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shareholder newsletter Shareholder Newsletter
Dr. Peter A. Bick, CEO
In the five months since we have gone
public on ASX, I have wanted to write an
inaugural newsletter to our shareholders
many times. We at CogState Ltd
(ASX:CGS) have been working hard and our
recent announc ement regarding the deal we
have signed in the US is indeed something
to Schutt about – Schutt Sports are the
number 1 maker of American Football
helmets (gridiron) worldwide. For a small
Australian company to get a partner of this
caliber is indeed unusual. What is an
Australian Biotechnology company that sells
cognitive tests doing with Schutt?
In an innovative deal structure, CogState
gets sponsorship, advertising, booth space
(at several US conference exhibitions), sales
force promotion, Public Relations exposure
and 2 pages of the Schutt sales catalogue
which goes to every one of the 18,000 high
schools and 1,200 colleges in the US that
play American Football – all at no cost to
CogState Ltd.
Schutt Sports gets to sponsor up to US$20m
worth of a CogState product known in the
US as “Concussion Sentinel” (the same
product used by the AFL in Australia is
called CogSport). This product is used to
check the baseline brain function of children
involved in contact sports BEFORE the
season begins. If these kids then sustain a
concussion DURING the season, their team
physicians can repeat a Concussion
Sentinel test to help determine whether the
child is ready to return to the field of play
(indicated by a brain function test comparing
results with those obtained at baseline).
By giving away tests to all high schools and
colleges in America for the first year,
CogState hopes to penetrate the US market
efficiently and capitalize on revenues from
this market in year two, when the same
users will be asked to pay if they want to
continue using the test.
“Concussion Sentinel” has been launched in
the USA this week. We have received good
press coverage to date, including a story in
USA Today, and the likelihood of more to
follow.
Where will growth for CogState come during
this first year if we give tests away for free?
Firstly, CogState is also attempting to sell
cognitive tests to pharmaceutical companies
for use in clinical trials. As recently
announced, we have been audited by a
major US drug company with a view to
qualifying us for a series of large trials.
These trials, if awarded, would allow
revenue recognition of between US$20-100k
each over a 6-18 month period.
An aspect of our business which has not
received much attention is our drug
development activities, which the market
and many investors have to date largely
considered unimportant to the value of
CogState. Some investors have questioned
why a company with revenues should also
be concerned with the high-risk business of
drug development. Other people I have
spoken with have had the opposite view –
that our drug pipeline is so exciting and
chasing markets of such huge size
(Alzheimer’s Disease and Parkinson’s
Disease) that we should be pushing this side
of our business harder.
The reality is that we are pushing both, but
pushing them prudently so as to keep a lid
on our spending. Our recent release
regarding our Alzheimer’s Disease
programme warrants a good read – for
those of you who are not scientists, the
announcement was that our researchers
had developed what is known as a bioassay.
The importance of this announcement is that
a bioassay can be used by CogState to
accelerate our search for a new drug for this
terrible disease. Although we are still
somewhat at the starting gate to develop a
drug and it will be many years before a drug
can be properly tested, we now are armed
with the right tools and I will keep you up to
date with our activities in this field via future
editions of the newsletter.
Kind regards,
Dr. Peter Bick