CogState aims to raise $5.5m at IPO

By Melissa Trudinger
Monday, 08 December, 2003

The latest company to jump on the IPO bandwagon is CogState, which filed its prospectus with the ASX mid-last week.

The company is seeking to raise AUD$5.5 million in its float, which is being underwritten by investment bank eG Capital, at a price of $0.50 per share. There is also an option to raise a further $1.5 million through oversubscription if the market is right.

According to CEO Peter Bick, the funds will be used to expand sales and marketing for the company's diagnostic test, which quickly and reliably measures changes in cognitive performance, as well as to further the development of two therapeutics for Alzheimer's and Parkinson's disease.

CogState's diagnostic test has been developed for use in a number of applications including drug development and research, where it can be used to assess the effects of a drug or device on cognitive function, management of sports-related concussion (CogSport), assessment of age-related cognitive decline due to early onset Alzheimer's disease (CogHealth) and for occupational health and safety purposes (CogSafe).

While the test engine is basically the same for all applications, the level of reporting and support varies depending on the application, Bick said.

The company has focused its energy to date on the first two applications. CogState is being used by drug companies including Pfizer and Johnson & Johnson for use in early-phase clinical trials to determine the impact of drugs on cognitive function. In addition, around 20 research studies around the world are making use of the test.

Bick said the company hoped to expand the clinical trials market, and would be using its own resources to do so, rather than going through a distributor, as the market is relatively small.

"It's an easy market to access and expand -- it's just a matter of penetrating the companies," he said. "It's a logical tool to use, and if it is being used in one trial, it is irrational not to use it in all trials."

The CogSport test also has a growing market, with customers ranging from elite sports teams including many of the teams competing in last month's Rugby World Cup, to school athletic teams at US and Canadian high schools and universities. Bick said that due to the size of the market, the company plans to appoint regional distributors to expand sales.

The company has also signed a letter of intent with Australian medical software and applications company Health Communications Network (HCN), which plans to include the CogHealth test for early Alzheimer's in its February release of Medical Director, a patient management application used by 85 per cent of Australian GPs.

"It's wonderful penetration, but we still have to get doctors to use it," Bick said.

The final application for the diagnostic test is the CogSafe test, which is designed to be used in occupational health and safety environments, as a return-to-work test to assess employees on sick leave due to injury or illness, and to monitor the effects of the work environment on employee health.

Bick said the company was in the process of developing the market for CogSafe, and had received positive feedback on the potential of the test from the Australian Worker's Union.

On the therapeutics side of the company, development is proceeding on two projects, an Alzheimer's drug based on angiotensin-4 receptor agonists, and a Parkinson's drug that utilises fatty acids to deliver dopamine precursor tyrosine to the brain, which have been in-licensed from Japanese and Israeli sources.

The company is using a "license in, develop, license out" model, and is outsourcing all development, focusing instead of project managing the process. Revenues from the diagnostic business are being used to partially offset the cost of drug development, Bick said.

He said the company was about to start lead optimisation on the Alzheimer's drug, with an eye to beginning human trials in 12-18 months. The Parkinson's drug has already been tested in humans, and is being further evaluated in animals prior to more clinical trials.

And Bick -- a former venture capitalist -- said that the company is continuing to evaluate other opportunities in Australia and overseas.

"We're always looking at other projects. I still have [access to] deal flow that I wouldn't cut off," he said.

CogState's offering opens on December 12 and closes on January 16th, with an expected listing date of January 28th.

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