Long-Term Care Adoption And International Expansion Will Drive Durable Cognitive Therapy Demand

Catalysts

About Alpha Cognition

Alpha Cognition is a commercial stage biopharmaceutical company focused on developing and commercializing therapies for cognitive disorders, with an initial emphasis on Alzheimer's disease.

What are the underlying business or industry changes driving this perspective?

• Accelerating ZUNVEYL adoption in long-term care homes, rising repeat orders and higher therapeutic dosing are positioning the drug as a preferred option for both cognitive and behavioral symptoms. This is supporting sustained revenue growth and operating leverage as sales scale faster than fixed commercial costs.
• Growing payer engagement, with one major PBM already contracted and a second expected, along with broader downstream plan adoption, is expanding reimbursed access. This should improve gross to net realizations and drive higher net product revenue per prescription.
• Upcoming CONVERGE, BEACON and RESOLVE data focused on real world cognition, behavior, sleep and caregiver burden are expected to strengthen clinical differentiation versus legacy treatments. This may enable better pricing power, higher formulary tiering and improved net margins over time.
• International expansion through the CMS partnership, including a China filing in review and anticipated 2026 approvals in additional Asian markets, offers a new royalty and milestone stream that can diversify revenue and enhance earnings without materially increasing Alpha Cognition's operating expenses.
• Advancement of a sublingual formulation with a planned IND in 2026 could extend ZUNVEYL's lifecycle and address broader patient needs in aging populations. This may support longer duration of therapy, higher lifetime revenue per patient and improved earnings visibility.

Assumptions

How have these above catalysts been quantified?

• Analysts are assuming Alpha Cognition's revenue will grow by 151.3% annually over the next 3 years.
• Analysts are not forecasting that Alpha Cognition will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Alpha Cognition's profit margin will increase from -262.2% to the average US Biotechs industry of 16.0% in 3 years.
• If Alpha Cognition's profit margin were to converge on the industry average, you could expect earnings to reach $18.9 million (and earnings per share of $0.71) by about December 2028, up from $-19.5 million today.
• In order for the above numbers to justify the price target of the analysts, the company would need to trade at a PE ratio of 34.2x on those 2028 earnings, up from -5.9x today. This future PE is greater than the current PE for the US Biotechs industry at 19.0x.
• Analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.7%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The long-term care channel is structurally dependent on a small number of Medicare Part D plans and PBMs, and Alpha Cognition currently has only one of the four key PBMs under contract, with roughly 15 percent of that book providing unrestricted coverage. Slower than expected pull-through or tougher formulary decisions could cap prescription volumes and limit net product revenue growth.
• Despite strong early uptake, ZUNVEYL prescriptions are concentrated in a subset of homes and prescribers. The fragile elderly population and reliance on anecdotal experience mean any unexpected safety signals, tolerability issues or weaker than expected real-world outcomes from the CONVERGE, BEACON and RESOLVE studies could slow adoption, leading to lower revenue and pressure on gross margins from higher support costs.
• Operating expenses have already more than tripled year over year as the company invests heavily in sales, marketing and reimbursement support. If ZUNVEYL sales do not scale quickly enough to absorb these fixed and semi-fixed costs, sustained operating losses could persist beyond the current cash runway and require further dilutive equity raises, weighing on earnings and per-share value.
• The international strategy and sublingual formulation are multi-year initiatives, with China approval not expected until late 2026 and royalties from Mainland China only anticipated from 2027. Any regulatory delay, partner underperformance or negative pricing dynamics in Asia could materially reduce the expected high-margin royalty and milestone streams and push out the timeline to positive net margins.
• Pricing power may prove less durable than management expects, as the recent WACC increase to over eight hundred dollars per month and a targeted steady-state net price of five hundred to five hundred and fifty dollars occur against a backdrop of rising payer scrutiny and budget pressure in cognitive disorders. This could drive deeper gross-to-net discounts, tighter prior authorization criteria and ultimately lower realized net revenue per patient and weaker earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The analysts have a consensus price target of $20.0 for Alpha Cognition based on their expectations of its future earnings growth, profit margins and other risk factors.
  
• In order for you to agree with the analysts, you'd need to believe that by 2028, revenues will be $117.9 million, earnings will come to $18.9 million, and it would be trading on a PE ratio of 34.2x, assuming you use a discount rate of 6.7%.
  
• Given the current share price of $5.31, the analyst price target of $20.0 is 73.4% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.