TIDMCOG
RNS Number : 1880Y
Cambridge Cognition Holdings PLC
03 May 2023
3 May 2023
Cambridge Cognition Holdings Plc
("Cambridge Cognition", the "Group" or the "Company")
Preliminary results for the year ended 31 December 2022
Cambridge Cognition (AIM: COG), which develops and markets
digital solutions to assess brain health, is pleased to announce
its preliminary audited results for the year ended 31 December
2022.
2022 performance
Cambridge Cognition had a transformative year in 2022, recording
25% revenue growth and a profit before acquisition-related costs,
continuing to commercialise and develop new solutions, and making
two bolt-on acquisitions (including one completed post period end),
as it enhances its position as a leading digital health tech
provider for CNS clinical trials.
Corporate and operational highlights
-- 25% revenue growth year-on-year and underlying profitability.
-- Innovative new product development and acquisitions that
added to the technology offering and expanded the addressable
market.
-- Leading market position with unique digital technology
solutions and full commercial coverage of the clinical trial market
for cognitive assessments.
-- Major contract wins, including two over GBP2m for sizeable clinical trials.
-- Sales order intake of GBP13.1m, up 8% on like-for-like prior
year (2021: GBP12.1m excluding GBP3.6m of large one-off
orders).
-- Contracted order book increased to GBP19.1m following the
acquisition of Winterlight Labs on 10 January 2023.
Financial highlights
-- Revenue up 25% to GBP12.6m (2021: GBP10.1m).
-- Gross profit up 21% to GBP9.3m (2021: GBP7.7m).
-- Profit for the year, adjusted for acquisition-related
expenses of GBP0.5m, of GBP0.1m (2021: GBP0.5m).
-- Loss per share 1.3 pence (2021: 1.4 pence earnings per share).
-- Cash generative with cash balance of GBP8.3m at 31 December
2022 (31 December 2021: GBP6.8m).
Commenting on the results, Matthew Stork, Chief Executive
Officer, said:
"2022 was a transformational year for Cambridge Cognition,
marked by significant multi-year orders, sustained revenue growth,
and the expansion of our core product set. We also successfully
concluded an acquisition in 2022 with another right at the start of
2023. These have strengthened our technology portfolio and enable
us to provide a full offering for CNS clinical trials. Looking
ahead, we remain committed to our objectives of driving revenue and
profit growth by increasing our market share through offering the
most innovative technology, supported by outstanding scientific
evidence and a very experienced team, in the high-value market for
CNS drug development."
Investor webinar
Cambridge Cognition's management will be hosting an online
presentation and Q&A session at 5.30 p.m. BST on Wednesday 3
May 2023. This session is open to all existing and prospective
shareholders. Those wishing to attend should email
cog@investor-focus.co.uk and they will be provided with log in
details.
Participants will have the opportunity to submit questions
during the session, but questions are welcomed in advance and may
be submitted to: cog@investor-focus.co.uk .
Enquiries:
Cambridge Cognition Holdings Plc Tel: 012 2381 0700
Matthew Stork, Chief Executive Officer press@camcog.com
Stephen Symonds, Chief Financial Officer
Panmure Gordon (UK) Limited
(NOMAD and Joint Broker) Tel: 020 7886 2500
Freddy Crossley / Emma Earl / Mark Rogers (Corporate Advisory)
Rupert Dearden (Corporate Broking)
Dowgate Capital Limited (Joint Broker) Tel: 020 3903 7715
David Poutney / James Serjeant
IFC Advisory Limited (Financial PR and Tel: 020 3934 6630
IR) cog@investor-focus.co.uk
Tim Metcalfe / Graham Herring / Zach Cohen
This announcement contains inside information for the purposes
of Article 7 of the Market Abuse Regulation (EU) 596/2014 as it
forms part of UK domestic law by virtue of the European Union
(Withdrawal) Act 2018 ("MAR"), and is disclosed in accordance with
the Company's obligations under Article 17 of MAR.
CHAIR'S INTRODUCTION
2022 was a pivotal year for our business with significant
achievements at all levels of the organisation. We achieved growth
in like-for-like orders and revenues, underlying business
profitability, cash generation and major progress in innovation. In
addition, two acquisitions also further expanded our position in
the market, positively impacting both our technology capabilities
and future revenue growth.
Cambridge Cognition's strategy is to develop and commercialise
unique, well-protected, high-value solutions supported by extensive
scientific evidence and expertise for central nervous system
("CNS") clinical trials. There has been excellent progress in
delivering this strategy and we believe Cambridge Cognition is
exceptionally well-placed for the future.
Over the year, the Board has continued to focus on careful
capital allocation as the Company has expanded organically and
inorganically. The acquisitions of Clinpal (the trading name for
eClinicalHealth Limited) in October 2022 and Winterlight Labs Inc
("Winterlight") at the start of 2023 enhance our portfolio, expand
the addressable market for our products and add to our revenue
growth and drive to sustained profitability. We also expect the
acquired products and technologies to prompt incremental use of the
Company's existing products.
In April 2022, we welcomed Stephen Symonds as Chief Financial
Officer and he was appointed to the Board in August 2022. Stephen
brings a wealth of top-four audit and clinical trial market
expertise at a senior level and is already making a strong
contribution to the growth of our company. The Board has concluded
that with the Company's continued growth, adding a Non-Executive
Director would be beneficial later in 2023 to bring further
independent guidance, scrutiny and experience.
Cambridge Cognition is positioned for accelerated revenue growth
and sustainable profitability in the coming years, both from its
current offerings and new products in development. The Board
expects the Company to grow rapidly and deliver substantial,
sustainable shareholder value in both the short and medium
term.
Steven Powell
Chairman
CHIEF EXECUTIVE OFFICER'S REVIEW
Introduction
I am delighted by Cambridge Cognition's performance in 2022. We
worked on a record number of clinical trials and increased revenue
substantially, while laying the foundations for further growth in
future years. In tandem with this growth, we have focused on
delivering high-value technology solutions and excellent customer
service.
Our overarching strategy is to develop and commercialise a
unique set of high-value solutions for CNS clinical trials. Those
solutions are well protected and supported by extensive scientific
evidence and expertise. Our product offerings and capabilities have
undergone a step-change through customer-oriented product
development and strategic acquisitions . Specifically, we have:
-- Further developed our suite of leading cognitive assessments,
making them accessible on more devices, in more than 50 languages,
and in any country.
-- Set up a global software infrastructure that adheres to
stringent data protection requirements and enables us to store
patient data locally, as mandated by regulations.
-- Acquired leading voice-based and decentralised clinical trial
solutions to establish the broadest offering in CNS-related
outcomes measurement.
-- Brought in expert-level capability in machine learning for
digital biomarkers, deep knowledge of computational linguistics,
and new clinical trial solutions, such as electronic consent and
telemedicine.
-- Expanded our software team to accelerate the development of
new modules, opening an office and recruiting an entire team of
software developers in South Africa.
-- Invested in sales and marketing, bolstering our brand
presence and providing full coverage across the US and Europe.
Additionally, we have established a distributor relationship in
Asia to expand our reach further.
These accomplishments position Cambridge Cognition to secure
more contracts and capture a more substantial share of the growing
market opportunity.
Overall, our 2022 financial results were very strong, with
revenue growth of 25% to GBP12.6m (2021: GBP10.1m) and orders
growth of 8% (on a like-for-like basis) over 2021 to GBP13.1m.
Administrative expenses were well managed during the year, and
although the gross margin percentage was slightly down on the prior
year, this was in line with expectations. In 2022, we changed our
accounting policy for cost of sales and have included pay costs
directly related to revenue (with the prior year restated to the
same basis).
The financial results for the year were tempered by a slightly
slower-than-expected final quarter as we experienced delays and
scope reduction associated with large orders. Market forecasts
suggest that this is not representative of a long-term trend. The
Company's strategy is designed to address intermittent slow periods
through a broader product offering and increasing volumes across
all contract sizes.
Activity has been high in the first quarter of 2023 and a
positive response from customers to developments in 2022 and early
2023. The Company ended 2022 with a strong contracted order book of
GBP17.6m which increased further to GBP19.1m in January 2023
following the acquisition of Winterlight. Moreover, with the
broadened portfolio and additional business capabilities, we have a
solid platform to achieve future profitable growth.
Market Overview
Cambridge Cognition operates across three main business
areas:
1. Pharmaceutical clinical trials: The Company has a fully
serviced digital outcomes assessment solution including software,
configuration (with customisation options), consulting, and
reporting services that accounts for approximately 90% of
revenue.
2. Academic research: The supply of cognitive outcomes
assessments is via a software-as-a-service solution for use in
research by academics.
3. Healthcare: The Company has two products to aid in the triage
and diagnosis of cognitive impairment, one for primary care
practitioners and one for secondary care specialists, that are FDA
and EU-approved medical devices. Demand is currently limited as
there is minimal reimbursement; this may change with more interest
in using digital cognitive biomarkers with new drugs being approved
for Alzheimer's disease.
Primarily related to clinical trials, five areas represent
substantial market opportunities for the Company:
1. Digital Cognitive Outcomes Assessments
Approximately 500-600 clinical trials each year use measures of
cognition(1) . The traditional assessment method requires
clinicians to ask patients questions and score the answers and can
be subjective, costly, and inconvenient. Touchscreen or voice-based
cognitive assessments can be used alongside or even replace
traditional assessment methods. The US market for digital cognitive
assessments was estimated at GBP70m in 2022 and growing at 10% per
annum(2) .
2. Automated Quality Assurance
In later phase clinical trials for diseases such as Alzheimer's
and Parkinson's Disease, patient consults are reviewed for quality
assurance. This is a new market opportunity for the Company: our
new offering automates part of the process and enables quality
assurance at a lower overall cost. We commissioned independent
market research and estimate the market opportunity could be GBP16m
per annum within five years(3) .
3. Electronic Clinical Outcomes Assessment ("eCOA")
eCOA systems are designed to capture patient, carer, or
clinician-reported data on a patient's outcomes during a clinical
trial. This is accomplished through using licensed questions or
scales that are usually widely used in clinical studies. Uptake is
gradual and clinical trial sites report that they use eCOA half the
time or less(4) . The remainder still rely on pen-and-paper methods
to collect outcomes. Taking a proportion of the reported global
market for all therapeutic areas, the eCOA market for CNS disorders
was estimated to be GBP160m in 2022, growing at 15% per annum(5)
.
4. In-Clinic, Hybrid and Virtual / Decentralised Clinical Trial
Systems
Pharmaceutical companies and CROs depend on various information
technology systems to effectively communicate with patients,
schedule events, gather and analyse clinical data, and prepare
reports. Among the most used modules are e-Consent, which captures
participation agreements, Electronic Document Management ("EDC"),
which stores all the clinical data, and Telehealth, which enables
clinician-patient consults. A wide range of providers offer one or
more of these systems, with some designed for in-clinic or virtual
use or both. No provider currently markets a CNS-dedicated
solution. The global market for these solutions in CNS virtual
clinical trials was estimated to be GBP140m per annum, growing at
15%(6) .
5. Patient Recruitment
There is a market opportunity for Cambridge Cognition to recruit
patients for a wide range of CNS clinical trials. Recruitment is
notoriously challenging: less than half of studies meet enrolment
goals(7) . We collaborate with several partners to provide clinical
consulting, patient tracking systems and clinical screening as part
of a dedicated patient recruitment offering. The CNS clinical trial
patient recruitment market, excluding advertising, is estimated at
GBP100m annually growing at 10% per annum(8) .
Operational Review
In 2022, the Group significantly enhanced its operational
capability and performance across commercial, clinical services,
product development, people management, and delivery. We
successfully provided solutions to a more extensive customer base
than ever before.
Considerable investment has been made in expanding our
commercial team, increasing the number of sales and sales support
staff from four to eight. These investments were made towards the
end of the year, with the aim of making an impact in 2023. As a
result, we now have full coverage of the cognitive assessment
market for clinical trials, a new sales team dedicated to virtual
clinical trials, and an experienced proposal management
function.
We achieved 100% on-time-in-full delivery of clinical trial
starts and a continued high customer service record, enhancing our
brand position as a gold-standard provider of assessments.
Excellent clinical project management and scientific support were
provided to academic customers, scientific collaborators, and
pharmaceutical clients.
The numerous publications and presentations referencing new data
by Cambridge Cognition employees, leading scientists, and
pharmaceutical companies continue to provide valuable evidence to
help secure contracts. The total number of papers citing studies
using the Company's assessments now stands at over 3,000. Two
notable examples of such partnerships in 2022 are the Company's
participation in the IdeaFast project to develop new digital
biomarkers of fatigue, and the Brain Health Registry programme, to
understand mild cognitive impairment globally.
Cambridge Cognition has continued to provide a single-source
service by shipping hardware to support clinical trials. Chip
shortages and production delays throughout 2022 increased the
challenge of obtaining and shipping hardware to clients. Despite
this, we achieved all contractual obligations and established an
additional inventory of the most used tablets and mobile
phones.
Over the year, the Company transformed its product development
function, introducing new systems and roles to streamline and
improve the efficacy of product development and maintenance. We
recruited considerable expertise in the product and research and
development teams with several senior-level new starts.
Software development resources were enhanced by opening a new
office in South Africa. The region boasts a large pool of highly
skilled software developers. As a result of natural attrition in
the UK, most of the Company's software development capacity at the
year-end was based in South Africa.
Investments have been made in the management team, training for
people managers, and role-specific training and development. We saw
some pay inflation as we ensured salaries were competitive for the
sector. At the same time, we reduced our recruitment costs
substantially during a growth period through more successful direct
hires managed by our internal team.
Corporate Business Development Review
Over the last two years, Cambridge Cognition had established an
ambitious strategic roadmap to develop new product and service
offerings, including building out modules to support clinic-based
and virtual clinical trials and developing a free-speech-based
verbal cognitive assessment. To accelerate the development of the
business and respond to demand, we made two acquisitions to obtain
those technologies and competencies.
In October 2022, the Company acquired Clinpal(TM) (the trading
name for eClinicalHealth Limited), a digital technology provider of
virtual clinical trial solutions that has been working on trials
for three of the world's top ten largest pharmaceutical companies.
With a patient-centric platform that connects patients, sites, and
pharmaceutical companies, Clinpal(TM) enables all the essential
steps in a clinical trial.
Clinpal was acquired for a total amount payable of GBP1.7m, and
the acquisition is expected to positively contribute to
profitability in 2024. The Clinpal acquisition immediately allowed
the Company to offer full in-clinic and virtual clinical trial
solutions, including specialised CNS clinical trial patient
recruitment solutions. This has already enabled us to respond to a
tender issued by a top-ten pharmaceutical company for a recruitment
contract.
The acquisition of Winterlight was completed in January 2023.
Winterlight, based in Toronto, Canada, has developed
machine-learning-based voice assessments using free-speech inputs
or those that require deductive reasoning or interpretation, as
well as a unique automated quality assurance service for
clinicians. Winterlight has an excellent customer list, including
five of the top ten global life sciences companies, and limited
overlap with Cambridge Cognition's existing customer base,
providing the potential to cross-sell and generate further revenue
growth.
The acquisition of Winterlight was completed for a total amount
payable of GBP7.0m. As at the acquisition date, Winterlight had a
strong pipeline of opportunities and a contracted order book of
GBP1.5 million (reduced subsequently from the previously announced
GBP2.5m as a Winterlight customer failed to secure adequate
financing and is now seeking a sale of its assets). As well as
actively cross-selling solutions at this time, the unique quality
assurance offering has enabled Cambridge Cognition to bid on a
large tender for cognitive assessments and clinician services as a
single provider, differentiating us from competitors.
In December 2022, Cambridge Cognition also entered into an
agreement with Luca Healthcare to commercialise our suite of
cognitive assessment tools in the China market. Luca Healthcare,
which has existing contracts with pharmaceutical companies in other
therapeutic areas, is now offering solutions for CNS clinical
trials and developing a healthcare solution. Our assessments are
hosted on a secure cloud-based server in China and can be run
seamlessly on Luca Healthcare's platform using Application Process
Interfaces ("APIs").
Having made the two recent acquisitions, we have prioritised our
go-to-market strategy for the combined business, including
opportunities to cross-sell from the enlarged portfolio, and the
focus is now on integrating operations and supporting functions.
These are critical next steps to ensure we achieve the expected
acquisition returns. While the Company remains open to other
corporate business development opportunities, such as partnerships,
licensing opportunities, or mergers and acquisitions, future
opportunities will be considered primarily in relation to
contribution to the Company's profit.
Innovation Review
Cambridge Cognition has a well-established reputation for
leadership in the sector and a history of firsts, which supports
the brand's reputation and creates unique differential advantages.
These are protected mainly through trademarks, copyright, and some
patents, establishing our intellectual property (or 'moat').
With continued investment in innovation in 2022, the three
companies, Cambridge Cognition, Clinpal, and Winterlight, all made
major advances.
CANTAB(TM) cognitive assessments
Cambridge Cognition's core product, CANTAB(TM), constitutes most
of the Company's revenues. It comprises 18 main tasks that cover
all the cognitive domains typically measured in a clinical trial.
In 2022, the number of publications supporting CANTAB(TM) grew to
2,850 and as at the end of April 2023 stands at over 3,000.
CANTAB(TM) assessments are available on Apple iPads(TM) and most
can be accessed through a web browser. In 2022, a development
project enabled screen resizing and demonstrated validity of
results for an assessment on a mobile phone as well. This
development will enable use of CANTAB(TM) in a much broader context
in the future.
Daily cognitive assessments
In 2022, the Company broadened its existing range of daily
mobile phone assessments by developing four additional prototypes,
due for launch in 2023. Three of these are screen-based, and one
voice-based. This will bring the Group's total number of short
daily assessments covering the main cognitive domains to six by the
end of the current year.
The use of these daily assessments is gaining traction. Two
major pharmaceutical companies published the results of their
studies in 2022:
1. Takeda, together with the University of Toronto, presented
data showing that a short daily task was well correlated with the
pen and paper version concluding that it could help with guiding
treatment choice for patients with depression(9) .
2. Sage published data showing that patients with Parkinson's
and Alzheimer's disease improved using a novel drug as measured by
two quick daily cognitive assessments(10) . Early in 2023, Sage
also published data showing that they could demonstrate the
day-by-day impact of their drug on cognitive function.
These new daily assessment are ground-breaking, novel
application of digital technologies with the potential to
objectively demonstrate drug effects in ways that have not been
possible before.
Voice-based cognitive assessments
Significant progress was made in 2022, both within the Company
and by Winterlight, in advancing the development of voice-based
cognitive assessments.
The in-house solution developed by Cambridge Cognition
progressed by:
-- Establishing a roadmap for multi-language support development
in 2023, essential for the widespread use of assessments in
clinical trials.
-- Creating a short daily assessment prototype for a
pharmaceutical company with a well-known verbal assessment but with
daily monitoring, allowing for quicker observation of drug effects
and potentially shorter and more efficient trials.
-- Agreeing on collaborations with two major universities to
validate existing assessments. These projects took considerable
time from initial discussion to full grant funding and commencing
work, though are now underway.
Winterlight achieved a number of milestones with its free-speech
solution. These milestones include:
-- Adding additional languages to bring the total number to nine
(more than any other company in the sector).
-- Establishing a quality assurance solution for clinical trials
with considerable market potential.
-- Improving its automated solution with better speech
recognition to simplify and reduce transcription costs.
Cambridge Cognition is now the only company offering such a wide
range of automated voice-based cognitive assessments. These have
the potential to replace many of the existing assessments commonly
conducted in clinical trials.
Academic Collaborations
As well as co-creating solutions with pharmaceutical companies,
Cambridge Cognition participated in several widely recognised
academic collaborations in 2022. Some of the most high-profile ones
include: the EU IMI grant-funded IDEA-FAST study to identify
digital endpoints for fatigue; the US NIHR-funded Brain Health
Registry that assesses cognition worldwide; the Deep and Frequent
Phenotyping longitudinal study of dementia and AI Brain, an EU
Horizon grant-funded study developing multi-modal biomarkers for
dementia. As well as showcasing our solutions and gathering data,
these have provided reference points for and contact with target
customers. By way of example, 13 major pharmaceutical companies
take part in IDEA-FAST.
Clinical Trial Solutions
2022 saw significant progress in clinical trial solutions
through the combined efforts of Cambridge Cognition and Clinpal.
Prior to the acquisition, a proportion of the software development
for the Clinpal solution was completed by Cambridge Cognition under
contract. Progress made in the year included:
-- Moving from installed solutions in data centres to
cloud-based servers in two regions with a plan to open a third in
2023. This improves patient data management and facilitates
compliance.
-- The Clinpal solution added patient-data management
communication features designed for a global virtual study that
started in 2022.
-- A next-generation patient application for Android and iOS was
designed for the IMI grant-funded Radial clinical trial due to
start in 2023.
-- New or upgraded modules for eConsent and Telehealth with the release set for Q2 2023.
Combined product offering
A key objective is to provide a unified solution incorporating
modules developed by Cambridge Cognition, Clinpal, or Winterlight.
All three solutions feature APIs to allow seamless functionality
within a single front-end user interface. This currently puts us in
a strong position to select one of the solutions to run as the
customer user interface while incorporating modules from the other
two. We are now bidding with solutions that integrate the three
platforms.
We plan to converge all three solutions, which will require time
and investment. We plan to accomplish this gradually, likely on a
module-by-module basis, as we perform maintenance or make
improvements to the system, taking the best of each platform.
In the medium term, there is the opportunity to create
multi-modal digital biomarkers by combining solutions. As well as
using touchscreen and voice data, this could also include
actigraphy or other clinical information to provide even greater
accuracy of diagnostic information. This is an exciting area of
future development that is likely to be funded by grants or
development partners.
Growth Strategy
Our overarching goal is to achieve profitable growth. Our
strategy in the short to medium term from 2023-2025 is to complete
development and commercialise our unique set of well-protected,
high-value, and validated solutions. In addition, our strategy
includes having a watching-brief on the healthcare market with the
readiness to promote our medical devices should demand and
reimbursement surface.
To achieve our strategic goals, Cambridge Cognition's areas of
focus for 2023 are:
1. Driving sales of existing products, including Winterlight and
Clinpal and winning a greater volume of clinical trial work for our
broader portfolio, including combined offerings.
2. Establishing partnerships with high-impact organisations in
the sector, such as major pharmaceutical companies and CROs.
3. Investing in innovation to maintain our brand position and
complete the development of our offering.
4. Realising synergies from acquisitions and ensuring continued
customer focus as we integrate the three businesses.
5. Focusing on our people and ensuring Cambridge Cognition is a
'great place to work'.
Economic and Political Environment
Amidst the COVID-19 pandemic, there was a surge in the adoption
of digital solutions, with virtual trials gaining remarkable
traction among our customers. This interest continues.
The ongoing war in Ukraine was and continues to be a cause for
concern, and our thoughts are with all those affected, including
several academic centres in the region that use our solution. No
contracts are being progressed with Russian centres at this time.
The conflict has had no material effect on revenues.
Inflation has had an impact on salary levels and may be
contributing to a reduced investment in the development of CNS
drugs. This could lead to a short-term decline in demand. We expect
the situation to normalise during 2023 and do not anticipate any
material impact on the Group's overall performance.
Corporate Outlook
Despite a turbulent global economic and political environment,
2022 was an excellent year for Cambridge Cognition. We saw
remarkable growth in orders, strong revenue growth, cash
generation, and considerable progress in innovation and corporate
business development.
The Company had a strong contracted order book at the end of
2022 that provides excellent revenue visibility through 2023 and a
promising pipeline of further opportunities for the year. With our
broader portfolio, we expect a considerable step-up in our total
addressable market and there is the potential for a considerable
increase in investment in CNS drugs with the successes recently in
Alzheimer's Disease with new drugs being approved. There does
remain some uncertainty around the global macroeconomic outlook,
though that is expected to be transitory to our markets.
The Company has extensive market opportunities within existing
and new growth markets. We estimate average growth rates across the
markets we are targeting to currently be approximately 10 percent
per annum, and we believe our revenue growth will exceed this rate
of market growth. We will continue to manage costs carefully and
aim to move back into profitability.
The outlook is very exciting as we have a full commercial team
and a much broader portfolio and can win many more sizeable
contracts as we build on our current position over the coming
years.
Matthew Stork
Chief Executive Officer
References:
1. Global Data, April 2023
2. Astute Analytica (2021) US Cognitive Assessment Market;
Adjusted using internal data to 10% from 2022.
3. Extrapolated from independent market research report commissioned by Cambridge Cognition.
4. DT Consulting, Clinical Digital Tracker, 2022
5. Grandview Research (2023), eCOA Market Analysis; Adjusted by
CNS studies as a proportion of all.
6. Estimate from Global Data, April 2023, and Assessing the
Financial Value of Decentralised Clinical Trials, Therapeutic
Innovation & Regulatory Sciences, 57, 209-19, 2023.
7. Strategies to improve recruitment to randomised trials.
Cochrane Database Syst Rev. 2018 Feb 22;2(2)
8. Grandview Research (2022), Clinical Trial Patient Recruitment
Market; Adjusted by CNS studies as a proportion of all.
9. An App-Based DSST for Assessment of Cognitive Deficits in
Adults With Major Depressive Disorder: Evaluation Study, JMIR Ment
Health 2022;9(10).
10. Sage Therapeutics Conference Poster at CTAD 2022.
CHIEF FINANCIAL OFFICER'S REVIEW
Overview
The Company delivered another strong performance in 2022 with
growth in the contracted order book and revenues, coupled with
continued positive cash generation that has enabled the completion
of two acquisitions, one in October 2022 and one in January 2023.
This review includes a comparison of the financial KPIs used to
measure progress over the year:
KPI 2022 2021 Movement
-------------------------------------- ------------- --------------- ----------
Revenue GBP12.6m GBP10.1m GBP1.5m
Gross margin 73.9% 76.1% (220)bps
Profit before tax GBP0.6m loss GBP0.3m profit GBP(0.9)m
Profit for the year (after adjusting
for acquisition related expenses) GBP0.1m GBP0.5m GBP(0.4)m
Investment in R&D GBP2.2m GBP1.7m GBP0.5m
Sales orders GBP13.1m GBP12.1m GBP1.0m
Contracted order book GBP17.6m GBP17.0m GBP0.6m
Cash GBP8.3m GBP6.8m GBP1.5m
-------------------------------------- ------------- --------------- ----------
Revenues and Gross Profit
We are pleased to report that our revenue grew by 25%, reaching
GBP12.6m compared to GBP10.1m in 2021. A large proportion of our
contracts are for clinical trials, which usually commence three to
six months after the signing of the contract and run for several
months or even a few years. As a result, most of the revenue
recognised in the year came from orders won in previous years, with
the remaining balance from in-year contract wins.
We anticipate the GBP19.1m contracted order book as of 10
January 2023 (following the acquisition of Winterlight) will
generate, subject to customer delivery schedules, at least GBP9.5m
of revenue to be recognised in 2023, with the balance to be
recognised in subsequent years. Recognised revenue split by type
was as follows:
2022 2021 Increase Increase
GBPm GBPm GBPm
--------------------------- ------ ------ --------- ---------
Software 5.0 3.6 1.4 39%
Services 6.5 5.6 0.9 16%
--------------------------- ------ ------ --------- ---------
Total Software & Services 11.5 9.2 2.3 25%
Hardware 1.1 0.9 0.2 22%
--------------------------- ------ ------ --------- ---------
Total Revenue 12.6 10.1 2.5 25%
--------------------------- ------ ------ --------- ---------
Services revenue grew by 16% in 2022 as more implementation and
bespoke development work were carried out, as well as the
additional data and study management provided as part of our
support to larger clinical trials. Software revenue increased by
39% but given the time lag between contract signature and software
usage, we would expect this to grow further in 2023. Hardware,
which is procured from third parties, is supplied by the Company to
support specific projects.
Three large, one-off contracts won in 2021 were for supplying
and supporting digital wearables for CNS clinical trials in 2022.
These had a high third-party cost of sales component that reduced
overall gross margin percentage in 2022. Gross profit was GBP9.3m
(73.9% margin) compared with GBP7.7m (76.1% margin) in 2021.
In 2022, we have changed our accounting policy for cost of sales
and now include pay costs directly related to revenue, with the
prior period restated. The impact on the current year was to
include GBP477,000 (2021: GBP394,000) of pay costs in cost of sales
that would have been in administrative expenses under the previous
accounting policy.
Expenditure
Administrative expenses, excluding acquisition expenses,
increased by 29% to GBP9.6m (2021: GBP7.4m), driven by two main
factors. Firstly, investment in commercial activities increased
considerably as the team expanded to provide complete market
coverage and to support further sales of decentralised clinical
trial modules. Secondly, we expanded our in-house software and
product teams to develop new and existing solutions to meet
customer demands and provide future sales opportunities. As with
many technology companies, we experienced inflationary pressure on
pay during the year, which we have addressed in part with the
addition of a software team based in South Africa.
Maintaining our position at the forefront of the sector requires
a sustained focus on research and development, a subset of our
administrative expenses. In 2022, a total of GBP2.2m was invested,
an increase from GBP1.7m in 2021. These funds were primarily
allocated towards developing novel high-frequency cognitive
assessments to broaden the portfolio, moving to Amazon Web
Services, strengthening our cyber-security, and conducting
essential maintenance of existing products. R&D spending as a
percentage of revenue was 17.4% in 2022 (2021: 16.8%), reflecting
our continued investment in our product portfolio, and we expect
this to decrease as revenue grows.
Capital Expenditure and Cash
Capital expenditure was GBP0.2m, primarily related to IT
hardware and office equipment. We have not capitalised any
development expenditure in the year.
Excluding acquisition-related costs, we had a marginal loss
before tax of GBP0.1m (2021: profit before tax of GBP0.3m). R&D
tax credits receivable were GBP0.2m (2021: GBP0.2m). The post-tax
loss for the year was GBP0.4m (2021: profit after tax of GBP0.5m),
which equates to a loss per share of 1.3 pence (2021: 1.4 pence
earnings per share).
As of 31 December 2022, cash was at GBP8.3m (31 December 2021:
GBP6.8m), and the cash inflow from operating activities during the
year was GBP1.7m (2021: GBP3.9m), again driven by sales orders.
During the year, GBP1.1m of cash was utilised to acquire
eClinicalHealth Limited. Sales contracts for clinical trials
typically include a billable amount upon signing, which means that
cash flow is generally ahead of revenue recognition.
The Company continues to hold an investment in Monument
Therapeutics Limited ("Monument"), the digital phenotyping drug
development business that was spun out in 2021. The investment in
Monument is carried at fair value and reflects the risks
attributable to early-stage biotechnology companies. Monument's
progress with early clinical trials remains on track and aligned
with our expectations. It is currently seeking Series A
investment.
Financial Outlook
Cambridge Cognition ended 2022 with sufficient cash to acquire
Winterlight and fund expected growth through to profitability. We
are optimally positioned for further growth in orders of our
existing solutions and to support our continued commercial
expansion. Considered investments will continue to be made to
achieve our strategic goals.
While low double digit revenue growth is expected in 2023, the
positive impact of acquisitions and continued investment in product
development is expected to see a decrease in cash balances and
operating losses for the year. With this investment and the
associated increase in scale, we anticipate a return to
profitability in the second half of 2024 and growth in
profitability thereafter.
The Company will continue to manage costs carefully with a focus
on realising synergies as we review our operational structure
following recent acquisitions. We anticipate that administrative
expenses and research and development costs will reduce through
2023 relative to revenues whilst we continue to invest in the
product portfolio and increase sales coverage.
We have set out five strategies to help improve people's health
globally while generating future revenue growth above expected
rates of growth, currently estimated at more than 10%, in the
markets in which we are operating. Accordingly, the Company is
targeting revenue growth in excess of the market growth rates with
increasing levels of growth in the medium-term driving towards
material profitability in 2025.
Stephen Symonds
Chief Financial Officer
Consolidated Statement of Comprehensive Income
For the year ended 31 December
Notes Year to Year to
31 December 31 December
2021
2022 (Restated)
GBP'000
GBP'000
--------------------------------------- ------ ------------- -------------
Revenue 3 12,613 10,094
Cost of sales (3,291) (2,409)
--------------------------------------- ------ ------------- -------------
Gross profit 9,322 7,685
Administrative expenses excluding
acquisition expenses (9,616) (7,435)
Administrative expenses - acquisition (479) -
related
--------------------------------------- ------ ------------- -------------
Total administrative expenses (10,095) (7,435)
Other operating income 156 14
--------------------------------------- ------ ------------- -------------
Operating (loss) / profit (617) 264
Interest receivable 9 -
Finance costs (16) (11)
--------------------------------------- ------ ------------- -------------
(Loss) / profit before tax (624) 253
Tax credit 215 197
(Loss) / profit for the year (409) 450
--------------------------------------- ------ ------------- -------------
Other comprehensive (loss) / income
Items that may subsequently be reclassified
to profit or loss
Exchange differences on translation
of foreign operations (302) 14
---------------------------------------------- ------ ----
Total comprehensive (loss) / income
for the year (711) 464
---------------------------------------------- ------ ----
(Loss)/ earnings per share (pence) 4
-------------------------------------- ---- ------ ----
Basic earnings per share (1.3) 1.4
Diluted earnings per share (1.3) 1.4
All items of income are attributable to the equity holders in
the Parent.
The above results relate to continuing operations.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December
Notes At 31 December At 31 December
2022 2021
GBP'000 GBP'000
------------------------------- ------ --------------- ---------------
Assets
Non-current assets
------------------------------- ------ --------------- ---------------
Intangible assets 1,421 373
Property, plant and equipment 188 52
Investments 49 49
Total non-current assets 1,658 474
------------------------------- ------ --------------- ---------------
Current assets
------------------------------- ------ --------------- ---------------
Inventories 216 126
Trade and other receivables 4,680 4,935
Current tax receivable 231 195
Cash and cash equivalents 5 8,322 6,810
Total current assets 13,449 12,066
------------------------------- ------ --------------- ---------------
Total assets 15,107 12,540
------------------------------- ------ --------------- ---------------
Liabilities
Current liabilities
------------------------------- ------ --------------- ---------------
Trade and other payables 15,012 11,908
Total liabilities 15,012 11,908
------------------------------- ------ --------------- ---------------
Equity
------------------------------- ------ --------------- ---------------
Share capital 312 312
Share premium 11,151 11,151
Other reserves 5,823 6,125
Own shares (71) (78)
Retained earnings (17,120) (16,878)
Total equity 95 632
------------------------------- ------ --------------- ---------------
Total liabilities and equity 15,107 12,540
------------------------------- ------ --------------- ---------------
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December
Share Share Other Own shares Retained
capital premium reserve earnings Total
s
GBP '000 GBP '000 GBP '000 GBP '000 GBP '000 GBP '000
----------------------------- --------- --------- --------- ----------- ---------- ---------
Balance at
1 January 2021 312 11,151 6,111 (78) (17,439) 57
Profit for year - - - - 450 450
Other comprehensive
income - - 14 - - 14
----------------------------- --------- --------- --------- ----------- ---------- ---------
Total comprehensive
income for the year - - 14 - 450 464
Credit to equity for
equity-settled share-based
payments - - - - 111 111
----------------------------- --------- --------- --------- ----------- ---------- ---------
Transactions with
owners - - - - 111 111
Balance at
31 December 2021 312 11,151 6,125 (78) (16,878) 632
----------------------------- --------- --------- --------- ----------- ---------- ---------
Balance at
1 January 2022 312 11,151 6,125 (78) (16,878) 632
----------------------------- --------- --------- --------- ----------- ---------- ---------
Loss for year - - - - (409) (409)
Other comprehensive
income - - (302) - - (302)
----------------------------- --------- --------- --------- ----------- ---------- ---------
Total comprehensive
income for the year - - (302) - (409) (711)
Transfer of own shares - - - 7 (7) -
Credit to equity for
equity-settled share-based
payments - - - - 174 174
----------------------------- --------- --------- --------- ----------- ---------- ---------
Transactions with
owners - - - 7 167 174
----------------------------- --------- --------- --------- ----------- ---------- ---------
Balance at 5,82
31 December 2022 312 11,151 3 (71) (17,120) 95
----------------------------- --------- --------- --------- ----------- ---------- ---------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December
Notes Year to Year to
31 December 31 December
2022 2021
GBP'000 GBP'000
-------------------------------------------- ------ ------------- -------------
Net cash flows from operating activities 5 1,668 3,945
Investing activities
-------------------------------------------- ------ ------------- -------------
Interest received 9 -
Purchase of property, plant and equipment (189) (56)
Purchase of investment - (49)
Net cash flow used in investing activities (180) (105)
-------------------------------------------- ------ ------------- -------------
Financing activities
-------------------------------------------- ------ ------------- -------------
Proceeds from exercise of share options 1 -
Repayment of borrowings 5 (133) -
Interest payments - (11)
Lease payments - (86)
-------------------------------------------- ------ ------------- -------------
Net cash flows from financing activities (132) (97)
-------------------------------------------- ------ ------------- -------------
Net increase in cash and cash equivalents 1,356 3,743
Cash and cash equivalents at start
of year 6,810 3,047
Exchange differences on cash and
cash equivalents 156 20
Cash and cash equivalents at end
of year 5 8,322 6,810
-------------------------------------------- ------ ------------- -------------
1. General information
Cambridge Cognition Holdings plc ("the Company") and its
subsidiaries (together, "the Group") develops and markets digital
solutions to assess brain health.
The Company is a public limited company which is listed on the
AIM market of the London Stock Exchange (symbol: COG) and is
incorporated and domiciled in the UK. The address of its registered
office is Tunbridge Court, Tunbridge Lane, Bottisham, Cambridge,
CB25 9TU.
2. Basis of preparation
The financial information of the Group set out above does not
constitute "statutory accounts" for the purposes of Section 435 of
the Companies Act 2006.
Statutory accounts for the year ended 31 December 2021 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2022 will be delivered to the Registrar
in due course. Those accounts have been reported on by the
Independent Auditors; their report for the accounts for both
financial years was (i) unqualified; (ii) did not include a
reference of any matters to which the auditor drew attention by way
of emphasis without qualifying their report; and (iii) did not
contain a statement under 498 (2) or 498 (3) of the Companies act
2006.
The Group financial statements will be properly prepared in
accordance with UK adopted international accounting standards. The
accounting policies adopted will be consistent with those followed
in the preparation of the consolidated financial statements for the
year ended 31 December 2021, except as noted below.
The Group has reconsidered its accounting policy for the
presentation of expenses in the income statement to include staff
and related costs relating to the delivery of those services within
cost of sales. The prior year income statement has been restated
for the reclassification of costs between cost of sales and
administrative expenses. As a result, the prior year has been
restated to reflect an increase in cost of sales of GBP394,000 with
a corresponding decrease in administrative expenses. The overall
operating profit for 2021 remains unchanged.
At the time of approving the preliminary results statement, and
based on a review of the Group's forecasts and business plan, the
Directors have a reasonable expectation that the Company and the
Group have adequate resources to continue in operational existence
for the foreseeable future. Thus, they continue to adopt the going
concern basis of accounting in preparing the preliminary
statement.
3. Segmental information
An analysis of the Group's revenue for each major product and
service category is as follows:
2022 2021
GBP'000 GBP'000
-------------- --------- ---------
Software 5,027 3,609
Services 6,528 5,638
Hardware 1,058 847
-------------- --------- ---------
12,613 10,094
-------------- --------- ---------
4. Earnings per share
The calculation of basic and diluted earnings per share ("EPS")
is based on the following data:
Earnings
2022 2021
'000 GBP '000
--------------------------------------------------------------- ------- ----------
Earnings for the purposes of basic and diluted
EPS per share being net (loss)/profit attributable
to owners of the Company (409) 450
--------------------------------------------------------------- ------- ----------
Number of shares
2022 2021
'000 GBP '000
--------------------------------------------------------------- ------- ----------
Weighted average number of ordinary shares
for the purposes of basic EPS 31,170 31,170
--------------------------------------------------------------- ------- ----------
Weighted average number of ordinary shares
for the purposes of diluted EPS 31,170 31,519
--------------------------------------------------------------- ------- ----------
The diluted loss per share is considered to be the same as
the basic loss per share. Potential dilutive shares are not
treated as dilutive where they would result in a loss per share.
5. Notes to the cash flow statement
2022 2021
GBP'000 GBP'000
-------------------------------------------------- --------- ---------
(Loss) / profit before tax (624) 253
Adjustments for:
Depreciation of property, plant and equipment 57 142
Amortisation of intangible assets 37 6
Share-based payment expense 174 111
Finance costs - 11
Acquisition related expenses deferred amounts 6 -
Interest receivable (9) -
-------------------------------------------------- --------- ---------
Operating cash flows before movements in working
capital (359) 523
Increase in inventories (88) (75)
Decrease/(increase) in receivables 1,012 (2,285)
Increase in payables 912 5,782
-------------------------------------------------- --------- ---------
Cash generated by operations 1,477 3,945
Tax credit received less tax paid 191 -
Net cash from operating activities 1,668 3,945
-------------------------------------------------- --------- ---------
Reconciliation of liabilities arising from financing
activities
2022 2021
GBP'000 GBP'000
-------------------------------------- --------- ---------
Net Debt as 1 January - -
Debt acquired in business combination 133 -
Financing cash flows (133) -
-------------------------------------- --------- ---------
Net Debt as at 31 December - -
-------------------------------------- --------- ---------
Cash and cash equivalents
2022 2021
GBP'000 GBP'000
Cash and bank balances 8,322 6,810
------------------------ --------- ---------
Cash and cash equivalents comprise cash and short-term bank
deposits with an original maturity of three months or less. The
carrying amount of these assets is approximately equal to their
fair value.
6. Annual Report & Annual General Meeting
The Company announces its intention to hold its Annual General
Meeting ("AGM") on Wednesday 28 June 2023. Details of the AGM will
be communicated to shareholders via the Company's website and a
Regulatory Information Service as soon as they are finalised. This
notice will also include the date on which the notice of AGM and
the Annual Report will be posted to shareholders.
This information is provided by RNS, the news service of the
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END
FR NKBBNCBKDOPK
(END) Dow Jones Newswires
May 03, 2023 02:00 ET (06:00 GMT)
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