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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 Mr. Tony Keating, Chief Executive Officer and Managing Director. Please go ahead.
Thank you, operator. Good morning, everybody, and thank you for joining our quarterly results conference call. I'd first like to welcome our shareholders, employees and members of the company's Board of Directors who joined us today.The second quarter was a busy quarter for the ResApp team, with a number of key milestones achieved that have continued to lay the groundwork for the successful commercialization of our products. First, I'd like to discuss the effects that the coronavirus pandemic has had on our business.While the pandemic has shown a light on the sector, both from a respiratory disease perspective and a telehealth standpoint, it has not come without significant challenges. In Australia, we've been extremely fortunate during the pandemic. However, most of the rest of the world has seen COVID-19 have a significant impact on daily life of business.Globally, we now have over 100 million confirmed to have been infected by the virus and over 2 million deaths. We are currently witnessing lockdowns in the U.K., with schools in England expected to remain close until at least early March. Many hospitals in Europe and the United States are full capacity. It is against this backdrop that we're commercializing a novel, innovative health technology used by clinicians to make decisions about their patients' health. While the coronavirus pandemic has certainly brought a number of challenges, our team has done exceptionally well to meet those challenges and achieve key milestones.At the beginning of the quarter, we were very happy to announce our partnership with Medgate to pilot ResAppDx in Europe. Medgate is a leading telehealth company, not just in Switzerland but throughout Europe and globally. Having been founded over 20 years ago, they're one of the world's oldest and most respected telehealth organizations. They have over 500 employees worldwide, including over 200 doctors performing telehealth consultations in Switzerland, Germany, the Philippines, India and the UAE. Medgate has 6,000 patient contacts per day.The agreement with Medgate is a key partnership for ResApp. Our team has been working closely with Medgate team to build and power an integration of ResAppDx into Medgate telehealth services. The technical integration and onboarding of Medgate clinicians has progressed very well with a 3-month pilot scheduled to begin within the next few weeks. Medgate not only presents a large and direct commercial opportunity. It is also a potential lighthouse customer, demonstrating to other potential partners the importance of ResAppDx and telehealth.We continue to work with our Australian telehealth partners, Coviu and Phenix Health. However, challenges in the Australian telehealth environment remain, with ResApp not currently available on the Coviu-supplied healthdirect vehicle platform, unchanged telehealth reimbursement rules and a continued drop in the rate of respiratory disease in Australia due to social distancing. We continue to work closely with Coviu and Phenix on options to increase adoption.We also continue to work with clinicians at Health Hub Doctors Morayfield, a federally funded COVID-19 respiratory clinic. I'm pleased to advise that clinical paper has been submitted summarizing the benefits ResAppDx is able to bring to the clinic. I'm looking forward to sharing with you when it has been published.On the topic of clinical publications, since our original spin out from the University of Queensland, we have worked to continue to publish our results in peer-reviewed journals and present at leading conferences. I'm pleased that in the last quarter, we saw a number of key papers published in the adult clinical studies. These were all published in collaboration with our clinical collaborators in Perth.The first was a paper highlighting our adult pneumonia results, which is published in the British Journal of General Practice, one of the leading peer-reviewed journals in primary care research worldwide, which is sent to over 50,000 clinicians and researchers each month. A second paper on the identification of COPD was published in JMIR Formative Research. Our clinical team will also be presenting at the upcoming TSANZSRS Annual Scientific Meeting. These papers and presentations provide us with important visibility amongst clinicians and health care professions.At the end of December, our teams completed the latest updates to our ResAppDx and SleepCheck products. These updates add significant new features that expand our market opportunity, improved integration with partners and provide an enhanced user experience. For ResAppDx, our focus was to streamline the experience for telehealth providers' customers who do not wish to download Android or iOS app.By introducing App Clips functionality on iOS and Instant App capabilities on Android will allow users perform the ResAppDx test without having to download and install the ResAppDx application. Instead, users can perform the test instantly through a website link, QR code or text message that they receive from their clinician or their telehealth provider. We're really excited about this functionality as not only does it make a more streamlined user experience but also greatly simplified integration of ResAppDx into telehealth platforms and allows the broader use of the solution outside of ad-based or even video-based telehealth.At the beginning of the quarter, we announced the availability of ResAppDx on Android phones. I talked in detail about the importance of this achievement in the last quarterly conference call. Android is a significant market and is important for us to validate ResAppDx on the Android platform and ensure that it meets all of the required standards.Using the proprietary testing techniques that the team developed for ResAppDx, we're able to achieve the same with SleepCheck. At the end of the year, we successfully launched SleepCheck to select Android devices and is now available by Google Play in 36 countries.During the quarter, we surpassed 5,000 downloads of SleepCheck, but the growth was slower than anticipated. At the beginning of the period, we had decided to expand our marketing to the U.K. due to the larger market opportunity. However, we then faced a number of challenges related to the spread of COVID-19 and forced lockdowns in the U.K.In our Australian marketing campaign, we found that PR, or earned media, was by far the most effective strategy at driving downloads. Unfortunately, replicating this in the U.K. was difficult as the new cycles were focused on the second wave of coronavirus, making it hard to obtain any significant share of the media. We are continuing to adapt our marketing strategy and have reduced our U.K. PR folks' efforts for the time being.To drive download rates, we continue to work with leading partners such as HealthEngine. We're looking to enhance our marketing strategies and adapt those to the local market and also progress the rollout of the app across additional Android devices. Importantly, launches certainly increased inbound interest in SleepCheck from potential partners, and we continue to assess a number of interesting partnership opportunities, which would greatly expand SleepCheck's revenue potential.In November, we met with the FDA to discuss obtaining approval to SleepCheck in the U.S. FDA clearance would unlock a substantial market. There are 42 million American adults who suffer from sleep disorders. We are very encouraged by the meeting. I felt that it provided a clear path forward to U.S. regulatory approval. We intend to initially pursue a 510(k) regulatory pathway for SleepCheck as a prescription-only device. This gives us the fastest route to market with the FDA's goal to be -- to make a decision for approval within 90 FDA days from the application submission.We'll be commencing a human factor study in the U.S. for SleepCheck this quarter which will provide the required data that we need for such a submission. Surely after completion of that study, we plan to file the 510(k). In parallel, we will move towards a direct-to-consumer or over-the-counter approval for SleepCheck and are planning a U.S. clinical study to support this.Beyond ResAppDx and SleepCheck, we announced a nonexclusive licensing deal with AstraZeneca Japan during the quarter. This is a major achievement and highlights the potential use of our technology with some of the world's most renowned companies. AstraZeneca will be using a new app, which we've built that counts patients coughs over extended periods and is able to accurately differentiate coughs from background noise. AstraZeneca will use the app in a clinical study of cancer patients, allowing study investigators to remotely monitor patients' respiratory health in real time.We've been working closely with AstraZeneca to localize and refine the app to their specification and is currently undergoing testing by the AstraZeneca team. Once the 2-year study begins, we'll receive a monthly license fee for each patient enrolled as well as a monthly support fee.While not expected to deliver significant revenue, the progress has certainly opened the door for us with AstraZeneca and allowed us to progress discussions with them on additional collaborations. There's also progress -- conversations with other parties interested in this technology.The need for long-term monitoring of patients in clinical trials or monitoring patients with chronic disease is an important emerging opportunity for ResApp. And the initial work with ResApp's had with AstraZeneca, that's an important base. Our wearable device, which is nearing completion, is also the perfect platform for deployment of a 24/7 monitoring solution, and we look forward to providing updates on this and our handheld device during the current quarter.Finally, I'd like to welcome Mike Connell to the ResApp team. Mike joined us this month as VP Commercial and has extensive experience in sales, marketing and strategy, with previous experience in pharma, health insurance and fast-moving consumer goods. Mike spent over a decade with GlaxoSmithKline, which included experience in Europe running its European established product business, generating billions in revenue. Most recently, Mike led corporate health partnerships at Medibank.I'm really excited to have Mike join the ResApp team to help us accelerate our commercial strategy. He has a very strong sector understanding and has established networks that will facilitate us to fast-track our growth over the coming months. Looking forward, we have major milestones within the next few months, including the start of the Medgate pilot, the conclusion of our evaluation of ResAppDx in Africa with Ilara Health and the submission of the 510(k) for SleepCheck RX in the U.S.So I'd now like to open the floor for any questions.
[Operator Instructions] Your first question comes from [ Kevin Wang ], a private investor.
Tony, it's Kevin here. I'm actually a private investor on behalf of my wife. So we invested substantially with you guys. My question is, a lot of the presentations and all these discussions that we have with you so far over the course of probably the last 12 months, it's a lot of background information and facts. But in terms of business, business strategies and how everything works, can you please provide us with some answer regarding the so what component of Medgate, telehealth, all the other stuff that you have?So what does this mean in terms of business strategy in terms of revenue, in terms of business model, what sort of due diligence, due process? Are you guys going through internally because we have no visibility as shareholders? And what's the Board doing? Because the Board has a governance responsibility oversight all this, but we're not hearing anything from the Board. And what sort of value are they adding? So that's pretty much my question.
Sure, Kevin. Let me try to break that down into 2 parts. So ResApp strategy from day 1 actually from the prospectus that we filed over 5 years ago has been to partner with telehealth providers and provide ResAppDx alongside a telehealth consultation. So partnerships with Medgate, partnerships with Coviu, with Phenix Health are completely aligned with that strategy and part of that strategy. So we will always be dependent on those partners having a good market share in telehealth. And that's one of the reasons why we're excited about the Medgate opportunity.Medgate has the largest telehealth market share in Switzerland, is one of the leading telehealth providers in Europe. And so our business model, as it's always been, has been to partner with those players and then to obtain a revenue based on the number of times the test is being used. So in the Medgate situation, we may look at each time the test is used, then we are paid a certain amount of money. And I think previously, we've discussed -- we've presented, again, unchanged from early days that we are looking at a return of $5 to $10 per test in those partnerships. So that's really our business model. That's been our business model from day 1, and we don't see any changes to that business model, and we believe that business model will be successful.From the perspective of what the Board adds to the company, the Board is there as an oversight and a strategy advice to the management of the company. We have Board members with extensive experience in biotech. We have Board members with extensive experience on corporate finance. And we have board members who have extensive experience in HealthTech and telehealth. So I believe that the Board adds significant amount of value to the management team and helps the management team execute on that strategy.
I'm Sorry. I was just going to follow up on that. That's fine. But we don't see any of those sort of stuff having -- I know that a certain amount of intellectual properties and so forth, that's behind closed door in the boardroom, but I think a bit of transparency which is what was sort of the whole market in the industry has been driving in probably the last 3 years in terms of governance, we need to see some transparency there.Because we don't know what they're really adding, but I can hear a lot of noise that's going on in the market from other shareholders. That's sort of questioning that that value and so forth. So maybe in the future, if you're going to be more transparent in what they're actually doing and what sort of value they're adding, that would be great.And the other bit is you answer that the business model is this. That's fantastic, too. We got Phenix, we got Coviu, but the business model is there, but how are we converting that? So what it is -- how are we converting that into revenue to take up? Because we're not seeing those take up in Australia. And that's because it's not integrated into Medicare.And the culture of your consumers and your customers or the patients that we're going for Medicare bulk bill, we're not going to pay an extra bit of money to get a third-party app that goes on top of it. So how does that work in Medgate in Europe? Are they different? Do they behave differently in terms of consumer behavior? So -- because it's all fantastic, but we're not converting. That's the thing. All this opportunity you're talking about, it's great, but we're not converting. That's my last question.
Yes. Let me add a few things to that. So I think it's very important to realize that this is a medical device. This is something that is not -- it takes a significant amount of change for clinicians, for telehealth providers or for anybody to switch and change to and trust a medical device. So there is -- this is not an app that we expect, and we've not ever provided any real guidance on how quickly we are expecting adoption to occur. What we're doing is working closely with people who we believe are leading telehealth providers in markets. So Coviu are the leading telehealth provider in Australia. Medgate are the leading telehealth provider in Europe. That's our focus.I think that the reimbursement is a challenging issue in some countries, such as Australia, where the government is responsible for reimbursement of medications and medical devices. That is not a fast process. We're obviously investigating that process and going down that route, but it is not a fast process. It is not something that can occur within a quarter. So it's a different situation in different jurisdictions, even in different -- even in different -- in particular countries, there are segments of the population who will pay for out-of-pocket with telehealth. There are sections of the population in Australia who will pay for out-of-pocket telehealth.In Europe, most of telehealth is funded by insurance companies. Medgate is primarily funded by insurance companies. So it's a different proposition than a government reimbursement. But yes, I agree that there are challenges associated with reimbursement with bulk reimbursement in Australia. We're working towards those. But we believe that there are other near-term revenue-generating opportunities that are not depending on that reimbursement.
Your next question comes from [ David Morris ], a private investor.
Tony, I wonder if you can elaborate, please, on our resubmission with the FDA for Dx. And as I understand it last time, we were knocked back because they couldn't believe that the benefits outweighed the risks. We've gone on and on about this. I'm starting to get worried that the FDA is no longer a viable option. Can you convince me and other shareholders that the FDA is viable? Or if it isn't, please tell us so, so we can get rid of these false hopes.
So David, I think that we said this in the last quarterly, and we have said it previously that we will be going back to the FDA. We're planning on submission -- of making a submission back to the FDA within the next few weeks.
Okay. So you see a positive pathway there. You must have had presubmission talks with them or given guidance by them because we all know this is a great product but it just doesn't seem to be embraced by people like the FDA, NHS and so forth.
So with the FDA, we will be submitting a request for a presubmission meeting. You need to realize that a submission request for a presubmission meeting actually requires a significant amount of written reports to go, if not just, hey, we would like a meeting. You need to lay out your arguments around what you want to discuss them with and what your proposals are, and that will be submitted shortly to the FDA.
But that -- we've heard that probably for the last 2 or 3 conference calls with you, Tony. It just doesn't seem as though it's getting any currency with shareholders.
Look, my focus is with the FDA to provide the best foot forward that we can with the FDA, and we will submit that when we're ready to submit that when we believe we have the best case for it. Submitting something before it's ready, doesn't make any sense when you're dealing with someone like the FDA.
[Operator Instructions] Our next question comes from [ Dennis Twanmu ], a private investor.
Thank you very much for the update on the de novo application to the FDA from the previous questioner. Again, that's obviously a fundamental issue for current shareholders. I've been a shareholder for probably 3 or 4 years now, and that was one of the key benchmarks what we're trying to achieve for the product. I mean we've got the CE mark principally. You've got the TGA for Australia, but the FDA was -- I don't know as we're very much looking forward to.My concern and again, the full question relates to the fact that we seem to handed it off on the SleepCheck. And again, I don't mind alternative pathways of revenue, alternative ways to go forward. But it just seems that we've had a long time to get this FDA resubmission right. It's in the middle of COVID where we should have had time to actually extend time getting it right. And again, I guess I'm looking for some assurances that what is our fundamental business plan moving forward? Is it ResApp or is it SleepCheck? Because if it's ResApp, why aren't we dedicating all of our resources to getting ResApp FDA approved.And again, I'm just curious that also, the question relates to the I guess the CE mark for EU. We've had that for a long time. We haven't really seen much in terms of any concrete revenue. I mean, there's some rough partnerships, but where is the revenue for all the approvals, whether it's TGA or CE mark approval? And again, just why can't we concentrate on the FDA and just get it through and get it done?
Sure. So I guess we made a first purposeful decision based on our approvals in Europe as well as Australia to focus our commercialization efforts in Europe and Australia. And those commercialization efforts have led to the partnerships with Coviu, Phenix and now with Medgate in Europe. So that was primarily our focus. That's where we see the immediate commercial opportunity. FDA is still on our radar. We definitely have not pivoted from ResAppDx to SleepCheck. SleepCheck is simply a second product in our product suite.On the FDA front, SleepCheck Rx, as we've discussed with the FDA, is a very straightforward path to FDA approval, being that there is a predicate device out that we're able to therefore file a 510(k) submission. So that's why, if anything, the SleepCheck product is slightly ahead of ResAppDx in the U.S. It's a more cleaner and simpler FDA pathway. But I think in general, our focus with Dx was that we have approvals in very large commercial markets, being Europe and Australia, the U.K. and so therefore, we have focused our efforts and successfully gotten the partnerships to get in those markets. Yes, those partnerships have not turned to revenue yet. But we're confident that those are the right partnerships with the leading organizations to drive us revenue in the longer term.
And again, speaking about the stack, you've got COVID-19 and that's obviously impacting the market and so. But is there any adjustments with Dx to sort of look at -- I know you've mentioned this in your past quarters about the integration and COVID-19. Is there any interoperability so that app can also pick up COVID-19 or differentiate on that? Or is that probably a trend?
Look, there are some signs that cough-based analysis could pick up COVID-19 with a number of groups globally looking at that. And I think I've said this before in quarterly. We are looking at that opportunity. But right now, we don't have anything material to report. We haven't run a clinical study or started a clinical study in that area just yet.
Your next question comes from [ Robert Weston ], a private investor.
Tony, appreciate you doing these conference calls. Look, I've got 2 questions. The first one probably relates first to the FDA. Can you give us a bit more clarity on what, I guess, extra information you have that you'll submit just because we know how it went last time? And if you could, to understand what will change this time.
Yes. So we're not really -- so I guess, from our perspective, we're going back to the FDA with questions around their final set of questions for us, questions and comments. At this point in time, we need to discuss our responses to those questions and those comments with the FDA before we're really able to share what the pathway will be. Without the FDA's, I guess, review of our proposed pathway, it's very premature for us to share that pathway with shareholders.
Okay. So do we expect that the [indiscernible] publication, Ilara Health trial and these kind of things will build the backbone of any benefits to outweigh the risks here?
No. So the FDA only looks within the U.S.
Okay. And the second question I have was, given your balance sheet has roughly 3/4 of funding left and we're bringing the revenue is almost nonexistent. How do we -- you said previously, we don't expect the cap rate and will be revenue generating moving forward. Is this still the case? Or has your view changed?
So right now, we have a lot of flexibility with that balance sheet. I mean, we have $4.2 million in the bank. We're expecting a relatively large R&D tax incentive rebate within the next month or so. We've just received some funding from EMDG, the Export Market Development Grants. So we have a lot of flexibility with the cash that we've got in the bank. Obviously, at a point in time, depending on what our revenue cash flow forecast looks like, funding may need to come from potential partners or maybe needed to come from shareholders. We're not sure at this stage. But at this point in time, we have a number of quarters up our sleeves to make a significant difference in the commercialization and hopefully make a significant difference in the revenue line as well.
Great. That's reassuring given a cap rate that these prices would considerably dilute the holdings.
[Operator Instructions] There are no further questions at this time. I'll now hand back to Mr. Keating for closing remarks.
Thank you, operator. So I'd like to close by thanking our shareholders for their continued support of the company and also thank the shareholders who asked questions today. I'm more than happy to answer those questions.We continue to execute on our plan. As I said earlier, this is a strategy that we've had with partnering with telehealth providers since our founding, and we really believe it's the right strategy for commercializing this technology. And so we're bringing these products to the market through key partnerships. And that's really the key for us is those key partnerships. So we look forward to updating shareholders on our progress and look forward to continuing these discussions as move forward on that journey. Thank you, everybody.
Thank you. That does conclude the conference for today. Thank you for participating. You may now disconnect.