Thanks for that info @Bear77 that is really good to understand.

Definitely seems like something shonky could be happening with someone front running some bad news that hasn't been released to market yet.

If this is true is shakes my faith in management a lot and would be a big red flag.

Not sure about others but luckily I only have small holding and the paper loss was made up pretty well by others.

Even though AEF are pretty average, they did well to get out. I should have paid more attention and followed them.

If it makes you feel any better, they didn't get out. They trimmed their holding and still own 8.5% of the company. So Net-Net they are still get burnt if it continues to decline.

The longer this trading halt goes on the more concerned I get.

As Bear77 pointed out above, if there was nothing to see here they'd have responded quickly, the fact that this is dragging out implies there is fire to go with this smoke.

Very difficult to fully exit without tanking the share price.

But as the saying goes, "Every little helps". So still a good call to trim at the top.

Have to be careful not to fall too much in love with the story.

As @thunderhead just mentioned CGS are in suspension

Although I love the story i thought the market cap vs what their service offered didn't match up so i only went for a watch position.

Trading halts to trading suspensions are just timing. There is a limited number of days that you can be in a trading halt, so if a company can not resolve their issue within the 2 or 3 days that they have (available as a trading halt), they are automatically rolled into a trading suspension, whether they ask to be or not. It actually makes no difference because exactly the same limitations apply (for shareholders) regardless of whether it's a halt or suspension, i.e. they can't trade. I don't think it makes any difference to the company involved either, except there is less time pressure on them once they are in a trading suspension.

I agree with others here that the longer it takes for CGS to reply to the ASX in a format that the ASX is happy to publish on their announcements platform, the worse it looks for CGS shareholders in terms of what price Cogstate are going to come back on the boards at.

This reeks of major management turmoil.

There is fundamentally nothing wrong with the product, so that's unlikely to be the reason for short interest.

There has been nothing in the research sector to suggest any reason for widespread study cancellations, so if it's contract related, it would only be one or two contracts. Material yes, but definitely not a reason to withhold from market for a few days with a suspension of trade.

My guess is that an insider knows something is very much wrong, and that has filtered through to some who have dumped as much as they can as quickly as they can.

Who knows if it's accounting, IP, legal action or otherwise? We will all find out soon enough.

Getting a hiding today as mentioned by @Noddy74 . Luckily my other holdings are rallying for some strange reason so able to absorb this loss.

Wonder how claude walker and matt joass are currently feeling on this.

Cogstate really need to take a long hard look at boosting compliance and governance within the org and not just ASX and ASIC.

And maybe do something about those glassdoor reviews!

@edgescape that is the third time you have told us about your other holdings, dont worry about what others think, or CW/MJ, unless you are running OPM, it is too burdensome. play your own game. makes you a better investor. imo good luck

@Bear77 spot on with your prediction of bad news.

Take-over interest that failed to progress and revenue not meeting expectations.

Two price sensitive pieces of information that were not released to the market until the price dropped >40% in two days. Clearly somebody inside was acting on this information before it was released.

@Solvetheriddle I was making the point about being diversified. And I did not cross post any codes.

this was my 'kill your darlings' moment. Too many bloody red flags.

There is potential for that @OUTSIDEcapital and we'll know if a "change to substantial holder" announcement is released. That will also identify who the potential bidder was.

It blows my mind that they didn't release anything about this takeover offer to the market particularly when they got to the stage of due diligence!

Big strike against management for this.

@Solvetheriddle you took the words out of my mouth mate.

Terrible communication from the management, does seem like they were intentionally trying to hide something.

To play devils advocate, if the contracts haven't been lost and revenues are just pushed to the next half, is a 47% decline in business value warranted? Is the company's future that much different now?

Hey @Vandelay you are right. However the lack of disclosure to share holders re opening books to someone bothers me. As does the quick rise to $2.40 and fast sell down - it certainly feels like people new something before the market and dumped. Very bad optics - orange flag for me with management. Broke my rule. I should have sold half as that was such a quick rise on no news.

@Vandelaythe more interesting question is what price the Board would let it go for. This is an awfully awkward way to announce that Cogstate is well and truly for sale.

Who knows why the suitor walked away - maybe there were skeletons (possible, but not much to go on), or did they walk away on valuation grounds (plausible).

The DD was clearly well into the weeds of the company, and I'm guessing that talks broke down over valuation.

Taking the pumped share price as a proxy, my speculative guess is the asking price was somewhere circa $3. If that's the case, then there is a medium term trade here from the current share price.

I had similar thoughts to @mushroompanda and @Slomo, although I was too timid to buy. (I was burnt by buying on sharp declines of a long list including OSP, RFG, BUB, LVT, ...) You guys have been rewarded with a nice return in a couple of days.

The financial negatives seem to be transitory, and the apparentl bungling by management on communication could be explained by relative inexperience and/or caution of a small team in dealing with questioning by the ASX. The CEO (Brad) seemed to be a pretty straight shooter at the SM meeting last year, and he definitely seemed like he was more focussed on the business than in polishing the message to shareholders. Maybe I'm a too optimistic, but this kerfuffle hasn't really changed my opinion of the LT for the company.

@mkkle, you and I are clearly talking different languages here (you the experienced VC investor and I the humble clinician) with different understandings of the nuance involved and how to make sense of it.

1. I point it out because if the thesis is that Cogstate is the only game in town, why did the researchers pick a different alternative? That's of relevance to the thesis, because it clearly isn't the only game in town. I don't know why Cogstate wasn't picked for this study, but it is worth asking the question.

2. No, it doesn't imply that it's the best test. Best for what? For that specific study? For screening in a clinical sample? For all purposes? It might the be the best for that specific purpose or study design. For instance, Cogstate's suite might allow them to run a large scale trial more efficiently or better compare against other data points than alternative measures. If so, it reinforces that the Cogstate thesis is one that is primarily about trials. I don't know what the reasoning is, but we know that it is a strong provider, if not the market leader in the trials segment. 

Assuming this will mean it translates into it being the best tool for clinical practice is a long bow. See previous posts.

3. Doctors are only human and will take anything for free if they can. If they are publicly shamed for taking something from a pharma company, it makes them think twice before taking it. 

If an individual clinician pays for it themselves, then there is no public shaming. Cogstate has its place, and an individual clinician will have to make their own value judgement about whether to pay for it themselves for their use case, or take a freebie and be publicly shamed for accepting something from a pharma company. Some wont care, but quite a few do, because Joe and Jane Public care immensely, and your reputation is on the line.

The evidence for freebies affecting prescribing patterns for drugs or devices is fairly conclusive, which is why pharma/device manufacturers do it.

I for one stopped accepting lunches, textbooks, dinners etc once my name was being recorded as accepting such gifts. I also stopped meeting with pharma reps, and suspect that my professional reputation is all the better for it.

I don't personally have a problem with any clinician who continues to accept gifts or freebies, as long as they are conscious of how it affects their prescribing behaviour and can reconcile that with their own values and practice, and most importantly, don't deny it or hide it. I cannot reconcile it so I don't anymore.