Cogstate (CGS: $2.15) has released preliminary results for the first half of this financial year.
The level of new contracts signed from clinical trials was up 105% over the PCP at US$41.7 million. This is a very strong result, given the company's breakeven level is around US$40 million of revenue for the full 12 months.
As indicated previously, what is pleasing about the progress of the company's business is its movement away from reliance of work in Alzheimer's disease, which previously has contributed to around 70% of total work. In the last half, Alzheimer's disease study work made up 38%, with trials in mood, sleep and other neurological studies contributing 45% of total contracts signed.
Last month the company announced some revenue recognition delays, of around US$2 million, which will be recognized in the current half. With the increase in cost base from expansion into other disease areas, the company's EBIT margin for the first half will be between 14%-17.5%, compared to 25% for FY2025.
Revenue Forecast for FY2026
Total revenue for the first half was US$26.9 million, with US$21.7 million of revenue already locked in from existing contracts for the second half. Last year the company added US$10.4 million in revenue in the second half from new contracts. If the same occurs this year, then clinical trial revenue for the full year (FY2026) will be US$59 million (up 17% from US$50.6 million). However it may be higher if a greater level of clinical trials contracts are secured. In the second half of FY2025, just US$21 million of new contracts were signed, compared to US$41.7 million signed in the first half of FY2026.
The strong growth in sales contracts, and expansion into new disease areas, and the very high level of work the company is bidding for, including through its channel partners such as Medidata, point towards a very strong 12-18 month outlook for the company. Cogstate highlighted that the level of work it is currently bidding for is at record levels.
Cogstate is capitalized at $368 million.
Bioshares recommendation: Buy
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