A company knows it’s become a Famous Name in this wide brown land when its product is routinely linked with the two biggest football codes (the AFL and the NRL).

Nowadays, a groggy player knocked senseless will repair to the change rooms for a Cogstate concussion test, rather than the old-fashioned ‘count my fingers then get back on the bloody ground’ routine.

Reflecting the increased awareness of the dangers of poor past concussion management, a group of former AFL players has launched a damages action in the Federal Court. As players’ rep Peter Jess notes, a 2001 video called Bumps, Biffs and Brawlers highlighted the cavalier culture around head injuries at the time.

International cricket authorities have also been urged to protect players (and even umpires) from concussion, given a hard leather ball launched at more than 100 kilometres an hour doesn’t exactly tickle.

The NRL now performs more rigorous testing of a player’s cognitive state when knocked out or concussed. Pic: Getty

It’s not all about sport

That’s the sexy sporting angle.

In reality, Cogstate’s (ASX:CGS) cognition testing business is more international in nature, with 98 percent of revenues derived — and 80 percent of costs incurred – in $US.

Here’s an outfit not exactly rooting for a higher $A.

An offshoot of neurological work carried out at Melbourne University, Cogstate has been honing its testing kits that are quick, accurate and easy to use.

Most revenues are derived not from the jockstrap brigade, but supporting clinical trials.

In a quantum leap, the US Food and Drug Administration approved Cogstate’s clinical product Cognigram as a class-two medical device.

The digital assessment tool, which takes about 10-15 minutes to produce an assessment, will be marketed as a prescription-only device for clinical and at-home use.

Cognitive testing is relevant not just for concussion, but for Alzheimer’s disease, head injury, multiple sclerosis, Parkinson’s disease, HIV related dementia, schizophrenia and attention deficit disorder.

A test for young and old

Cognigram aims to manage patients between as young as six and as old as 99.

Why not centenarians? They’re not assumed to be senile, but the reason for the cut off it the lack of a 100-year old plus population pool to allow comparative testing.

“The science behind it is exactly the same,” O’Connor says of the various indications Cogstate can be used for. “The difference is the format of the information and what you do with it.”

The company was expected to start selling Cognigram in the US before the end of calendar 2017, targeting hospitals, GPs and clinicians. In the case of hospitals, there’s an imperative to reduce readmittance rates for disorders such as post operative cognitive decline after anaesthesia.

“We don’t intend to build a big commercial team,” O’Connor says. “Our plans are focused on specific pilot programs to generate initial revenue and gather usability data.”

The test is designed for either single or periodic use and is not skewed by “language, education, cultural background or practice.”

In May, Eli Lilly selected Cogstate to assist with its numerous Alzheimer’s disease trials, to ensure “high quality neuropsychological outcome measures.” Cogstate is described as the pharma giant “preferred partner” for Alzheimer’s, which is both difficult to treat and to diagnose.

Cogstate is also on the payroll of Johnson & Johnson, Novartis and Pfizer.

Knock-out results

Cogstate recorded $US29.5m ($39m) of new contracts in 2016-17, up 4 per cent. Actual sales revenue came in at $35m ($US26.5m), up 28 percent in $A terms while the company recorded a modest EBITDA loss of $100,000.

Since the June financial year cut-off, the momentum of sales has improved, with a record $US7.6m of new contracts in the September quarter and $US8.2m of new work in October and November.

In all, Cogstate has $US44m of contracted revenue, $US22.1m to be recognised in the 2017-18 year. This puts the “disappointing” June half in the past.

Cogstate is due to report its December quarter numbers in the third week of January.

Cogstate’s financials are enough to do anyone’s head in because of the use of dual currencies and alternative numbers based on “recognised revenue”, new contracts and revenue backlogs on contracts already in place.

With the company having moved to reporting in US dollars, at least one layer of complexity – foreign exchange translation — is removed.

CGS share prices over the past 12 months. Source: Investing.com

Dr Boreham’s diagnosis

Cogstate shares remain well below their $1.20 a share levels of a year ago and we can only posit that investors would like to see more of the benefits trickling to the bottom line.

Speaking of investors, Cogstate’s shareholder base is a tad more interesting than that of the average biotech bear.

Chairman Martyn Myer represents 17 percent shareholder the Myer Family, which understandably is scouring for something better to invest in than moribund department stores.

Australia’s Chief Scientist Dr Alan Finkel gives his low-emission seal of approval with a chunky 8 percent stake (before he assumed the nation’s chief boffin role).

Then there’s David Dolby and – yes – he represents the Dolby sound system family (Dolby founder Ray Dolby died of Alzheimer’s disease in 2013).

For Spinal Tap fans, Dolby of course should read “Dobly”. In any event, here’s hoping that Cogstate management can crank the earnings dial up to eleven for all investors.

Disclosure: Dr Boreham is not a qualified medical practitioner and does not possess a doctorate of any sort.   He has never suffered a knockout blow but still can’t remember where he left his keys.

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