REG - Cambridge Cognition - Acquisition of Winterlight Labs Inc

Cambridge Cognition HoldingsAnnouncement

11/01/2023 07:00

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230111:nRSK3110Ma&default-theme=true

RNS Number : 3110M  Cambridge Cognition Holdings PLC  11 January 2023

 

Cambridge Cognition Holdings Plc

("Cambridge Cognition" or the "Company")

 

Acquisition of Winterlight Labs Inc

 

Cambridge Cognition builds a leading position in vocal biomarker technology

for clinical trials with the acquisition of Winterlight

 

Highlights

·    Acquisition of Winterlight, a leader in monitoring cognitive
impairment through free-speech analysis

·    Significantly enhances Cambridge Cognition's expertise and position
in voice-based assessments

·    The market for speech-based biomarkers for all conditions is reported
to be growing at 66% per annum and, is predicted to be around US$220 million
by 2026(1)

·    Total consideration for the Acquisition is £7.0 million, comprising
a cash payment of £3.0 million and £4.0 million in Cambridge Cognition
shares

·    Limited overlap with Cambridge Cognition's existing customer base,
potential to cross-sell and generate further revenue growth

·    Potential to add more than £2.0 million to Cambridge Cognition's
revenue in 2023 with considerable further growth in 2024

 

Cambridge Cognition (AIM: COG), which develops and markets digital solutions
to assess brain health, is pleased to announce the acquisition of Winterlight
Labs Inc ("Winterlight"), a leader in monitoring cognitive impairment through
free-speech analysis (the "Acquisition").  The total consideration for the
Acquisition is £7.0 million, comprising a cash payment of £3.0 million and
£4.0 million in Cambridge Cognition shares.

 

Winterlight, based in Toronto, Canada, focuses on machine-learning based voice
assessments, using free-speech inputs or those that require deductive
reasoning or interpretation.  These are widely used in clinical trials.
 Winterlight has its origins in the Computational Linguistics department at
the University of Toronto, which developed novel methods of analysing speech
that were first patented in 2007.  In 2015 it spun out Winterlight, led by
two entrepreneurial team members and supported by a leading professor in the
field.  Winterlight raised angel and venture capital funding, invested
considerably in new applications and clinical validation, and built a business
with over 20 pharmaceutical and healthcare customers over the past 7 years.

 

Both Cambridge Cognition and Winterlight share a common goal of developing
digital health products to better understand, detect and treat conditions
affecting brain health.  The capabilities of the combined organisation will
create a company with strengths across technology platforms for screen-based,
structured voice-based and free-speech based cognitive assessments for
clinical trials.  The combined company is well positioned to secure a market
leading position with voice biomarker technology for clinical trials, with
further potential for healthcare applications in the future.

 

The market for voice biomarkers for all conditions is reported to be growing
at 66% per annum and, starting from a modest base, is predicted be around
US$220 million by 2026(1).  Furthermore, Cambridge Cognition commissioned
extensive market research for voice solutions in 2022 and estimate that the
market opportunity for those currently provided by Winterlight specifically
could exceed US$30 million by 2027.

 

Strategic rationale for the Acquisition

 

To date, Cambridge Cognition's approach to voice technology has been focussed
on replicating structured short - that is one or two word - verbal assessments
that incorporate novel intellectual property.  This has enabled the Company
to scale delivery of well-validated cognitive tests.

 

With the Acquisition, Cambridge Cognition is adding to its existing portfolio
of leading screen-based cognitive assessments and structured voice-based
cognitive assessments with the complementary free-speech and vocal biomarker
technology of Winterlight.  Winterlight's 28 staff, with complementary and
additional expertise in voice solutions and machine learning, are joining
Cambridge Cognition.  Taken together, the Acquisition significantly enhances
Cambridge Cognition's expertise and position in voice-based assessments.

 

Winterlight has an excellent and growing portfolio of customers including five
of the top 10 life sciences companies globally, using its technology to
measure disease progression and response to therapy.  It has limited overlap
with Cambridge Cognition's existing customer base, providing the potential to
cross-sell and generate further revenue growth.

 

The combined offering will support the Company's growth ambitions with the
opportunity to further diversify its revenue stream.  Over the longer-term,
combining the results of Cambridge Cognition's existing digital cognitive
assessments with Winterlight's free-speech cognitive assessments presents an
exciting opportunity to create a multi-modal biomarker with greater levels of
sensitivity to help assess and potentially support the treatment of CNS
disorders.

 

Terms of the Acquisition

 

The total consideration for the Acquisition is £7.0 million, comprising a
cash payment of £3.0 million and £4.0 million in Cambridge Cognition shares.
 The total consideration was based on Winterlight's forecast 2023 revenues
from their existing and growing contracted order book.

 

The cash consideration of £3.0 million is being funded from the Company's
existing cash resources, which were approximately £8.3 million as of 31
December 2022.

 

The £4.0 million share consideration comprises the issue of 3,445,595 new
ordinary shares of 1p each in the Company ("New Ordinary Shares") at a price
of 116.09 pence per share, the volume weighted average price of the Company's
shares on the London Stock Exchange over the 20 trading days up to 5 January
2023.  On Admission, further described below, the New Ordinary Shares will
represent approximately 10.0% of the Company's total issued capital.  The New
Ordinary Shares will be subject to a six-month lock-in period and an orderly
marketing agreement thereafter.

 

For the year ended 31 December 2022, Winterlight generated revenue of £1.0
million and reported a loss before tax of £2.1 million.  Winterlight's gross
assets are approximately £0.7 million.  Winterlight had a contracted order
book of £2.5 million as of 31 December 2022, with approximately 35% expected
to be recognised as revenue in 2023.

 

It is expected that the Company will continue to invest in the Winterlight
solutions, further developing its proprietary products and integrating with
the existing Cambridge Cognition solutions.  With a larger team, the combined
business has a strengthened sales and marketing resource that is anticipated
to generate new opportunities.  The combined entity aims to retain all
existing employees whilst making modest non-employee related cost savings.

 

With a strong contracted order book already in place and third party
commercial due diligence reporting outstanding customer feedback along with
the potential to drive additional sales across the combined product portfolio,
this presents an exciting growth opportunity for Cambridge Cognition.  It has
the potential to add more than £2.0 million to Cambridge Cognition's revenue
in 2023 with considerable further growth in 2024.

 

The Company's performance for 2022 is expected to be in line with the market
expectations and the Company anticipates releasing a trading update for the
year ended 31 December 2022 in the week commencing 30 January 2023.

 

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

 

"Having developed short speech-based cognitive assessments for several years,
we have seen the considerable potential for longer free-speech assessments.
 There is a major opportunity over the medium term for growth in this field
and it is important to be an early entrant to secure a strong position for the
future. Winterlight has established itself as a leader in monitoring cognitive
impairment through free-speech analysis, as confirmed by extensive external
market research.  With this acquisition, we can now offer many of the verbal
cognitive assessments used in clinical trials giving us the potential for
major growth in the coming years.  We look forward to welcoming our new
colleagues at Winterlight so that together we can build on our combined
expertise in voice technology to drive innovation in clinical trials."

 

Liam Kaufman, Cofounder of Winterlight Labs, said:

 

"For nearly 8 years as a company and many years before within the University
of Toronto, Winterlight has worked to develop speech-based digital biomarkers
for healthcare and clinical trials.  I am incredibly proud of what we have
engineered, validated and delivered to our life science partners.  This
transaction opens an exciting new chapter for Winterlight.  We bring to
Cambridge Cognition proprietary free-speech analysis technology and a
dedicated team that are experts in the field.  We are looking forward to
being a part of Cambridge Cognition and together we can build a leading
position in vocal biomarker technology."

 

Admission and Total Voting Rights

 

Application has been made for the New Ordinary Shares to be admitted to
trading on the AIM market of the London Stock Exchange ("Admission").
 Admission is expected to take place at 8.00 a.m. on or around 16 January
2023.

 

On Admission the Company's issued share capital will comprise of 34,615,688
Ordinary Shares, with no Ordinary Shares held in treasury.  Therefore, the
total number of Ordinary Shares in the Company with voting rights will be
34,615,688.  This figure may be used by shareholders in the Company as the
denominator for the calculations by which they will determine if they are
required to notify their interest in, or a change to their interest in, the
share capital of the Company under the FCA's Disclosure Guidance and
Transparency Rules.

 

References

(1.) Coherent Market Insights, 2019

 

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 Winterlight

 

Winterlight was spun out of Toronto University in 2015 with a proprietary,
tablet-based technology that assesses cognitive health (including memory,
thinking, and reasoning) by analysing hundreds of language markers from short
snippets of speech.

 

For further information visit https://winterlightlabs.com/
(https://winterlightlabs.com/)

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  ACQFLFVALTIILIV