Cogstate Limited (CGS) Earnings Call Transcript & Summary

Good morning, everyone, and welcome to the 17th Annual General Meeting of Cogstate as a listed company. My name is Martyn Myer, and I'm Chairman of Cogstate, and of this Annual General Meeting. We're very pleased to welcome those of you participating online through our first virtual meeting platform. While obviously accommodating the need for social distancing in these very strange times, we hope that this virtual format will encourage greater participation and engagement among our shareholders going forward. Now for the formalities of the meeting. The notice of the annual meeting was duly given, and the meeting has been properly convened. We will turn to the resolutions later in the meeting. Please note that only shareholders, proxy holders or shareholder company representatives may vote. I note that a quorum is present, and therefore, I declare the meeting open. I move that the notice of annual meeting be taken as read. And the agenda for the meeting will be as follows. I'll introduce the Board of Directors, and I'll give a short address. Then we'll hear from Brad, our CEO. And then the formal business of the meeting, which includes the resolutions of the [ voting ]. Voting on the resolutions will be conducted by way of poll. And shareholders attending the meeting via this online platform will be able to cast their vote using the electronic voting card received after clicking the Get A Voting Card button. Please refer to the virtual annual meeting online portal guide for use or help online specified. Following the presentations, general business questions will be taken. Shareholders participating online through the virtual meeting website, please click on the Ask A Question button and type your question and click Submit. I encourage shareholders who have questions to further -- to send their questions through as soon as possible. Shareholder questions received prior to the meeting will be addressed during the general business questions. So to begin. Let me introduce our Board of Directors. As I said, my name is Martyn Myer, and I have been the Chairman since the formation of Cogstate in 1999, and I participated in every funding round that the company has undertaken. My investment in Cogstate continues a family tradition of support of neuroscience in Australia. Ingrid Player joined our Board in August of 2019 and joins us today from Melbourne. David Dolby, representing the Dolby family, joined the Cogstate Board in November 2013, and joined us today from San Francisco. Richard van den Broek joined our Board in August 2010 and joins us today from Connecticut. And Richard Mohs joined the Cogstate Board in January 2017 and joins us today from Chicago. And finally, our CEO, Brad O'Connor, has been in the role, his role, since December 2005, joins us today from Melbourne. Brad will address the meeting shortly. I'd also like to welcome and introduce Mark Harrison, the Pitcher Partners, who was the engagement partner on our external audit. Mark will be available to answer shareholders' questions relevant to the audit and accounts. To get started, please allow me to take you back to the formation of Cogstate in 1999. In the late '90s, around the same time as my mother was suffering from Alzheimer's disease, an old school friend of mine, Dr. David Darby, came to me with the basic outline of an idea to use technology to simplify the measurement of cognition. He said the technology he was seeking to develop would allow for the repeat assessment with highly sensitive measures. Further, he explained that the use of the technology would allow initial cognitive testing to be taken out of the hands of expensive specialist medical practitioners, such as neurologists and neuropsychologists, and allow trained staff to administer the test. To me, this sounded amazing. The technology would allow us to make -- take cognitive assessment beyond specialist centers and into the community, where it could help meet the need for early detection of memory impairment. Our ambition was to make regular cognitive assessment as simple and common place as measuring blood pressure, something that everyone should do periodically as a part of good health care. We wanted to avoid the problems that plague traditional cognitive assessments and ensure that our tests were repeatable and don't discriminate based on the language or culture of the individual being tested. In other words, we wanted to be able to test anyone, anywhere, at any time. When I and a handful of others provided the original seed capital to start Cogstate in December 1999, our investment thesis was centered around the idea that in an aging population with an increasing incidence of Alzheimer's disease, technology could play a vital role in identifying patients that would benefit from new treatments that were sure to come on to market eventually. After 20 patient years, with yesterday's announcement of the worldwide license of Cogstate technology to Eisai, our vision is becoming a reality. And I'm very proud to have the opportunity to share this exciting news with you today. Since first launching our technology in the clinical trials market in 2004, the majority of Cogstate's revenue has come from this business segment, where our customers are pharmaceutical companies seeking to determine the impact of the investigational compounds have on cognition. The Healthcare segment represents the original investment thesis that I mentioned earlier. In this market, our technology is used to help answer the questions, "Doctor, is there anything wrong with my memory?" In August 2019, we announced that we have partnered with Eisai to launch our technology to consumers, employers, government and physicians in Japan. With looming potential of a disease-modifying therapy to treat patients with Alzheimer's disease, we see a huge opportunity for Cogstate technology in the Healthcare segment. In both these segments, Cogstate relies on the data and more than 600 peer-reviewed publications that comes from decades of collaboration between academic researchers and the Cogstate scientific team, led by our Chief Science Officer, Dr. Chris Edgar, and our Chief Innovation Officer, Dr. Paul Maruff. Today, Cogstate works across a range of different indications, but there's no doubt that the application of our technology and the screening tool for memory loss that may be associated with Alzheimer's disease represents an enormous opportunity. Globally, Alzheimer's disease is a huge societal problem that strains health care budgets, reduces the quality of life for an increasing number of older people and places an enormous burden on loved ones, who must become caregivers. Alzheimer's disease is the most significant untreatable chronic disease in the world today. The number of people living with Alzheimer's disease increases every year. And to date, there has been no therapeutic treatments that could alter the course of the disease. As the world's population rapidly ages, the societal impact of Alzheimer's disease and related dementias is staggering. Early detection of cognitive impairment is critical for meaningful intervention around care planning, lifestyle modification and symptomatic treatment. And it would be especially critical with the advent of an approved therapy that could change the course of this devastating disease. And as an industry, we've never been closer to a disease-modifying therapy than we are now with multiple promising monoclonal antibodies in late-stage development and one under priority review with the FDA right now. Therefore, it was with great pride that I announce that Cogstate has entered into a worldwide licensing arrangement with global pharmaceutical company, Eisai, market Cogstate technologies in the health care market. The agreement with Eisai that was executed over the weekend and announced yesterday, represents the expansion of a partnership that began more than 2 years ago when Cogstate and Eisai began to explore the possibility of working together. After a number of small initial pilot projects, in August 2019, the 2 companies agreed to a 10-year license of Cogstate technology in Japan. At that time, Eisai also became a Cogstate shareholder. And today, they hold around just under 7% of Cogstate's issued shares. We're now very pleased to be able to expand our agreement with Eisai to enable the global launch of our technology in the health care market. The exclusive agreement with Eisai provides Cogstate with an initial upfront payment of USD 15 million, plus an ongoing royalty stream linked to retail price of Cogstate technology. Additionally, Eisai will fund important development of Cogstate technology as well as funding the commercial and marketing teams in each country. Brad will provide more specifics in respect of the deal terms. However, before I hand over to Brad, I'd like to play a short video where we'll hear the perspective of prescribers, drug developers and Eisai leadership provide additional context for the significance of this licensing agreement and the role of technology, more specifically Cogstate technology, in transforming brain health assessment. [Presentation]

Hi, everybody. My name is Brad O'Connor, I'm the Chief Executive of Cogstate, and thank you for attending this Annual General Meeting. As Martyn mentioned, the global deal announced yesterday expands upon the agreement entered into by Cogstate and Eisai last year. Over that time, Eisai had proven to be a really supportive partner that is committed to building an entire ecosystem for dementia patients and their families, with solutions targeting everything from identification of the first signs of memory loss to the development of therapeutic treatments, as well as a range of lifestyle factors in between. Under the terms of the license, Eisai will be responsible for marketing Cogstate technology in all countries, including all existing technology as well as all the future improvements to that technology. The agreement will exclude the clinical trials market, where Cogstate will continue to offer our technology services independently. The license has a term of 10 years on a country-by-country basis from the date of commercial launch in each of those countries. Eisai have committed to launch within USA inside 1 year, the European Union within 3 years and China within 4 years. Eisai will have the option to terminate the agreement after 5 years under certain specific conditions. Under the license, Eisai will pay Cogstate a minimum payments totaling USD 45 million across 10 years, including a USD 15 million upfront license fee and $30 million of minimum royalties. Those minimum royalties, which increase from year-to-year, will total at least $10 million for the period of years 1 to 5 and at least $20 million for the period of years 6 to 10. Similar to the agreement in respect to Japan, Eisai will fund any software development work required to further develop, improve or alter the product for use within each country. And Eisai will also manage all regulatory issues and will be responsible for all sales and marketing activities. The resulting data from the use of Cogstate technology will be jointly owned by Eisai and Cogstate. Notwithstanding this substantial opportunity that exists in the health care market, it is our firm belief that the potential launch of a disease-modifying treatment in Alzheimer's disease and the expanded use of Cogstate technology for the early detection of cognitive decline amongst individuals in the community will both be very positive developments for our clinical trials business. So now begins a new era for Cogstate. In collaboration with an incredibly dedicated and focused commercial partner like Eisai, we now have the opportunity to become the leading measure of cognitive health for individuals around the world. So it's really exciting time. We'll now briefly turn our attention to the financial results for the 2020 financial year as well as an update in respect of the quarter just finished. For the year to 30 June 2020, Cogstate recorded a loss before tax of just over $2 million. It was a 46% improvement on the prior year loss. However, more important than the annual result was the improvement we saw in the financial results in the second half of the financial year. During the 2020 financial year, Cogstate executed $46 million of clinical trial sales contracts. That result was an improvement of over 150% on the prior year and 28% improvement on the previous record that was set in 2018. It took some time for the improved sales to deliver an increase in revenue. And therefore, in the first half of the 2020 year, the contribution from the Clinical Trials segment fell significantly as a result of the decrease in revenue, and that was in line with our expectations. However, in the second half of the year, the improved sales results began to deliver an increase in revenue, which in turn improved the contribution from the Clinical Trials segment. Combined with another positive contribution from the Healthcare segment in the second half of the year and cost control from year-to-year, Cogstate was able to deliver a profit before tax of $823,000 for the second half of the 2020 financial year. I note that a detailed presentation in respect of the 2020 financial results is available in the Investors section -- Investor Center section of the Cogstate website. And we encourage you to regularly visit that Investor Center to get access to the most up-to-date news and analysis. Having spent considerable time talking about the Health Care segment already during this meeting, we'll focus now on the September quarter results for the Clinical Trials business. The conduct of clinical trials and the ability of trial participants to participate in planned in-person site visits, continues to be impacted in varying degrees by the ongoing COVID-19 pandemic and the associated social distancing measures. This does not impact Cogstate's business significantly, but it is causing some delays to assessment. And those delays can result in delays to revenue recognition from a Cogstate perspective. For the quarter ended 30 September, we executed $8.3 million worth of clinical trials sales contracts, and that's consistent with the previous quarter and approximately 8% better than the previous corresponding period. Due to some delays with respect to revenue recognition, during the September 2020 quarter, the value of contracted future revenue increased by $2.7 million to $42.1 million. This is a positive sign for future revenue recognition expectations. Clinical Trials revenue was up 52% compared to the previous corresponding period. But due to those revenue recognition delays that I just mentioned, we do see an 18% decrease in Clinical Trials revenue compared to the most recent June quarter. Overall, revenue was up 22% on the previous corresponding period. Important to note though, that, that previous corresponding period, the September 2019 quarter, included over $1 million of Healthcare revenue, which predominantly related to the upfront payment that we received from Eisai in respect of the Japan license that we entered into last year. So to summarize. As I stated earlier, we now begin a new era for Cogstate. In collaboration with an incredibly dedicated and focused commercial partner like Eisai, we now have the opportunity to become the leading measure of cognitive health for individuals around the world. Our clinical trials business has shown significant growth over the last 18 months. And subject to the uncertainty that's caused by COVID, we are confident that we continue -- we can continue that trend of growth. Our cash position, which was already strong, will be significantly enhanced by the $15 million upfront payment that will be received in the coming weeks. Taken all together, we're confident that Cogstate will deliver a profitable financial year '21. And that we're well placed to be able to deliver value creation for our shareholders into the future. We'll now open up for questions before moving to the formalities of the meeting.

Thanks, Brad. Are there questions from shareholders? Ruth?

Yes, Mr. Chairman. There are. We do have several that have come in. We'll go ahead and start with the first. This is in relation to the ERT partnership announced previously. The question is, can we get any update on how the collaboration with ERT is progressing? Any early feedback from ERT customers?

Brad, I'll let you handle -- comment then.

Thank you. Look, it's a good question. So the relationship is going very well with ERT. We've spent considerable time working towards technology integration and also commercial integration, understanding how the 2 companies will work together. We have jointly bid now on a number of opportunities. Those opportunities range in stage from just initial request for information through the formal proposals that have been submitted. We haven't yet executed a joint agreement, a joint award, but we're hoping to be able to do so in the coming months.

Thank you. The second question that we have, Mr. Chairman, is regarding to the COVID-19 situation, which was just spoken to. But maybe some people want to comment on it further. So currently, do you see further clinical trial delays in Europe and America among the contracts that are already signed and now waiting to start revenue booking? And then, do we expect this will cause a bias on revenue recognition in the second half?

Brad, that's again you.

Yes. So look, it's again, an excellent question. Yes, obviously, we are seeing some impact in terms of site visits for clinical trials. That does slow down testing rates and it does -- and therefore, can slow down Cogstate's revenue recognition. Overall, the degree of confidence within the sector in terms of initiating new studies still appears to be good. And what we're seeing in those new studies, though, is people are really planning or -- to have a virtual aspect to those studies. That suits our business and suits our delivery in terms of the technology delivery that Cogstate undertakes. But notwithstanding that, the question and the -- that was alluded to there was the delay of revenue, and have [indiscernible] been, therefore, biased to second half revenue recognition. And I think that's a really good point. Certainly, we've seen some revenue through the September quarter that has been delayed, that we expect to now recognize in the December quarter, more than $1 million of revenue pushed out from September to December. And given the increasing infection rates through much of, particularly the Northern Hemisphere, I do think we do have to expect that to be a continuing issue that we're facing. Yes, and with that trend towards more virtual visits to try and accelerate those studies.

Thanks, Brad.

The next question we have, Mr. Chairman, is regarding -- I'll just read this one out. Will there be any form of a dividend payable to shareholders based on some of the announcements made in this earlier part of the AGM?

That's a very good question. And given we've only just signed this agreement with Eisai and we haven't yet received the cash, which will be coming before the end of the second quarter, we've scheduled to come together as a Board for detailed planning and strategy discussions in the early December. And certainly, we'll be considering opportunities for utilizing these funds, both to help grow the company and secure our position over these uncertain times. But at the moment, we have certainly not discussed the possibility of a dividend. But we'll be discussing all of these issues over the coming weeks. Brad, you might like to add a comment there?

Yes. I think the general statement I would make is that we have our -- in terms of the business plan and as we've been talking to shareholders about for some months now, our expectation is the Clinical Trials business continues to drive an increase in bottom line results. And that will then equate to an improvement in cash position from trading operations. So based on that, there's a question about whether do we have an excess in cash at the moment. And the other point that I would make is that it's really important for Cogstate, as part of this agreement with Eisai, to really focus on what it is that we do very well, which is delivery of a high-level scientific and technical expertise, without trying to necessarily increase staff resources substantially. So we don't -- our view is not necessarily that we'll need to start-up a lot. There's certainly some additional roles that we'll need to fill to make sure we execute on the opportunity in front of us. But we don't want to see an increase in substantial cost base in that health care part of the business. But we do need probably some time just for all that to play out, so we can understand what our cash needs are going forward and then make informed decisions based on those plans.

Okay.

We just have a couple more questions here, Mr. Chairman. The next one is can you provide an update in respect to the status of potential Alzheimer's disease drugs in development?

Yes. I think Brad is well placed to do that. But there's certainly a number of -- a large number of drugs under development. And one, in fact, in front of the FDA at the moment. But Brad, you -- again, you might like to comment?

Yes. Thanks, Martyn. So look here, Eisai and their development partner, Biogen, certainly are focused on the development of 2 potential therapies at the moment. The first of which, as Martyn alluded to, called aducanumab, had the biologics license application for that, potential therapy has been lodged with the FDA in the United States. The advisory committee meeting in respect of that application is coming up within the next few weeks. And the FDA is committed to making a decision in respect of that application no later than the 7th of month. And then additionally, Eisai and the development partner, Biogen, also have another therapy known as BAN2401, which is also currently in Phase III clinical trial, is expected to read out. Our understanding is that's somewhere in 2022. And then there's a range of other therapies that are within the Phase III pivotal clinical trial process.

Thanks, Brad.

Another question we had just come in. What is the more valuable -- what is more valuable to provide a barrier to entry for Cogstate? The data collected over 20 years or the software? And then tied to that is, how complex is the software? And how difficult would it be for a competitor to match its functionality?

I might start here. Look, I think Eisai who scanned the world for a partner to work with, and they looked at 10, if not, over 100 different alternative partners, came to us, I think, in the end, because of our science. And we referred earlier to the number of peer-reviewed papers [indiscernible] is undoubted, that's sort of global expertise. And in fact, you heard Mr. Naito, who's the CEO of Eisai, referred to that. And I think that's the real strength of the company. And it means -- to me, that's difficult to replicate quickly by a potential competitor. And the FDA have now accepted drugs, approved drugs, which have used our tools and technology as endpoints. And it boils down to the science. The FDA is very science focused. And I think that would be difficult to replicate and represents a substantial barrier to entry. But Brad, you might like to comment as well.

Sure. So I think there's a couple of different issues to consider here. So the first is that with the partnership with Eisai, Cogstate is moving very much to a consumer or individual-focused delivery model here. So our customers will be individuals and their, any, family doctors as well as specialist doctors. There is an aspect with respect to competition that relates to customer retention. So it's both customer acquisition and customer retention. One of the things that we think is really important with respect to customer retention, is that history that people will develop in respect of their cognitive profile and there's the -- their rate of cognitive decline to the extent that they're experiencing that. So I think that is really important. And then certainly, what we see is -- and a critical part of a first mover advantage and a real reason why we wanted to make sure that we were out in front of this opportunity with a good commercial partner like Eisai. And then over time, the opportunity to expand the database that Martyn was talking about. So the opportunity here is to have our technology in front of the millions of people globally. Building up an enormous database, it allows us to potentially start to look at that data in different ways. Realistically, at the moment, the analysis of Cogstate data, whilst complex, is focused around individual endpoints. And the opportunity into the future to look at those much larger data sets and to think about the ways in which we could apply machine learning to improve the sensitivity of those tests, I think, is really exciting. And to the extent that we continue to focus on that innovation is going to be a critical part of how we keep those barriers between us and our competition. And that's one of the reasons that we're focused, Dr. Palmer Ruff, one of our founders, on this area of innovation of our technology, which is not necessarily looking at just at new test or developing new tests to cognition, but really focusing around how to improve the analysis of the existing test and improve the sensitivity of those measures.

Thanks, Brad.

We've had a couple more questions come in, Mr. Chairman. The first of which is, how much of your Q1 bookings were new bookings versus change orders?

Brad, I think you could comment there?

Yes. So that's again, a good question. And that's actually an interesting one and quite an insightful question because what we saw in the June quarter -- and so if you look at the difference between June quarter bookings and September quarter bookings, they look almost identical. But the makeup of them was quite different. So we mentioned when we talked about the June quarter results, that there was a lot of change orders in there. There was a lot of adaptation and a lot of that driven by COVID, where the protocols needed to change to reflect more of a virtual experience. And so a lot of the bookings there were, were change orders to existing contracts. That changed a bit in the September quarter as -- and we expected that because there was a bit of pent-up demand for people, who had, had to pause on the initiation of their planned studies through March to June as a result of COVID. And so the percentage of new study initiation in that September quarter result is much greater than it was in the June quarter. So whilst the numbers look almost identical in terms of growth profile, the September quarter result is a much stronger result in terms of bookings.

Thanks, Brad. We've probably got time for 1 or 2 more questions.

Perfect. We'll go ahead and ask this final question then. Why did you enter the Eisai deal now as opposed to waiting to see what happens with aducanumab's advisory committee meeting that is scheduled for next week?

Again, Brad has been deep in the discussions with Eisai, so he can probably comment there.

Yes. It's a really good question and a fairly nuanced question. The thing that I would say here is that one of the things that really -- that we were very impressed with respect to Eisai, is that they are really focused around building this broader dementia ecosystem rather than just building or finding a cognitive test to partner with or accompany a specific drug launch. You'll appreciate that there's a high degree of uncertainty in respect of the FDA review of the aducanumab trial, and that had a whole bunch of complications with respect to that study. And so I think the risk of associating directly with one compound is significant. And what we wanted to do is really focus on the need for better assessment of memory impairment in the community and ensure that what we did was partner with somebody, who was focused on that need. And then obviously, there's a link to potential therapies. But I think we can get overly focused on the potential therapy, which becomes a binary decision as to whether the regulators approve that or not. And what we want to do is solve the existing problem of the identification of memory impairment and then apply that to a therapy, whether that be aducanumab or any other therapy. And of course, we really hope that the aducanumab application is successful. I think that would be great for society as a whole. But our focus was around building out that great ecosystem.

And I think, Brad, that's reflected in -- Eisai and Cogstate began these discussions long before they even announced or considered that they would submit to the FDA, and we're talking 18 months ago. So they have this view that they want to build an ecosystem around management of the disease in the community. Of course, Japan has a rapidly aging population. And that's -- I think that's why they're very, very, very strong partner for us. I think that's probably all the time we have for questions at the moment. Of course, there can be more questions around any of the resolutions and so on as we come for them.

So we might move now to the formal portion of the meeting. And these are matters requiring resolution, which are outlined in the notice of annual meeting. I begin by noting that I've signed the minutes of the previous Annual General Meeting of Cogstate Limited as Chairman of that meeting and a copy of the minutes are available for inspection. Before moving to the various resolutions to be considered today, let me outline the procedures for today's meeting. As I mentioned earlier, and as set out in the notice of annual meeting, each of the resolutions will be conducted by a poll. Also, in accordance with the company's constitution, the directors have determined that each shareholder who is entitled to attend and vote at this meeting is entitled to a direct vote on a resolution. These procedures ensure that the views of as many shareholders as possible are represented at the meeting. Results of the polls will be declared and released to the ASX as soon as possible after the conclusion of the business of this meeting. Only shareholders, proxy holders or duly appointed representatives are entitled to speak or vote at this meeting. As Chairman of the meeting and having been appointed as proxy for a number of -- for a member entitled to vote, as detailed in the notice of meeting, I will vote where authorized or undirected proxies in favor of each resolution. As a reminder, you can cast your direct vote using the electronic voting card that you received after clicking the Get A Voting Card button. If you are both a shareholder and a proxy holder or a shareholder company representative, or have more than 1 holding, you can receive a separate voting card by clicking the Get A Voting Card button. Please vote on all resolutions prior to submitting the voting card. If you hold shares in joint names and all holders are online, you will have received 1 voting card only for your holding. If you have any questions about casting your vote online, please refer to the online platform guide or call us on the numbers set out in the guide or on the screen in front of you. At each time, each resolution is considered, the resolution will be displayed along with the proxies received. You'll be able to submit questions by registering as a shareholder or a proxy holder and selecting the Ask A Question button. You can submit questions now, and they will be dealt with at the appropriate time. All questions should be addressed to me as Chairman. I reserve the right as Chairman to rule questions as not pertaining to the meeting or out of the order. We will now move on to the resolutions of the meeting. The Corporations Act requires that the annual financial report of the company and its controlled entities for the year ended 30th of June 2020, which includes the financial statements, note of the financial statements and Directors' declaration and Directors' Report and the Auditors' Report be laid before the AGM. Neither the Corporations Act nor the company's constitution requires a vote of shareholders on the report. However, shareholders will be given reasonable opportunity to raise questions or comments on the management of the company. But at this time, I would open up for questions in respect of the financial statements. Of course, our auditors are here also if necessarily. So are there any questions regarding the financial statements and reports?

Mr. Chairman, at this point, none are submitted. But I suppose we can wait just a moment, let people finish typing.

Yes. No question?

Still none. We can always come back and answer them, if any are submitted later.

That's a good idea. So why don't we move on to the next resolution. Resolution 2 is to consider, and if thought fit, to pass the following resolution as an ordinary resolution, that the remuneration report, as disclosed in the annual Directors' Report for the year ended 30th of June 2020 be adopted. Are there any questions regarding this resolution?

Once again, I'll pause to give people time to type out any questions. And we have no submitted questions from Resolution 1.

Okay. As Chairman of the meeting and as outlined in the notice of meeting, I intend to vote all open proxies in favor of this resolution. The proxy and direct voting position is now shown on your screen. And I'd remind all shareholders, who have not yet voted to please submit your vote on item 2. Are there any questions regarding this resolution, Ruth?

No, there are no questions submitted, Mr. Chairman. I think we're good to move on.

I would ask shareholders, therefore, to please vote for Item 2 now. Thank you. [Voting]

Resolution 3a is the election of myself as Director. Therefore, I will vacate the chair and hand over to the chair of our Audit and Risk Committee, Ingrid Player. Ingrid, over to you.

Thank you, Martyn, and good morning. Resolution 3a is to consider and if thought fit, pass the following resolution as an ordinary resolution. That Martyn Myer, a director of the company, who retires by rotation at this AGM in accordance with Clause 48.1.2 of the company's constitution and being eligible, offers himself for reelection, to be reelected as a Director of the company. As we heard earlier, Martyn's been Chairman of Cogstate's Board of Directors since the company's founding in 1999. His credentials are detailed in the explanatory notes to the notice of meeting. And I note that in addition to chairing the board, Martyn chairs the Cogstate Remuneration and Nomination Committee and also serves as a member of Cogstate's Audit, Risk and Compliance Committee. Except for Martyn, due to his conflict of interest, the Board unanimously recommends shareholders vote in favor of Martyn's reelection. Are there any questions regarding this resolution?

Once again, I will pause to give people a chance to type anything out. And just to note, we did not have any questions submitted for the previous resolutions at this time. I'll give folks just another minute.

Okay. If there are no questions...

At this time, still no questions.

Thank you. This then concludes the discussion of this item. As Chair and as part of the meeting and as outlined in the notice of meeting, I intend to vote all open proxies in favor of this resolution. The proxy and direct voting position is now being shown on your screen. I remind all shareholders who have not yet voted to please submit your vote for Item 3a now. Thank you. I will now hand back to Martyn. [Voting]

Thanks, Ingrid. Resolution 3b is to consider and if thought fit, pass the following resolution as an ordinary resolution. That Mr. Richard van den Broek, a Director of the company, who retires by rotation at this AGM in accordance with Clause 48.1.3 of the company's constitution and being eligible, offers himself for reelection, be reelected as a director of the company. Richard's credentials are detailed in the explanatory notes to the notice from annual meeting. And I note that Richard sits on the Cogstate Remuneration and Nomination Committee. Except for Richard, due to his conflict of interest, the Board unanimously recommends that shareholders vote in favor of Richard's reelection. Are there any questions regarding this resolution?

Once again, I'll give folks just a moment to type any questions they may have. We have no questions to this point regarding previous resolutions.

Okay.

And still no questions.

Okay. Thank you. As there are no further questions, this concludes the discussion of this item. And as Chair of the meeting and as outlined in the notice of meeting, I intend to vote all open proxies in favor of this resolution. The proxy and direct voting position is now being shown on your screen. I remind all shareholders who have not yet voted to please submit your vote for Item 3b now. Thank you. [Voting]

Resolution 4 is to consider and if thought fit, to pass the following resolution as an ordinary resolution. That the purpose of ASX Listing Rule 10.14 and for all other purposes, the proposed issue to Mr. Bradley O'Connor of 100 -- 1,250,000 options in the company, pursuant to the Cogstate Employee Share Option Plan, as described in the explanatory notes that the notice of Annual General Meeting be approved. The terms of the options are outlined in the explanatory notes of the notice of meeting. I note that each option entitles the CEO to subscribe for a fully paid ordinary share in the company. The options will be issued for no consideration, but at the strike price to exercise the options will be $0.782. Being a 15% premium to the 5-day VWAP as at the 21st of September 2020, this was just before the issuance of the notice of the Annual General Meeting. Subject to the below performance conditions being met, the options will vest according to the following schedule over 3 years. 1/3 of the options will vest on the second anniversary of the date of issue. And the remaining 2/3 of the options will vest on the third anniversary of the date of issue. When vesting to occur, one of the following hurdles must be achieved: completing a commercial deal with a pharmaceutical company or other companies utilize Cogstate's technology, for the triaging of patients is a prescription of an outsized disease-modifying growth; and -- importantly, and, the approval of the drug in question by the U.S. FDA or the achievement of USD 7.5 million annual EBIT in any 1 year of the 3 years. The options will expire 5 years from the date of issue. Except for Brad, due to his conflict of interest, the Board unanimously recommends that shareholders vote in favor of this resolution. Are there any questions regarding this resolution?

As per the other resolutions, I'll give people just a moment to type out any questions. And again, there are no questions regarding previous resolutions that have been submitted.

Okay.

And again, looks like no questions at this point.

Thank you, Ruth. If there are no further questions, this concludes the discussion of this item. As Chair of the meeting and as outlined in the note of the meeting, I intend to vote all open proxies in favor of this resolution. The proxy and direct voting position is now being shown on your screen. I remind all shareholders, who have not yet voted to please submit your vote for item 4 now. Thank you. [Voting]

Resolution 5 is to consider and if thought fit, to pass the following resolution as an ordinary resolution. That for the purpose of ASX Listing Rule 10.17 and Clause 51.1 of the constitution of the company, and for all other purposes, the maximum aggregate fees payable to nonexecutive directors of the company be increased by AUD 200,000 per annum from AUD 450,000 to AUD 650,000 per annum, inclusive of superannuation, such fees to be allocated to the directors as the Board of Directors may determine. In respect of this resolution, I note the following, the annual aggregate amount of AUD 450,000 was set at Cogstate's Annual General Meeting in October 2016, 4 years ago. And prior to that, the fee pool was increased from AUD 350,000 at the company's annual meeting held in October 2009. The increase will be allocated as the Board determines, but could be influenced by factors such as appointing and retaining directors with special skills, accounting for an increase in business activity as overseen by the directors, meeting future market-related increases in fees and the appointment of additional directors to the Board, if appropriate for future circumstances. Are there any questions regarding this resolution?

Again, I'll pause to give listeners a chance to write out any questions they may have and submit them. And again, there are no submitted questions for previous resolutions at this point.

Okay.

And it looks like there are still no submitted questions at this point.

Thank you. As there are no further questions, this concludes the discussion of this item. As Chair of the meeting and as outlined in the notice of the meeting, I intend to vote all open proxies in favor of this resolution. The proxy and direct voting position is now being shown on your screen. I remind all shareholders, who have not yet voted to please submit your vote for Item 4 now. Thank you. [Voting]

Shareholders participating should now submit their votes via the online platform. Voting will close in 5 minutes. Please note, as Link Market Services will need time to count and order all the votes submitted online today, the results of this meeting will be announced to the ASX shortly after the completion of the meeting. This completes the formal business of the meeting. I now declare the meeting closed, and I thank you all very much for your attendance and participation. Thank you very much.