Cogstate Limited

Well, welcome everyone to Cogstate's Full Year Results for Financial Year 26. I'm pleased to introduce our presenters today, Brad O'Connor, Cogstate's CEO and Managing Director, Jaron Watson, our CFO, and Rachel Collar, our Executive Vice President of Clinical Trials. Before we get started, a reminder that this webinar is being recorded and all participants are in listen-only mode. We'll be opening for questions at the end and invite you to submit those questions using the chat function below. We'll try to get through as many of your questions in the allotted time and may aggregate similar questions. This webinar will be available later today on our Investor Centre. Over to you, Brad.

Thank you, Rebecca. Today's presentation does include forward-looking statements and therefore I note our disclaimer stating this information in the presentation is general in nature and I encourage all investors to consider your own investment objectives and to review in detail our full year FY26 results that were lodged with the ASX earlier today. So look, I think FY26 is landmark year for Cogstate and delivered on our strategy diversification and expansion of our offering and that delivered not just record financial results but also an increase in the scale of the business all at the same time we're investing in technology and planning the next phase of the growth in our business and it's a really exciting time for everyone who's involved in the cogstate business from management to board to shareholders and i think we all fence feel that real sense of momentum that exists within the business at the moment As a management team, we feel that the strategies that we've put in place over probably more than the last five years are starting to really bear fruit. And that's reflected in our FY26 numbers, but perhaps more importantly is reflected in the number of sales opportunities that we're continuing to see each month and the confidence in future revenue growth that comes from having almost $120 million of contracted future revenue as at 30 June, 2026. So during the year, we delivered profitable growth, revenue just shy of $61 million and an EBIT margin 25%. Strong sales of $89 million through financial year 26 provide visibility to revenue growth into FY27 and beyond, and we'll talk about that as we get through the presentation. The company's really well capitalized with almost $35 million cash and no debt. we've declared our second annual dividend and we were active in the share buyback during the year. Our sales reflected the value that we were able to extract from our strategic partnerships but also reflects an increase in trial starts in central nervous system diseases as well as our expansion into new areas and as we get through the presentation today Rachel's going to dig into that a little bit further. Our combination of neuroscience expertise and scalable technology really position as well within our market and looking forward we have a generational opportunity I think to use technology and AI to enhance our business and expand our margins in the future and so Darren's going to talk to that as we get through the presentation. So a quick look at the metrics that shows a really high performing business. Sales contracts of $89 million that we just closed last month were up 116%. Those sales across a record number of trials with 90 new trials initiated during the year, which was up from just 35 last year. And that gives you a real sense of the momentum inside the business. At the end of the year, the Cogstate team's managing 171 clinical trials, which is up from 110 at the same time last year. Again, showing that it's just changing dynamics inside the business. We begin the FY27 year with record revenue under contract. Of the $118.5 million of contracted future revenue, 48.3 of that is expected to be recognised in FY27, which is up 54% on the same time last year. Revenue for the FY26 year was up 15% and profit before tax up 16%. The results showed a bias to the second half of the year with second half revenue up 27% on the first half. And given that additional revenue, margins increased through the second half of the year where we recorded a gross margin of 62% and our EBIT margin pushed out to 30% in that second half of the year. HAPL allocation was again disciplined, including investment in technology, as well as our active share buyback. And as I mentioned, the declaration of second annual dividend today. So as we continue to grow revenue, we're able to both invest in technology and also maintain profit margins. So profit before tax margin was maintained at 26%, despite a slight decrease in gross margins over the year. And that decrease in gross margins from 61% to 58% was flag time this time last year as we were investing in substantial increase in trials that we saw coming through the year. We needed to make sure we had the resources in place to deliver on that. As mentioned, we recorded a really strong second half of the 26th financial year with second half revenue up 27% compared to the first half and up 17% compared to the same June half last year. that revenue increase allowed us to increase second half gross margins to 62%, which was up from 53% in the first half and EBIT margins in the second half of 35% up from 24% in the first half. So that just demonstrates the leverage that exists in our business. And that really reflects that the cost base, the cost of sales that we report is really just people. So as we can see that revenue growth, we can really get that leverage over those people. So the strong sales performance recorded in FY26 has set up Coldstate for future revenue growth. Of the 118.5 million of contracted future revenue, 48.3 is expected to be recognised in FY27. That's up 54% on the prior year. Of that 48.3, 46.1 of that is clinical trials revenue. The other 2.2 is our healthcare revenue that relates to our agreement with ASI that will roll off over the coming years. So that 46.1 million of clinical trials revenue expected to be recognised in FY27. And that's up 58% on the same time last year. The table to the right of screen, bottom right of screen here gives you really good visibility in terms of how that revenue contracted clinical trials revenue will roll off. And I think what's really important to call out here is the growth, not just in the first year, revenue roll off, but second and third year as well, as you can see that year two revenue growing from 19.1 to 29.1 and year three from 10.8 to 18.4 million of revenue locked in. And that gives you a sense that as we grow those contract sales and we grow that contracted revenue base going forward, how we're going to be able to grow revenue from not just 26 to 27, but 27, 28. And I think that's really important for investors to understand. Of course, our revenue growth in FY27 is going to depend on our in-period conversion of sales contracts executed within this 27 year, but our starting position is materially stronger. So with that, I'm going to hand over to Rachel to really dig into some of these numbers and how the business is operating. Thank you, Rachel.

Thanks, Brad. So over the next few slides, I'll share a bit about our clinical trials business and how it's evolving, both in terms of scale and in diversity. So as Brad mentioned, we initiated 90 new trials in the year. So this is up from 35 in financial year 25. So growth of more than 150%. As the chart shows, this wasn't driven by a single quarter or a small number of studies. We saw strong performance across both halves of the year, resulting in the highest level of trial starts in our history. Just as importantly, those new trials came from a much broader range of therapeutic areas. While Alzheimer's disease remains an important focus for Cogstate, nearly half of new trial starts were in mood, sleep and other neurological conditions. with a further third coming from rare disease trials. This diversification reflects the success of our strategy to expand beyond our traditional strengths. Behind these results is a significant operational achievement as well. Over the past year, we've successfully scaled our teams, added expertise in new therapeutic areas, and expanded our services and capabilities while also maintaining our delivery across a much larger volume of work. The growth in mood, sleep, and other neuro studies is particularly encouraging, increasing from 13 trial starts in financial year 25 to 41 in financial year 26. This demonstrates that our investment in capital and capabilities and in talent is really translating to meaningful adoption. So this slide highlights the growing scale of our active trial portfolio. At 30 June, 2026, we were supporting 171 ongoing trials. That's up 55% from the prior year. Consistent with what we saw in new trial starts, much of this growth is coming from mood, sleep, and other neuro, demonstrating the success of that expansion strategy. What's particularly encouraging is the number of new active phase two trials, which increased 73% to 78 studies. These programs represent an important source of future revenue. While not every study will progress to phase three, a large number of them will, and these are really where we see the trial sizes and revenue potential increase. We've already seen the revenue increase at a group level, but looking at clinical trials revenue, the aspect that I wanted to call out here is the second half revenue performance, where we recorded clinical trials revenue of $32.7 million, up 17% on the prior corresponding period, and 27% versus the first half of financial year 26. It's also worth noting that license fee revenue was not an abnormal factor in the second half revenue growth. That's to say second half revenue was not distorted by any one-off license fee revenue. We also saw a significant contribution from our central rating programs in the second half of the year. And these are important because they have a different revenue profile with revenue recognized more closely in line with patient activity. So as a result, they typically generate less revenue in the first few quarters following contract award before revenue accelerates as the recruitment and study activity build. This makes the second half result particularly encouraging as it reflects the underlying strength of the portfolio today while also creating additional revenue opportunity as these newer studies mature. So a natural question, what's driving this increase in activity that's led to revenue and profit growth? First, our strategy to expand beyond Alzheimer's disease into psychiatry and sleep and broader neuro, it's gaining real traction. These are the areas attracting significant biopharma investment, including psychedelics and the incretin-based therapies for mood disorders. In addition, the industry is investing heavily in orexin programs, specifically associated with type 1 narcolepsy, but we're also seeing these orexin programs going into new indications. Cogsate digital tests are serving as a key endpoint in these trials. That interest by pharma in orexin compounds and the value that they attribute to these programs, that was highlighted in Lilly's $7.8 billion acquisition of Sintesa that happened earlier in the year. We've also continued to expand our presence in rare disease clinical trials. This is an area where Cogstate has historically established a really strong reputation, and this is supported by our chief science officer, Dr. Pam Ventola, who is a key opinion leader in CNS endpoints in these types of trials. And beyond just indication expansion, we've also broadened the services that we're providing to customers. So our global network, about 400 neuropsychologists strong in over 50 languages, it's increasing the value of the contracts that we win and strengthening our position within studies. through services like rater training and monitoring, but also telehealth-style central rating assessments. Finally, market conditions have been generally favorable. Trial activity across CNS has remained strong, and our strategic partner model continues to expand our reach and introduce Cogstate to new sponsors and new programs. So of these metadata, the largest of those strategic partners and integrations is measured by revenue. And since launching that partnership in October of 2024, we're seeing a growing pipeline of opportunities emerge. And then more broadly, our CRO and technology partnerships are expanding our market reach and embedding Cogstate solutions into additional clinical trial programs. And then as Darren will detail in the next few slides, approximately 40% of the value of new sales contracts have been signed in financial year 26 through our channel partnerships. And I think this really demonstrates the increased impact that these relationships are having on our growth trajectory. So Darren, maybe I'll hand it over to you for this financial summary.