$481 Mil Federal COVID Contract Awarded to Young IVD Company

HHS had relationship since 2018 with Cue Health; wants to quickly scale up made-in-USA portable tests

IN THEIR FIGHT AGAINST THE PANDEMIC, federal officials are boosting the fortunes of some little-known or emerging in vitro diagnostics (IVD) companies. One example is the recent award of a $481 million  COVID-19 test contract to Cue Health Inc., of San Diego.

Earlier this month, the federal Department of Health and Human Services (HHS) and the Department of Defense (DoD) announced a contract that calls for Cue Health to produce six million rapid molecular COVID-19 tests by March 2021.

Feds May Be Fueling IVD Trend

This development could signal an important trend in the IVD industry that could have long-term consequences. According to statements by HHS and DoD officials, the nation’s billion-dollar IVD corporations are unable to fulfill this and similar contracts for COVID-19 instruments and tests because their manufacturing capacity is already stretched to the limit.

This is why federal agencies are willing to issue sizeable contracts for COVID-19 testing products to young IVD companies and new entrants such as Cue, which reportedly has capacity to immediately launch production of tests exclusively at its San Diego facilities. The contract terms provide Cue with up-front capital so it can increase its manufacturing capacity.

The total contract—worth $481 million—will help Cue Health achieve manufacturing economies of scale that could allow it to compete more effectively against the major IVD corporations as the SARS-CoV-2 pandemic eventually winds down.

Another interesting element in this story is that Cue Health is a known factor to HHS. The Cue Health platform, HHS said, was funded starting in 2018 for development of a molecular influenza test by the Biomedical Advanced Research and Development Authority (BARDA). As the pandemic surged in March, BARDA expanded the collaboration and Cue had adopted its platform to the coronavirus.

BARDA is part of the HHS Office of the Assistant Secretary for Preparedness and Response. “This award exemplifies the importance of agencies like BARDA, which invest in platform technologies that can be applied to diverse health security needs,” said Admiral Brett Giroir, M.D., U.S. Assistant Secretary for Health, in an HHS statement. “This investment will allow Cue Health to expand its footprint and significantly scale up production, and by doing so enable this technology to be deployed throughout our testing ecosystem to benefit all Americans.”

In an interview with Bloomberg News, Giroir added, “Companies need money up front, particularly small companies. This is not Abbott or BD (Becton Dickinson).” However, Abbott Laboratories, Abbott Park, Ill., does have a $750-million contract with HHS and DoD for 150 million rapid tests. Abbott has “invested hundreds of millions in two manufacturing facilities,” to produce its BinaxNOW COVID-19 Ag Card test.

Cue acknowledged that the federal government’s award will help the company access supplies and speed-up production of the molecular point-of-care tests to 100,000 COVID-19 tests kits per day by March, 2021.

“Our vision in designing the Cue Health Monitoring System was to enable individuals to have more control over their health and lives by providing access to actionable, accurate health data in real time. The U.S. government’s support has and will allow us to fulfill this vision in this particularly critical moment,” said Ayub Khattak, Cue Founder and CEO, in a news release.

The Dark Report contacted Cue Health for its comments and had received no response as of press time.

Test Has EUA, Used in NBA Bubble

Cue’s COVID-19 test is already being used in healthcare, education, and business settings. In fact, Cue COVID-19 tests were deployed by the National Basketball Association (NBA) during the 2019-2020 season. Before players or staff entered the “NBA bubble,” they were required to have two negative COVID-19 tests, MedCity News reported.

“So, if it’s good enough for LeBron (LeBron James of the Los Angeles Lakers), we want to democratize it and make sure it’s available to the American people,” Giroir said in Bloomberg News, where he explained the government will use these SARS-CoV-2 tests in geographic areas that have COVID-19 outbreaks and at healthcare locations such as skilled nursing facilities.

The U.S. Food and Drug Administration announced Emergency Use Authorization in June for the Cue Health Monitoring System and the Cue COVID-19 test. Also important to HHS and DoD was a prospective study by Mayo Clinic suggesting accuracy of the test. (The study data was requested by The Dark Report and have not yet been released to the public.)

“The Cue testing system is highly sensitive and specific and nearly equivalent to the best large referral laboratory systems,” Giroir said. Across four clinical studies, the test has 98.7% sensitivity and 97.6% specificity, Cue said. In a Limit-of-Detection (LoD) study, the Cue COVID-19 cartridge confirmed LoD of 20 SARS-CoV-2 RNA genomic copies per sample.

Compact COVID-19 Test System

Cue’s COVID-19 test is performed on the Cue Health Monitoring System, which is small enough to fit in the palm of a hand. Included is a Cue Test Cartridge (operated by a reusable battery-operated Cue Cartridge Reader) and single-use test kit with a Cue Sample Wand (a nasal swab).

The test works after the swab is inserted into the cartridge, which detects the genetic material of the SARS-CoV-2 using a molecular amplification reaction, according to the Cue website. Results are sent to the Cue Health App and the user’s smartphone in about 20 minutes. The sample reader, which can be reused, costs a “few hundred dollars” and the cartridge “tens of dollars,” according to a statement by Khattak in the San Diego Union-Tribune.

New IVD Opportunities

The need by federal agencies to respond to the SARS-CoV-2 pandemic is the reason why regulators are revising regulations governing clinical laboratory testing and how the lab analyzers and tests used for COVID-19 testing are reviewed and cleared for market. In normal times, a federal agency would not be granting a contract worth almost half a billion dollars to an emerging IVD company. But these are extraordinary times and the longer the pandemic continues the greater the likelihood that smaller IVD companies can win big contracts from different federal agencies.

CUE Health’s COVID-19 Test Uses Nasal Swab, the Reader Reports Results to a Smartphone

NOT ONLY IS IT NOTEWORTHY THAT TWO FEDERAL AGENCIES AWARDED A $481 MILLION CONTRACT for six million COVID-19 tests to an emerging in vitro diagnostics (IVD) company in San Diego, but it is equally noteworthy that the company’s technology is built around a small reader and smartphones for collecting and reporting data from the reader. Cue Health’s system is designed to perform “in-home and in-clinic diagnostics” and was used by the National Basketball Association (NBA) this summer and fall to do COVID-19 testing on the players and staff.

The Cue Health test system paid for by a COVID-19 test contract

Business Milestones for Cue Health

• 2010: Cue Health, a healthcare technology company manufacturing medical diagnostic products for clinical and at-home use, is founded by Ayub Khattak and Clint Sever in San Diego, Calif.

• 2018: Cue partners with the Biomedical Advance Research Development Authority (BARDA) to develop a molecular Influenza test.

• March 2020: BARDA announces acceleration of collaboration with Cue to manufacture Cue’s COVID-19 test. Cue adapts its platform to respond to the pandemic.

• June 2020: Cue raises $100 million in a Series C funding round for developing Influenza and COVID-19 tests. The Cue Health Monitoring System and Cue COVID-19 test receive Food and Drug Administration Emergency Use Authorization.

• October 2020: Cue Health announces $418 million award by Department of Health and Human Services and Department of Defense to produce six million molecular point-of-care COVID-19 tests using the Cue Health System.



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