Resonance Health (ASX:RHT) is the latest health stock to obtain FDA approval.

The company’s HepaFat-AI software monitors liver health and by analysing traits in MRI datasets. Namely, volumetric liver fat fraction (VLFF), proton density fat fraction (PDFF) and steatosis grade.

It can help in the management of several diseases including Non-Alcoholic Fatty Liver Disease (NAFLD) and obesity.

It is estimated that between 24-30 per cent of the world’s population has NAFLD right now. If its prevalence continues to rise, the healthcare burden over the next decade could increase to over US$1 trillion in the USA alone.

Having obtained FDA approval the company can now market HepaFat-AI for commercial distribution in the USA.


Why FDA approval is a big deal

FDA approval is always a critical step for small caps seeking to enter the USA. Most obviously it lets them sell their device into the world’s largest healthcare market.

But the degree of rigour and scrutiny the FDA gives is seen as a further sign of confidence that companies can “make it anywhere”. In fact in some jurisdictions, companies can re-use the same clinical data to gain approval from their regulators.

It is also a catalyst for share price re-rating as evident in Micro-X (ASX:MX1) and Avita Medical (ASX:AVH) as well as the solid debuts of already FDA green-lighted 4D Medical (ASX:4DX) and Control Bionics (ASX:CBL).

Resonance Health chairman Martin Blake concurred.

“This is a great milestone in the company’s history; a magnificent advancement in the field of quantitative MRI,” he declared.

While the company has not yet won clearance in Australia and in the Europe – TGA and CE Mark approval respectively – it told shareholders it is working towards both.

Resonance shares spiked 45 per cent today.

Resonance Health (ASX:RHT) share price chart