ResApp’s Covid-19 cough app fails to reach sensitivity thresholds under Pfizer takeover

ResApp CEO Tony Keating is confident the company’s app could diagnose Covid-19 and Pfizer’s offer still represented an ‘attractive premium’.

A smartphone app that aims to diagnose Covid-19 by listening to the sound of a cough has failed to reach the sensitivity thresholds required to deliver a bonanza for shareholders under a proposed takeover from pharmaceutical giant, Pfizer.

Shares in ASX-listed ResApp dived more than 28 per cent to 12c on Tuesday morning after emerging from a trading halt. Trading had been suspended pending the release of a study into its Covid app.

The 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.

As a result, Pfizer’s takeover offer will remain at 14.6c a share, or $127m – the lower end of an independent expert’s valuation into ResApp, which said the company could be worth as much as 27.7c a share.

Had ResApp replicated the results of its pilot – which achieved 92 per cent sensitivity across a clinical trial of 741 patients, exceeding the real-world measured sensitivity of rapid antigen tests – Pfizer would have paid ResApp shareholders another $53m.

ResApp chief executive Tony Keating remained confident that the company’s app could diagnose Covid-19 and Pfizer’s offer still represented an “attractive premium”.

He said given the app uses machine learning, the more cough sounds it process the more accurate it will become.

“While we remain confident that our algorithms can detect Covid-19 using cough sounds, they will require further refinement, testing and validation to ensure that they perform to the level needed,” Mr Keating said.

“This work will continue with the benefit of now having over 1300 additional cough sound recordings with gold standard PCR test results to use to train and improve the algorithms. Notwithstanding, the results underscore the considerable work, challenge and cost of bringing our technology to market.”

To this end, Mr Keating urged ResApp shareholders to support Pfizer’s takeover.

“Following the results of the data confirmation study, Pfizer’s all cash offer represents an attractive 62 per cent premium to our share price prior to announcement of the initial scheme and removes any risk associated with the future development and commercialisation of ResApp’s technology.

“We strongly recommend shareholders vote in favour of the revised scheme to accept the 14.6 cents per share in cash being offered by Pfizer. A scheme booklet containing all the relevant information ahead of the vote will be in shareholders’ hands next month. As a shareholder, I intend to vote my shares in favour of the scheme.”

Pfizer made its initial takeover offer, at 11.5c a share, in April, after which ResApp commissioned BDO to prepare an independent report about whether the sale would be in the best interest of shareholders. That report determined the value of ResApp shares was actually between 14.6c and 27.7c.

It comes as Pfizer’s mRNA Covid-19 vaccine has been the jab of choice for most Australians under the government’s immunisation program. As well as vaccinations, Pfizer has developed a Covid-19 antiviral drug, which has become the leading pandemic pill prescribed in the US.

Catherine Bennett, a Deakin University epidemiologist who is a member of the company’s Covid-19 scientific advisory board, said last week ResApp’s technology “would significantly reduce the number of rapid antigen and PCR tests required, while still maintaining the disease surveillance needed to manage the continued impact of Covid-19”.

ResApp, which came out of the University of Queensland, already has smartphone apps which can diagnose respiratory diseases approved by the Therapeutic Goods Administration. It can be used to diagnose pneumonia, asthma exacerbation and chronic obstructive pulmonary disease.

In the past six months, its shares have more than doubled from hovering around 6c.