Aim-traded Cambridge Cognition (COG:173p), a company that has developed a suite of computer-based cognitive assessments to improve the understanding, diagnosis and treatment of neurological and psychological diseases, has announced a $0.5m (£0.37m) contract with a major pharmaceutical company for the use of its Cognition Kit™ digital health software in a clinical trial.
The smart software measures cognitive health on mobile and wearable devices, enabling researchers to gather data in everyday life and clinicians to make more insightful treatment decisions for their patients. The clinical trial will monitor patients diagnosed with a neurological condition by using a Cognition Kit smartphone app to test their brain health remotely, thus providing the sponsor with rich real-world data outside of clinical sites in a more cost-effective and patient-centric fashion. The contract highlights the growing interest from the pharmaceutical industry.
Cambridge Cognition already has a collaboration with US-based Takeda Pharmaceuticals to monitor and assess cognitive function in patients with Major Depressive Disorder (MDD) using a specially designed app on an Apple Watch. It has generated sales orders of £590,000 to date and Cambridge Cognition chief executive Dr Steven Powell believes revenues can double year on year. MDD is a leading cause of disability worldwide, affecting an estimated 350m people of all ages.
It’s not the only part of the business scaling up rapidly as Cambridge Cognition has contracts with two of the world’s largest Alzheimer’s disease trials for its CANTAB Recruit – an online platform to improve the efficiency of recruitment of patients into clinical trials, initially focused on patients with Alzheimer’s disease. The first of those contracts has increased 24-fold in value to over £1.2m in its first year. Patient recruitment accounts for one-third of the total costs in pharmaceutical clinical trials, and CANTAB Recruit allows sponsors to increase their recruitment efforts without requiring participants to visit a study site or take part in more invasive testing, saving time and costs and delivering a more patient-centric recruitment experience.
The raft of positive newsflow has sent Cambridge Cognition’s share price up by 31 per cent since I last advised buying at 127p (‘Riding earnings momentum’, 16 Apr 2018), and the price has doubled since I initiated coverage at 87p ('Positive thinking', 19 Apr 2017). A forward PE ratio of 45 for the 2019 financial year may seem punchy, but this is a highly operationally geared business, so expect profits to ramp up quickly, assuming of course the company continues to win contracts. That's a real possibility, so I would run your healthy profits.
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