Cogstate
FY20 results
By Manuel Maurício
September 09, 2020
Cogstate, our cognition tests company, released its Annual Report a couple of weeks ago. Although there were no big surprises, I’m updating some of the metrics.
Revenue was up 31% year-on-year to AUD$14 Million in the second half of the year (which ends in June 30).
This growth was due to higher Clinical Trials revenue which has gone up to $12,8 Million in the second half of the year…
… and a major increase in the Healthcare segment, due in most part to the Eisai partnership that has contributed with $1 Million in the first half of the year.
I’ve found no mention regarding the source of revenue in the Healthcare segment for the second half of the year on the company’s statements. I’ve sent the company an email and I’m still waiting for a reply.
On his latest presentation, Connor, the CEO, showed a pretty interesting chart that illustrates the high level of operating leverage of the Clinical Trials segment. As you can see from the chart below, the costs have been pretty much stable over the past two years, and the profit contribution correlates highly with the variations in revenue.
This means that as the revenue goes up, the margins should expand disproportionately.
Unfortunately, the recent growth hasn’t yet translated into profits.
So meanwhile, what we should be looking at is both the contracts being signed and the contracts backlog. We’ve seen this previously, but I’m posting it nonetheless.
Both numbers are going up, which is obviously what we want to see.
From the $39 Million in Backlog, $15 Million are expected to be recognized in the next financial year (which has already started).
One interesting piece of information given by Connor on his presentation is that 20% to 25% of the backlog is composed of clinical trials related to Rare Diseases and not just Alzheimer’s Disease. This is new. In previous years the revenue coming from Rare Diseases was virtually zero, so we might have a new avenue for growth here.
Regarding the strength of the balance sheet, there should be no major reason for worries given that following the recent Rights Offering, the company still has net cash of $7,7 Million while the cash burn has been around $2,5 Million.
THOUGHTS AND CONCLUSION:
There’s no major changes from my previous write-up. We’re still waiting for the partnerships with Eisai in Japan and ERT in the US to bear fruits, as well as the FDA final word on the Biogen treatment for the Alzheimer’s Disease which is due on the 7th of March 2021.
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