Cambridge Cognition Holdings make considerable progress in commercial and product development

Brain Health

Investment in digital health and eCOA leads way to sustainable growth

Cambridge Cognition Holdings plc (LON:COG), which develops and markets neuroscience technology to assess brain health, announced today its unaudited preliminary results for the year ended 31 December 2019.


2019 was a year of significant technological and operational advances that provide a solid basis for future profitability, even though transient factors in the pharmaceutical industry adversely affected the financial results for the year.  The Group has had a strong start to 2020 with £2.61m of orders booked in the first quarter to 31 March 2020.

Financial summary

·      Total Revenues of £5.04m (2018: £6.13m)

·      Gross profit of £3.89m (2018: £5.23m)

·      Loss before tax of £3.12m (2018: loss of £1.49m)

·      Loss for the year of £2.90m (2018: loss of £1.44m)

·      Loss per share of 12.4 pence (2018: loss of 7.0 pence per share)

·      Cash balance at 31 December 2019 of £0.90m (31 December 2018: £1.11m)

·      Equity placing raised £1.40m post period end in March 2020

Operational highlights

·      Order book at 31 December 2019: £5.69m (31 December 2018: £6.08m)

·      Q1 2020 order intake of £2.61m (Q1 2019: £2.12m)

·      Strong finish to 2019 and equally strong start to 2020 lays foundation for expected growth in 2020

·      New configurable eCOA solution launched in Q3 2019 with early sales wins

·      Doubling of digital solution sales including a major contract announced in March 2019

·      Focus on commercialising solutions, with new products launched in 2019, and reducing R&D over 2020 as the business moves towards profitability

·      Cost reduction measures for 2020 already implemented

·    New commercially focussed CEO appointed in May 2019 and subsequently the leadership team strengthened in early 2020 with the appointment of new Chief Operating and Chief Commercial Officers

Commenting on the results Matthew Stork, Cambridge Cognition Holdings Chief Executive Officer, said:

“2019 was a year of difficult financial challenges and a year of transition, part of which was my appointment as CEO in May.  We have managed costs carefully, set a new strategy and made considerable progress in commercial and product development.  We are excited about the opportunity to grow rapidly with our multi-product strategy targeting two large markets, each growing at around 20% per annum.  

“We saw an improvement in sales in our core markets over Q4 2019 and, with a strong pipeline of opportunities for our new technologies, we have had an excellent start to 2020.  We have also completed the fundraising, which has provided us with investment funds and additional working capital.

“We are very concerned about the impact of COVID-19 on the health and welfare of people around the world.  We have taken steps to care for those in the business and around us. 

“We have prepared a full contingency plan for COVID-19, which we are progressively implementing as the situation evolves.  We are currently providing a full service with our teams working remotely.  We are seeing some delays to customer contracts – and there could be more if the lockdown stretches into late Q3 – however recent contract wins are compensating for these delays.” 



I am pleased to present my first annual CEO’s review having been appointed to the position in May 2019.

2019 was a year of transition as a shift to a more commercial focus and new technology solutions began to make an impact on sales.  At the heart of this transition was the implementation of a new strategy to target two fast growth markets with multiple solutions.

The Company also achieved several product development milestones using the funds raised early in 2019.  These included completing the development of a configurable electronic Clinical Outcomes Assessment (eCOA) platform, further development of the digital health solution, completion of a proof of concept of our voice solution, and preparing the digital phenotyping project for spin out.

These developments resulted in first sales of new digital, eCOA and voice solutions.  Sales of digital solutions doubled for the second year running, with major contract wins with global pharmaceutical companies.  This provides a great platform for potential future growth.  

Despite good progress with both development and commercialisation of new technologies, there were several market factors that impacted sales in 2019 and these are outlined below.  The Company took action to respond to these factors during the period, continuing product development and expanding marketing, while managing costs to ensure that the loss in 2019 was in line with the expectation set at the half-year. 

R&D spending was increased in 2019 to complete the development of new products.  In 2020 and beyond, as products become available for commercialisation, we plan to reduce R&D spending to a lower, sustainable level.  At the same time, operational cost savings and efficiencies were implemented within the organisation as part of our overall drive towards profitability.  

The year-ended with a strong Q4 sales performance with £3.60m of orders taken prior to the end of the year expected to be recognised as revenue in 2020.  In 2020, we have already seen a significant contract win of £1.37m and the award of an Innovative Medicines Initiative grant, which we have separately announced.

Despite the global impact of COVID-19, our customers continue to place orders at a level that is most encouraging for the outlook for this year.  A strong order intake in Q1 2020 is being followed by good progress with qualified order prospects in Q2 combined with careful cost and cash management.  

It is difficult to predict the absolute impact that delays to clinical trials might have on our recognised revenue for the year.  A number of customers have temporarily delayed new clinical trials because of the redirection of medical facilities to treat COVID-19 patients and to support social isolation, but once lockdown restrictions begin to lift, these trials should resume.  The FDA and other regulatory bodies have announced guidelines to assist the conduct of clinical trials during this period, confirming that there is a willingness to find ways to continue to operate during these difficult times.

Financial Results

Transient, negative market factors impacted on sales of one of the Company’s core products, CANTAB™, in 2019.  The merger of two large customers meant that an anticipated large order was not placed and the same merger delayed progress (and hence revenue recognition) of a study that was won in 2018.  Collectively, these had an adverse impact of approximately £1m on revenues in 2019. 

There was also a reduction in the number of clinical trials in two key areas of our business: drug safety and Alzheimer’s disease.  This reduced sales orders from 2018 levels by approximately £1m in 2019.  We believe this dip is temporary, as we have seen a resurgence in opportunities through Q4 2019 and into early 2020, but the arrival of COVID-19 has added a degree of uncertainty.

Despite the positive effect of a large digital order win in March 2019, bespoke work required to fulfil this order did reduce gross margins and also delayed the completion of our new eCOA platform.  The impact on gross margins was £0.40m.  With the digital developments now complete and the large digital study underway, we are looking forward to seeing the benefits from both these areas in 2020.    

The collective impact of these factors was to reduce the value of sales orders booked by the Company in the year to £4.93m, representing a 38% decrease on the prior year order intake figure of £7.93m.  Whilst this clearly reduced our revenue for the year, there is comfort that contracted revenues yet to be recognised remain strong at £5.69m as at 31 December 2019.  Furthermore, the amount that is estimated to be recognised within one year is £3.60m, ahead of the equivalent value of £3.39m at 31 December 2018.  Going forward, we have improved our sales process and operation by, amongst other measures, increasing our sales coverage and having a more targeted lead generation programme.

Group revenues for 2019 by product segment, together with comparative figures, are as follows:

 2019 £m2018 £mChange £mChange %
Total Software & Services4.875.92(1.05)(17.7)
Total Group Revenues5.046.13(1.09)(17.8)

Overall software and service revenues were lower in the year, compared to 2018.  The timing of orders is significant to revenues as there is usually a lag between receipt of order, implementation of study and revenue recognition.  The timing of study execution impacts our revenues as the flow of revenue from a committed order can be disrupted when a study is delayed or postponed.  With a greater volume and greater product mix of sales, the Group will become increasingly resilient against such external factors.

Hardware revenues are a small proportion of overall revenues, but the requirement for us to provide and provision hardware for a minority of customers remains a necessary part of our business, especially as we increasingly deliver a full range of solutions, particularly for bespoke projects.

Gross profit was £3.89m (77.2% margin) compared with £5.23m (85.3% margin) in 2018.  This reduction is a result of a higher cost of sales relating to a large digital sale announced in March 2019, which required a significant level of bespoke work as well as increased hardware supply.  We are planning some bespoke work in 2020, though less than in 2019, and so expect margins to improve.  

Administration costs increased by 3.9% in the year from £6.75m in 2018 to £7.01m.  The key element of this increase was the growth in R&D costs of £0.30m as set out above.  Other overhead costs reduced in aggregate, despite investment in strategic and commercial reviews.  Indeed, the run rate of costs at the year-end was considerably lower than at the mid-point and costs in 2020 are expected to be at least 15% lower than in 2019.

The loss before tax for the year was £3.12m, compared with a loss of £1.49m in 2018.  R&D tax credits were £0.22m.  The loss for the year after tax was £2.90m, which equates to a loss per share for the year of 12.4 pence, compared with 7.0 pence in 2018.  

Cash outflow from operating activities was £2.32m (2018: £0.64m outflow).  Capital expenditure was minimal.  After accounting for the £2.27m net received from an equity placing in Q1 2019, overall, cash outflow was limited to £0.21m.

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The cash balance of £0.90m at the 2019 year-end was subsequently supplemented by the £1.40m placing in Q1 2020 (£1.28m net) meaning that, as far as can reasonably be forecast given the uncertain impact of COVID-19, after running a series of scenarios the Group has sufficient resources for its ongoing operations and development plans.

The balance sheet remains consistent year-on-year, notwithstanding the introduction of IFRS 16 on leases.  The Group has no long-term debt.

Strategic Review      

A full strategic review was performed in mid-2019 following my appointment as CEO.  The opportunity to accelerate the growth of the business was evident and a well-balanced, multi-product strategy has been agreed.  This is being implemented to increase market share in two growth markets in which the Company has strong competitive advantages:

1.  The market for eCOA, which is a c.US$1bn market growing at 17% per annum.  Products in this market measure clinical outcomes and ultimately help pharmaceutical and biotech companies gain approvals and differentiated label claims for new drugs.  The Company targets both clinical trials for drugs for central nervous systems (CNS) disorders, which account for 15% of all clinical trials, and for other drugs that may affect cognition. 

2.  The market for digital health solutions for CNS disorders, which is estimated to be a US$250m market growing at 20% per annum.  The Company is primarily targeting the provision of digital solutions to pharmaceutical companies in this market.

In order to achieve this, the strategy has been refined to:

1.  Create the opportunity to build a smoother revenue line through revenue growth, ironing out the fluctuations caused by larger orders for clinical trials, and through longer-term contracts for post-marketing licensing solutions to pharmaceutical companies.

2.  Build a diversified product mix based on four product categories of CANTAB™, eCOA, and digital and voice solutions.  There is minimal additional sales resource required to support the additional products as they are all purchased by the same target customer groups (pharmaceutical and biotechnology companies and clinical research organisations). 

3.  Focus on commercialising products, building sales of products already developed and reducing R&D spend as a percentage of revenue as the Company naturally evolves.

4.  Build partnerships to access wider opportunities and geographies.  There are sizeable healthcare and business-to-consumer opportunities for cognitive assessments, though they take specialist skills and considerable resources.  In addition, there are potential partnerships to be made with major clinical research organisations and with companies with existing footprints in major markets such as China.

5.  Reduce investment in non-strategic activities. As a direct result, the Company plans to spin out its digital phenotyping programme, which has considerable potential as a separately funded entity.

Operational Review 

Improving commercial execution is an ongoing operational goal.  There was considerable progress in 2019 with a Company-wide focus on winning new orders supported by an increased spending on sales and marketing.  These initiatives began to reap rewards in the second half of the year in terms of lead generation – the Company generated double the number of leads in the second half of the year compared to the first half – and that translated into a sales recovery in the final quarter and a strong, qualified pipeline at the start of the year for the first half of 2020.

There was also good progress in building partnerships that could generate incremental sales growth in 2020.  These are supporting geographic expansion in India and China and building commercial relationships with companies that specialise in CNS drugs and clinical trials.

We delivered significant progress across our key areas of innovation in 2019.  In the eCOA area, we completed the development of our new, configurable eCOA solution in Q3 2019.  This is a significant advance as it provides unique advantages over many competitors.  It is an excellent complementary product to our existing core CANTAB™ products and is also applicable outside of the cognition market.  We believe there is significant potential for growth in this area.

The digital cognitive assessments that the Company markets are specifically designed to measure cognition day-to-day during clinical trials.  During 2019, we achieved a major milestone in developing software to collect, store and report on data from wearable devices as well.  This means that the Company can provide information on both cognition and functional – such as the number of steps per day – performance by patients.  We won a major order for a clinical trial requiring both sets of data from a top 10 pharmaceutical company in Q1 2019 worth £1.3m.  We have seen that the interest and demand for these products is strong and that we are able to build solutions to suit individual customers’ complex needs.  Overall, digital health orders taken in 2019 were £1.64m, more than double the £0.72m taken in 2018.

In the digital healthcare field we concluded development of our first voice prototype.  We completed a proof-of-concept study with 2,868 people, demonstrating that the solution can automate verbal clinical assessments in any environment and that it has the potential to be developed further into a potential digital biomarker.  We gained our first sales for the voice solution in clinical trials, which is encouraging evidence of demand of this nascent solution. Whilst this market is not as mature as the eCOA market this is clearly an area of great potential.  Over 2020, we will continue development of the voice solution and will develop our minimum viable product, which we aim to launch in Q4 2020.

Our digital phenotyping project has progressed well during 2019, and this is now ready for spin-out, which we aim to complete in Q2 2020, subject to securing an investment partner.

Our operations team continues to provide outstanding customer service, providing essential support needed for clinical trials, for example, working with clinical trial managers to set up studies and ensuring clinical trial sites are well prepared to use the cognitive assessments we are providing.  They help differentiate us and provide confidence to customers that their clinical trials will be completed on time and with accurate, reliable data.  Responses to our customer survey in 2019 were extremely positive and the satisfaction level was at 100%.  This is a testament to the dedication of the Cambridge Cognition team.  

In all of these areas and others we continue to take a leadership position in the science that underpins our products. We continue to produce and support publications detailing advances in the area, as well as presenting at conferences and supporting leading academics in the field.

Board Changes

As we transition to the next stage in the development of the Company, we are also implementing change to the Board of Directors.  With my appointment as CEO, Steven Powell was appointed as the new non-executive Chairman of the Company, following the retirement of Michael Lewis from his position as non-executive Chairman.  Michael had been a board member for 6 years and we thank him for his contribution to the Company.

In the summer of 2019, we were saddened to report the death of Dr. Nick Kerton after a battle with cancer.  Nick had been CEO of Cambridge Cognition before moving to a non-executive director role after the diagnosis of his illness.  Nick is missed greatly by his family, friends and colleagues.

In building a Board for a new era of the Company, we welcomed Debra Leeves as a non-executive director who brings extensive leadership, commercial and board experience gained in public and private life science companies.  We are also announcing the intention of Eric Dodd to retire from the Board and he will not stand for re-election at the forthcoming AGM.  Eric has been a Board member for six years and chaired the audit committee.  We are grateful to Eric for all of his support.  We anticipate appointing at least one new non-executive director to the Board during 2020.


With the arrival of COVID-19, the business has been presented with a new challenge.  The Company continues to be fully operational throughout the pandemic, with a flexible workforce using remote systems and working from home.  We are also seeing a considerable increase in interest in virtual clinical trials, which we are able to support. 

So far, there has been no significant net impact on the business.  While certain customers are deferring the start date for their clinical trials and others whose trials are already underway have either halted or slowed the recruitment of subjects into their trials temporarily, our order intake continues at an encouraging rate while other customers trials continue as planned.  Indeed, we have seen an increase in interest in fully virtual clinical trials, which our systems can support.

All indications from our scenario planning suggest that our business can withstand reasonable downside risks from COVID-19.  We have reduced our costs to conserve our cash and have continued to work to deliver to our contractual obligations.  Our current assumptions are that most clinical trials that have been delayed will begin late Q2 or early Q3 2020.  However there remains some uncertainty as to when operations will return to near normal and we will be monitoring developments closely in all those countries where we are involved with trials and will adapt our plans accordingly if there is any indication that there will be further delays.  


With core CANTAB and new eCOA products, the Group is well positioned to address the growing demands in our market.  With our eCOA solution we are already winning new business and generating positive customer feedback on early sales of the new offering.  Further developments in the digital area, in particular with our voice offering, maintain the Company’s profile as a leader in innovation.

We start 2020 with a platform for profitable growth and a strong well-tuned strategy and business plan.  We have both a solid commercial base, having made excellent progress with our customers and partners, and competitive product offerings from our innovation advances made during 2019. We have also made internal changes to create more efficient and nimble teams, as demonstrated during the current COVID-19 pandemic. 

Following an excellent Q1 2020, we are working through the difficulties caused by the pandemic and we are continuing to build a solid base for growth over the medium-term. 

With the financial support from our investors, which is gratefully received, we see an increasing number of opportunities ahead within fast-growth markets and have the resources to capitalise on them.  We are developing an exciting digital health business which we believe can build substantial, sustainable shareholder value.

Matthew Stork

Chief Executive Officer

5 May 2020

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Cambridge Cognition Holdings plc

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Cambridge Cognition Holdings plc

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