Breathe Easy study comes up trumps
ResApp Health (RAP) released positive top line results for its 979 adult prospective double-blind clinical study (known as Breathe Easy). RAP's smartphone-based algorithms were found to accurately diagnose all respiratory diseases included in the study:
- lower respiratory tract disease – recorded positive percent agreement (PPA) of 88% and negative percent agreement (NPA) of 89%);
- pneumonia – recorded PPA of 86% and NPA of 87%);
- asthma exacerbations – recorded PPA of 89% and NPA of 84%); and
- chronic obstructive pulmonary disease (COPD) – recorded PPA of 83% and NPA of 91%).
The aim of the results was to achieve PPA and NPA of >80%. These results are in addition to the recently announced pediatric results that have been submitted for regulatory approval in Europe and the US. The adult respiratory market is estimated by Morgans to be three times larger than the pediatric market.
There are a number of short-term catalysts:
- complete recruitment for an at-home obstructive sleep apnoea study (expected 2QCY19);
- CE mark approval (expected 3QCY19); and
- US FDA Clearance (expected 4QCY19).
As at 31 December 2018 the cash reserves were A$6.8m which is sufficient for the current programs.
No changes to forecasts
We have made no changes to our forecasts. The key assumption we have made is that the telehealth companies in the US will be the primary customers for the technology. Given the faster progress in Europe, we may see earlier adoption of the technology in this region.
Given there are no changes to forecasts our DCF derived valuation and share price target remain unchanged (Morgans clients can login to view). The downside risk is failure to achieve FDA and CE mark clearance in a timely manner. ResApp Health (RAP) is recommended only for investors with a higher risk profile.
We retain our Add recommendation.
Morgans clients can login to view our detailed report and share price target for ResApp Health (RAP). Alternatively, please contact your Morgans adviser or nearest Morgans office for access.
Disclaimer(s): Analyst owns shares.
Morgans Corporate Limited is acting as general corporate adviser to ResApp Health Limited and may receive fees in this regard. Morgans Corporate Limited was Lead Manager to the placement of shares in ResApp Health Limited and received fees in this regard.
The information contained in this report is provided to you by Morgans Financial Limited as general advice only, and is made without consideration of an individual's relevant personal circumstances. Morgans Financial Limited ABN 49 010 669 726, its related bodies corporate, directors and officers, employees, authorised representatives and agents (“Morgans”) do not accept any liability for any loss or damage arising from or in connection with any action taken or not taken on the basis of information contained in this report, or for any errors or omissions contained within. It is recommended that any persons who wish to act upon this report consult with their Morgans investment adviser before doing so.