REG - Cambridge Cognition - Acquisition of eClinicalHealth Limited

Cambridge Cognition HoldingsAnnouncement

12/10/2022 07:00

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RNS Number : 5563C  Cambridge Cognition Holdings PLC  12 October 2022

Cambridge Cognition Holdings Plc

 

("Cambridge Cognition" or the "Company")

 

Acquisition of eClinicalHealth Limited

 

Acquisition to extend Cambridge Cognition's virtual clinical trial solutions

 

Cambridge Cognition Holdings Plc (AIM: COG), which develops and markets
digital solutions to assess brain health, is pleased to announce that it has
entered into an agreement to acquire the entire issued share capital of
eClinicalHealth Ltd ("eClinicalHealth" or "eCH"), a virtual clinical trial
("VCT") solution provider, for consideration of up to approximately £1.7
million.  This presents an exciting opportunity for the Company to expand its
VCT offering considerably in a rapid growth market.

 

eCH is a digital technology provider of innovative approaches for the delivery
of virtual clinical trials that is working on trials for three of the world's
top ten largest pharmaceutical companies.  With a patient-centric platform
that connects patients, sites and pharmaceutical companies, the technology
enables all the essential steps in a clinical trial.

 

The VCT market, although still emerging, is growing rapidly and there are more
central nervous system ("CNS") virtual trials than for any other therapeutic
area(1).  The acquisition will enhance Cambridge Cognition's capabilities in
this area and enable the Company to improve it's offering for CNS clinical
trials, so that it now covers all modules from recruitment through to clinical
reporting.  The expanded range will be targeted at the Company's existing
customers and provides a platform to accelerate the Company's medium-term
growth.

 

Strategic rationale for the acquisition

 

Virtual clinical trials provide an opportunity to help address many of the
issues that confront drug development programmes, including recruitment,
retention, diversity, trial delays and costs(2).  VCT solutions can support
both in clinic and at home trials.  It is an emerging sector and currently,
only a few trials labelled as virtual or decentralised are run fully at home.
Many continue to be hybrid, operating in clinics and at home, and using some,
but not all of the modules provided by VCT technology providers.

 

The increased use of VCT technologies is part of a mainstream digital adoption
trend and now 89% of pharmaceutical companies use some virtual technologies in
their trials(3).  While the COVID-19 pandemic accelerated the VCT adoption
trend, growth is expected to continue.  The overall market for virtual
clinical trials, including technology, services and patient costs, is
currently estimated at US$7.8 billion per annum and growing at 14% per
annum(4).

 

Many CNS disorders, such as Depression or Alzheimer's Disease, are suited to
virtual clinical trials as clinic visits may not be essential and day-to-day
measurements (such as the short daily cognitive assessments provided by
Cambridge Cognition) at home may provide richer information on the progress of
the condition.

 

Cambridge Cognition's core products are digital cognitive assessments and
electronic clinical outcomes assessments ("eCOA"), which are increasingly used
in clinical trials at home as well as in clinic.  The Company had, prior to
the acquisition, developed and sold several additional virtual clinical trial
modules, such as a medication reminder, that have proven to be attractive
add-ons to the outcomes assessments.

 

The acquisition will enable the Company to deliver on its strategic goal to
increase its total addressable market and achieve additional growth through
corporate business development.  It provides Cambridge Cognition with broader
functionality, increasing its competitive position in the VCT sector, and the
potential for further up-sales of virtual modules, together with an additional
customer base.

 

As a further benefit, eCH has been selected to deliver a virtual clinical
trial solution for a prestigious diabetes research project led by a consortium
of major pharmaceutical companies.  Diabetes can cause cognitive impairment
and is a potential expansion area for Cambridge Cognition.

 

Further details of the acquisition

 

The total consideration for the acquisition will be up to approximately £1.7
million, comprising an initial cash payment at completion of the acquisition
of £0.4 million, and up to a further £0.8 million of additional cash
consideration payable in or before May 2024.  The balance of the
consideration of up to £0.5 million will be settled through the issue of new
ordinary shares in the Company, contingent on project delivery and commercial
execution milestones being achieved (the "Equity Consideration") by 31
December 2023. Any Equity Consideration is expected to be issued in May 2024,
at an issue price of 132.97 pence per new ordinary share (being the six month
volume weighted average price at 10 October 2022). Should the full Equity
Consideration be payable, it would equate to approximately 1.3% of the
Company's currently issued share capital.  Any Equity Consideration will be
subject to an orderly marketing agreement until 31 December 2024.

 

It is expected that the Company will continue to invest in the eCH virtual
clinical trial product, first in further sales and marketing and subsequently
to continue to develop the offering, including tailoring it for the CNS
market.  This investment will be funded from the Company's existing cash
resources.

 

For the year ended 31 January 2022, eCH generated revenue of £1.0 million and
reported a loss before tax of £0.3 million.  Gross assets subject to the
transaction are approximately £0.3 million.  The acquisition could add 5-15%
to expected Company revenues in 2023 and make a positive contribution in 2024.

 

Completion of the acquisition is expected on 25 October 2022 and is
unconditional.

 

Commenting, Matthew Stork, Chief Executive Officer of Cambridge Cognition,
said:

"This acquisition is an exciting step in our strategic goal to provide a
specialist dedicated service for CNS clinical trials.  The continued rise in
virtual trials, and CNS virtual trials in particular, has led us to carefully
consider how best to expand our offering quickly to serve this growing market.
 The acquisition provides Cambridge Cognition the opportunity to capitalise
on this market momentum more rapidly than organic development, particularly
given eClinicalHealth was identified as a strong technology target.  The
business offers the functionality to make us more competitive in the CNS
virtual trials space and opens the wider Cambridge Cognition business to their
established client base of major pharmaceutical, medical device and contract
research organisations."

 

References

1.   GlobalData. Virtual trials run by pharma by therapeutic area Jan 2021 -
Aug 2022

2.   GlobalData. 2021. Virtual Trials Research Report

3.   Florence, 2022 State of Clinical Trial Operations Technology Report

4.   CB Insights, Market Trend Report: Decentralized Clinical Trials, July
2022

 

Investor webinar

 

The Company will conduct a live presentation and Q&A session for investors
on Thursday 13 October 2022 at 5:00 pm BST.  The presentation is open to all
existing and potential shareholders.  Those wishing to attend should email
cog@investor-focus.co.uk (mailto:cog@investor-focus.co.uk) and they will be
provided with log in details.  There will be the opportunity for participants
to ask questions at the end of the presentation.  Questions can also be
emailed to the above address ahead of the presentation.

 

For further information, contact:

 

 Cambridge Cognition Holdings Plc                      Tel: 012 2381 0700

 Matthew Stork, Chief Executive Officer                press@camcog.com (mailto:press@camcog.com)

 Stephen Symonds, Chief Financial Officer
 Panmure Gordon (UK) Limited (NOMAD and Joint Broker)  Tel: 020 7886 2968

 Freddy Crossley / Emma Earl                           (Corporate Finance)

 Rupert Dearden                                        (Corporate Broking)
 Dowgate Capital Limited (Joint Broker)                Tel: 020 3903 7715

 David Poutney / James Serjeant
 IFC Advisory Ltd (Financial PR and IR)                Tel: 020 3934 6630

 Tim Metcalfe / Graham Herring / Zach Cohen

 

Notes to Editors

 

About Cambridge Cognition

 

Cambridge Cognition is a technology company developing digital health products
to better understand, detect and treat conditions affecting brain health. The
Company's software products assess cognitive health in patients worldwide to
improve clinical trial outcomes, identify and stratify patients early and
improve global efficiency in pharmaceutical and healthcare industries.

 

For further information visit www.cambridgecognition.com
(http://www.cambridgecognition.com)

 

About eClinicalHealth

 

eClinicalHealth (operating as Clinpal™) is a digital technology provider of
innovative virtual approaches for the delivery of clinical trials that is
working on trials for three of the top ten largest global pharmaceutical
companies. With a patient-centric platform that connects patients, sites and
pharmaceutical companies, the technology enables all the essential steps in a
clinical trial.  eClinicalHealth has been selected to provide the core
platform for the Trials@Home proof-of-concept RADIAL study, having  been a
valued consortium member working alongside 30 EFPIA and Academic and SME
partners since 2019.

 

For further information visit www.clinpal.com (http://www.clinpal.com)

 

 

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