ResApp Heath has been acquired by Pfizer at a fully diluted value of $180 million, or $0.208 per share. The company was acquired via a Scheme of Arrangement with an 82% approval based on total shares voted (75% required) and 62% of shareholders voting in favour (50% required). The Scheme was approved by the Supreme Court of NSW last week.
ResApp Diagnostics made a backdoor listing onto the ASX in 2015 through an acquisition by Narhex Life Sciences and being renamed ResApp Health. At the end of December last year the company had accumulated losses of $40.4 million with $3.4 million in cash.
ResApp Diagnostics was founded by Brian Leedman with the aim of effectively delivering a digital stethoscope through a smartphone. The technology was exclusively licensed from the University of Queensland with the technology successfully commercialised under the helm of CEO Tony Keating. Keating was formerly at UniQuest, the commercialisation arm of the university that developed the original technology.
The main application for the ResApp technology was for use in telehealth procedures and for triaging in hospitals to help diagnose respiratory conditions and infections, such as asthma, pneumonia, bronchiolitis, croup, and differentiating between upper and lower respiratory tract infections.
In March 2021, ResApp decided to initiate a study to apply its technology to assist in the detection of COVID-19, which Leedman said he was keen for the company to pursue, having re-joined the board in May that year.
The first clinical study delivered very encouraging results in trials conducted in India and the US. The sensitivity of the test was 92% with a specificity of 80% with those results released in March. Three weeks later the company received a bid from Pfizer valuing the company at $100 million ($0.115 per share).
In June Pfizer increased its offer to between $0.146 per share to $0.207 depending on the results of a confirmatory study. However that study missed its minimum targets achieving a sensitivity of 84% but a specificity of only 58%. Pfizer subsequently increased its bid to $0.208 per share irrespective of the confirmatory study missing its primary endpoint.
For Pfizer the ResApp diagnostic aid for COVID-19 will fit well into its COVID-19 vaccine and COVID drug (Paxlovid) portfolio, which generated sales of US$8.8 billion and US$8.1 billion respectively in the June quarter. However further development of the technology will be required to improve the algorithm, particularly around specificity.
Keating said that the application for COVID-19 diagnosis was only part of the reason Pfizer is interested in the ResApp technology, with Pfizer also keen to continue commercialising the broader respiratory test and the SleepCheckRx product.
ResApp employs around 20 staff in Brisbane and that team is expected to increase as Pfizer accelerates the commercialisation of the ResApp technology according to Keating.
ResApp will be seen as a successful commercialisation of Australian healthcare technology, but also an example of being able to rapidly respond to new global healthcare needs. Keating said that one of the lessons learned was that at times the company sought to move too quickly in product development. However the company conducted some exceptionally good trials and algorithm development stated Keating.
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