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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
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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, CEO and Managing Director. Please go ahead.
Thank you, operator. Good morning, everybody, and thank you for joining the ResApp Health's quarterly results conference call. Recently, we announced the exciting news of our positive COVID-19 results and Pfizer's proposed acquisition of the company. I will certainly talk about these today, but we'll start by covering the rest of our business, which is beginning to grow nicely.
I'll start with our cash receipts for the quarter. We were very pleased to announce this morning that our cash receipts for the quarter were $178,000, a growth of 44% from last quarter. We are starting to see growth in cash receipts. This quarter included cash receipts from Janssen as part of our ResAppDx deal announced in November last year as well as continued cash receives from Alodokter, Medgate and SleepCheck direct-to-consumer sales. We are pleased with this growth and expect to see continued growth in cash receipts moving forward.
In January, we saw ResAppDx launch on Alodokter and Doctors on Demand platforms in both Indonesia and Australia. I've talked about the scale of Alodokter operations previously, that business services a very large population, offering the potential of a large number of tests. While we are not expecting material revenue from these launches in the near term, we are excited about the opportunity for growth in the use of ResAppDx on these platforms as well as with our previous launches with Medgate, Phenix Health and Coviu. This growth in use is our #1 focus for ResAppDx.
We also continue to secure additional partnerships to achieve this growth. In the last quarter, we signed an LOI, a letter of intent, with Homify, Philippines-based starter planning to launch telehealth service this year. We signed a license agreement with Health Teams, an Australian aged-care provider. We also recently signed a 1-year pilot agreement with the Dartford and Gravesham NHS Trust, U.K. This last deal, with Dartford and Gravesham is our first deal with the U.K. NHS, which is a key target customer for ResAppDx. The NHS is the largest health care organization in the world, employing over 120,000 doctors and over 330,000 nurses. To give some idea of the scale of the NHS, on an average, they have more than 1 million people visit in NHSGP. We're excited about the opportunity to work with the innovative team at Dartford and Gravesham to rollout the benefit that ResAppDx can bring the NHS.
The U.S. is still 1 of the largest and fastest-growing telehealth markets in the world, and we continue to pursue FDA clearance for our technology there. Based around feedback from our previous de novo submission, during January, we held a pre-submission meeting with the FDA to progress a version of ResAppDx that detects lower respiratory tract illness in children and adults. We received excellent feedback from the FDA during that meeting and potential approval pathways, and we expect to continue to engage with the FDA through additional pre-submission meetings to move closer to clearance.
We're also pursuing FDA clearance for a prescription-only regimen structure, which we call SleepCheckRx. We submitted a 510(k) premarket submission to the FDA in October last year, and received a request for additional information in December. We've met with the FDA to discuss our responses and expect to now submit our responses in June. We remain confident in obtaining clearance to SleepCheckRx in the U.S.
While revenue from our direct-to-consumer sales of SleepCheck remains low, we're advancing several promising discussions with partners in the industries such as insurance and health care, which have the potential to greatly increase our SleepCheck revenue.
Now I'd like to move on to our COVID-19 programs. We are thrilled to announce in March that we had achieved positive results for our new smartphone-based screen test for COVID-19. Our rooms are able to identify COVID-19 infection in 92% of people who had the infection using a combination of cough audio and patient-reported symptoms. This level of sensitivity exceeds the reported real-world performance of rapid antigen test. At this level of sensitivity, we demonstrated an 80% specificity, which means that we correctly identify 80% of people who did not have COVID-19. But most importantly, in a population with 5% prevalence with COVID-19, just fairly common, our test will achieve a negative predictive value of 99.5%, meaning that people have received a negative test result are likely truly negative and may not require rapid antigen or PCR test.
We are positioning our COVID-19 screening test as a test to be used upfront in the testing process. If our test provides a negative results and is unlikely that further testing will be required. However, if our test does provide a positive results, and follow-on rapid antigen or PCR testing would be required to confirm a true positive and reject the false positive.
The use in our test -- of our test in this way offers significant benefits. By reducing the number of rapid antigen or PCR test required, it reduces the distribution challenge caused by physical tests and reduces the cost and environmental impact of current testing methods. We hold a dedicated webinar on our COVID-19 results, which is available to view on our website. If you haven't seen that, and please do so as it provides more detailed information on the results and the benefits of our COVID-19 screening test.
There are a number of next steps in our COVID-19 programs, a number of which are now underway. First, our initial results were cross-fold validation results. Cross-fold validation is a statistically technic used to estimate performance on unclaimed data. We have now extended our Indian and U.S. studies to collect additional data for further validation of our algorithms. We're also having advanced discussions with several sites including our existing U.S. media site to perform a blinded prospective study for regulatory purposes.
We are in parallel, preparing to engage with regulators globally to confirm pathway for regulatory approval of our COVID-19 screening test, which includes the FDA and our notified body in Europe. These regulators will provide input into the prospective study design and other requirements needed for approval. Right now, it is difficult to provide any estimates on the timing of approvals, but we know that regulatory agencies have an expedited review of COVID-19 screening and diagnostic tests during the pandemic. And while there are no guarantees, we believe that test may be eligible for similar treatment.
The other big news this month is Pfizer's proposal to acquire the company for $100 million through a scheme of arrangement. It is an exciting prospect for the company. Pfizer is a leading biopharmaceutical company with global reach, and they share our vision and belief that our cost base technology can help transform health care. Pfizer's interest in the company recognizes both the uniqueness of our technology and the strength of the team that we've built. We validate the many years of dedicated work that our team has spent progressing our technology forward.
The Board casually considered Pfizer's offer and subject to independent expert report and the absence of the superior proposal are unanimously recommending that shareholders vote in favor of the scheme and will vote their own shares in favor. A factor in the Board's decision to support Pfizer's proposal is the attractive premium to the pre-announcement share price. The offer has a 28% premium to the closing price of ResApp shares of the day prior to the announcement and a 40% premium to the 30-day delay -- 33 months delay. The scheme of arrangement has a defined set of actions that will start to occur over the coming months, including regulatory approvals and a shareholder meeting.
The next important milestone for shareholders will be the release of the scheme book, which provide detailed information on the scheme, including all of the reasons for the directors' recommendation as well as the independent experts report. We're expecting to provide the scheme booklet to shareholders in mid-May. The final milestone will be the scheme meeting where shareholders will welcome the scheme. The scheme meeting is currently expected to be held in mid-June.
To continue the momentum of all our activities and ensure that we didn't go into a holding pattern all the scheme process is undertaken, we also in parallel into the research and development license agreement with Pfizer. As part of this license agreement, Pfizer agreed to pay a $3 million upfront payment as well as milestones worth up to $1 million. These funds allow rather to continue to progress all of our programs, including the commercialization of ResAppDx and SleepCheck, whilst continuing the development of our COVID-19 screen test. As part of our R&D license, we are now working closely with Pfizer COVID-19 programs, and as I mentioned earlier in the call, we are making swift progress.
So thank you for listening to the call this morning, and I'd like to now open the line for questions.
[Operator Instructions] Your first question comes from Tyron Carl, who is a private investor.
First question is just regarding the Pfizer bid. So if the Pfizer bid is successful, have you been promised, or do you reasonably expect to receive a new role within Pfizer organization? If so, how can you objectively cast your vote on the proposed acquisition when you have the vested interest in seeing the acquisitions succeed? Should you not state entirely from voting without assigning your shares to the Chairman to ensure you don't have a conflict of interest, either in fact or perceived?
No discussions have been had with Pfizer. Generally, as you imagine and as I mentioned before, Pfizer is acquiring the company, both for our technology and our team. But at this point in time, there have been no offers of employment, et cetera, to any of the team in ResApp. You'll also know I believe that there are that obviously, if there is a conflict of interest, then various directors, nonexecutive or executive directors do need to exclude themselves from the voting and from the recommendation. And there's -- there are clauses in the scheme that allow directors to do so. But at this point, there is no conflict of interest of any directors.
[Operator Instructions] Your next question comes from [indiscernible], who is also a private investor.
Tony, the quarterly activities reported Pfizer reference -- represents an attractive option for shareholders. I can tell you it's not attractive in my eyes, and I know 100% of shareholders on the [ whole ] is not attracted. And also I'm pretty confident the majority of retailers that [indiscernible] same. The early days it was $0.50, maybe a $0.50 in one stage when [indiscernible] approval, and now we've got the COVID tests. I remember management talking about $1 and $2 takeover, but now it's value of $0.115. And I know there's been increase by $0.115, was that -- it's been at $0.04 or $0.05 before as [indiscernible] going around for the last couple of years and no revenue. How can shareholders going to be happy with $0.115, I don't know, what do you think of that Tony, I don't think it's good.
Look, as I said earlier, one of the factors in the -- big factors in the Board's decision to support Pfizer's proposal is that it was a significant premium to the ResApp's share price over the last 6, 12 months, ResApp's share price has been well less than $0.10 for the last 2 years. It's a decent premium, and it's similar to market premium. But you see for similar acquisitions to the share price prior to the announcement of the deal. So shareholders were buying and selling ResApp's shares over the last year well at less than $0.10. So in reality, it is a good premium to where the share price is at. Look, we understand shareholders concerns, and really, we will provide all of those reasons in the detailed scheme book and then shareholders have the final decision to say based on the Board's recommendation, independent experts recommendation and their own decision. So look, from our perspective, we looked at a number of factors, and we believe that it offers shareholders a significant premium to where the share price was up.
Yes, it is a significant premium, but a lot of shareholders bought a lot higher than $0.05. So may be leaving a lot of money, but that's all we've got a statement.
Your next question comes from Mark Riley, who is a private investor.
I guess, first of all, congratulations on all the great work. Getting those results for COVID-19 is exceptional and going into Alodokter, that's a massive opportunity. And the takeover bid obviously a massive validation for the technology as well. And what you described is also in the other future of the company looks fantastic. But the thing is it doesn't [ jells ] me is that the Board has recommended we take this offer. So you said there's a great premium, et cetera, et cetera. But I guess in my mind, the company was pulling in $10 million a year, the company would be valued well more than $100 million, which makes me think does a Board not have confidence that this product can generate that type of revenue in the next 2 or 3 years. It just seems like there's a lack of path of monetizing the product amongst all that. So just like your comments around the future monetization. Obviously, you can put figures around that. But has anything changed that you've gone down this commercialization [indiscernible] not going to plan? Or what's happening there?
Look, I think -- I just say, I can't make forward-looking statements on where we expect revenue to be. I think this very much comes down to the premium on the share price and that over the last 6 months, 12 months, the ResApp shareholders have been buying and selling ResApp shares at less than $0.08, significantly lower than that, and this offers a good premium to that. I think if you want to value ResApp from another perspective through future forecasted revenue, then it's not just revenue that you need to value ResApp through, it's a revenue of risk as well and understand those risks. So you need to make sure that you're not just valuing the company based on potential revenue numbers, there are risks of getting that.
So the independent experts report and the Board looked at a number of different measures of company value, and we'll always look at that. But the fundamental fact is that the market was valuing ResApp at less than $70 million, even post release of the COVID-19 data. And that we had Pfizer offer us both a validation of our technology, but also our shareholders with a significant premium on what they were buying and selling the shares the day before the deal was announced. And so that's really what it comes down to.
So if you're talking about risk, is there a risk that the company needs more money, more capital in the future if the Pfizer deal doesn't go ahead? Did you test that market, the previous fund providers not willing to provide any more funds or anything?
No. So that's not the risk that I'm talking about here. So obviously, ResApp would need to raise money at some point, whether through a license agreement such as that we've struck with Pfizer, which is obviously a great deal for us and that we're getting $4 million in nondiluted funding or through financial providers. The risks I'm talking about here are business risks such as FDA approvals, such as whether COVID is around in 2 years' time, whether people buy the product, et cetera. There are a number of business risks that always needs to be considered when you're valuing the company based on future revenues.
So I intend to vote now, would there be any concern -- would you have concerns of the business going forward being a going concern if we voted again?
No. As I said, the Pfizer license agreement provides us with a decent amount of funding. At this point in time -- and then we will look at additional means to potentially raise money or secure additional funds to licensing agreements or through capital raises at a later point. But in all honestly, if it does get both down, then there is a significant amount of validation from Pfizer's offer.
[Operator Instructions] Your next question comes from Richard Black with Territory Loans.
So my question is, what it seems highly likely in my opinion that the vote will go as a no, and the deal won't go ahead. Can you just explain to shareholders what the process is and what happens once that vote is taken place?
Yes. Look, I would rather not comment on whether it's going to be yes or no. There is still many months away before that vote happens. And so I think that shareholders should be reviewing the scheme book in detail to make their decision as well as the independent experts report. So I think that's an important fact. From our perspective, we are continuing to run the business as normal. Obviously, with some exciting work that we're doing with Pfizer on the COVID products. But also, as you can see, doing a lot of stuff commercially with ResAppDx. From a shareholder perspective, there's no -- I guess, not a lot that happens post the vote, that is either a yes or no vote, if there [indiscernible] then the company eventually becomes delisted, shareholders receive cash for their shares and the company being moved forward within the Pfizer for no vote and the company just simply moves forward.
Yes. I guess we want to have some confidence that, I mean, everybody I'm speaking to is a strong no on this stocker. We all believe it's worth more. We've all invested in the company for a long time and we'd like to see it reach its potential. We're going to have faith and confidence that the current Board of Directors can deliver. And when you sort of give us a recommendation to some of these price, it does raise that question, have confidence going forward. So I think we -- I would personally like to comfort around okay, if it's I'm not asking to say or if or no or not. If it is a no, then you're confident in the ability of the current Board and management to drive this company to the success that we believe it can treat.
Richard, I'm obviously not prepared to make forward-looking statements around what sort of revenues, et cetera, that we might potentially see. And as I've mentioned before, that people should be looking at this through a number of reasons, through a number of lenses. But look, from personal, I'm confident -- I'm very confident in the future of ResApp. I think we -- our technology is in an extremely great -- good position with some great validation from our clinical studies and now the validation from Pfizer. I'm very confident in the future. I think the rest of the Board are also very confident in the future, but our position was, but we thought that a premium to the current share price was a good deal for our shareholders.
Sure. Okay. And the cool vote on that. That's a rough, I guess, [indiscernible] decide that on the vote. But we completely agree. The company is in a terrific position, and it's just sort of hitting the sweet spot right now. So we would like to see we need to speak for many shareholders here. I would like to see the company achieve its potential, and we've all been here for a long time and sort of been very involved in this. So yes, I'm very glad to hear that you're confident in the future, and we'll see how play that. I personally think the Pfizer offer is great. It's great that we've got the offer, a great validation. But yes, we don't want to let go this trash.
Your next question comes from Michael Frishman, Retail Investor.
My understanding is that the core product ResAppDx was approved under the Medical Device Directive sale in the European Union in around August 2019. However, regarding your statements surrounding business risk and regulatory, the Medical Device Directive is set to expire in 2024. What is the pathway moving forward for registration under the Medical Device Regulation to allow continued sale of ResAppDx?
So ResAppDx has already achieved that.
All approval under medical device regulation?
Correct.
Your next question comes from Jim Baker, who is private investor.
Quick question of subject from Pfizer, even though I'm a strong no voter. The handheld devices that we paid for design and stuff in the market, haven't heard any news on that for maybe 6 months or more?
Yes. So we deprioritized that development to get the COVID [ room ] how we worked on. We are probably at the final stages for the approval of that product or the handheld device. But right now, it's been on a holding pattern because of work. So we hope to get back to that shortly.
So it's not there in the order, it's still an ongoing possible?
It's still an ongoing projects. Yes.
Your next question comes from David Morris with [ Morris Superannuation ].
I'm just interested about this independent experts. I don't really think the shareholders really give much interest in what this independent expert is going to say. However, it is going to be done by this expert. But can you give us a little bit of color around how this independent expert will be picked? And will this independent expert have full knowledge of figures, past figures with Medgate and Alodokter and the like and forward exposure to those companies?
So David, the independent expert is a legal process. So the independent expert is typically both on account type independent expert, but also a sector expert, so in our case, [indiscernible] or a biotech expert. They are provided, obviously, with all their financials, including contracted revenue, forward-looking revenue as well as estimates of revenues moving forward, they then value the company. And as I said earlier on the call, companies typically value based on the share price, the market value of the company, volume-added average prices, et cetera, ask price, all those, and also using a discount cash flow valuation of the company of future-looking revenues. So they will perform all of that analysis and come up with a range, and that range will either obviously include or will not include the $0.115 for Pfizer and then we'll make a recommendation or they believe that it is a fair outcome for shareholders.
Your next question comes from Pat Hunter, who is a private investor.
I've been investor in the company for probably 5 or 6 years and have a lot of faith in it. I just feel that us investors that have brought it up and down the -- have a lot of money invested will be left out of any future prospects for ResApp. Someway you could possibly set a selling for $100 million, sell it for $49 million and give them less than 50% share in it and you still look to $49 million for ongoing research and you have back all your faithful investors behind.
Look, I think it's important to know that this is the offer from Pfizer. The offer from Pfizer is an acquisition. They've made that offer to the Board and then the Board have had to consider that offer and make a decision on that offer and whether or not to recommend it, and therefore take a full. We understand, obviously, the concerns of being left out of future gains, and that's really the decision that shareholders need to make, our recommendation for shareholders to take it. But the decision that shareholders need to make is $0.115, a good number. It's something that they're happy with based on what they see as the future ResApp. If last week, they could buy or sell their shares at $0.06 or $0.08, it's $0.115 or do they believe that ResApp could make significantly -- have a significantly higher market cap in the future, understanding all of the risks associated with that. And that's why I really ask shareholders to please read the scheme book when it comes because I think that's the best way to be informed about all of the potential outcomes.
Well, I read it as an offer is upward negotiation. It doesn't just ever finish with just the run offer. Surely, the Board can put our case forward. And with the proposal that I sort of put forward, you have the money to go forward, and you wouldn't leave all of us pay for investors that have invested a lot more than $0.115 in your company, just hung us all out to dry it because we'll see no future going from there anything will be left out.
Look, Pat, I think I can't talk about confidential discussions or negotiations that happened prior to the offer. But what I can say is that this is the offer that has been made and that the Board willing to vote for unanimously recommend to shareholders. I can't talk to any confidential negotiations that happened prior to the offer being made.
Yes. Well, obviously, I'll be writing no because we're not going to leave all that money on the table. And I hope that doesn't go ahead, but I hope we have a successful company into the future that we're all involved in.
Your next question comes from [indiscernible].
Just very quickly, you keep talking about $0.115 being a premium on the shares. And I guess if the shares have been trading with the numbers that you've been talking about, and we've seen. But I do note that on that Monday when basically the deal was brought out that the shares were about to take off. So I'm a little, I guess, probably annoyed that the fact that you keep talking about $0.115 being a premium. Was the -- how long had the actual Pfizer offer being on the cards? And was there any particular reason why maybe it was the gun was shot that day when the shares were about to actually take off?
Look, I'm not sure whether we can forecast whether the shares we're going to take off on that Monday or not. The shares had being low for 3 months. They've been low after the COVID-19 results. Look, we've been discussing with Pfizer, as I said, negotiating with Pfizer for a number of months. At that time, Pfizer had provided a proposal over the weekend, the Board met with our financial advisers as well as our legal team. And over the weekend decided that, that was a proposal that we would be able to support and that we'll provide to shareholders on the moment.
Tony, those shares were definitely people were lining up to buy shares. After all the marketing and the media attention that had occurred in the last probably 2 to 3 weeks that is definitely we've been in the share market. So $0.115 is far from the premium for something that's got the opportunity of changing respiratory diagnosis the whole way around the world. So I'll be voting with that no and my husband, Peter Slipper will be voting a big fat no as well. We're very disappointed. We would like to have seen you see this the whole went through. And I hope come to day of the vote, but it does get voted down, and then we'll see from there. And then I would hope that you were going to talk to us a bit more about what's happening rather than meeting shareholders feeling like during the dark all the time. So communication, I think, is very, very important.
There are no further questions at this time. I'll now hand back to Mr. Keating for closing remarks.
Thank you, operator, and thank you, everybody, for joining the call this morning. The next few months will obviously be very busy for the team and myself, and we look forward to keeping you updated on our progress. Thank you, everyone. Have a great day.
That does conclude our conference for today. Thank you for participating. You may now disconnect.