- ResApp Health (RAP) has plunged into the red after inadequate test results for its COVID-19 detection app shaved $53 million off of a takeover bid from Pfizer
- An independent confirmation study for RAP’s smartphone-based COVID-19 identification technology showed “significantly lower” results than a previous study in March
- Pfizer had offered to pay 20.7 cents per share for control of ResApp if the latest results were on par with the March results, but the biotech giant will now offer 14.6 cents
- This effectively lowers the value of the Pfizer deal from $180 million to $127 million given the test results came in below the threshold of the higher Pfizer offer
- ResApp is down 24.57 per cent and trading at 13 cents per share at 1:15 pm AEST.
ResApp Health (RAP) shares have plunged into the red after inadequate test results for its COVID-19 detection app shaved $53 million off of a takeover bid from Pfizer.
An independent confirmation study for RAP’s smartphone-based COVID-19 identification technology, designed to detect COVID-19 through a cough audio base, showed “significantly lower” results than a previous study in March.
The new study was part of a revised scheme of arrangement with pharmaceutical giant Pfizer Australia, which offered to buy ResApp for 20.7 cents per share if the test results were as good as the first study. This offer valued RAP at around $180 million.
However, in the latest study, RAP’s COVID-19 algorithm achieved a sensitivity of 84 per cent and a specificity of 58 per cent.
These results are lower than the thresholds under the revised scheme with Pfizer, which included a minimum sensitivity of 86 per cent and a minimum specificity of 71 per cent.
This means the takeover price has dropped to 14.6 cents per share in cash, representing an equity value of $127 million.
Pfizer has not yet confirmed if the deal will go ahead, but the ResApp board has told its shareholders to continue to support the deal.
Managing Director and CEO Tony Keating said the results underscore the “considerable work, challenge and costs” of bringing the company’s technology to the market.
“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,” he 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.”
ResApp was down 24.57 per cent and trading at 13 cents per share at 1:15 pm AEST.