Recap on key US clinical trial
On the 9th March 2018, ResApp Health (RAP) announced it had enrolled 640 patients in its SMARTCOUGH-C-2 study. The study is a prospective, multi-site, double blind study to evaluate the efficacy of the ResAppDx smartphone application in the diagnosis of childhood respiratory diseases from cough sounds.
The SMARTCOUGH-C-2 study plans to enroll by mid-CY18 up to 1,667 patients aged 29 days to 12 years of age who present to one of the three participating sites in the US with signs or symptoms of respiratory disease. The study's co-primary endpoints are positive and negative percent agreement with clinical diagnosis for pneumonia, lower respiratory tract disease, viral lower respiratory tract disease and croup. The clinical diagnosis will be made by an independent, centralised clinical adjudication committee using all available clinical data, including radiology and microbiology.
Presentation from CEO Tony Keating – highlights key catalysts
Dr Tony Keating, CEO and Managing Director of ResApp, delivered a company update to the Morgans network recently. Dr Keating spoke about the progress of the SMARTCOUGH-C-2 trial and the Breath-Easy Australian adult and children study. Top line results are due for both around mid-CY18.
You can watch the presentation below:
No changes to forecast, however valuation discount unwound
We make no changes to forecasts, having previously pushed our forecasts out by 12 months following a failure in the first US trial to achieve clinical significance following procedural and protocol issues. In our modelling we have assumed additional capital will be required in FY18 to fund further adult studies and undertake regulatory submissions. However, additional fund raising is unlikely until the top line results are known.
ResApp had A$4.3m in cash at 31 March 2018 and subsequently received A$0.7m through the R&D tax incentive.
Our share price target is set at a discount to our DCF valuation. However as recruitment and trial results remain on track we have reduced the discount from 75% to 20%. The key risk is an unfavourable clinical outcome.
We upgrade our recommendation from Hold to Add.
Morgans clients can login to view our detailed report and upgraded share price target for ResApp Health (RAP). Alternatively, please contact your Morgans adviser or nearest Morgans office for access.
Disclaimer(s): Morgans Corporate Limited is acting as general corporate adviser to ResApp Health Limited and may receive fees in this regard.
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