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A COVID-19 test developed by Abbott Laboratories may require a backup test if the results are negative following reports of false negative findings in a diagnostic still being promoted by the Trump administration.
Abbott’s ABT, -2.63% shares were down 2.9% in trading on Friday.
President Donald Trump on Friday reiterated his support, saying Abbott’s ID Now molecular diagnostic is “a great test.”
On Thursday evening, the Food and Drug Administration (FDA) had issued an alert, seeking to alleviate concern that the ID Now test can generate false negative results after New York University researchers published a preprint that found up to 48% of the results from nasal swabs were false negatives among 101 patients.
A preprint is an early version of a medical study that has not been peer reviewed and should not be considered fact. Much of the medical research emerging during the COVID-19 pandemic has been first published in preprint form.
The regulator said it is working with Abbott to create a letter calling for a backup test if the negative results don’t match a patient’s symptoms, and it is studying whether the accuracy issues can be attributed to the swab type or the material used to transport the samples. At least 15 adverse events related to the test have been reported to the FDA.
“The NYU study results are not consistent with other studies and relied on a small sample size,” Abbott said in a statement, noting that it has shipped 1.8 million of the tests in question in the U.S. The company stands by a false negative rate of 0.02%, according to UBS analysts.
Read: The FDA tightens rules around antibody tests as companies talk up their value
Abbott has received emergency use authorizations (EUA) from the FDA for several COVID-19-related tests: three molecular tests, including ID Now, that are used to diagnose infections, and two serological tests that can detect antibodies, which indicate a previous infection with the virus. ID Now received an EUA on March 27 and is being used to test White House officials.
“These tests are highly sophisticated, very quick, very good,” Trump said earlier this week at a news conference. “We do have a great testing capability at the White House.”
According to comments made by Abbott CEO Robert Ford during an April 16 earnings call, the first phrase of the ID Now launch focused on getting the test to frontline health care workers. “And as we start to ramp up manufacturing for ID NOW, as we’ll start to implement those actions in the month of May, into June, we’ll start to roll this out into a second phase where we’ll start to be able to test more of the general population,” he said, according to a FactSet transcript of the call.
It’s unclear at this time whether the NYU study included health care workers in the patient sample.
Analysts have been bullish on the moneymaking potential for diagnostics companies during the pandemic based on anticipated demand for both molecular and serological COVID-19 tests. Credit Suisse analysts have said Abbott’s COVID-19 tests will be a “significant new growth driver” for the company over the next two to three years.
Analysts this week generally view the FDA’s announcement as uneventful.
“While we view this [label change] as a concession on the part of Abbott, at this point, we don’t believe it will have much of a near-term impact on demand,” Raymond James analysts wrote in a note to investors that repeated the company’s outperform rating.
Abbott’s stock is up 3.3% year-to-date, while the S&P 500 SPX, +0.08% is down 11.7%.
