ResApp Health Ltd (ASX:RAP) shares slide lower despite strong obstructive sleep apnoea study results

The ResApp Health Ltd (ASX: RAP) share price has returned from its trading halt and dropped lower on Thursday.

It sank notably lower in early trade along with the rest of the market but has since clawed its way back and is down just 2% at the time of writing.

What was announced?

This morning the digital health company announced positive results from its prospective, double-blind obstructive sleep apnoea (OSA) clinical study.

According to the release, analysis confirmed that ResApp’s machine-learning algorithms were able to accurately identify OSA from a patient’s overnight breathing and snoring sounds recorded using only a smartphone placed on a bedside table.

The data from the study shows that its algorithms achieved 84% sensitivity and 83% specificity for identifying patients with an apnoea hypopnea index greater than or equal to 5/h (Patients with mild, moderate or severe OSA) compared to simultaneous gold standard in-laboratory polysomnography scored using the current 2012 AASM scoring criteria.

The area under the receiver operating characteristic curve, which is a standard measure of how well a test distinguishes between two diagnostic groups, recorded a score of 0.9. A value of 1 represents a perfect test.

The CEO and managing director of ResApp, Tony Keating, sees a major opportunity for the company’s technology.

He said: “By using an off-the-shelf smartphone, we have the opportunity to deliver a highly-scalable, accurate and easy-to-use screening test for OSA. This has the potential to improve the health of a large portion of the population and significantly reduce the economic burden that undiagnosed OSA causes.”

Before adding that: “These clinical study results confirm that our sleep apnoea solution works very well and we now look forward to comparing the performance of our algorithms with home sleep testing, which is the final step before we make a regulatory submission.”

What’s next?

Management advised that the company is now recruiting patients undergoing home sleep testing and is targeting a regulatory submission for its sleep apnoea screening product by the end of this calendar year.

Should you invest?

I’ve been very impressed at the way ResApp has transformed itself from being the laughing stock of the ASX to a credible healthcare technology company.

While it is still too soon for me to invest, I’ll be eagerly watching on to see how things progress in the coming months and would suggest fellow investors do likewise.

In the meantime, investors can gain exposure to the booming sleep treatment market through the likes of Fisher & Paykel Healthcare Corp Ltd (ASX: FPH), ResMed Inc (ASX: RMD) or Somnomed Limited (ASX: SOM). My pick of the three would have to be ResMed.

Alternatively, these mid cap growth stars could be even better investment options in FY 2019.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has recommended ResMed Inc. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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