Co. With Alzheimer's App 'Meaningfully Undervalued,' Analyst Says
Research Report

While Cognetivity Neurosciences Ltd. (CGN:CNX) reported quarterly operating results that were below expectations, analyst Stefan Quenneville of Echelon Capital Markets continued to view the company as "meaningfully undervalued" given its software platform's proven efficacy.

The company's CognICA platform uses an app to replace time-consuming pen and paper assessments given to diagnose Alzheimer's dementia (AD) patients.

The commercial rollout of the platform, "while still fledgling, continues to gain commercial traction," the analyst wrote in an updated research note on June 30.

Govt Decision Is Catalyst to App's Adoption

The company reported revenues of CA$4,200 for the quarter ending April 30, 2023, versus the analyst's estimate of CA$41,500. It generated a net loss of CA$2.1 million vs. Quenneville's estimate of CA$1.1 million, and an earnings-per-share (EPS) loss of CA$0.02 vs. an estimate of CA$0.01. Cognetivity ended the quarter with CA$720,000 in cash.

A recent decision by the Centers for Medicare and Medicaid Services to reimburse Alzheimer's drugs with traditional FDA approval "should serve as a meaningful catalyst to drive adoption of CognICA," Quenneville wrote.

Quenneville wrote that a recent decision by the Centers for Medicare and Medicaid Services to reimburse Alzheimer's drugs with traditional FDA approval "should serve as a meaningful catalyst to drive adoption of CognICA, given that the reimbursement is contingent upon collecting real-world evidence of effectiveness through a registry that will gather patient information in an 'easy-to-use' format."

Cognetivity recently announced a collaboration with major Japanese medical device company Clairvo Technologies, a subsidiary of Marubeni Corp. to integrate the CognICA test into Clairvo's artificial intelligence portfolio of health and wellness products.

"While we believe this partnership bodes well for the longer-term strategic growth of CognICA in Japan, we do not expect it to drive meaningful revenue in the near term," Quenneville wrote.

Bottom Line Unaffected

The analyst said some minor adjustments have been made to Echelon's forecasts, but they don't "materially impact our CA$0.75/(share) price target and Speculative Buy rating," he wrote. "Our price target represents 188% upside from the current stock price of CA$0.26 and is generated using a five-year DCF with a discount rate of 12% and terminal growth rate of 5%."

Globally, around 700 million people are over 65 years old and 50 million have AD, Quenneville noted. Half of the sufferers die without having received a diagnosis, and most are diagnosed at a stage where care providers have limited opportunity to take mitigation steps like behavioral and pharmaceutical interventions.

The FDA-cleared CognICA platform offers time-savings and enables clinicians to secure reimbursement for monitoring of cognitive abilities in neurodegenerative conditions like AD.

Important Disclosures:

1. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
2. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
3. This article does not constitute medical advice. Officers, employees and contributors to Streetwise Reports are not licensed medical professionals. Readers should always contact their healthcare professionals for medical advice. 

For additional disclosures, please click here.