Cognetivity Neuroscience has loads of upside, says Echelon

Echelon Capital Markets analyst Stefan Quenneville updated clients on Friday on AI digital health company Cognetivity Neuroscience (Cognetivity Neurosciences Stock Quote, Charts, News, Analysts, Financials CSE:CGN), keeping a “Speculative Buy” rating on the stock and saying the rollout of its AI-enabled cognitive decline detection platform is just getting underway.

Vancouver-based Cognetivity announced its first quarter fiscal 2024 financials on Thursday for the period ended April 30, 2023, reporting $4,200 in revenue and a net loss of $2.1 million. The top and bottom lines were misses compared to Quenneville’s forecasts at $41,500 in revenue and a net loss of $1.1 million, with Quenneville saying higher than expected SG&A was the primary cause.

Cognetivity is commercializing its CognICA Integrated Cognitive Assessment app, promoted as an alternative to existing pen-and-paper assessments for clinicians. CognICA is now FDA-approved for detecting signs of cognitive decline and dysfunction and is available for use in the US, UK and the Middle East, with Cognetivity currently working to expand into other regions.

The company recently announced a partnership with a major Japanese medical device company, Clairvo Technologies, a subsidiary of Marubeni Corp, to integrate its CognICA test into Clairvo’s AI health and wellness product stack. 

“Our AI platform enables clinicians to make more informed decisions when diagnosing, monitoring, and treating patients at the provider level and healthcare managers at population level,” said Dr. Sina Habibi, CEO of Cognetivity Neurosciences, in a June 13 press release. “Japan can be a role model for the rest of the world and we are extremely excited by the opportunity.”

Quenneville said the Clairvo deal bodes well for the longer-term strategic growth for CognICA in Japan, although he doesn’t see it driving revenue over the near term.

The analyst is forecasting full fiscal 2024 revenue and EBITDA of $1.3 million and negative $5.8 million, respectively, and fiscal 2025 revenue and EBITDA of $7.0 million and positive $2.0 million, respectively. 

“We believe the recent CMS decision to reimburse Alzheimer’s drugs with traditional FDA approval should serve as a meaningful catalyst to drive the adoption of CognICA, given that the reimbursement is contingent upon collecting real-world evidence of effectiveness through a registry that will gather patient information in an ‘easy-to-use’ format,” said Quenneville.

With the update, Quenneville reiterated a 12-month target on CGN of $0.75 per share, representing at press time a projected return of 188 per cent.

“We continue to view CGN as meaningfully undervalued given the CognICA platform’s proven efficacy, ease of use and scalability, and we are maintaining our $0.75/shr price target and Speculative Buy rating,” he wrote.