Dementia is one of the most devastating conditions of modern times, causing misery and confusion for sufferers and their loved ones. Alzheimer’s disease is the most common form of the disease, affecting more than 60 million people today and is likely to affect twice that number in the next 20 years.
The human cost is almost incalculable, but the World Health Organization puts the economic cost at more than £1 billion a year, including professional and informal care.
It’s no surprise then that pharmaceutical companies are racing to find ways to cure Alzheimer’s or stop its progression. Cambridge Cognition is helping them do this and the shares, now at 51p, should go far.
The company designs digital tests to assess brain health on a monthly, weekly or daily basis. Tests are taken on tablets, mobile phones or even smart watches and results are instantly transmitted to Cambridge Cognition. After analyzing the data, scientists send it to pharmaceutical companies and academics, who are testing new treatments for Alzheimer’s and other brain-related conditions, such as depression and schizophrenia.
Its clients include major multinationals such as Swiss giant Novartis, small biotechnology companies and academic researchers around the world. They turn to Cambridge Cognition because it is renowned for offering some of the best digital tests on the market and also for providing the best service.
Business wave: Cambridge Cognition brain health tests can be taken on a smartphone
The company was spun off from the University of Cambridge in 2002, following a trial originally developed by two professors in the 1980s. Traditionally, companies and scientists test new drugs for brain-related diseases by gathering groups of patients and sending psychiatrists or special testing experts to evaluate these individuals face to face. Not only is the process time-consuming and expensive, but it is also subjective and the results can be erratic.
Digital evidence is different. Objective and reliable, they can be done at any time and repeated frequently, providing a much more detailed analysis of whether medications work and how effective they are.
Cambridge Cognition’s CANTAB test is widely considered the gold standard in the digital field, but CEO Matthew Stork has been adding new options, including speech tests and daily assessments, which only take a couple of minutes.
The tests check about ten different brain functions, including short-term memory, emotional empathy, reaction times, attention and concentration. The group has moved on to conduct qualitative tests with questions such as how happy people feel or how much pain they feel, on a scale of one to ten. And last week, Stork announced a partnership with ActiGraph, a company that performs physical mobility testing using devices that look like watches but are much more sophisticated.
Big pharma companies can be slow to change. Face-to-face testing has been the norm for decades and many continue to use it, but the adoption of digital options is accelerating as companies come under increasing pressure to reduce costs and deliver new drugs more quickly.
Stork also hopes to begin providing tests directly to doctors and hospitals. Huge advances have been made in the field of Alzheimer’s, with new treatments reaching the market and others in the pipeline. However, once sales begin, trials will need to be conducted to evaluate the effectiveness of the drugs and which patients are most likely to benefit from them.
Last year was difficult for Stork and his team. Hit by slower economic growth and rising costs, many pharmaceutical companies reduced their testing activity. Cambridge Cognition still increased sales by 7 per cent to £13.5m, but made an operating loss of £1.2m.
Conditions improved in the second half, however, orders are growing and brokers expect revenues of £16 million and profits of £600,000 by 2024, a material increase in the coming years.
Midas Verdict: Cambridge Cognition creates cutting-edge digital tests to help treat some of the world’s most devastating diseases. At 51p, the shares seem unrelated to this company’s experience and future prospects. A long-term purchase.
Traded in: AIM tflicker: TOOTH Contact: cambridgecognition.com or 01223 810700