COGSTATE LIMITED ASX Announcement
21 January 2022
onlyBusiness Update and December 2021 Quarter Cashflow
All figures in US$
PCP = Previous Corresponding Period
Cogstate Ltd (ASX:CGS) has today released a business update and its Appendix 4C - Quarterly Cash Flow statement for the quarter ended 31 December 2021 (2Q22).
Highlights:
2Q22 REVENUE OF $10.8M, UP 40% COMPARED TO PCP
- Clinical Trials revenue of $9.7m, up 43% compared to PCP
- Healthcare revenue of $1.1m, up 31% compared to PCP
use1H22 REVENUE OF $23.1M, UP 67% COMPARED TO PCP
- Clinical Trials revenue of $20.8m, up 66% compared to PCP
- Healthcare revenue of $2.2m, up 93% compared to PCP
2Q22 CLINICAL TRIALS SALES CONTRACTS OF $13.7M, COMPARED TO $14.3M in PCP. 1H22 SALES CONTRACTS OF $54.5M, UP 141% COMPARED TO PCP
TOTAL REVENUE BACKLOG OF $132.9 MILLION, A RECORD RESULT, UP 78% COMPARED TO PCP
- Clinical Trials revenue backlog of $92.0m, up 85% compared to PCP
- Healthcare revenue backlog of $40.9m
NET CASH OF $24.6M AT 31 DECEMBER 2021*
- Cash inflow from operations of $1.5m, including movements in passthrough costs paid on behalf of customers. Cash inflow was $1.4m excluding the effect of passthrough costs.
- Net cash increased $1.2m from $23.4m at 30 September 2021, including proceeds from exercise of employee share options of $0.4m
APPENDIX 4D HALF YEAR FINANCIAL REPORT
personal | • Detailed financial report for the half year ended 31 December 2021 is expected to be released on Thursday | |||||||||
24 February 2022. | ||||||||||
2Q22 | 2Q21 | Variance | 1H22 | 1H21 | Variance | |||||
US$m | US$m | % | US$m | US$m | % | |||||
For | Total revenue from ordinary activities | 10.8 | 7.7 | 40% | 23.1 | 13.9 | 67% | |||
- Clinical Trials revenue | 9.7 | 6.8 | 43% | 20.8 | 12.6 | 66% | ||||
- Healthcare revenue | 1.1 | 0.8 | 31% | 2.2 | 1.1 | 93% | ||||
Sales contracts executed | 13.7 | 14.3 | (5%) | 54.5 | 22.6 | 141% | ||||
Contracted future revenue | 132.9 | 74.8 | 78% | 132.9 | 74.8 | 78% | ||||
Explanatory Notes
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Sales contracts: In the Clinical Trials division, Cogstate enters into contracts ("sales contracts") with both pharmaceutical and biotechnology companies for the provision of Cogstate technology and services, for use in clinical research trials, to determine the extent to which their investigational compound is impacting the cognition of the patient population. The contract value will differ for each clinical trial, depending upon the scope of the technology and services provided by Cogstate, as well as the complexity and length of the trial. An increase in the total value of sales contracts executed will increase the revenue backlog and will, over time, result in an increase to revenue recognised by Cogstate.
Calculation of revenue from Clinical Trials division: Revenue from sales contracts is recognised over the life of the contract. The length of a clinical trial can vary from several months for a phase 1 study and up to 4-5 years for a phase 3 study. Revenue is recognised based upon achievement of pre-determined milestones. During each period, revenue may be recognised from (i) contracts in the backlog at the beginning of the period, as well as (ii) sales contracts executed during the period. Usually there is a time lag between an increase or decrease in the level of sales contracts executed and a corresponding change to recognised revenue.
Contracted future revenue backlog: Executed sales contract values that have not yet been recognised as revenue at period end are referred to as "contracted future revenue". The revenue from these contracts will be recognised upon achievement of pre-determined milestones throughout the clinical trials. The contracted future revenue figure provides insight into future revenue performance.
Healthcare revenue: Cogstate has developed tools specifically designed to aid healthcare professionals, in general and specialist practice medicine, with objective assessments of cognition in patients. Cogstate's Healthcare offering includes the system branded as Cognigram™, a medical device which allows for regular and standardised testing to assist in the early detection of cognitive decline that could be related to a range of factors, including neurodegenerative diseases such as Alzheimer's disease. On 26 October 2020, Cogstate announced an exclusive global licensing agreement with pharmaceutical company Eisai (was previously just Japan), under which Eisai will market Cogstate technology as digital cognitive assessment tools targeting physicians, corporations, municipalities and also directly to consumers.
Due to the significance of the global licensing agreement, the group announced in its 1H21 results that it had reviewed the application of its accounting policy in respect of revenue relating to the grant of licences, provision of supporting services and the provision of server access, in accordance with the requirements of AASB 15 Revenue from Contracts with Customers.
Under the 10-year global (ex-Japan) agreement between Eisai and Cogstate executed on 26 October 2020:
- In addition to the upfront payments from Eisai of US$15 million, Cogstate is also due to receive an ongoing royalty on revenue derived by Eisai from the sale of Cogstate technology. Over the course of the 10-year global agreement, the contractual terms prescribe that the royalty payments shall not be less than an additional $30 million ($10 million over years 1-5 and $20 million over years 6-10).
- The full $45m (upfront payment of $15m plus the minimum royalties of $30m due over the course of the global license agreement) is being amortised on a straight-line basis over 11 years (10-year term + 12 months to commence). Actual cash royalties paid in each period will be the higher of (i) royalty amount calculated based on sales of product or (ii) minimum annual cash royalty, which ramp up over the contract period.
Business Update and December 2021 Quarter Cashflow (Appendix 4C) | Page 2
Revenue
Cogstate reported quarterly revenue of $10.8 million for 2Q22, up 40% on pcp (2Q21 | $7.7m) and 1H22 revenue of | ||||||||
$23.1M, a record half for Cogstate, up 67% on pcp (1H21 | $13.9m). | ||||||||
Revenue | 2Q22 | 2Q21 | Variance | 1H22 | 1H21 | Variance | |||
US$ m | US$ m | % | US$ m | US$ m | % | ||||
only | Clinical Trials | 9.7 | 6.8 | 43% | 20.8 | 12.6 | 66% | ||
Healthcare | 1.1 | 0.9 | 31% | 2.2 | 1.2 | 93% | |||
Research | (0.03) | 0.05 | (168%) | 0.01 | 0.13 | (90%) | |||
Total Revenue | 10.8 | 7.7 | 40% | 23.1 | 13.9 | 67% | |||
useClinical Trials revenue benefitted from the ongoing strength in new Clinical Trials Sales contracts executed in r cent periods, with quarterly new contract sales exceeding quarterly Clinical Trials revenue for 10 consecutive quarters.
Healthcare revenue was primarily the recognition of approximately $1.1m of deferred revenue associated with the Eisai licencing agreement. The partnership with Eisai continues to progress well with product launched in Taiwan and Hong Kong and launch in the USA and several other Asian countries in the pipeline.
Sales Contracts Executed
personalFor the quarter ended 31 December 2021, Cogstate executed $13.7 million of Clinical Trials sales contracts, taking the first half of FY22 to a record $54.5 million. The gross value of 1H22 contracts signed is $57.5 million with the
et total including the cancellation of one ongoing trial in 1Q22.
Alzheimer's disease trials continue to drive the growth in Clinical Trials sales contracts executed. In 2Q22 Alzheimer's represented 69% of sales contracts while for 1H22 Alzheimer's represents 90% of contract sales.
As reported in 1Q22, included in 1H22 is a large phase 3 Alzheimer's disease trial where Cogstate digital assessments will be used as important endpoints in the trial.
For
Business Update and December 2021 Quarter Cashflow (Appendix 4C) | Page 3
For context, a history of Clinical Trials sales contracts executed, per quarter, since 1 July 2019 is provided below:
only | Sep Quarter | Dec Quarter | 1st | Mar | Jun | 2nd | Financial | |
US$m | US$m | Half | Quarter | Quarter | Half | Year | ||
US$m | US$m | US$m | US$m | US$m | ||||
FY22 YTD | $40.8 | $13.7 | $54.5 | |||||
FY21 | $8.3 | $14.3 | $22.6 | $13.3 | $11.4 | $24.7 | $47.3 | |
FY20 | $6.7 | $17.5 | $24.2 | $9.5 | $7.6 | $17.1 | $41.3 | |
Contracted Future | Revenue | |||||||
Total Contracted future revenue increased to $132.9m as at 31 December 2021 vs $74.8m in pcp. The contracted | ||||||||
use | ||||||||
future revenue figure provides insight into future revenue performance of the Group. |
In Clinical Trials, contracted future revenue increased during 2Q22 with the value of contracts executed ($13.7m) exceeding Clinical Trials revenue recognised ($9.7m). The value of new contracts signed has now exceeded revenue recognised in each of the last 10 consecutive quarters.
Clinical Trials Sales Contracts vs Revenue Recognised
personalThe strong 1H22 new contract sales in Clinical Trials have in turn driven a further increase in the backlog of Clinical ForTrials contracted future revenue to a record of US$92.0m. The graph below shows contracted future Clinical Trials
evenue as at the end of each half year period since June 2017, as well as the December 2021 quarter.
Business Update and December 2021 Quarter Cashflow (Appendix 4C) | Page 4
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CogState Ltd. published this content on 20 January 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 20 January 2022 21:31:08 UTC.
