The U.S. FDA has cleared the way for Abbott Laboratories sixth COVID-19 test, a near-patient, point-of-care antigen test that gives results in 15 minutes and can be run without laboratory equipment. The company has priced the Binaxnow COVID-19 Ag Card rapid test at $5 and is offering a complementary mobile app that allows people to display their test results when asked by organizations for verification.

The U.S. FDA’s emergency use authorization (EUA) for Binaxnow comes as businesses and schools are attempting to reopen amid the ongoing pandemic, pushing the limits of testing supplies.

This is not the first rapid COVID-19 antigen test, but Cowen analyst Joshua Jennings said it offers “a meaningful discount to competitors’ rapid lateral flow COVID-19 antigen test pricing at $15-$20 per test.”

Major White House deal

Abbott will start shipping tens of millions of the tests in September, ramping up to 50 million tests a month by the following month. Final distribution plans are still be worked out.

According to Jennings, the plan is to distribute Binaxnow to U.S. sites that don’t have access to its ID Now rapid molecular system or m2000/Alinity-m central lab-based molecular testing capabilities, limiting “cannibalization of ABT’s current COVID-19 testing volumes.”

In late-breaking news, the White House is reportedly poised to pay Abbott $750 million for 150 million units of the test. “This is a major development that will help the country to remain open, get Americans back to work, and kids back to school,” White House communications director Alyssa Farah said in a statement to CNBC. “The Trump Administration is proud to partner with Abbott Labs to make this purchase possible to help the American people.”

The highly portable, affordable test is about the size of a credit card and works similarly to an at-home pregnancy test. A health care provider takes a nasal swab of a patient with suspected COVID-19 and immediately inserts the swab into the test card, engaging lateral flow technology that initiates the test and produces a result. No extra chemical reagents are required besides what comes with the test kit.

This simplicity of the test “keeps the number of components to a minimum and removes the possibility of delays caused by supply chain issues,” John Hackett, divisional vice president of applied research and technology for Abbott’s diagnostics business, told reporters late Wednesday. “That’s one of the ways we’ve been able to produce this test at mass scale while keeping it affordable.”

Reliable results

The test has also demonstrated high sensitivity and specificity, achieving 97.1% and 98.5%, respectively, in a clinical study. That makes it a reliable alternative to laboratory-based tests, which generally have high sensitivity but can take days or longer to deliver results.

Along with the test, Abbott is launching a secure, no-charge mobile app, Navica, that will let people who test negative display a temporary digital health pass. The pass, which can be scanned at places of entry, is renewable with subsequent testing and includes the date of the test result.

The company is banking on the low price point on the test and the preference of nasal swabs vs. more invasive nasopharyngeal swabs to encourage more people to get tested and tested more often.

“We intentionally designed the Binaxnow and Navica app so we could offer a comprehensive testing solution to help Americans feel more confident about their health and lives,” said Robert Ford, Abbott’s president and CEO. “Binaxnow and the Navica app give us an affordable, easy-to-use, scalable test, and a complementary digital health tool to help us have a bit more normalcy in our lives.”

The prescription-only test is intended for the qualitative detection of nucleocapsid protein antigen from SARS-Cov-2, the virus that causes COVID-19, in nasal swabs. It designed to be used in CLIA-qualified point-of-care settings, and can be performed within those settings by doctors, nurses, school nurses, occupational health specialists and others with minimal training.

Answers in ‘real-time’

Jeff Shuren, director of the FDA’s Center for Devices and Radiological Health, called the new COVID-19 antigen test “an important addition to available tests because the results can be read in minutes, right off the testing care. This means people will know if they have the virus in almost real-time.”

Brian Weinstein, of William Blair, called Binaxnow a gamechanger in the fight against COVID-19. “Make no mistake that it is a big addition to the capacity in this country and should be celebrated as such.”

He added that the EUA “unequivocally validates antigen testing as a cornerstone of testing solutions” in the U.S.

Abbott beat expectations for second quarter earnings, thanks to a strong performance in diagnostics. Total sales for the quarter were $733 billion, down 5.4% from the same period in 2019 but much better than Wall Street’s estimate of $6.81 billion, which would have been an 11% decline. Postponement of elective surgeries hurt medical device sales, but diagnostics rebounded following an initial decline to more normal testing, bolstered by COVID-19 testing.

COVID-19 testing-related revenue accounted for $615 million of the $1.99 billion in diagnostics sales Abbott tallied for the quarter, buoyed by $152 million in sales of its IgG antibody test, $283 million for its m2000 molecular test and $180 million for its rapid ID Now test.

Quidel Corp., which obtained an EUA for its Sofia SARS Antigen FIA rapid point-of-care test in June, welcomed the addition of another antigen entrant, saying it doesn’t change its pipeline and marketing strategy. “The validity of rapid antigen testing has been questioned by some, including state public health officials, and together with Abbott, BD and perhaps others, we can begin to change the mindset and to expand the utility and demand for this technology.”

The EUA gave Abbott’s stock a nice bump, pushing it up $8.10 to $111.29 at the close of business on Thursday.

Richard Newitter, of SVB Leerink, noted that a number of COVID-19 testing companies, both polymerase chain reaction (PCR) and antigen, were trading lower in response to Binaxnow’s $5 price, but wagered that demand for PCR tests will remain high due to their role in confirmatory testing.

“We see TMO [Thermo Fisher Scientific Inc.] and HOLX [Hologic Inc.] continuing to be most defensive vs any antigen risk in the market. Though we see the potential for ABT’s Binaxnow COVID-19 Ag Card to help address some of the asymptomatic testing volume with its 50M tests per month capacity and low price point ($5),” he wrote.