PERTH, Australia – Australian digital health company Resapp Health Ltd. was down nearly 52% following news that the U.S. FDA rejected its de novo request for its smartphone application for the diagnosis and management of respiratory disease.

The agency rejected the application, citing the need for additional information to demonstrate that the “clinical benefits of the device outweigh the risks,” CEO Tony Keating told analysts during a March 12 conference call on the news.

Resapp is developing smartphone applications for the diagnosis and management of respiratory disease. Its machine learning algorithms use sound to diagnose and measure the severity of respiratory conditions without the need for additional hardware.

Resapp filed its de novo application for the pediatric indication with the FDA last April for lower respiratory tract disease, asthma/reactive airways disease and primary upper respiratory tract disease. The application was supported by the Smartcough-2 study that enrolled 1,470 patients ranging in age from 29 days to 12 years.

Resappdx achieved a positive percent agreement between 73% and 78% and a negative percent agreement between 71% and 86% when compared to a clinical diagnosis for lower respiratory tract disease, asthma/reactive airway disease and primary upper respiratory tract disease. The clinical diagnosis was made by an independent, centralized clinical adjudication committee using all available data, including radiology and microbiology.

The terms positive and negative percent agreement are used instead of sensitivity and specificity when a new test is compared to a nonreference standard, such as a clinical diagnosis. Positive percent agreement (the substitute for sensitivity) is the proportion of patients with the disease that test positive. Negative percent agreement (specificity) is the proportion of patients without the disease that test negative.

Keating said he was disappointed by the FDA's decision, especially after already receiving approvals of the diagnostic in Europe and Australia.

"Following positive discussions during the review process last year with the FDA and submitting a detailed response to the FDA’s request for additional information in December, we were anticipating either approval of the de novo or further dialogue as the next steps in the process," he said.

Resapp will work closely with the agency and its regulatory adviser Experien Group to plan next steps, he said, noting that “we do believe many of the FDA points can be addressed.”

To that end, “[w]e will continue to advance our case in the U.S., but none of this changes our plans to enter different markets with efforts now focused on the U.K., Europe and Australia, where we have regulatory approvals,” Keating said.

Of note, the Resappdx-EU is a mobile software application to be used by clinicians for the diagnosis of lower respiratory tract disease, croup, pneumonia, asthma/reactive airway disease exacerbation, COPD exacerbation and bronchiolitis. The software uses machine learning algorithms that analyze a patient’s cough sounds to diagnose disease. Resapp got a boost in the form of a capital raise of AU$5 million (US$2.9 million) in February to accelerate European commercialization.

“We see telehealth as a major part of that growth as the U.K. and Europe move toward digital health care systems to increase efficiency,” Keating said, adding that the EU CE mark facilitates entry toward Asia.

In the U.K., the National Health Service has directed that all general practitioners should provide telehealth services by April 2021, the CEO said. Meanwhile, in Germany, the government recently passed a law allowing telehealth services for the first time.

COVID-19 pandemic offers massive telehealth opportunities

“Telehealth in Europe is not quite as mature as in the U.S., but, with the coronavirus, we’re seeing that accelerate.

“With the COVID-19 pandemic now global, we’re seeing a sharp increase in telehealth, especially with respiratory disease, as it provides the only way to triage patients at home prior to them visiting health care facilities. Remote diagnostics can prevent spread of the disease, especially among health care workers, and reduces hospital overcrowding.

“We know that over 50% of telehealth consultations are respiratory related, and we know that we have the only solution that doctors can use to get clinically useful information on that respiratory disease during a telehealth consultation,” he said.

Resapp is engaged in several ongoing discussions in two areas where its technology can help. Like SARS and MERS, COVID-19 causes pneumonia, an infection of one or both lungs, leading to cough, difficulty breathing and fever.

However, triage screening based on these symptoms alone is not effective, and not all patients have these symptoms at all times. A full assessment, which requires lung consultations with stethoscope or CT scanning, involves significant risk to health care workers because of the physical contact required.

Resappdx could be used to identify patients with a lung infection with better specificity, Keating said. Individuals identified with a lung infection then could undergo a full evaluation with correct precautions. Patients who test negative and likely only have upper respiratory infections could be managed at home.

If COVID-19 does affect the lungs in a unique way, it could be that a cough could present a unique signature, he added.

Resapp is engaged with a number of global government agencies and potential partners, Keating said.

“Yesterday, Australia announced an AU$2.4 billion plan to fight COVID-19, which includes telehealth support, all of which only helps our commercialization efforts,” Keating said.

In November 2019, Resapp entered a partnership with Coviu, Australia’s leading telehealth software platform, to integrate the Resappdx-EU into Coviu’s telehealth platform. Expected to be completed this month, the integration will see Resappdx-EU become available to more than 5,500 clinicians.

“2020 is the year we become a commercial entity, enjoying revenues from Australia, Europe and beyond,” Keating predicted.

Sanofi option still on

Keating dismissed investors’ questions about Sanofi SA not exercising an option to acquire exclusive rights to develop, manufacture and commercialize a respiratory disease self-assessment application specifically for consumers.

In November 2019, Resapp entered an agreement that granted Sanofi an exclusive license option to use the outcomes generated under the Startup Creasphere incubator program. Under that program, Resapp and Sanofi collaborated to build a smartphone application to leverage Resapp’s diagnostic algorithms to provide at-home support to consumers. Sanofi had until March 7 to exercise the option.

“We worked with Sanofi to develop a smartphone app to provide at home support for consumers. We believe there is a massive commercial opportunity to help consumers manage their health. Conversations with Sanofi are ongoing. They have not dropped out or shown lack of interest,” Keating said, adding that the company is also in discussions with other companies.

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