Cogstate : Annual Report – FY2024

About this update from Cogstate Ltd

Contents Financial Performance 2 Summary Financial Results 2 Message from the Chairman and CEO 3 Cogstate Directors 6 Company Secretaries 8 Directors' Report 10 Auditor's Independence Declaration 20 Audited Remuneration Report 24 Financial Report 37 Financial Statements 38 Notes to the Consolidated Financial Statements 42 Consolidated Entity Disclosure Statement 72 Directors' Declaration 73 Independent Auditor's Report 74 Shareholder Information 81 Corporate Directory 83 Corporate Governance Statement The Board of Directors of Cogstate Limited is responsible for the corporate governance of the Group. The Corporate Governance Statement has been lodged separately and is available on the Company website: www.cogstate.com These financial statements are the consolidated financial statements of the Group consisting of Cogstate Limited and its subsidiaries. A list of the major subsidiaries is included in Note 28. The financial statements are presented in US dollars. Cogstate Limited is a company limited by shares, incorporated and domiciled in Australia, and whose shares are publicly traded on the Australian Securities Exchange (ASX:CGS). Its registered office is Level 32, 367 Collins Street Melbourne Victoria 3000 Australia. A description of the nature of the Group's operations and its principal activities is included in the Directors' Report. We have ensured that our corporate reporting is timely, complete and available globally at minimum cost to the Group. All ASX Announcements, reports, presentations and other information are available at our Investor Centre on our website at www.cogstate.com.au/investors/. The financial statements were authorised for issue by the directors on 22 August 2024. COGSTATE LTD 1 Financial Performance Revenue Segment EBITDA EBIT $43.4m $9.3m $6.5m (2023: $40.5m) (2023: $4.8m) (2023: $2.2m) FY23 results above includes non-recurring restructuring costs ($0.5m) Profit Before Tax $7.1m (2023: $3.0m) Profit After Tax $5.4m (2023: $3.6m) Message from the Chairman and CEO Summary Financial Results 1H24 2H24 FY24 FY23 US$ US$ US$ US$ Total Revenue 20,168,909 23,258,864 43,427,773 40,451,123 Clinical Trials Revenue* 17,920,459 21,522,257 39,442,716 36,050,153 - Direct costs (excluding direct depreciation) (6,838,109) (6,668,040) (13,506,149) (14,811,165) - SG&A costs (2,061,870) (2,143,848) (4,205,718) (3,507,109) Clinical Trials Contribution* 9,020,480 12,710,369 21,730,849 17,731,879 Contribution % 50% 59% 55% 49% Healthcare Revenue 2,248,450 1,736,607 3,985,057 4,400,970 - Direct costs (462,808) (647,645) (1,110,453) (1,285,873) Healthcare Contribution 1,785,642 1,088,961 2,874,603 3,115,097 Contribution % 79% 63% 72% 71% Operating Expenses - Total product development & engineering (2,554,101) (3,321,423) (5,875,524) (5,444,781) - Less capitalised software development costs 426,999 780,765 1,207,764 926,309 - Less product development costs reimbursed 358,073 356,050 714,123 225,004 Net product development & engineering (1,769,029) (2,184,608) (3,953,637) (4,293,468) Computer costs (1,120,169) (1,153,187) (2,273,356) (1,839,086) Insurance (413,288) (397,458) (810,746) (849,805) Professional fees (1,019,401) (775,762) (1,795,163) (1,708,742) Marketing (9,764) (1,850) (11,614) (73,547) Office & facilities (142,628) (214,682) (357,310) (217,658) Travel (140,480) (232,474) (372,954) (402,873) Other administration costs (2,962,934) (2,808,524) (5,771,458) (6,660,520) Total Operating Expenses (7,577,693) (7,768,545) (15,346,238) (16,045,699) EBITDA 3,228,429 6,030,785 9,259,214 4,801,277 Depreciation and amortisation (1,429,428) (1,309,142) (2,738,570) (2,594,942) EBIT 1,799,001 4,721,643 6,520,644 2,206,335 Net interest 292,185 288,662 580,847 666,040 Other Income - - - 152,736 Net profit before tax 2,091,186 5,010,305 7,101,491 3,025,111 Effective 1 July 2023, former segment, Research, is now part of the Clinical Trials segment. Prior year revenue and profit/(loss) information for Research has been included within Clinical Trials for comparison. Welcome to the 2024 Annual Report Dear shareholder, In February 2024, Cogstate celebrated 20 years on the Australian Stock Exchange. In February 2004, in what were very different times, Cogstate raised A$7 million via its initial public offering and joined the ASX with a market cap of less than A$20 million. Back then, the small Cogstate team was solely focused on creating and validating digital assessments of brain health. We were keenly aware of an aging population who were becoming more aware of brain health, and we were confident that access to measurement tools was going to be key to better brain health in the future. That is as true today as it was 20 years ago. In other ways, Cogstate now bears little resemblance to the company that first presented itself to public company investors: Today, Cogstate is a trusted partner to global pharmaceutical companies, who rely on both our technology and our expertise to manage the primary endpoints for their pivotal trials of potential therapies. We are proud of the strong relationships that we have built with global leaders in neuroscience research, such as Eli Lilly & Co. (Lilly) and Eisai Co., Ltd (Eisai). Cogstate is now a team of more than 160 full time staff in Australia, the USA, UK and Japan, growing from what was just a handful of people in Melbourne two decades ago, and is now enhanced by a collection of more than 250 consulting neuropsychologists around the world. The digital assessments we offer our customers have developed in line with technological advancement over the last 20 years, but they continue to be based on excellent science and peer reviewed validation. The services we provide to our pharmaceutical customers have grown. Cogstate now offers a full suite of cognitive measurement services, reflecting both the changes in the conduct of global clinical trials, as well as the best-of-breed scientific and operational expertise that helps us to improve the signal- to-noise ratio for customers running complex trials in central nervous system diseases. Cogstate is now a trusted partner to pharmaceutical and biotechnology companies developing prospective treatments for a range of different diseases, predominantly diseases of the central nervous system. This work in clinical trials represents more than 90% of our revenue base. A key metric in terms of the success of Cogstate's clinical trials business has always been the value of sales contracts executed in any given period. Throughout the 2023 and 2024 financial years, the value of clinical trials sales contracts has fallen from the heights set in the 2022 financial year, predominantly reflecting a decrease in the value of new contracts from phase 3 Alzheimer's disease trials. However, this data only tells part of the story. 2 ANNUAL REPORT 2024 COGSTATE LTD 3 Cogstate's strategy is to follow therapies through the various stages of development. The development of an Alzheimer's treatment can be worth up to US$80 million to Cogstate in contracted revenue over the entire life of the development program, from phase 1 to phase 3. Further, we understand the significant cost of running a phase 3 Alzheimer's trial, which is why it is usually only the large pharmaceutical companies who can afford to run such trials. For Cogstate, future growth is dependent upon securing early stage (phase 1 and phase Alzheimer's trials from large pharmaceutical companies and then following that work through the stages of development. During FY24, Cogstate established the basis for growth in Alzheimer's disease sales contracts for future periods. Over the last year, we have been able to significantly expand the customer base for Cogstate's offering in Alzheimer's disease trials, specifically with large pharmaceutical companies: Phase 2 Alzheimer's trials provide the basis for future growth. During FY24, Cogstate executed four contracts for phase 2 Alzheimer's trials with four different large pharmaceutical companies (three of those companies are new Alzheimer's customers for Cogstate). Phase 3 Alzheimer's trial provides more immediate upside. In the June 2024 quarter, Cogstate executed a start-up agreement for a phase 3 Alzheimer's trial, again with a large pharmaceutical company. A start-up agreement is generally of low value but allows Cogstate to begin work on an upcoming trial prior to the execution of the main contract. In in the first few weeks of FY25, Cogstate executed the main contract in respect of the phase 3 trial. Cogstate has also demonstrated growth in our clinical trials offering, beyond Alzheimer's disease: Sleep disorders. Another area of near-term growth for Cogstate is sleep disorder trials where drug candidates act on the neuropeptide Orexin to modulate arousal and other functions. We are engaged in multiple late-stage program initiations planned in multiple indications, including trials planned whereby a Cogstate digital test will be included as a key endpoint based on strong phase II data using that same test. In this area we have invested in unique, fit-for- purpose solutions to enhance usability and acceptability by individuals with sleep disorders and enhanced real time data quality monitoring leveraging our data lake and data analytics capabilities. Mood disorders. The area of mood disorders includes indications such as major depressive disorder, bipolar and anxiety. There are a number of exciting new targets and mechanisms including the area of psychedelics where we're seeing an increase in pipeline opportunities as these programs move into later phases. During FY24, Cogstate invested in the development of new materials that have strengthened our competitiveness in these programs. We have also expanded our network of consultants to include individuals with expertise supporting these trials. Rare diseases. Cogstate is working extensively in phase 2 Rare disease trials - specifically rare genetic neurodevelopmental disorders. We expect phase 3 trial starts for multiple customers through FY25 and FY26. Of course, Cogstate has always had an eye to opportunities beyond clinical trials. When founding the company in 1999, our initial investment thesis was that digital assessments of cognition would play a critical role in providing simple, accurate, and actionable data on which patients and doctors alike could understand brain health. In 2020, Cogstate partnered with Eisai to take Cogstate digital assessments into the community. The Eisai agreement provided Cogstate with a valuable inflow of capital with a US$15 million upfront payment received in December 2020. The agreement also provided Cogstate shareholders with certainty of ongoing license fees over the next 10 years, with upside beyond those contracted minimum fees. Since then, we have seen successful phase 3 trials of monoclonal antibodies, developed by both Eisai and Lilly, that have demonstrated the ability to alter the trajectory of decline of patients with early Alzheimer's disease. Eisai's Leqembi has now launched in a number of countries, including the USA, Japan, and China. Lilly's Kisunla (donanemab) was approved by the FDA in early July and has since launched in the USA. The launch of disease modifying therapies, and the complexities of the diagnostic and prescription process (particularly in the USA) for the monoclonal antibodies as a class of drugs in early Alzheimer's disease, has highlighted the lack of preparedness of healthcare systems around the world to identify patients who would most benefit from these new treatments. The Cogstate team, in conjunction with consultancy firms with expertise in the space, have undertaken focus group work in the community and established that there is demand for easy to use, low cost, accurate tests of cognition. Similarly, we have worked to understand the role of primary care physicians in the diagnostic pathway, and the lack of connection between those family doctors and the specialists who are prescribing new Alzheimer's therapies. The Cogstate team have established clear opportunities where Cogstate technology and expertise can be applied to solve some of these identified problems in healthcare systems. In April of this year, we announced that we had amended the Global License Agreement with Eisai to allow Cogstate to continue to work in concert with Eisai, but also to explore an extended role that Cogstate can potentially play in building an integrated system to allow Alzheimer's patients access to the right intervention at the right time. Under the amended agreement, Eisai holds a non-exclusive license for Cognigram in the USA and CogMate in certain Asian countries until August 2031. The non- exclusive license is a substantial reduction in Eisai rights compared to the global exclusive license held by Eisai prior to the amendment. In exchange for Eisai's reduced rights, Cogstate has agreed to forgo US$15 million of future royalties, mainly impacting financial years 2028 through to 2031. Over the next year, Cogstate will continue to progress exploratory plans regarding alternative distribution approaches for our digital cognitive assessment technologies. These approaches will be complimentary to the direct-to-primary care avenue Eisai will pursue in the USA, and include exploration of the following opportunities: Consumer health tracking behaviours, and assessing how purpose-designed consumer cognitive measurement may fit into these existing habits; Assessing non-traditional healthcare delivery models, and how related patient behaviours predict interest in cognitive health tracking; Community-based partnerships that bring cognitive measurement into the physical and online places where likely users come together; and Partnerships that can scale remote delivery of cognitive tests (including leveraging existing, proven capabilities and relationships in clinical trials) to condense the timeline for medical diagnosis and treatment. Financial results Revenue for FY24 was up 7% to $43.4 million, while profit before tax increased 135% to $7.1 million--that is, a $2.9 million increase in revenue delivered a $4.1 million increase in profit. The Cogstate team, conscious of the uncertainty of timing of execution of large sales contracts, focused on delivering revenue from ongoing programs along with tight cost management to deliver profit growth. Cogstate finished the year with $29.4 million of net cash and no debt. Clinical Trials sales contracts executed throughout FY24 totaled $27m, down from $34m in the prior year. As mentioned above, the raw numbers do not tell the whole story as the sales contracts executed in FY24 provide substantial upside in FY25 and beyond. At 30 June 2024, Cogstate had $101.6 million of contracted revenue that will be recognised in future periods. Thanks to our talented team Throughout the year, we have seen and benefited from the personal growth of various team members. Specifically, Rachel Colite, in the role of Executive Vice President, Clinical Trials, has demonstrated a keen understanding of the business and an ability to lead a large group. Similarly, Dr. Pam Ventola has been promoted into the role of Chief Science Officer at Cogstate in recent months, handling her change in responsibility with ease whilst bringing significant energy and appetite for change to the role. The whole team continues to focus on the dual goals of delivering for our customers while also seeking to advance our offering with improved technology solutions. They are dedicated to Cogstate's mission and values and, as shareholders, you should be proud of the quality of their work and the high esteem in which they are held within the industry. Thanks to our unwavering supporters On behalf of the Board and everyone at Cogstate, we also want to thank our shareholders for your continued support. We are acutely aware of the desire of our shareholder base to see Cogstate return to the growth profile that we demonstrated in FY20 and FY21 and, as stated, we believe that we have a book of work that can deliver growth in the coming periods. The launch of disease modifying therapies for treatment of early Alzheimer's disease represents significant opportunity for Cogstate. We are committed to exploring the extended role Cogstate can potentially play in building an integrated system to allow Alzheimer's patients access to the right intervention at the right time. We remain eager to deliver against our long-term growth strategies that we believe will deliver long- term shareholder value. Our shared commitment will undoubtably shape a brighter future for our organisation and the global communities of researchers and patients we serve. Martyn Myer AO Brad O'Connor Chairman CEO 4 ANNUAL REPORT 2024 COGSTATE LTD 5 Cogstate Directors Martyn Myer AO BE, MESc, MSM CHAIRMAN Mr Myer is Chair of the Doherty Institute at the University of Melbourne and the board of the Australian Chamber Orchestra. He previously served as Deputy Chancellor of the Council of the University of Melbourne, President of The Myer Foundation, one of two principle Myer Family philanthropic funds, President of the Howard Florey Institute of Experimental Physiology and Medicine and was a director of The Florey Institute of Neuroscience and Mental Health, where he participated in the transition of the Institute's research focus towards diagnostic and therapeutic neuroscience, including a focus on degenerative brain diseases. Committees: Remuneration and Nomination Committee (Chair) and Audit, Risk and Compliance Committee Other directorships and interests: Doherty Institute, and the Australian Chamber Orchestra Brad O'Connor B Bus MANAGING DIRECTOR AND CHIEF EXECUTIVE OFFICER Mr O'Connor has responsibility for Cogstate's overall strategic direction and day-to-day operations as well as development of expansion opportunities outside of the core clinical trials business. Prior to taking the position of CEO at Cogstate in 2005, Mr O'Connor joined Cogstate as Chief Financial Officer and Company Secretary in 2004. Prior to that, Mr O'Connor held senior positions at Spherion Group, Australian Wine Exchange and PricewaterhouseCoopers. Other directorships and interests: N/A Richard Mohs PhD INDEPENDENT NON-EXECUTIVE DIRECTOR Dr Mohs is currently Chief Scientific Officer for the Global Alzheimer's Platform (GAP) Foundation, a non- profit devoted to enhancing the speed and quality of Alzheimer's disease research. Richard also serves as a consultant to academic institutions, foundations and biopharmaceutical companies, and is a member of the Board of Governors for the Alzheimer's Drug Discovery Foundation. Dr Mohs retired from Eli Lilly in 2015, where he held leadership positions including Vice President for Neuroscience Early Clinical Development and Leader of the Global Alzheimer's Drug Development Team. Before joining Eli Lilly, Dr Mohs spent 23 years with the Mount Sinai School of Medicine where he was Professor in the Department of Psychiatry and Associate Chief of Staff for Research at the Bronx Veterans Affairs Medical Centre. Committees: Remuneration and Nomination Committee and Audit, Risk and Compliance Committee Other directorships and interests: Board of Governors for the Alzheimer's Drug Discovery Foundation, Consultant for various biotechnology companies, academic institutions and foundations Ingrid Player BEc and LLB (Hons), GAICD INDEPENDENT NON-EXECUTIVE DIRECTOR Ms Player brings deep healthcare sector experience and strong commercial expertise to the Board of Cogstate. She has held senior executive roles with Healthscope Ltd, a leading private healthcare provider in Australia, including the former positions of Group Executive - Legal, Governance and Sustainability, and General Counsel and Company Secretary from 2005 until 2019. Ms Player also has considerable international commercial and regulatory experience that spans different markets and industries, which she gained in private legal practice in Australia and in The Netherlands. She holds a Bachelor of Economics & Bachelor of Laws (Hons) from Monash University. She is a graduate member of the Australian Institute of Company Directors. Committees: Remuneration and Nomination Committee and Audit, Risk and Compliance Committee (Chair) Other directorships and interests: Non-executive director on the boards of HealthShare Victoria (retired 30 June 2024), Cleanaway Waste Management Limited, Epworth Foundation, and Integral Diagnostics Richard van den Broek CFA INDEPENDENT NON-EXECUTIVE DIRECTOR Mr van den Broek is founder and managing partner of HSMR Advisors LLC, a U.S. based fund manager with an investment emphasis on small and mid-cap biotech public companies. Prior to his time as an investor in the healthcare industry Mr van den Broek had a ten year career as a biotech analyst, starting at Oppenheimer & Co., then Merrill Lynch, and finally at Hambrecht & Quist. Committees: Remuneration and Nomination Committee Other directorships and interests: PhaseBio Pharmaceuticals Inc and Pulse Biosciences Inc Kim Wenn BCompSc INDEPENDENT NON-EXECUTIVE DIRECTOR Ms Wenn brings extensive technology experience and strong commercial expertise to the Board of Cogstate, with over 30 years experience in innovation roles. Until July 2018, Kim held the role of Chief Information Officer at Tabcorp Holdings, an ASX50 listed company where Kim led a team of 1,200 technology experts to drive strategic direction through digital transformation. Kim's experience includes, among other things, business strategy, governance and change management-with a focus on digital disruption. Ms Wenn holds a Bachelor of Computer Science from Monash University and completed an Advanced Management Program from Harvard University. She is a graduate member of the Australian Institute of Company Directors. Committees: Remuneration and Nomination Committee and Audit, Risk and Compliance Committee Other directorships and interests: Bupa Asia Pacific entities (Bupa ANZ Insurance Pty Ltd, Bupa ANZ Healthcare Holdings Pty Ltd, Bupa HI Pty Ltd, Bupa HI Holdings Pty Ltd and Bupa Foundation (Australia) Limited) 6 ANNUAL REPORT 2024 COGSTATE LTD 7 Company Secretaries CUSTOMER STORY FDA Approval for New Alzheimer's Disease Therapeutic Supported by Cogstate Cogstate managed the endpoint data quality program of all cognitive and clinical outcomes in a global phase 3 trial of an amyloid-lowering drug for patients with early Alzheimer's disease. To ensure high fidelity measures, the large global trial required a rigorous rater qualification and training program enhanced by central review of ratings by Cogstate's global network of expert neuropsychologist consultants and senior scientists. The US Food and Drug Administration (FDA) approved the launch of the treatment for marketing. David Franks BEc, CA, FFin, FGIA, JP David is a Principal of the Automic Group. He is a Chartered Accountant, Fellow of the Financial Services Institute of Australia, Fellow of the Governance Institute of Australia, Justice of the Peace, Registered Tax Agent and holds a Bachelor of Economics (Finance and Accounting) from Macquarie University. With over 30 years' experience in finance, governance and accounting, Mr Franks has been CFO, Company Secretary and/or Director for numerous ASX listed and unlisted public and private companies, in a range of industries covering energy retailing, transport, financial services, mineral exploration, technology, automotive, software development and healthcare. Mr Franks is currently the Company Secretary for the following ASX Listed entities: Applyflow Limited, COG Financial Services Limited, Cogstate Limited, Exopharm Limited, IRIS Metals Limited, IXUP Limited, JCurve Solutions Limited, Noxopharm Limited, Nyrada Inc, White Energy Company Limited and ZIP Co Limited. He was also a Non-Executive Director of JCurve Solutions Limited from 2014 to 2021. Kristi Geddes LLB, BPsychSc, Grad Dip Legal Practice, Grad Dip Health and Medical Law Kristi is General Counsel at Cogstate. She has 20 years' legal experience in private practice and in-house roles, and has undergraduate and post graduate qualifications across law, health and psychological science. She is an Affiliate member of the Governance Institute of Australia. 8 ANNUAL REPORT 2024 COGSTATE LTD 9 Directors' Report Your directors present their report together with the financial report of the consolidated entity, consisting of Cogstate Limited and the entities it controlled ("the Group" or "Cogstate"), for the financial year ended 30 June 2024 and the auditor's report thereon. Cognigram is a Class ll exempt FDA listed digital medical device that can be marketed in the USA and is designed to be utilised by healthcare professionals. CogMate is a direct-to-consumer product, with limited feedback provided to the individual patient. CogMate is not considered to be a "medical device" and therefore does not require regulatory approval. DIRECTORS' REPORT The Amended Global License Agreement will allow Cogstate to continue to work in concert with Eisai, but also to explore an extended role that Cogstate can potentially play in building an integrated system to allow Alzheimer's patients access to the right intervention at the right time. Cogstate is organised into two main operating divisions: Principal activities During the year, the principal activities of the Group consisted of: Creation, validation and commercialisation of digital brain health assessments; and Design and provision of quality assurance services in clinical trials, focused on the administration, scoring and recording of conventional brain health assessments. Cogstate solutions are widely used in hundreds of academic and industry sponsored research studies. As at 30 June 2024, Cogstate technology had been deployed in more than: 1,800 academic research studies 578 industry sponsored clinical trials Business Strategies and Prospects Cogstate was formed in December 1999 with a business thesis centered around the role of digital brain health assessments in an aging society with an increasing awareness of brain health. Over time, Cogstate's business has evolved and expanded. Creation and Scientific Validation of Digital Brain Health Assessments Cogstate was founded as a disruptive solution that sought to leverage technology to simplify the measurement of cognition (brain health) in order to make cognitive assessment more accessible to the community. Once the initial versions of the technology had been created, focus quickly turned to scientific validation of the technology; proving equivalence and/or superiority to standard measures of cognition such as a neurological exam conducted by specialist physicians. Today, Cogstate technology is scientifically proven, with support provided in the form of over 625 peer reviewed publications across a wide range of indications and drug classes. The Role of Academic Collaboration in Scientific Validation Since the development of the first version of its technology, Cogstate has sought to collaborate with academics the world over. As part of these collaborations, Cogstate provides technology at little or no cost to academics, but in return is granted access to data that can be used for validation or marketing. Launch of Clinical Trials Offering Leveraging the validation obtained through academic collaborations, in 2004 Cogstate executed its first commercial agreement with Pfizer to support a clinical trial. Since that time, Cogstate has gained extensive experience in the conduct of clinical trials across a range of different indications. Cogstate has collaborated with more than 140 different customers, in the support of more than 570 clinical trials, in more than 110 languages, involving 13,700 clinical trial sites where Cogstate has trained more than 24,000 site staff in respect of the neuropsychological assessments deployed in the trial. Extending Cogstate's Total Addressable Market to Include Consumers and Physicians In 2017, Cogstate's Cognigram product received clearance as a HIPAA compliant U.S. FDA Class II Medical Device, which subsequently received marketing authorisation in multiple additional regulatory jurisdictions around the world. Then in 2020, Cogstate and pharmaceutical company Eisai Co., Ltd (Eisai) established a global partnership to develop and commercialise such digital brain performance assessment tools for individuals and doctors. Eisai chose to partner with Cogstate as a result of our significant scientific and commercial validation. During the 2024 financial year, Cogstate and Eisai renegotiated the global license agreement. Under the Amended Global License Agreement, Eisai will hold a non- exclusive license to distribute specified Cogstate products in the following countries: Cognigram in the USA, including a shorter, memory only, version that has been developed in conjunction with Eisai; and CogMate in Taiwan, South Korea, Thailand, India, Malaysia, Philippines and Vietnam. Both Cognigram and CogMate utilise the Cogstate Brief Battery, a collection of four cognitive tests that have been scientifically validated as sensitive to changes in cognition associated with early stages of Mild Cognitive Impairment (MCI) and early Alzheimer's disease. Clinical Trials Segment Over the last 19 years, almost all Cogstate revenue has been generated from the sale of technology and associated services to pharmaceutical and biotechnology companies to demonstrate a drug's impact on cognition in clinical trials. Initially, revenue was derived only from the provision of highly sensitive computerised cognitive tests, as well as service fees associated with the deployment of the technology. Over time, services were added in respect of the management, training and monitoring of conventional cognitive assessments to improve the reliability and sensitivity. Today, Cogstate's full-service solutions span the entire clinical trial lifecycle from study design to final statistical analysis. Recently expanded offerings include more flexible deployment models and modalities for computerised testing, as well as more efficient and effective rater training and monitoring solutions to meet the quality assurance needs of clinical trials. Growth strategies in Clinical Trials include: Leverage adoption of decentralised clinical trial methodologies to grow market share Expand capabilities in key therapeutic indications while continuing to grow market penetration in Alzheimer's disease in line with increased investment in drug development Establish and deepen channel partnerships with leading platform and service providers as a means of growing customer base Continue scientific publication and marketing of the utility and validity of Cogstate technology Leverage brand awareness generated from the launch of consumer and physician tools within the Healthcare market Healthcare Segment Outside of the Clinical Trials segment, Cogstate has developed tools specifically designed to aid healthcare professionals with objective assessments of cognition in patients. The system, branded as Cognigram™, allows for regular and standardised testing to assist in the early detection of cognitive decline that could be related to a range of factors including head injury, neurodegenerative disease or side effects following pharmacological treatments. There are additional applications in areas such as pre- and post-operativecare-especially critical in vulnerable or aging populations-to help ensure a full recovery and reduce rates of hospital re-admittance. Informative and automated reports allow clinicians to easily track a patient's cognitive change over time, compare results to age-matched normative data, and understand performance on both specific cognitive domains and composite scores. Notwithstanding the list of applications above, the most significant opportunity for Cognigram is in the area of dementia screening and care. Cognigram has achieved regulatory clearance to be marketed in multiple jurisdictions including the United States, Europe and Australia. 10 ANNUAL REPORT 2024 COGSTATE LTD 11 DIRECTORS' REPORT Review of Results and Operations Clinical Trials Sales Contracts The value of Clinical Trials sales contracts executed during FY24 was $27.0 million, a decrease of 21% compared to the prior year. The decrease largely reflects a decrease in the value of sales contracts for trials of potential Alzheimer's therapies in FY24 ($12.9 million in FY24, down from $25.7 million in FY23 and $74.5 million in FY22). The value of sales contracts executed (excluding Alzheimer's trials) increased to $14.0 million in FY24, up from $8.7 million in FY23 and $8.0 million in FY22. Clinical Trial Sales Contracts Executed 80 60 million 40 US$ 20 0 FY22 FY23 FY24 FY21 Q1 Q2 Q3 Q4 Clinical Trials Portfolio Cogstate is currently managing 112 clinical trials, across all stages of drug development: 17 22 Phase I Phase II Phase III Other 27 46 Clinical Trials Segment Result Clinical Trials revenue increased to $39.4m in FY24, up 9% from the prior year, primarily as a result of the rectification of enrolment and regulatory delays associated with a number of trials in FY23, that impacted revenue in the prior year. The segment contribution increased to $21.4m, up 22% from the prior year. This outcome was as a result of the increased revenue as well as slightly reduced staffing levels and tight cost management. DIRECTORS' REPORT Healthcare Segment Result Revenue for the Healthcare segment is predominantly made up of revenue from the Eisai Global License Agreement. Revenue was lower than the prior year by 9% as a result of the amendment to the Eisai agreement in April of this year. The 8% reduction in segment contribution was as a direct result of this revenue reduction. Group Contracted Future Revenue Total contracted future revenue decreased by 23% to $101.6m as at 30 June 2024, compared to $132.6m at 30 June 2023. The contracted future revenue figure provides insight into future revenue performance of the Group. The revenue backlog for both the Clinical Trials and Healthcare segments are highlighted in the table below: 30 June 2024 30 June 2023 US$ US$ Contracted Clinical Trials Revenue 85,643,497 97,951,714 Eisai License - Global 15,430,385 34,035,590 Eisai License - Japan 515,467 615,658 Contracted future Group revenue at 30 June 101,589,349 132,602,962 The expected run-off of future revenue backlog is shown in the chart below. 30 25 million 20 15 US$ 10 5 0 FY26 FY27 FY28 FY29 FY25 Clinical Trials Healthcare Corporate Governance The Board of Directors of Cogstate Limited is responsible for the corporate governance framework of the Group having regard to the ASX Corporate Governance Council published guidelines (4th Ed.) as well as its corporate governance principles and recommendations. Details of the Group's corporate governance framework for the year ended 30 June 2024 are contained in the Corporate Governance Statement and Appendix 4G released to the ASX and located at https://www.cogstate.com/investors/corporate-governance/ Likely Developments The Group expects to maintain the present status and level of operations. 12 ANNUAL REPORT 2024 COGSTATE LTD 13 DIRECTORS' REPORT Financial Position At 30 June 2024, the net assets of the Group were $40.9 million. Summary Balance Sheet as at 30 June 2024: Variance in net assets 30 June 2024 30 June 2023 increase/(decrease) US$ US$ US$ % Cash and cash equivalents 30,124,231 28,675,988 1,448,243 5% Trade and other receivables 9,964,006 7,532,671 2,431,335 32% Property, plant and equipment 416,365 369,683 46,682 13% Intangibles 10,478,668 11,112,999 (634,331) (6%) Other assets 6,854,685 6,375,234 479,451 8% Total assets 57,837,955 54,066,575 3,771,380 7% Trade and other payables 6,049,737 4,553,731 (1,496,006) (33%) Deferred revenue 7,225,918 8,503,406 1,277,488 15% Other liabilities 3,640,493 3,320,862 (319,631) (10%) Total liabilities 16,916,148 16,377,999 (538,149) (3%) Capital 36,572,044 36,318,220 253,824 1% Accumulated profits / (losses) 2,337,917 (162,488) 2,500,405 1539% Reserves 2,011,846 1,532,844 479,002 31% Total equity 40,921,807 37,688,576 3,233,231 9% Net Cash The Company had $29.4m net cash as at 30 June 2024. 2024 2023 US$ US$ Total cash at 30 June 30,124,231 28,675,988 Cash held on behalf of customers in respect of pass-through expenses at 30 June (677,430) (882,847) Net cash held for operations at 30 June 29,446,801 27,793,141 DIRECTORS' REPORT Material Business Risks Cogstate actively manages the risks that could materially impact our ability to sustain our future financial performance and deliver our long term strategy. The material business risks that have the potential to impact achievement of the Group's strategic priorities and business objectives, with relevant mitigation strategies, are outlined below. These risks should not be taken to be a complete or exhaustive list of the risks and uncertainties associated with Cogstate. Many of the risks are outside the control of the Directors. There can be no guarantee that Cogstate will achieve its stated objectives, that it will meet trading performance or financial results guidance that it may provide to the market, or that any forward looking statements contained in this report will be realised or otherwise eventuate. The more generic risk areas that affect most companies or general economic factors that may impact Cogstate have not been included below. Risk The risk and its impact How are we responding Competitive Cogstate provides proprietary digital • We identify opportunities for investment within offering brain health assessments along with the business that will enable Cogstate to scientific and operational expertise improve its offering to customers (for example, in respect of the assessment of investment in data ingestion, analytics and reporting through FY22 and FY23). cognition in the context of clinical • We are continually innovating, with a focus on trials. A risk to Cogstate is that it must ensuring we have superior digital cognitive testing available across a range of modalities continually evolve its offering, that can be used in a range of settings. with new technology, new delivery • Our science team is actively engaged with modalities, better data analytics the industry, regularly evaluating market and new systems to ensure that it developments and trends. remains a leader in a competitive • We regularly scan the market for new entrants or market. developments within existing competitors. Additionally, it is expected that the • We have close relationships with major launch of new Alzheimer's disease customers, ensuring that we understand their treatments will bring an increase in current and future needs and adapt our offering demand for brain health assessment, to meet those needs (for example, delivery of leading to an increase in competition fully remote clinical trials). in the space. Technology Cogstate operates critically • During FY23 we developed a Cybersecurity - Information important testing which is expected Risk Appetite Statement to guide a strategic security to be available at all relevant approach to security, including a program of and cyber business times and involves works to continually improve cybersecurity framework. security the collection of personal and • We regularly monitor the availability of our confidential data. A risk to Cogstate arises where the technology against targets to ensure availability. • We monitor the health of critical systems and business is unable to effectively have contingency plans in place for disruptions. operate in the event of a major • We engage external expertise to review our business disruption meaning it is unable to provide services to controls framework and conduct penetration testing, and more specifically our cyber security customers causing significant impact controls, to ensure we continue to improve our to customers. tools and processes. A further risk to Cogstate is a • We provide regular staff training on cyber security breach of the Group's security risks and policies. technology with private data • We have business continuity plans that are accessed by an unauthorised third regularly reviewed and tested. party resulting in Cogstate breaching regulations, customer contracts and/ or employee agreements. 14 ANNUAL REPORT 2024 COGSTATE LTD 15 DIRECTORS' REPORT Risk The risk and its impact How are we responding Talent Cogstate relies on the skills and • We regularly review our employee remuneration commitment of key talent to deliver and reward strategy to ensure we are market services to customers. competitive. A risk to Cogstate is the loss of key • We conduct regular employee engagement surveys and create action plans to address talent and the inability to attract and employee feedback. retain key talent in a competitive • We invest in employee development through market. This could result in an a Learning@Cogstate program and continually inability to deliver service to our invest in our employees' development. customers or a deterioration in the • We have implemented a "virtual-first" model quality of service provided to our customers. where the majority of employees work remotely, providing Cogstate with access to a wider geographical spread of employees giving a greater access to skills and talent. Business The Clinical Trials segment • While continuing to focus on Alzheimer's disease concentration generated 91% of Cogstate's and win new work in that expanding market, FY24 revenue and is a significant we are expanding our capabilities into other contributor to Cogstate's overall indications. financial performance, whilst one • We are leveraging our relationships with key customer represented 38% of customers in Alzheimer's disease to grow Cogstate revenue. revenue in other disease areas. Additionally, in the Clinical Trials • We are continuing to establish a leadership position in remote digital cognitive assessments. segment, Cogstate derived • We are expanding the use of cognitive testing as approximately 64% of its FY24 revenue from Alzheimer's disease a safety end point. clinical trials. The loss of a key • We have established a global licensing customer represents a significant agreement with Eisai to grow the use of digital risk to the ongoing growth of cognitive assessments in general healthcare to Cogstate's business and a downturn diversify our revenue base beyond clinical trials. in Alzheimer's disease research could negatively impact Cogstate revenue and earnings. Board of Directors The following persons held office as directors of Cogstate Limited during the financial year: Martyn Myer (Chairman) Brad O'Connor (CEO) Richard Mohs Ingrid Player Richard van den Broek Kim Wenn Company Secretaries The following persons held office as Company Secretary of Cogstate Limited during the financial year: David Franks Kristi Geddes DIRECTORS' REPORT Meetings of directors The number of meetings of the Group's Board of Directors and of each Board committee held during the year ended 30 June 2024, and the numbers of meetings attended by each director were: Audit, Risk and Remuneration and Board meetings Compliance Committee Nomination Committee Board meetings (sub-committee) meetings meetings A B A B A B A B Martyn Myer 8 8 2 2 6 6 3 3 Brad O'Connor 8 8 2 2 N/A N/A N/A N/A Richard Mohs 8 8 N/A N/A 6 6 3 3 Ingrid Player 8 8 2 2 6 6 3 3 Richard van den Broek 8 8 N/A N/A N/A N/A 2 3 Kim Wenn 8 8 N/A N/A 6 6 3 3 Number of meetings attended. B: Number of meetings held during the year. Audit, Risk and Compliance Committee Ingrid Player (Chair), Martyn Myer AO, Richard Mohs, Kim Wenn Remuneration and Nomination Committee Martyn Myer AO (Chair), Richard van den Broek, Richard Mohs, Ingrid Player, Kim Wenn Interests in the shares and options of the Company As at the date of this report, the interests of the directors in the shares and options of Cogstate Limited were: Number of Number of Options over Ordinary Shares Ordinary Shares Mr Martyn Myer 23,614,566 - Mr Richard Mohs 67,000 - Ms Ingrid Player 134,098 - Mr Richard van den Broek 4,458,500 - Ms Kim Wenn 12,586 - Mr Brad O'Connor 4,438,102 3,250,000 Proceedings on behalf of the Group No person has applied for leave of Court to bring proceedings on behalf of Cogstate Limited or any of its subsidiaries. Dividends No dividends have been paid during the financial year. The directors do not recommend that a dividend be paid in respect of the financial year (2023: US$nil). Significant changes in the state of affairs There have been no significant changes in the state of affairs of the Group during the year. Matters subsequent to the end of the financial year No matter or circumstance has arisen since 30 June 2024 that has significantly affected, or may significantly affect: the Group's operations in future financial years, or the results of those operations in future financial years, or the Group's state of affairs in future financial years. 16 ANNUAL REPORT 2024 COGSTATE LTD 17

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