COGSTATE LIMITED ASX Announcement
28 July 2022
onlyBusiness Update and June 2022 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 30 June 2022 (4Q22).
useHighlights:
FY22 CLINICAL TRIALS SALES CONTRACTS OF $82.5M, UP 74% COMPARED TO PCP
- 4Q22 Clinical Trial sales contracts of $8.8m, down from $11.6m PCP
4Q22 REVENUE OF $12.6M, A RECORD QUARTER FOR COGSTATE, UP 26% COMPARED TO PCP
- Clinical Trials revenue of $11.5m, up 30% compared to PCP
- Healthcare revenue of $1.1m, no change compared to PCP
FY22 REVENUE OF $45.0M, UP 38% COMPARED TO PCP
- Clinical Trials revenue of $40.3m, up 41% compared to PCP
- Healthcare revenue of $4.5m, up 19% compared to PCP
TOTAL REVENUE BACKLOG OF $139.1M, UP 37% COMPARED TO PCP
- Clinical Trials revenue backlog of $100.2 million, up 72% compared to PCP
- Healthcare revenue backlog of $38.8 million
TOTAL CASH OF $30.6M AT 30 JUNE 2022
- 4Q22 cash inflow from operations of $5.4m.
- Total cash at 30 June 2022 increased $3.0m from $27.6m as at 31 March 2022
- FY22 net cash inflow from operations of $9.7m and total cash increase during FY22 of $7.0m
GUIDANCE IN RESPECT OF FY22 EARNINGS
personal | • For the year to 30 June 2022, Cogstate expects to record a profit before tax in a range of $10.3 - $10.8 | ||||
million - see page 3 of this release for more detail. | |||||
• Cogstate expects to release audited financial reports on Tuesday 30th | August 2022. | ||||
For | |||||
4Q22 | % Change | FY22 | % Change | ||
US$m | PCP | US$m | PCP | ||
Total revenue from ordinary activities | 12.6 | 26% | 45.0 | 38% | |
- Clinical Trials revenue | 11.5 | 30% | 40.3 | 41% | |
- Healthcare revenue | 1.09 | 0% | 4.5 | 19% | |
- Research revenue | 0.07 | 0% | 0.2 | 0% | |
Sales contracts executed | 8.8 | (23%) | 82.5 | 74% | |
Contracted future revenue | 139.1 | 37% | 139.1 | 37% |
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.
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 June 2022 Quarter Cashflow (Appendix 4C) | Page 2
Business Update - Commentary
Note: all figures represent un-audited financial results. Audited financial results are expected to be released on Tuesday 30th August 2022.
onlyQuarterly Revenue History:
A strong finish to the FY22 year, with $12.6m revenue recorded for the quarter - a record result for Cogstate - which took FY22 revenue to $45.0 million.
Clinical Trials
Healthcare
Research
useTotal
A record $82.5 million of Clinical Trials sales contracts were executed during FY22, up from $47.3 million in the prior year. The significant growth in the value of sales contracts executed reflects the increase in research & development spend in the area of Alzheimer's disease along with an increase in decentralised design of clinical trials - both changes that have positively impacted Cogstate's business.
Cost control, in respect of both direct costs and overhead costs, has resulted in growth in both gross margins and EBIT margins throughout FY22.
personal | ||||||||||||||||||
FY22 Guidance Updated (Group Results) | ||||||||||||||||||
FY22 Results | Previous Guidance | Updated Guidance | ||||||||||||||||
Revenue | $44m - $47m | $45.0m | ||||||||||||||||
Operating Expenses | 31% - 33% of revenue | 30% - 31% of revenue | ||||||||||||||||
EBIT Margins | 20% - 24% of revenue | 23% - 24% of revenue | ||||||||||||||||
EBIT | $8.8m - $11.3m | $10.3m - $10.8m | ||||||||||||||||
Operating cashflow | >$5m | $9.7m | ||||||||||||||||
Further detailed analysis of the FY22 financial results will be provided upon release of the audited financial | ||||||||||||||||||
statements on Tuesday 30th August 2022. | ||||||||||||||||||
Revenue | ||||||||||||||||||
Cogstate reported quarterly revenue of $12.6 million for 4Q22, up 26% on pcp (4Q21 | $10.0m). Total revenue for | |||||||||||||||||
For | FY22 was $45 million, up 38% on pcp. | |||||||||||||||||
Revenue | 4Q22 | 4Q21 | Variance | FY22 | FY21 | Variance | ||||||||||||
US$ m | US$ m | % | US$ m | US$ m | % | |||||||||||||
Clinical Trials | 11.5 | 8.8 | 30% | 40.3 | 28.7 | 41% | ||||||||||||
Healthcare | 1.09 | 1.09 | 0% | 4.5 | 3.8 | 19% | ||||||||||||
Research | 0.07 | 0.07 | 0% | 0.2 | 0.2 | 0% | ||||||||||||
Total Revenue | 12.6 | 10.0 | 26% | 45.0 | 32.7 | 38% | ||||||||||||
Clinical Trials revenue in 4Q22 was $11.5m, up 30% on pcp, and up 41% from FY21.
While 4Q22 Clinical Trials revenue was a record quarter, it has continued to be impacted by a slower than expected patient enrolment in a key Alzheimer's study, though that issue has now been resolved. The slower than expected study recruitment has delayed the provision of Cogstate services, thereby impacting 4Q22 revenue.
In Healthcare, 4Q22 revenue was primarily the recognition of approximately $1.1m of deferred revenue associated with the Eisai licencing agreement.
Business Update and June 2022 Quarter Cashflow (Appendix 4C) | Page 3
Sales Contracts Executed
only | Clinical Trials Sales Contracts Executed | |||||||
personal use | ||||||||
For | For context, a history of Clinical Trials sales contracts executed, per quarter, since 1 July 2019 is provided below: | |||||||
Sep Quarter | Dec Quarter | 1st | Mar | Jun | 2nd | Financial | ||
US$m | US$m | Half | Quarter | Quarter | Half | Year | ||
US$m | US$m | US$m | US$m | US$m | ||||
FY22 | $40.8 | $13.7 | $54.5 | $19.2 | $8.8 | $28.0 | $82.5 | |
FY21 | $8.3 | $14.3 | $22.6 | $13.3 | $11.4 | $24.7 | $47.3 | |
FY20 | $6.7 | $17.5 | $24.2 | $9.4 | $6.5 | $15.9 | $40.2 |
For the quarter ended 30 June 2022, Cogstate executed $8.8 million of Clinical Trials sales contracts, with 59% relating to Alzheimer's disease trials. This takes the total value of new contracts executed during FY22 to $82.5 million, up 74% compared to pcp.
Trials in Alzheimer's disease continues to represent a significant driver of clinical trial sales, representing 84.2% of the value of contracts executed in FY22, compared to 65.3% in FY21.
Business Update and June 2022 Quarter Cashflow (Appendix 4C) | Page 4
Contracted Future Revenue
Total Contracted future revenue decreased to $139.1m as at 30 June 2022 vs $143.5m as at 31 March 2022 however, increased from $101.5m at 30 June 2021. The contracted future revenue figure provides insight into future revenue
onlyperformance of the Group.
In Clinical Trials, contracted future revenue decreased during 4Q22 with the value of contracts executed ($8.8m) less than Clinical Trials revenue recognised ($11.5m).
usepersonalAside from the reduction in backlog of Clinical Trials contracted future revenue to $100.2m as at 30 June 2022 vs $103.6m as at 31 March 2022, the graph below shows significant growth within contracted future Clinical Trials revenue as at the end of each half year period since June 2020:
For
Business Update and June 2022 Quarter Cashflow (Appendix 4C) | Page 5
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CogState Ltd. published this content on 27 July 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 27 July 2022 22:37:06 UTC.
