© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you for standing by, and welcome to the ResApp Health Quarterly Results Investor Call. [Operator Instructions] I would now like to hand the conference over to Tony Keating, CEO and Managing Director. Please go ahead.
Thank you, operator. Good morning, everybody, and thank you for joining our quarterly results conference call. I'd like to welcome our shareholders, employees and members of our Board of Directors. I'd like to start by talking to our cash receipts for the quarter. At $7,000, our cash receipts were lower this quarter than the previous quarter. We are confident that the deals we have recently completed and the deals that are in our commercial pipeline will lead to improved performance here. I'd like to talk about 3 areas that our team are focusing on to drive growth: firstly, expanding the use of ResAppDx by doctors by partnering with telehealth providers; secondly, expanding the opportunity for SleepCheckRx by working towards U.S. FDA clearance; and finally, by responding to the challenge and the opportunity presented by the COVID-19 pandemic. So telehealth is one of the key areas of focus for our commercial team. It's in telehealth where we offer the only scalable way for telehealth clinicians to accurately evaluate the respiratory health of their patients. Our strategy in telehealth is to secure partnerships with leading telehealth providers globally, and we are now seeing positive traction with key telehealth providers. Medgate is a European telehealth provider that's based in Switzerland. They provide telehealth services to much of the Swiss population. At the start of this calendar year, we kicked off a pilot study with Medgate, so that Medgate's team could evaluate both the clinical and the commercial benefits of ResAppDx. We were very pleased in August to announce that Medgate had considered the pilot a success and had signed a commercial license agreement to continue the use of ResAppDx. Since signing, Medgate has seen a steady increase in the use of ResAppDx, and importantly, we've seen high levels of patient satisfaction. We're also particularly happy with the increasing clinician confidence, which is a very important lead indicator. During the quarter, we also signed a license agreement with Alodokter, which is Indonesia's largest telehealth provider. Alodokter delivers telehealth at real scale. The platform connects over 50,000 doctors and 1,500 hospitals and clinics with millions of Indonesian patients. As ResAppDx only requires a smartphone, we offer really the only practical solution to deliver respiratory assessment at this sort of scale. We are working closely with the team in Alodokter to integrate ResAppDx into their platform and are on track to launch by the first of December. One important first step was to obtain regulatory approval in Indonesia, which we achieved in September. We also secured during the quarter an important deal with the Australian private telehealth company, Doctors on Demand. There are several key factors that really excite us about this deal. Doctors on Demand are a leading provider of telehealth solutions in Australia with many innovative offerings. Secondly, the deal gives us access to the corporate telehealth market in Australia, which will provide important insights and is less reliant on Medicare reimbursement. And finally, the deal will help us gather important real-world use data to secure reimbursement here in Australia, which is really the key to unlocking future revenue here in Australia and other similar markets. An important part of our strategy for SleepCheck is our U.S. market entry. The U.S. offers a huge market opportunity with an estimated $42 million Americans suffering from sleep apnea and a significant portion of those being undiagnosed. After a number of meetings with the U.S. FDA, we decided to pursue a 510(k) pathway for clearance for a prescription-only version of SleepCheck called SleepCheckRx. A 510(k) pathway is a relatively fast process, with the FDA expected to make a decision on 90 days after submission. In October, we submitted our 510(k) file to the FDA, and we're expecting a decision in January. COVID-19 remains a major global health challenge and will continue for many years to come. While we have seen the rollout of vaccines, we still see COVID-19 placing a major burden on the world's health systems, and especially on countries with low vaccination rates. Screening, contact tracing and isolation still provide a key role in health systems managing the virus. Identifying the virus in unwell patients and helping their carriers better manage their condition will be an important part of practicing acute care medicine. As an example, just think of the rapid flu test, which is routinely carried out and is today a $0.5 billion market. And it's expected to grow, the rapid flu test, to a market of over $1.5 billion by 2025. There have been a number of studies in the past which have indicated that cough contained a signature that is unique to COVID-19. This is hugely exciting and really leverages and strengthens ResApp's fundamental value proposition, analysis of cost downs using just the smartphone. So we have the potential to deliver an instant, highly scalable and low-cost test to the more than 6 billion people in the world who have a smartphone in their pocket. ResApp is uniquely positioned to successfully develop this type of COVID screening test as we're the only group in the world that have taken algorithms from the research lab through to a regulatory approved product. And it's more than just building the algorithms. It's training them against high-quality clinical data, testing and validating them in well-controlled clinical trials, building need for this product and then obtaining the required regulatory approvals to market and sell the product. We've done all of this before. We also have an invaluable resource in evaluating the algorithms, a large library of pre-pandemic cost downs from patients with other lower respiratory tract infections. This means we can ensure that our algorithms truly identify COVID-19 and don't falsely identify other respiratory tract infections as COVID-19. We now have 3 clinical studies recruiting patients in both the U.S. and India. And right now, we're transitioning from that initial clinical study phase to our algorithm development. Based on our prior algorithm development experience, we have an internally developed candidate algorithms for us to use and test during this process. Earlier this week, we announced that we had reached our first milestone of recruiting 100 PCR-confirmed COVID-19 positive patients in India. With this, we can move into the stage of training and testing our algorithms on the data that we've collected both in India and in the U.S. We will continue to collect data in both the U.S. and India with the Indian study now being expanded to 200 positive patients. The combination of the data collected in the U.S. and India is crucial for us to test the robustness of our algorithms across 2 distinct patient groups. And the increase in data also gives our machine learning algorithms more data to work with and greater confidence in our testing. So this means potentially this allows us to reach our goal of declaring success faster. We're still in the discovery phase, but we are confident that the data we have collected and our experience in algorithm development means that we have a great opportunity to deliver algorithms to make a real difference in the fight against COVID-19. So thank you all for listening to the call this morning, and I'd now like to open the line for questions.
[Operator Instructions] The first question today comes from [ Tyron Carroll ], private investor.
Given the success of the positive cases in the India study via the hospital setting, are you going to use this model for the study in the U.S. once the algorithm is confirmed to be positive? Given that your study has shown low incident of the positive cases via the study, additionally, I think because they're actually seeking medical treatment by the hospital, not just, oh, I should check that I feel sick, with the home kit.
Yes. That's a good question. So I think what's important to look at here is the intended use of the product. So we've talked about the intended use of the product being initially screening of COVID-19 to be used in potentially pre-event or pretravel or pre-employment. And so it's important that when you run a clinical study, you gather patients and data from that intended use setting. So it's very important to us, and that's why we're continuing with the U.S. study. It's very important for us to recruit patients both in the hospital, such as the India setting, which gives us the more moderate to severe cases of COVID, but it's also important for us to get people at home who are maybe mild or maybe asymptomatic or may not have COVID at all so that we can get a range of people across the spectrum of the disease so that we can accurately say, yes, this will work well in the intended use screening setting.
[Operator Instructions] The next question comes from [ Mark Smith ], private investor.
Can you hear me, Tony?
Yes. I can, [ Mark ]?
Sorry, didn't get my last name right. That's all. Yes. So we've got a very great product here, SleepCheck [indiscernible] and ResAppDx. Can you confirm out of that $7,000 for ResAppDx generated any of that revenue?
Look, we're not in a position where we're giving the breakdown of that revenue. But at this point, that revenue is across our product lines.
Okay. And I assume -- with the quarterly cash receipts right, so it's not accrual but [indiscernible]. Is there much of a lag in Medgate payments at all?
I'm not going to comment directly on Medgate itself. That is a confidential agreement with [indiscernible] with AstraZeneca, for example, type of different payments. You're right. The cash receipts [indiscernible] 60 days of payments depending on the partner.
Okay. Can you -- with the Medgate, obviously a few leaders there. We've got the number of doctors, which I assume [ 40 or 30 ], is that correct?
No. So the way Medgate works is if Medgate's upfront symptom checker identifies respiratory symptoms and are automatically pushed through the ResAppDx test. Our focus really with Medgate is driving volume and driving patient satisfaction and driving clinician confidence. And we're really happy to see over the last few months that those have all started to increase, which is really important when we look to the long-term future of that deal.
Yes. So this workflow seems to be really good that it's automated. It looks at the symptoms and then pushes them into the test. How do you go about increasing that volume if you're not signing up delta, you're not talking to concerns directly? How do you actually increase that volume? Or what's the strategy around that?
Yes. So for us, it's engaging with clinicians on the Medgate side. And so we're actively talking to and engaging with both our clinical affairs team as well as clinicians. And we're now seeing the results of that. We're seeing the results of us getting their clinicians more comfortable using ResAppDx. And we're driving essentially the use cases. So it's quite an exciting time as we start to see clinician adoption. I think it's really important to realize that clinicians are the gatekeepers here, right? So clinicians tend to be conservative because they have a duty of care to their patients. So for us, it's really building use over time by getting clinicians more and more comfortable using ResAppDx for a wide range of conditions.
Okay. And can you confirm -- I haven't actually read anywhere in an announcement that they're actually paying for at the moment, and there was talk about how there needed to be some work on how it actually gets paid through the rebates or something. But then I've seen a webinar where [ Brian ] said that they are paying for it. So can you confirm that we're actually getting money when it is used?
Yes. So yes, it's a commercial agreement with Medgate, and we do get paid.
Okay. I'll [ start with the confirm ] like that. Okay. All right. Good luck for the next quarter.
The next question comes from [ David Morris ] from [ Morris Super ].
Tony, can you hear me okay?
Yes, [ David ].
Tony, with you signing with Doctors on Demand, how are you going to overcome the Australian hurdle of patients having to pay the fee $10 or whatever it might be for the use of the test? From what I understand, that has put a couple of patients off just jumping up with an extra amount. And this especially was highlighted through Phenix Health, not even sure about Coviu. So can you just elaborate on the Australian payment system and whether or not you're working on getting it approved with Medicare?
Yes. So thanks, [ David ]. I think that's a really important question. I think the Doctors on Demand deal has a number of, I guess, key -- there was a number of key reasons for doing the Doctors on Demand deal. And one of them was exactly what you're talking about and overcoming that problem. And so I think our deal with Doctors on Demand, firstly, gives us access to corporate Australia. So Doctors on Demand have companies like Flight Centre, Allianz Insurance as customers. And so these payers are, I guess, less reliant on Medicare reimbursement, and the patients themselves won't be paying for this. This is paid for by their employer in most of these cases. So that's the first part that makes Doctors on Demand exciting for us. It skips around that patient payer problem. The second part of the Doctors on Demand is really the value of the data that we're able to get from that agreement. And so what that agreement provides us with is real-world use data. And that real-world use data is going to be exceptionally valuable and really, the key for securing Medicare reimbursement in Australia and elsewhere as well. So it's not just Australia, but it's also elsewhere. But that's why we've done the Doctors on Demand deal, to really counter or get around that problem that you talk about, which is patient pay here in Australia. And we think that by working with corporates, we can get around that but also generating the data that we need to go to Medicare and ask for reimbursement.
Sure. Do you think if you can get the Medicare reimbursement going that Phenix Health and Coviu will become more important? Because right now, I don't really think they're generating much at all.
Yes, I agree. I think that Phenix and Coviu for us have a couple of headwinds. One of them is this is the patient's ability or the patient's willingness to pay. And I will stress, that's not just the patient's willingness to pay for ResAppDx. That's the patient's willingness to pay for telehealth in general. And this is a general headwind against telehealth in Australia in that we've seen telehealth take off in Australia due to the COVID-19 pandemic, but the government have reined in telehealth reimbursement. And companies like Phenix and Coviu on their direct-to-consumer telehealth model for acute care for GP have struggled. And I think that's also a factor here.
Sure. If I may ask just one more question. Re your COVID-19 clinical studies, I noticed that you've mentioned that the studies were open, which meant you were able to access the data fairly early. Did you, in fact, have an ability to train the AI prior to the first COVID test, like I don't know, ability to just, I don't know, just record some numbers that you would be able to benefit the AI? Because otherwise, it would be pretty tough to employ 1,500 patients without the AI already being trained to pick anything up.
So let me explain the process a little bit around what we do with algorithm development. So I guess the first step in the process is looking for what we're calling algorithm candidates. So these are methods that we have potential algorithms based on different types of signal processing or machine learning techniques that we've used over the years. We've used a certain set of algorithms for pediatric, a certain set of algorithms for adults, a certain set of algorithms for sleep apnea. And so we have, over the last few months, and really, I guess, nearly since the pandemic started, really looked at those different algorithm candidates and sort of refined our thoughts around which ones we think could be successful for COVID. We know that, for example, with COVID, you get certain type of signature on a CT scan, which means there is a certain type of signature in the lungs, a certain type of geometric change in the lungs. And so we know that we can potentially look at algorithms that do that. So right now, we have a number of candidates that we think are really strong. What we need to do next is then train those candidates on a set of data, on a set of COVID patients. So whether they are -- we need both positives and negatives as well as our existing dollar set as well. So basically, what we're doing right now is now that we have a decent set of data from India as well as some data from the U.S., we'll put that together and start training algorithms and looking at training those candidates and seeing which ones are potentially successful. And then as we get more and more data coming in, we'll be able to get, I think, get closer -- get faster to that point of success and get more confident that what we have is truly able to predict COVID-19. And so that's really the key. So I think we're moving to a place where we're getting more and more confident. And once we get to a good level of confidence, then obviously, we'll be excited to share that with everybody.
[Operator Instructions] The next question comes from [ Locklin McDonald ], private investor.
Tony, I hope you can hear me well.
Yes, [ Locklin ].
Just a 2-part question. Are you able to give an update on the ResAppDx FDA submission with the U.S.? And then with that, the second part of the question is, obviously, in early '17 and '18 and even '19 when we were applying for approvals for these programs, we were talking about how there was a number of different companies all around the world pretty much, I guess, standing outside the door ready to come in. Where do you see the headwinds at the moment of we've got these regulatory approvals, but we're not exactly getting the revenue coming in? Where do you see the headwinds at the moment of why this program isn't really exactly taking off as quickly as what we initially thought it would?
Yes. Sure. I guess let me answer the first question first for the FDA. So we had gone back and we have submitted a pre-submission meeting request to the FDA, I think it was earlier this year for ResAppDx. So that submission meeting, at the moment, we are still hoping that, that submission meeting happens before the end of the year. As you can probably appreciate, the FDA is still very focused on COVID-19 and very focused on clearing a bit of a backlog that they have. So it is quite difficult and challenging to get in front of the FDA right now. We've had recent discussions with the FDA in the last week, last couple of weeks. That really gives us a lot of confidence that there is an opportunity to meet with the FDA before the end of this year. So while I can't guarantee anything today, we're pretty confident we'll get in with the FDA to be able to discuss what we think is the next steps forward with the FDA. So I'm actually really excited about starting to talk to them again about what we've got and how we are repositioning ResAppDx and answering some of the questions that are asked before. I think from the headwind side, I think there's probably 2 main areas that we are working on, which I think will hopefully trigger that solid growth and that fast growth. The first is physician behavior or clinician behavior. And that's what we're starting to see. At ResApp -- sorry, at Medgate, we're starting to see, as clinicians use the test more and more, they become more and more believers in the technology and really understand its usefulness. It's not just a matter for most clinicians of just reading a paper saying, "Hey, this works at 85%, 90% accurate. It's about experiencing it themselves and seeing how it makes a difference in the best standard of care. So I think that's the first thing. And we're starting to grow that. They are used to a stethoscope. They are used to an X-ray and it is changing their behavior, which does take some time. The second is really around the market access and reimbursement side of things and the payer. I think solving for the payout is something that is really important. That's something that we've really started to focus on. And I can say that Mike Connell, coming onboard at the beginning of this year as VP, Commercial, coming onboard from somewhere like GSK, global pharma, really understands that market access and reimbursement piece and has really pushed our commercial team in that direction. And so if you think about what I talked about just before about why Doctors on Demand is so important, to get that market access payer piece correct. With Medgate, it's similar. We know that Medgate is a private market with private insurers, and so it makes sense for us to be starting there. While somewhere in Australia, we do have those headwinds about reimbursement, as I think [ David ] mentioned before, but we're trying to solve this. So I think that's probably the story. It's really about clinician behavior and changing clinician behavior. And then secondly, about making sure that we're entering the markets where there is a willing payer and making sure that payer has the evidence that they need to start paying.
[Operator Instructions] At this time, we're showing no further questions. I'll hand the conference back to Tony.
Great. Thank you, operator. So I'd like to close by thanking our shareholders and staff for their continued to support. We continue to make really excellent progress. And right now, we're expecting a really strong year of growth for the company. So thank you all, and hope you have a great day.
Thank you. That does conclude our conference. You may now disconnect your lines.