MIDAS SHARE TIPS: Cambridge Cognition’s smart testing for Alzheimer’s… it’s a tip to think about

Dementia is one of the most crippling conditions of modern times, causing misery and confusion for sufferers and their loved ones. Alzheimer’s disease is the most common form of this illness, affecting more than 60 million people today and likely to afflict double that number in the next 20 years.

The human cost is almost incalculable but the World Health Organisation puts the economic cost at more than £1 trillion a year, including professional and informal care.

It is not surprising then that drug companies are racing to find ways to cure Alzheimer’s or stop its progression. Cambridge Cognition is helping them to do it and the shares, now 51p, should go far.

The company devises digital tests to assess brain health on a monthly, weekly or daily basis. Tests are carried out on tablets, mobile phones or even smartwatches and results are transmitted instantly to Cambridge Cognition. After analysing the data, scientists send it to pharmaceutical firms and academics, who are trialling new treatments for Alzheimer’s and other brain-related conditions, such as depression and schizophrenia.

Customers include major multinationals, such as Swiss giant Novartis, smaller biotech businesses and academic researchers from around the world. They turn to Cambridge Cognition as it is recognised as offering some of the best digital tests on the market and providing top service, too.

Business brainwave: Cambridge Cognition’s tests of brain health can be carried out on a smartphone

The company was spun out of Cambridge University in 2002, following a test originally developed by two professors in the 1980s. Traditionally, companies and scientists analyse new drugs for brain-related diseases by amassing groups of patients and sending psychiatrists or special testing experts to assess these individuals face-to-face. The process is not only time-consuming and expensive, it is also subjective and results can be erratic.

Digital tests are different. Objective and reliable, they can be carried out any time and repeated frequently, providing far more detailed analysis of whether drugs work and how effective they are.

Cambridge Cognition’s CANTAB test is widely considered the gold-standard in the digital field but chief executive Matthew Stork has been adding new options, including voice tests and daily assessments, taking just a couple of minutes.

Tests check around ten different brain functions, including short-term memory, emotional empathy, reaction times, attention and focus. The group has moved into qualitative testing with questions such as how happy people feel or how much pain they are in, on a scale of one to ten. And last week, Stork announced a tie-up with ActiGraph, a firm that conducts physical mobility tests using devices that look like watches but are much more sophisticated.

Big pharmaceutical firms can be slow to change. Face-to-face testing has been the norm for decades and many continue to use it but adoption of digital options is gathering pace, as companies come under increasing pressure to cut costs and deliver new drugs more quickly.

Stork also expects to start providing tests directly to doctors and hospitals. Huge advances have been made in the Alzheimer’s field, with new treatments coming to market and others in the pipeline. Once sales begin however, tests will have to be run to assess how effective drugs are and which patients are most likely to benefit from them.

Last year was difficult for Stork and his team. Hit by slower economic growth and rising costs, many drug firms scaled back testing activity. Cambridge Cognition still increased sales by 7 per cent to £13.5 million, but made an operating loss of £1.2 million.

Conditions improved in the second half, however, orders are growing and brokers expect revenues of £16 million and profits of £600,000 for 2024, rising materially over the next few years.

Midas verdict: Cambridge Cognition creates cutting-edge digital tests to help treat some of the world’s most devastating diseases. At 51p, the shares seem oblivious to this firm’s expertise and future prospects. A long-term buy.

Traded on: AIM Ticker: COG Contact: cambridgecognition.com or 01223 810700

This post first appeared on Dailymail.co.uk