After producing a net profit before tax in the first half of FY2025 of US$5.2 million, Cogstate (CGS: $1.66) has upgraded its guidance for the second half, with net profit before tax expected to reach between US$6.8 million and US$8.8 million. For the full year, this translates to net profit before tax of US$12–14 million (A$18–21 million), up 69 percent. Revenue for the full year is expected to be at least US$54 million (A$82 million), up 20 percent. Over the last three years, the company has put significant effort into reducing its cost base to allow an increasing proportion of sales revenue to flow through to net profit.
One of the reasons for the healthy increase in revenue is strong growth in drug development in the CNS field. Cogstate’s product and service offering provides measurement of changes in cognition and neurological function in studies of Alzheimer’s disease and other CNS conditions, as well as in paediatric and rare-disease drug studies.
The Potential to Change Alzheimer’s Disease Forever
A major shift appears to be underway in how Alzheimer’s disease is being tackled. Both Eli Lilly and Biogen are conducting studies in people with no symptoms of cognitive decline but with elevated phosphorylated tau levels—an early-stage Alzheimer’s indicator. Eli Lilly’s 3,000‑patient presymptomatic study began in 2021 and is now fully recruited. While the Trailblazer‑3 study is due to reach its primary endpoint in 2027, some U.S. analysts suggest an earlier, event‑driven readout could occur later this year, once a predetermined number of participants exhibit cognitive decline.
Eli Lilly’s approach with its drug kisunla is to treat patients only until amyloid levels return to normal. Participants, who have no cognitive impairment, are randomized to receive placebo or kisunla; in one study, 47 percent of patients were able to cease treatment after 12 months. According to Cogstate CEO Brad O’Connor, early intervention could prevent or at least delay the disease until patients die of other causes, potentially expanding the beneficiary population tenfold.
“If this trial reads out positive, it will change the course of Alzheimer’s disease forever,” O’Connor believes. Treating patients earlier also reduces ARIA (brain swelling) side effects compared to treating those with advanced disease and significant plaque build-up.
Implications for Cogstate
Other clinical studies in Alzheimer’s disease will likely shift to presymptomatic populations, necessitating larger, longer trials. Eli Lilly’s Trailblazer‑ALZ 3 study follows patients for three and a half years. Cogstate is currently conducting cognitive assessments across all presymptomatic Alzheimer’s studies.
Cogstate will host an Investor Insight Series webinar on Alzheimer’s disease on Tuesday, 5 August.
Cogstate Builds Healthy Relationship with Global Partner
In October last year, Cogstate announced a partnership with Medidata to jointly supply Cogstate’s services to the clinical trials field, while Cogstate maintains its independent offering. This agreement is Cogstate’s largest and most significant partnership to date. Medidata employs around 4,000 people, supports approximately 8,000 ongoing clinical studies, and was involved with 72 percent of all FDA‑approved drugs last year. The revenue impact of this partnership has yet to materialize.
At a recent joint briefing, Medidata CEO Anthony Costello stated, “There is no way to be a serious player in the CNS space and to take advantage of the increase in research dollars if you don’t have a joint offering like this [with Cogstate]. The CNS sector has been on an upward trajectory and is expected to explode over the next few years.”
Cogstate is capitalized at A$284 million.
Bioshares recommendation: Buy
CEO Brad O’Connor will be presenting at next month’s Bioshares Biotech Summit in Hobart.
Disclaimer:
Information contained in this newsletter is not a complete analysis of every material fact respecting any company, industry or security. The opinions and estimates herein expressed represent the current judgement of the publisher and are subject to change. Blake Industry and Market Analysis Pty Ltd (BIMA) and any of their associates, officers or staff may have interests in securities referred to herein (Corporations Law s.849). Details contained herein have been prepared for general circulation and do not have regard to any person’s or company’s investment objectives, financial situation and particular needs. Accordingly, no recipients should rely on any recommendation (whether express or implied) contained in this document without consulting their investment adviser (Corporations Law s.851). The persons involved in or responsible for the preparation and publication of this report believe the information herein is accurate but no warranty of accuracy is given and persons seeking to rely on information provided herein should make their own independent enquiries. Details contained herein have been issued on the basis they are only for the particular person or company to whom they have been provided by Blake Industry and Market Analysis Pty Ltd. The Directors and/or associates declare interests in the following ASX Healthcare and Biotechnology sector securities: Analyst MP: 1AD, ACR, AVR, CGS, CUV, CYC, DXB, IMM, LBT, MX1, OPT, NEU, PAB, PXS,RNO,SOM. These interests can change at any time and are not additional recommendations. Holdings in stocks valued at less than $100 are not disclosed.
