Abbott gets FDA approval for 15-minute, $5 covid test

A 15-minute covid test from Abbott Laboratories that will be priced at just $5 has been granted emergency authorization for use in the U.S., a breakthrough that could ease the bottleneck that has crimped much of the nation's testing capacity.

The North Chicago-based company's shares climbed as much as 13% in pre-market trading. The product, dubbed BinaxNOW, works without relying on laboratory equipment at a time when labs can take as long as two weeks to produce results. It uses a nasal swab and a small reactive card, and it can be administered by a range of health-care workers, including pharmacists, at almost any location.

Abbott will start shipping the test within two weeks and intends to manufacture 50 million tests a month by October. The aim: Meet a surge in demand from Americans seeking to return to in-person schoolrooms and work.

Demand for an antigen test "could be ENORMOUS -- think about employers, restaurants, games/events, transportation etc. using these tests for ensuring safety," Vijay Kumar, an analyst at Evercore ISI, wrote in a note to clients.

"This test approval represents a key requirement for society to ultimately return to a sense of normalcy," said Robbie Marcus, an analyst at JPMorgan, in a note. He forecast Covid-19 related testing may generate $2.7 billion to $2.8 billion of revenue for the year, "a sizable tailwind for a company already better exposed to the virus than many in our coverage."

The test uses so-called lateral flow technology, similar to the method used in at-home pregnancy tests. Essentially, these tests run a liquid sample along the surface of a pad with reactive molecules to show a result. While a pregnancy test is designed to detect a hormone, Abbott's BinaxNOW looks for an antigen, a tiny portion of the coronavirus protein that's collected from inside the nose.

"It's detecting them at a critical point in the infection cycle, when they are at the highest risk of spreading disease," said John Hackett, divisional vice president of applied research and technology at Abbott Diagnostics. "This will be a powerful tool in preventing the transmission of the virus and helping us return to normal life."

While several other companies are selling antigen tests that also work quickly, they require some equipment to get the results. The technology also sometimes yields lower accuracy in exchange for working faster. The BinaxNOW is 97.1% sensitive, meaning it correctly diagnoses those with the infection that often, and 98.5% specific, meaning an infection is correctly ruled out that often.

BinaxNOW is the sixth test Abbott has launched to track coronavirus, including molecular tests that detect current infections and antibody tests that show someone has successfully fought off the pathogen. Since the first one was launched in March, the company has sold more than 27 million of its tests so far in the U.S.

Through Wednesday's close, Abbott's shares had climbed 19% for the year.

At the same time, Abbott is launching a mobile app called Navica that will be connected to the test, giving users an electronic record of their coronavirus status. The results could be used much like a boarding pass to allow those who are negative to return to everyday activities.

Those with a positive result will be told to quarantine and contact their doctor. Health-care workers who conduct the tests are required to report positive results to public health officials.

The U.S. is currently running about 800,000 tests a day nationwide, or 24 million a month, according to the Covid Tracking Project. Abbott built two new manufacturing facilities in the U.S. to produce BinaxNOW, allowing it to more than double the number of tests available to 50 million a month.

"Our nation's frontline health-care workers and clinical laboratory personnel have been under siege since the onset of this pandemic," said Charles Chiu, a professor of Laboratory Medicine at University of California, San Francisco. "The availability of rapid testing for covid-19 will help support overburdened laboratories, accelerate turnaround times and greatly expand access to people who need it."