Cogstate Limited (ASX:CGS) CEO, Brad O’Connor Presents at the ASX CEO Sessions in SydneyCogstate Limited
(ASX:CGS) is a technology and services company. We provide expertise in respect of the measurement of cognition. When we talk about cognition, really what we’re talking about is thinking. Predominantly we sell our services to pharmaceutical companies, who use it in their drug trials to determine whether their drug is working or not. We’ve got offices in the US, Europe and Australia, about 130 people in total supporting that technology.
So Cogstate will provide everything from expertise in respect of the design of the clinical trial, through to the technology that’ll be used to measure the effectiveness of the drug, in the clinical trial. Data management services, project management services, statistical analysis. Our customers are large pharmaceutical companies.
We drive 45 per cent of our revenue from the Alzheimer’s disease market, but also we’ll work in indications such as schizophrenia, depression. But Alzheimer’s disease is a major driver in what we’re doing. We’re seeing a lot of advancement now in terms of Alzheimer’s disease, as drug companies are getting closer to potential treatments for Alzheimer’s disease. That’s generating a lot more revenue for us as we’re providing those services, particularly in that indication.
Cogstate had a fantastic first-half, which really grows from our strong second-half of our 2015 financial year. We recorded over 100 per cent growth in revenue for the year, so just on $13 million of revenue for the first-half of the 2016 financial year. That delivered earnings before interest of tax of $1.1 million and a profit after tax, of $2.5 million.
Cogstate offers expertise in the measurement of cognition. So our customers include, not only pharmaceutical companies, but also the contract research organisations that will run clinical trials on behalf of those pharmaceutical companies. Because of that degree of expertise, increasingly the contract research organisations are working with us, to provide that speciality around the measurement of cognition. We’ve grown our commercial business development team substantially, over the last two years. And with that, we’ve seen expansion, both our customer base and also our revenues associated with that.
We’ve got really good visibility in terms of future revenue that comes from the long term contracts that we have in place, for these clinical trials, with over $50 million worth of contracted work currently on our books. With the growth of our customer base, what we’ve seen is that many of our customers are using us for - in the whole programs. So we’re seeing that winning work in one clinical trial, leading to work in additional clinical trials, within that company.
So we’ve got strategic accounts, both at a contract research organisational level, as well as a pharmaceutical company level. As we’re developing closer relationships with those companies, what we’re seeing is we’re imbedding ourselves further and further, and being involved in more studies. That combined with just an expansion of customer base, as we’ve expanded our commercial business development team, means that we’re seeing more and more studies that we have the opportunity to bid for. Our proposals are up substantially, a four times increase in proposals compared to where we were this time last year; notwithstanding the fact that our actual sales contracts are also up over 100 per cent on last year.
Within the next 12 months, Cogstate will continue to grow our revenue. We’ll start the 2017 financial year with a backlog of revenue, which is more than 50 per cent above where we started the 2016 financial year. So we’ll grow revenue again through the 2017 financial year. We’ll see continued growth in our personnel and continued growth in our indications that we’re working on.
So we’ve been working hard to develop data sets that support the use of our technology, in indications like oncology. And we’re seeing that grow from zero to 20 per cent, over the last 12 months of our contract revenue base. So looking to grow revenue again, grow profitability and continue to expand the use of the technology.
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