Cambridge Cognition Share Discussion Threads

[earwacks] 22/11/2023 10:12

Saw on Stockopedia someone asked the question ‘ is it time to bail on auditor resignation?’ I think the process of tendering for a new auditor might explain some of the recent fall, at least I hope so. Thornton resigned with no issues. The new auditors are Crowe uk voted one of the top accountancy firms in 2022. There have been a number of late audits this year, mostly due to work load. that’s my interpretation :) gl

[40 fathoms] 10/11/2023 11:10

Blood based biomarkers (tests) are going to be an extremely important diagnostic tool both in terms of determining pathology but also in determining treatment. However they will not replace cognitive testing. What they will replace is PET scans or lumber puncture and CSF testing. The cognitive test will always be the first step in the diagnostic pathway as it is cheap and will provide the cost justification (rule out other possible issues) to undertake additional testing. In the US currently the total cost of diagnosis is between $6,000 and $8,500, even with blood based biomarkers this is likely to still be close to $2,000.

@Cerrito - I have occasional access to a bloomberg and used their tracking service.

[cerrito] 09/11/2023 18:55

40 Fathoms
Thanks from me as well for your explanation as to the fall.
Which share tracking service do you use, as a matter of interest?

[earwacks] 09/11/2023 16:06

Minsky If it is there is a complete misunderstanding of what COG do. Which is quite possible.there is plenty of info out there to explain

[minsky] 09/11/2023 13:59

Could some of today's drop be related to the story about a blood test for dementia?

[earwacks] 09/11/2023 11:21

Thanks Fathom. Seems the most plausible explanation. Also possibly why they went the rather generous loan note route. A placing just before end of lock in period might not have gone down very well. On the business side the news has been very positive.

[40 fathoms] 09/11/2023 09:43

All of the shareholders that took equity in the Winterlight transaction had stakes below 3% hence no need to RNS.

I got the information from a shareholder tracking service. The two shareholders I referred to are First Star Venture Fund II and Novatio LP.

[somerset lad] 09/11/2023 08:55

40 Fathoms, I wondered what the source was for your last post about institutional sellers, as I can't see any RNSs for sales during October? Thanks!

[40 fathoms] 09/11/2023 05:26

It looks like many companies on AIM at the moment, sellers need to sell and no one needs to buy. Underlying progress has no influence on share price.

I think it is worth noting that 2 of the 5 instos shareholders that took equity as part of the Winterlight acquisition have sold out post the expiry of their lock up and were very aggressive sellers during October.

[earwacks] 08/11/2023 16:55

Pretty odd market reaction to the news of 1 product producing 15 million per annum in under 5 years. It is a pretty odd market all round

[cerrito] 24/10/2023 11:50

I had no preconceived idea, 40 Fathoms, of the size of the market in 5 years and thanks for your clarification.

[40 fathoms] 24/10/2023 10:50

@Cerrito, How much would you expect this niche to be worth ?

I think GBP 16 mil to GBP 20mil feels like a good guess at this point. At the current time this quality control/auditing work is done by trained neurophysiologists at a charge out rate of about US$ 750 per hour. At random they will pull a certain number of the rater guided sessions, review and score them against the protocol. Each one might take 60 - 80 mins to review and enter in to the system and is often done days, weeks even months after the session. The very largest phase III AD trials might have 1,750 people enrolled. They will be tested maybe 3 or 4 times over a 2 or 3 year trial and @ 20% of those sessions will be sampled for quality. So even the very largest trials are likely to be only spending @US$ 400k to US$ 500k per year on this service. I am assuming our pitch is that we will review every session, there will be a standardisation to the reviews and we are cheaper.

It is worth keeping in mind that this is an additional service and not a core product. Nevertheless even half of GBP 16 million @+85% margins will have very meaningful impact on profit and market cap should it come to pass.

In the RNS they mention potential applications in healthcare, I think here we might see significant and near term interest. With the new AD drugs on the market for obvious reasons both healthcare systems and insurers will be very keen to audit and quality control the administration of cognitive tests. There is significant academic literature on the inherent variability in outcomes based on differing test administrations.

[cerrito] 24/10/2023 08:46

Yes good news and good that they will get immediate revenue but the following showing the smallness of the market surprised me
Quote
market opportunity for automated quality assurance for CNS clinical trials measuring cognition alone is estimated to be GBP16m per annum within five years.
Unquote

[40 fathoms] 13/10/2023 03:42

This link is to an investor day video that was posted today by Cogstate to help investors understand the their cognitive digital trials business. The video is long, so it might something for the weekend viewing.

Cogstate is a very similar company to CAMCOG. However, it is further advanced in its commercial development and has a much narrower focus, primarily on Alzheimer's (@70% of revenue) and rare diseases (@10% of revenue). At this point the companies are rarely in direct competition and for both of them their biggest competitors remain the providers of traditional pencil and paper tests. Just to give a sense of the potential size and scope of these markets last year Cogstate put out an estimate that despite being far in the lead in AD they still only had @17% of cognitive testing in the AD trials market. It is also worth noting that CAMCOG is involved with numerous early stage AD trials and will end up with a decent share of the AD market overtime.

The video gives a very good overview of the cognitive testing business case and also the huge and deep moat that these companies are able to enjoy. It also shows very clearly how well CAMCOG is positioned in the cognitive trial services ecosystem. CAMCOG is far ahead, both in terms of its technology and the scope of services it is able to offer in to trials. It is also probably also worth mentioning that AD only represents about 15% of the total spend in CNS space.

I hold both companies and it is clear that both will grow revenue significantly in the coming 3 or 4 years. However, for CAMCOG specifically we should understand it is about 3 or 4 years behind Cogstate in its move from R&D and validation to commercialisation. Cogstate clearly demonstrates the commercial path and revenue trajectory that we are on.

[earwacks] 11/10/2023 06:30

Much needed and welcome news Fathom in this very intolerant msrket

[40 fathoms] 11/10/2023 06:12

Excellent News .... where as previously we would have only offered CANTAB in to a trial like this we are now able to offer essentially a turn key clinical assessment solution for trials. Also worth noting that this is a NEW client.

"The contract combines the Company's proprietary CANTAB® touch-screen cognitive assessments with verbal assessments from its recent Winterlight Labs acquisition, for the first time. Additionally, the Company will supply its electronic Clinical Outcome Assessments ("eCOA") and provide full training for clinicians, together with quality control services.

This initial contract is valued at approximately £1 million and revenue is expected to be recognised over a two-year period, starting in 2023. There is potential for a further contract with the same customer, of slightly higher value, in 2024 once the initial results have been analysed from this trial."

[40 fathoms] 28/9/2023 13:20

The main competitor is Cogstate who are listed in Australia and they really only compete in 2 areas that being Alzheimer's and Rare Diseases. Cogstates technology is inferior (currently) they are dominant the market for Alzheimer as they are supported by both Eisai and Eli Lilly.

It has taken Cogstate almost 20 years to make a dent in pencil and paper testing in AD. The length and scale of phase III AD trials means some of their contract wins can be in the the $10 to $20 million range. We are about % years behind them in AD but we are catching up fast and over the next couple of years we are likely to see some very, very significant AD trial wins. We are the dominant digital provider in almost every other therapeutic area.

I think what is not yet to be appreciated by the market is the power of the underlying strategy Matthew Stork is employing. Often as one of the key endpoints in a trial, cognitive function and which system you use to test this is a key parts of the trial design. Who does everything else around that like finding patients, enrolling patients, providing experimental endpoints like voice, administering certain questionnaires, scheduling and recording nurse or doctor visits, auditing quality, reminds patients to take the therapeutics etc is not critical to the outcome and is normally handled by the CRO who then subcontracts it out, often with each function going to different parties. What Cambridge Cognition can now say to the CRO or the Client is you have selected us for cognitive testing why not let us handle everything else. We can do it better, cheaper, in one seamless platform that is built to work together and reduces complexity.

This is now what they are starting to market and I am certain it will prove very attractive in the market. The call yesterday alluded to the fact that a number of contracts are already in contracting include elements from the both of the new acquisitions.

[targatarga] 28/9/2023 06:09

A few director buys may help!

[earwacks] 28/9/2023 05:10

Glad I persevered the torturous effort to sign in for this webinar renewing passwords with battery running out on the mobile etc.
This is the most accurate diagnostic company with cheaper less accurate competition from about 1 other company. They have 10 of the top global pharmaceutical companies as clients and counting. Clearly they were short footed by delayed contracts in the first half, the main reason for the loan note, but also to finish the integration of Winterlight and Clinpal to be able to offer combined solutions. They are confident of no more funding required and will meet forecasts for full year. 60/40 split between institutional and private shareholders which explains the over reaction in the share price drop I think. All they have to do now is prove it. Baring circumstances outside their control I am confident they will.

[40 fathoms] 27/9/2023 08:17

Link to Directors Talk results summary/interview

[40 fathoms] 26/9/2023 23:32

So if we take the average of the forecast for Dowgate and PG ... we get the following.

2023 Revenue GBP 13.9 m
2024 Revenue GBP 16.05 m
2025 Revenue GBP 17.8 m

So they need to grow revenue by 28% in the next 2 years to meet that target

2023 EBITDA GBP -1.65 m.
2024 EBITDA GBP +0.940 m
2025 EBITDA GBP +1.78 m

2023 Est P/E NA
2024 Est P/E 156 x
2025 Est P/E 15.3 x

A 30 percent increase in revenue over the next 24 months seems very achievable to me and if achieved the 15.3x 2025 PE looks very very cheap, given the structural growth prospects that would still persist.

[40 fathoms] 26/9/2023 09:45

Today's volume has a non retail feeling ..... repeated 25k and 50k clips are not typical of retail. My bet it is one of the previous Winterlight shareholders selling down the COG shares that they took.

It very much has the feel of forced selling, either a margin call or someone try to clear a line from their books by the end of the month/quarter

[earwacks] 26/9/2023 08:41

Good point Fathom. Same ridiculous reaction to Niox results, almost equally absurd in terms of their news about scaling up operations and increasing cash flow 5 fold. seems to be an instinctive automatic reaction to results, sell sell sell whatever the news. Recovering a bit now. Seems to me the business has moved forward and in a much better place than when they were over £1.20 last year. Cost savings of £1.5 million covers the interest on the loan note nearly 5 times over for starters

[40 fathoms] 26/9/2023 08:10

Not an overreaction more a wrong reaction. It appears some have not read or have not understood the upgrades to projected profitability.

[earwacks] 26/9/2023 07:28

Good job I couldn’t get more shares. Bit of an over reaction possibly this morning