ResApp share price surges 11% higher on positive update

The ResApp Health Ltd (ASX:RAP) share price has been on fire on Monday morning. Here's why…

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The ResApp Health Ltd (ASX: RAP) share price has started the week on a positive note.

In morning trade the digital health company's shares have surged 11% higher to 24.5 cents.

This leaves the company's shares trading within sight of their 52-week high of 27 cents.

Why is the ResApp share price surging higher?

ResApp's shares have taken off this morning after the market responded positively to the top-line results from its prospective, blinded at-home obstructive sleep apnoea study.

According to the release, ResApp's algorithms, which analyse a person's breathing and snoring sounds recorded using a smartphone placed on a bedside table, were able to accurately identify obstructive sleep apnoea (OSA) when compared to a simultaneous at-home comprehensive sleep study.

The release explains that a total of 308 patients were recruited for the study. However, those with partners and pets in the room were excluded, meaning a total of 238 patients were analysable.

The study endpoints were the algorithms' performance in identifying three severities of OSA. These were mild, moderate, and severe and were compared to an American Academy of Sleep Medicine Type II sleep study performed simultaneously in the patient's home.

The good news for ResApp shareholders is that for all three AHI thresholds, the area under the receiver operating characteristic curve (AUC) was greater than 0.91. This demonstrates that ResApp's algorithms, when used at-home, have an excellent ability to identify mild, moderate, or severe OSA.

Interestingly, in a recent ResMed Inc. (ASX: RMD) presentation, it revealed that research shows that less than 20% of those with OSA have been diagnosed or treated. So there certainly could be a large market opportunity for ResApp if it can successfully diagnose people through a smartphone app.

ResApp's CEO, Tony Keating, was pleased with the results. He said: "We achieved excellent performance previously during our in-laboratory sleep studies and it is great to see the same high levels of performance replicated in our intended use setting, in peoples' homes."

Mr Keating also referenced the same data used by ResMed. Adding: "Nearly one billion people suffer from sleep apnoea and 80% of those with moderate or severe sleep apnoea remain undiagnosed. By delivering a highly scalable, low cost smartphone app for OSA screening we have a huge opportunity to reduce the health and economic impact of undiagnosed OSA. We will now move forward into the regulatory submission and commercialisation phases of this exciting project."

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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