Why the Resonance Health (ASX:RHT) share price is shooting 39% higher today

The Resonance Health Limited (ASX: RHT) share price is shooting 39% higher today after the company announced an important FDA clearance.
The post Why the Resonance Health (ASX:RHT) share price is shooting 39% higher today appeared first on The Motley Fool Australia. –

increase in asx medical software share price represented by doctor making excited hands up gesture

The Resonance Health Limited (ASX: RHT) share price is shooting the lights out today. This comes after the company announced it has received a 510(k) clearance from the United States Food and Drug Administration (FDA) for its HepaFat-AI software.

At the time of writing, the Resonance Health share price is up 38.7% to 21.5 cents. In comparison, the All Ordinaires Index (ASX: XAO) is up 0.7% to 6,969 points.

What’s driving the Resonance Health share price?

The Resonance Health share price is surging today following the company’s positive FDA clearance announcement.

According to Resonance Health, the FDA has cleared the pathway for the company to begin commercialisation for its HepaFat-AI technology.

HepaFat-AI is a medical imagining technology that uses artificial intelligence to assess liver fat. The software analyses volumetric liver fat fraction (VLFF), proton density fat fraction (PDFF), and steatosis grade in individuals who suffer from fatty liver disease.

Once screened, a doctor or physician is able to explain the results to the patient which can, in turn, support them in weight loss management. In addition, the report can also evaluate if a person has a suitable liver for becoming a donor.

It is estimated that up to 30% of the world’s population suffers from non-alcoholic fatty liver disease (NAFLD). This represents up to 2.3 billion people who face the possible risk of developing liver damage and fibrosis.

In financial terms, Resonance reported that over the next 10 years, the increasing incidence of NAFLD could cost the healthcare system $1 trillion in the United States alone. Furthermore, another 334 billion euros could expected to be sunk into treating the disease across Germany, France, Italy and the United Kingdom.

The company said that while there are currently a number of ways to measure liver fat, comparing results from different scan types is very difficult, with results highly variable. HepaFat-AI aims to improve on traditional testing measures by delivering a standardised assessment that allows for accurate comparisons across various scanner types. The company also highlighted that steatosis grading can be time consuming using other methods, however its software has automated the process, allowing for results to be produced much faster.

Resonance Health stated that it intends to pursue multiple channels to get HepaFat-AI to market.

What did management say?

Resonance Health CEO Ms Alison Laws commented on HepaFat-AI’s applications and the result from the FDA. She said:

The use of artificial intelligence in medical image review and assessment has the ability to support and transform radiology via the delivery of rapid, reproducible results whenever needed. HepaFat-AI, the Company’s second AI-based medical device to gain clearance from the FDA, will enable radiologists to report three key parameters (VLFF, PDFF, and steatosis grade) in patients in this significant and ever-increasing addressable market.

The clearance from the FDA to assess and report all three metrics in HepaFat-AI patient reports is an outstanding result for the Company and an outstanding result for the product itself.

Resonance Health share price summary

The Resonance Health share price has been on the rise since late September, delivering more than a 50% gain to shareholders. Resonance shares are, however, still 17% lower since the beginning of the year.

The Resonance share price reached a 52-week high of 28 cents in January and a 52-week low of 9.2 cents in March.

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Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Resonance Health Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Why the Resonance Health (ASX:RHT) share price is shooting 39% higher today appeared first on The Motley Fool Australia.

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