Pacific Edge : Investor Update - Oct 2022

Dear Shareholders,

In this second quarter shareholder update, I am pleased to report the investments we are making to drive the adoption of Cxbladder tests globally are delivering early results.

As we detail on page 3, the volume of Cxbladder tests processed at our US and New Zealand laboratories has risen strongly against the first quarter and the prior year, with the increase in throughput being mirrored by an increase in the number of US clinicians ordering our tests.

We have on-boarded 14 new people since the end of March, bringing our global team to 100 at the end of September. Most of the new hires are charged with advancing our revenue growth objectives and increasing awareness of the peer-reviewed clinical evidence that underpins the clinical value of Cxbladder.

We have hired effectively against plan with the recruitment of new Account Executives (AEs) and marketing hires, while establishing our new Medical Affairs Team

and new Virtual Sales Team. The Virtual Sales team, responsible for growing our sales pipeline through prospecting activities, while enhancing the Cxbladder customer experience with streamlined service, ordering, and delivery of test results, is the first among these new hires to have a clear impact. We expect all commercial hires

to build further momentum in the quarters ahead.

Our US National Sales Meeting (see page 5), held in September

under the banner of 'Unlocking Our Potential', was a key step towards this goal. We assembled all staff across the broader commercial team and focused our training on a standardized selling process, maturing our new AEs, and upskilling our tenured AEs, while creating opportunities to share successes, and reinforcing a culture that celebrates excellence at Pacific Edge.

"The increase in throughput is being mirrored by an increase in the number of US clinicians ordering our tests"

In the New Zealand market, we continue to make progress in encouraging healthcare providers to use Cxbladder earlier in the patient care pathway (see page 4). We have also made further steps into new markets such as Australia and Singapore, including the recruitment of a new business development manager for Southeast Asia, based in Singapore.

We continue to advance our clinical evidence generation program to strengthen the case for Cxbladder to be included in global standards of care and gain coverage by healthcare payors. Patient recruitment is steadily rising for studies already underway, while the more-recently initiated studies are navigating key administrative milestones (see page 6).

This important progress continues despite the release for public comment in July of a proposed new Local Coverage Determination (LCD) from Novitas, the Medicare Administrative Contractor with jurisdiction for our US laboratory. If accepted without change, this proposed LCD would result in a loss of coverage for Cxbladder tests by the US Centers for Medicare & Medicaid Services (CMS).

As demonstrated by the continued increase in Cxbladder testing volume, the proposal has had little to no impact on demand for our tests. Cxbladder remains a covered test while submissions on the proposed LCD are being considered, and feedback from our sales force is that it is not on the radar of our key US customers and physicians.

Pacific Edge maintains that in the absence of any adverse reporting event about the performance

of Cxbladder, it would be unprecedented to lose coverage. To this end, we have offered comments on the proposal (see page 4). We maintain our position that the proposed LCD is unlikely to survive in its current form and continue to responsibly plan for all eventualities.

We look forward to providing a further update when we release our half year financial results on 24 November 2022.

Dr Peter Meintjes

Chief Executive

Cxbladder tests processed at Pacific Edge's laboratories in the US and New Zealand have set another record in an early demonstration that our investments to drive adoption are delivering results.

In the three months to the end of September 2022, the team processed 7,861 tests, a 36% improvement on the 5,780 tests processed in the same quarter in the prior financial year and an 11% increase on the 7,055 tests processed in the three months to the end of June 2022. For the six- month period, test volumes reached 14,916, a 34% increase on the 11,136 tests processed in the same period in the prior financial year.

which as we mentioned in May is linked to the achievement of certain revenue milestones. In addition to the hiring of a new Virtual Sales team, our recruitment program has included hiring of account and marketing executives and the establishment of a new Medical Affairs team.

We are confident that these investments will continue to build sales momentum. The Account Executives we hired last year are beginning to hit their stride, while new hires are learning the ropes and bringing fresh insights and energy to the team.

We are seeing early results with

opportunities emerging in previously uncovered territories. Similarly,

our Medical Science Liaison team is quickly upskilling, developing strategies to drive enrolment in our clinical studies and support our sales efforts.

In the Asia Pacific, where test numbers are dominated by the relatively mature New Zealand market, volumes in the three-month period were 1,165, an 8% increase on the same period a year ago and a 19% increase on the June 2022 quarter. For the six-month period, New Zealand test volumes were largely flat on the same period a year ago at 2,147 tests.

US test volumes for the latest three-month period increased to 6,696, a 42% improvement on the 4,706 in the same period a year ago and up 10% on the 6,073 processed in the three months to the end of June. For the six-month period, US test volumes were also up 42% on the same period a year ago to 12,769.

We have also seen an increase in US clinicians ordering our tests to 979, a 42% increase on the 689 ordering clinicians at the same time a year ago and 10% ahead of the

894 ordering clinicians at the end of June 2022.

Our internal metrics show that this increase in ordering clinicians reflects an important contribution from the new Virtual Sales Team, a key element of the investment program to drive growth we set out in May 2022. This team has had an immediate impact through prospecting activities, and by assisting on-the-ground teams with the on-boarding of new clinicians and urology practices, while ensuring the streamlined ordering of tests and results delivery.

We continue to prudently invest in line with the investment program,

TOTAL TESTING VOLUME (PACIFIC EDGE GROUP)

UNIQUE ORDERING CLINICIANS (US)

Te Whatu Ora Te Pae Hauora o Ruahine o Tararua MidCentral and Te Whatu Ora Whanganui have become the latest New Zealand regional public healthcare providers to adopt Cxbladder in the primary care setting.

From the end of September General Practitioners in Palmerston North, the Horowhenua, Manawatu, Otaki and the Whanganui districts have been able to use Cxbladder Triage (CxbT), together with imaging to assist them to safely rule out bladder cancer in patients presenting with hematuria.

By identifying these patients in primary care, CxbT reduces the need for urology referral and

further invasive testing, such as a cystoscopy. This new primary care pathway offers a streamlined standard of care and is receiving increasing attention from patient advocacy groups, as it provides patients with greater comfort and peace of mind.

The approach was pioneered in Canterbury and was supported by a clinical review published in the New Zealand Medical Journal in 20201. The review showed fewer patients were referred to secondary care and required invasive procedures. When cancer was diagnosed the time to treatment was also reduced. Meanwhile those who received a negative CxbT test gained early

reassurance (within a couple of weeks) that they did not have bladder cancer.

More than 70% of New Zealand's population now has access to Cxbladder through the public health system and we are actively engaging with the national system, Te Whatu Ora - Health New Zealand and Te Aka Whai Ora, the new Māori Health Authority, to expand access for the remainder of the population.

Pacific Edge has seen no disruption to demand for Cxbladder and it remains a covered and reimbursed test by the Centers for Medicare & Medicaid Services (CMS), despite the proposed Local Coverage Determination (LCD) that would see Cxbladder Detect and Cxbladder Monitor lose coverage if implemented without any changes.

Novitas, the Medicare Administrative Contractor with jurisdiction for Pacific Edge's laboratory in Hershey Pennsylvania, issued and sought public comment on the LCD in July. Pacific Edge submitted written comments

for consideration supported by multiple Key Opinion Leading customers, the patient advocacy group BCAN (Bladder Cancer Advocacy Network) and our industry partner the Coalition for 21st Century Medicine (C21), which also coordinated with other affected companies in its response.

Subsequent to the comment period closing on 6 September 2022, Pacific Edge has requested meetings with Novitas directly and with the CEOs of Guidewell (Novitas' parent company)

and CMS with assistance and coordination from C21.

Our view remains that the proposed LCD contains inconsistencies, unintended consequences and a methodology that may violate Medicare's rules.

Most notably, the proposed LCD appears focused on tests for guiding therapeutic decisions after a confirmed diagnosis (PGx or Pharmacogenomics testing), apparently excluding diagnostic biomarker tests from clinical tool kits. The LCD also takes the highly unusual step of 'outsourcing' coverage determinations to third party databases.

We have yet to hear how our submissions have been received

and do not know when we will get a response. However, we will get 45 days' notice of the adoption of a new LCD.

Meanwhile, a proposed LCD must be withdrawn or adopted within a year of the closure of public comment. So, if Novitas issues a new draft LCD the clock starts again. We are looking forward to gaining certainty from Novitas.

CMS delegates administrative authority to Medicare Administrative Contractors (MACs)

NOVITAS is the MAC with jurisdiction for

Pacific Edge's US Laboratory

"Unlocking Our Potential" was the theme of the Pacific Edge Diagnostics USA (PEDUSA) national sales meeting held in Hershey, PA in mid-September. Traditionally an annual event, COVID restrictions forced us to cancel two previous meetings, so this was the first in-person gathering of the entire sales force in over three years.

The meeting was a key initiative of our strategy to build capability and capacity within Pacific Edge to drive the adoption of Cxbladder and accelerate revenue growth. It helped to build relationships within the commercial team and was a significant step towards standardizing process and training new hires, ensuring new account executives benefit from the insights of tenured executives and they in turn benefit from the energy and insights new team members bring to the company.

Over the course of three productive days, the US sales, and executive teams, with some customer service, and laboratory team involvement as well, were able to interact and discuss ways that we can better help clinicians and patients in the diagnosis of bladder cancer. The focus on

unlocking our potential reflected our understanding that impactful insights delivered at the right moment can help solidify the value that Cxbladder offers to clinicians and patients.

"The meeting was a key initiative to build capacity and capability"

To that end, the team heard from a practicing urologist that uses Cxbladder, a bladder cancer patient, and a broad array of Pacific Edge experts on how to lead sales conversations with impactful insights. We also discussed the existing high- quality peer reviewed evidence for Cxbladder that answers the range of questions that patients

and our customers regularly face and how to present this information in a meaningful way that leads to increased Cxbladder utilization at the earliest point in patient care.

The sessions - along with a team scavenger hunt around Hershey and an evening event to celebrate our retiring PEDUSA Chief Executive Jackie Walker

• renewed and re-energized relationships across the entire US based Pacific Edge team. It was also a great opportunity for staff to meet the new team members who have joined PEDUSA since our last meeting three years ago. Of course, all good sales reps know that what matters from here is the follow up - we will be tracking their progress and continuing to reinforce the new enhanced selling model until a review of the implementation in early 2023.