Cogstate Limited (ASX.CGS) has expanded its partnership with Japanese pharmaceutical company Eisai Co Ltd in a global agreement to develop Cogstate’s digital cognitive assessment tools to be used by individuals and healthcare professionals.
Under the exclusive licensing agreement, Eisai will pay US$15 million upfront for the rights to market Cogstate technology globally.
The agreement will specifically exclude clinical trials, where Cogstate will continue to market its offering independently.
Shares have been as much as 36% higher to $1.08, a new three-year high.
Development and commercialisation rights
The agreement has expanded the association between Eisai and Cogstate, which was announced in August last year in respect of product launch in Japan.
Under the agreement, Eisai has acquired exclusive development and commercialisation rights in Japan for all cognitive function tests developed by Cogstate, including the Cogstate Brief Battery (CBB), which is used globally in clinical trials.
This comes at a time as Eisai and its development partner Biogen, which has jointly developed two late-stage potential therapies for Alzheimer's disease, await feedback from the US Food and Drug Administration (FDA) on the application to have aducanumab approved as a treatment for Alzheimer’s disease.
An outcome is expected by March 2021.
The pivotal phase III study for another potential treatment under joint development by the two companies, known as BAN2401, is currently ongoing and scheduled to conclude in 2022.
Terms of agreement
The 10-year Eisai agreement also includes low double-digit royalties on annual gross sales of Cogstate technology in all regions, globally, for a minimum total payment of at least US$30 million over the term of the licence.
Under the terms of the agreement Eisai will:
- Provide an upfront payment to Cogstate of US$15million, payable within 45 days;
- Pay Cogstate a royalty, determined by reference to a range of factors including retail market price of the company’s technology in all regions;
- Fund necessary product development activities to further tailor Cogstate solutions for each territory and use case; and
- Be responsible for all commercial activities in respect of the sale and marketing of Cogstate technology in all territories.
In addition to the upfront payment of US$15 million, the agreement provides for cumulative royalties of at least US$30 million over the term of the licence.
The minimum royalties, which will be paid quarterly, shall increase from year to year, and will not be cumulatively less than US$10 million for the period of one to five years.
This agreement has an initial term of 10 years for each country, from its first commercial product sale on a country-by-country basis.