The CogState Limited (ASX: CGS) share price soared over 50% today after revealing some positive Japanese news.
Cogstate is a neuroscience technology company that aims to optimise brain health assessments to advance the development of new medicines and to enable earlier clinical insights in healthcare. In August 2019, Cogstate entered into an exclusive licensing agreement with the pharmaceutical company Eisai, where Eisai will market Cogstate technologies as digital cognitive assessment tools in Japanese markets. In October 2020, Cogstate extended this agreement to the rest of the world.
What happened today?
Eisai and development partner, Biogen Inc, have announced that the US Food and Drug Administration (FDA) has granted accelerated approval for aducanumab (to be marketed as ADUHELM) for the treatment of Alzheimer’s disease.
This approval has been granted on data from clinical trials demonstrating the effect of ADUHELM on reducing amyloid beta plaques, a biomarker that is reasonably likely to predict clinical decline (benefit).
Under the accelerated approval conditions, which provide patients suffering from the disease earlier access to treatment, Biogen will conduct a controlled trial to verify the clinical benefit. If the trial fails to verify clinical benefit, the FDA may initiate proceedings to withdraw approval of the drug.
The approval by the FDA of ADUHELM is the first new treatment approved for Alzheimer’s disease since 2003 and, Cogstate says, is the first approved therapy that targets the fundamental pathophysiology of the disease.
What does this mean for CogState?
Under the 10-year agreement between Eisai and Cogstate executed on 26 October 2020, Eisai had a right to terminate the agreement after year five under certain conditions. Following the approval of ADUHELM by the FDA, Eisai no longer have that right to accelerated termination of the agreement.
In addition to the minimum contractual royalty payments over commercial years one to five of US$10 million, Eisai now is also contractually obliged to make the minimum royalty payments to Cogstate over commercial years six to ten, being an additional total payment of US$20 million over that period.
