide guidance to urologists on how to use the test. We find Phil, and it's a very good question, we find that there is an increasing thirst for the knowledge of how best to use the test in what settings. And the publications we put out now are increasingly asking us to define the clinical backgrounds in which we expect to see a change. So in other words, they're saying, great result. Thanks for showing us how this works. But what now do you recommend we should be doing in light of this result? So that creates a dilemma because the guidelines are generally where they would seek recourse for those sorts of questions and guidelines follow adoption. So we continue our efforts to drive Sextraeta into those guidelines. And of course, NCCN was our first success in the U. S. And we're looking to get into the AUA and potentially the EAU as well. Could that help, Phil? I'm not sure I answered that question very quickly, but Yes. Just timing. I mean, obviously, they get reviewed and updated by lots of it every couple of years. I'm just wondering if it's still on that sort of trajectory of every few years that they would update it and that gives the opportunity to be included. Sure. Yes. So the AUA guidelines probably have the longest cycle time there every 4 years. But they do have a requirement where you are able to if you release a significant outcome, you can get that reviewed for inclusion in the year of that release. So they've got that sort of fast track provision there. So we will leverage that every opportunity. Similarly, NCCN guidelines, they are reviewed annually and EAU are reviewed annually as well. So, it's on guidelines that constantly being reviewed. And so it really just comes around to the bolus of evidence that is generated. And the urology directors of New Zealand run those themselves. There's a question there from Ajay. Have any Pacific Edge products been given regulatory approval in Europe? Yes, Ajay, I hope I answered that question just recently. But yes, we have preapproval for the uroencephalic system and for the test itself in Europe. We have a question here. Note 5 of the financial statements mentioned that Mount Paper Medicare may be subject to refund if the group was subject to an audit by CMS in the future. We test for identified which were not medically necessary. Does Pacific Edge perceive this as a risk, the current revenue in the future? And could you elaborate more on how this process refund process works? So just to give you some context on that, the acquisition forms are completed by the clinician and it's their determination that the use of CX bladder is medically necessary. And that's the key thing that CMS is looking for. So that's a requirement that the clinicians actually assess that medical necessity. They submit the test request, we complete the test and then Medicare make the payment based on that information. So that's the process. We believe that there's minimal risk. The clinicians are the best advised to make that recommendation on when it's medically necessary. There's also another question around the U. S. Dollar and the impact that it's had in this financial year. Correct, U. S. Dollar has been weaker in the financial year we've just completed. So it has had an impact on revenue. It's also had an impact on costs as well. As the U. S. Moves more towards covering its costs and moving towards cash flow positive, The impact of the U. S. Dollar sort of reduces the impact on the financial results and we've seen that this year. So I can't give you a dollar figure, but we apply in calculating year on year. We take the average U. S. Rate over that period. So there has been reasonably material impact on the financial results. It has reduced the revenue slightly with the exchange rate. So that is something that we monitor and measure. That looks like that's the end of the questions we have here today. I'm going to pass back to the moderator to close out our session. Thank you all very much for great questions and being online to listen to our presentation today. Thanks for the moderator. Thank you. Ladies and gentlemen, this concludes today's call. Thank you for your participation. Stay safe. You may now disconnect.