CogState, Pfizer sign development deal

CogState (ASX:CGS) has signed an agreement with Pfizer worth up to AUD$1.28 million over three years to support the development of the Melbourne-based company's cognitive test portfolio.

"We have been in discussions with Pfizer for a number of months -- it takes a while to get deals like this executed, but it is a good deal for CogState," said CEO Brad O'Connor, who returned to Australia this morning after meeting with Pfizer in the US.

Cogstate acquired the original computer-based cognitive test through an agreement with Pfizer last year, giving the drugmaker preferred rates to CogState's test and CogState a royalty-free licence to market the new test to other drug companies. Pfizer also provided funding for the opening of Cogstate's new US office in Connecticut.

Under the new agreement, CogState will develop a set of novel paediatric neuropsychological computer tests and tests for Alzheimer's disease and Parkinson's disease. The paediatric cognitive tests will be designed specifically for the neuropsychological assessment of children in clinical trial settings.

"Children have a different level of development and require different tests," O'Connor said. "Our new tests will be more specific than our current tests and will add to our portfolio of products. They are all adaptations of the same theme, no matter what the application -- what changes are how you put the test together and the analysis of the results."

Earlier this year, CogState acquired speech acoustic technology from Canadian company NeuroSolutions, which also worked with Pfizer in its development. The technology is currently used for the measurement of disease progression and treatment response in Parkinson's disease patients and will also be developed with the new funding. It has the potential for further application in other neurological disorders including schizophrenia.

"We use the technology to analyse voice properties and wavelengths to detect sudden changes in the voice," O'Connor said. "This is a good mechanism for identifying changes to the brain."

The funds will also be used for the ongoing development of CogState's proprietary technology for the early detection of dementia due to Alzheimer's disease.

O'Connor anticipates that the commercial roll-out of the new cognitive tests will begin in the last quarter of 2006.

"We plan to develop these into real commercial applications and bring them within the existing CogState system, which will make it a broader suite of products," he said.

CogState will also work in conjunction with the School of Medicine at Yale University to develop the new tests and once the products are available Pfizer will receive them on discounted terms.

In September, CogState announced the company would refocus and concentrate on the development of its software for clinical information technology. The company is planning to out-license its drug development assets, and will not seek to in-license any new drug development projects.

Former CEO Peter Bick left the company in November, and O'Connor stepped into the role.

Placement

CogState has also raised $300,000 with a placement of 3 million fully paid ordinary shares at an issue price of $0.10. The funds will be directed to working capital, specifically additional sales resources in North America and Europe where the company hopes to grow sales of its diagnostic tests. CogState recently opened an office in Connecticut and extended its operations in the UK.

The placement was arranged by Taylor Collison.