The Cogstate Limited (ASX: CGS) share price has continued its ascent on Thursday.
In morning trade, the neuroscience technology company's shares are up a further 17% to $2.24.
Though, it is worth noting that the Cogstate share price was up as much as 27% to $2.42 at one stage. The latter brought its two-day gain to an incredible 73%.
Why is the Cogstate share price surging higher?
As we covered here yesterday, investors were scrambling to buy the company's shares yesterday despite there being no news out of it.
However, as we pointed out, the gain was likely due to its partner and shareholder, Japan's Eisai, revealing that its experimental drug for Alzheimer's disease has helped slow cognitive decline in patients in the early stages of the illness.
A phase 3 clinical trial of lecanemab revealed cognitive decline was slowed by 27% after 18 months based on 1,795 patients, who were randomly assigned to receive either the drug or a placebo every two weeks over the months.
Cogstate's response
Yesterday afternoon, Cogstate responded to a request from the Australian stock exchange to explain the recent trading in its securities.
While the company advised that it will not benefit directly from Eisai's news because its partnership excludes clinical trials, it does see potential for it to benefit indirectly.
The company explained:
In respect of Cogstate's business in Clinical Trials, when commenting on its FY23 outlook on 30 August 2022, the Company noted that the release of positive phase 3 clinical trial data from Eisai (and others) may be expected to lead to a general increase in research and development expenditure in respect of Alzheimer's disease, which may provide additional sales opportunities for Cogstate in its Clinical Trials business and may also impact Cogstate's Healthcare business.
Cogstate has also consistently stated that the upside revenue opportunity for the Healthcare business, beyond the contracted minimum payments from Eisai, is expected to be dependent upon the release, reimbursement, and availability of proven Alzheimer's therapeutics.
In addition, the company sees these developments as a potential positive for its Cognigram offering. It said:
Since executing the agreement in October 2020, Eisai (which is also a substantial holder in the Company) and Cogstate have progressed commercial plans for launching digital brain health assessment solutions using Cogstate technologies, including both a direct-to-consumer self-check as well as a medical device, Cognigram, to aid healthcare professionals in clinical diagnosis decisions. It may be expected that such digital cognitive assessments could play an important role in supporting the type of large-scale cognitive assessment that will be necessary in the launch of disease modifying therapies for Alzheimer's disease.
All in all, these are exciting times for Cogstate and its technology.
