ISS urges shareholders of Covid-19 cough detection outfit ResApp to take Pfizer’s $180m

An influential proxy adviser says ResApp, which has developed a smartphone app to detect Covid-19, should accept Pfizer’s $180m takeover offer.

ResApp CEO Tony Keating says the company’s app will get better as it hears and analyses more coughs.

Institutional Shareholder Services has backed Pfizer’s $179m takeover of a fledgling biotech which is developing an app to detect Covid-19 via coughing into a smartphone.

Despite a block of ResApp investors voicing opposition to the deal, which the company’s board has backed, the proxy advisory group said the buyout’s benefits outweighed its disadvantages.

“ResApp shareholders will receive certain and immediate value for their shares without incurring brokerage or stamp duty costs, given that the full consideration is in cash,” ISS said in its voting recommendations ahead of the takeover scheme meeting on August 19. “The market appears to have reacted favourably to the scheme, given the increase in the company’s share price following the announcement. There is a downside risk to the company’s share price if the scheme does not proceed.”

ISS said Pfizer’s offer “provides certainty against the risks associated with the execution of ResApp‘s long-term strategy”.

ResApp has been working on a smartphone app to analyse the sound of a person’s cough to detect Covid-19. If it succeeds, the machine learning algorithms could transform coronavirus testing worldwide.

In June, a study revealed that ResApp’s Covid-19 algorithm achieved a sensitivity of 84 per cent and specificity of 58 per cent. This was below the minimum thresholds of 86 per cent for sensitivity and 71 per cent for specificity and “significantly lower” than the results of ResApp’s pilot study.

Pfizer amended its offer of 14.6c per ResApp share to 20.8c a share on Wednesday.

“The independent expert has concluded that the proposed transaction is fair and reasonable, and is in the best interests of ResApp shareholders in the absence of a superior proposal,” the advisory report said. “The proposed consideration matches the preferred value and is within the independent expert’s assessed value range.”

The app uses machine learning, meaning the more cough sounds it has processed, the more accurate it will become.