The ResApp Health Ltd (ASX: RAP) share price has been one of the worst performers on the Australian share market on Wednesday.
The digital health company's shares were down as much as 67% in morning trade,
They have recovered slightly this afternoon, but are still down 55% to 7.7 cents at the time of writing.
Why is the ResApp share price crashing lower?
Investors have been heading to the exits in their droves following the release of two updates this morning.
The first was in relation to its direct-to-consumer product being developed under the Startup Creasphere program.
This program was a collaboration with the consumer healthcare business unit of healthcare giant Sanofi. It was focused on building a consumer health-focused product using ResApp's novel respiratory disease diagnostic algorithms.
However, this morning the company revealed that Sanofi has not exercised the option to enter into exclusive negotiations for a pilot phase.
FDA bombshell.
The second announcement was even more disappointing. According to the release, the US FDA has advised that ResApp's De Novo classification request for ResAppDx-US has not been approved.
It also advised that it will require additional information to demonstrate that the probable benefits of the device outweigh its probable risks.
The company, along with its regulatory consultants, Experien Group, will now request an in-person meeting with the FDA review team to determine its next steps in the United States. This may include a resubmission.
The company's CEO, Tony Keating, said: "We are understandably disappointed by the FDA's decision, especially after recently receiving European (CE Mark) and Australian (TGA) regulatory approvals."
"Following positive discussions during the review process last year with the FDA and submitting a detailed response to the FDA's request for additional information in December, we were anticipating either approval of the De Novo or further dialogue as the next steps in the process."
He concluded: "We will now work closely with the FDA and Experien Group to plan our next steps in pursuing regulatory approval in the US. In parallel, we will also continue to focus our commercialisation efforts in Europe and Asia-Pacific, where we have the appropriate regulatory approvals and a growing list of commercial opportunities."
