Analysts are suddenly bullish on ResApp ahead of a ‘critical’ six months
Health & Biotech
Health & Biotech
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Analysts have lifted their recommendation for coughing app biotech ResApp (ASX:RAP) to a speculative buy ahead of a “critical” six months for the company.
ResApp has sent its shareholders on a rollercoaster ride over the past couple of years as it attempts to get its technology, which can help manage respiratory disease such as asthma with diagnostic smartphone apps, approved around the world.
The company’s shares have more than doubled since late March and were trading at 16c on Thursday.
Its recent quarterly showed a small operating profit thanks to the research and development tax refund and $5.5 million cash in the bank, which Morgans analysts view as “sufficient to fund its current programs”.
“We await a number of clinical and regulatory milestones which we view as significant catalysts and will continue to drive investor interest over the next six months prior to expected first commercialisation efforts,” Morgans analysts Iain Wilkie, Scott Power and Dr Derek Jellinek said.
The company is currently sweating on the outcome of US and European applications to have its device approved for use in children; Morgans has a positive view and ResApp chief Tony Keating is “quietly confident” of regulatory approval.
But failure could result in a hefty share price fall.
“As noted in RAP’s quarterly commentary – there were a number of significant milestones achieved including positive results from the Australian adult cough study, it established an Industry Advisory Board (strategic counsel on commercialisation), development of a hardware component, and the presentation of a study published on the paediatric clinical studies,” analysts said.
“We view the establishment of the commercialisation board and the development of a standalone hardware component as positive and points to management’s internal expectations of regulatory approval in the short-term.”
Near-term catalysts for ResApp include the beginning of an at-home obstructive sleep apnoea study as well as the CE Mark and US FDA clearance, all of which are expected before the end of the calendar year.
Morgans put the target price for RAP shares at 23c, a 47 per cent premium to their current trading price.