Quest Diagnostics DGX recently announced the receipt of the FDA’s Emergency Use Authorization (“EUA”) to use specimen pooling with its Quest Diagnostics SARS-CoV-2 RNA (Quest SARS-CoV-2 real-time reverse transcription polymerase chain reaction or rRT-PCR) test. Notably, Quest Diagnostics is the first lab provider to have received the FDA’s authorization for the specimen pooling method for COVID-19 testing in the United States.
The company expects to start using the technique at laboratories in Chantilly, VA and Marlborough, MA by the end of this week, followed by other laboratories.
Quest Diagnostics also received three EUAs for the use of the Self-Collection Kit with Hologic’s Panther Fusion and Aptima, along with Roche’s cobas molecular platforms.
With the recent regulatory clearances, the company’s Diagnostic Information Services business is expected to be strengthened on a global scale.
Significance of the Approval
Post the approval, the Quest SARS-CoV-2 rRT-PCR test can be used with pooled upper respiratory specimens. In the pooling technique, specimens are collected into individual vials and then combined into small batches or pools by the laboratory. A negative result for a batch signifies that all patients in that pool are considered negative. However, in case of an occurrence of a positive result for the batch, each specimen is retested individually. Thus, this method is an efficient way to evaluate patients in regions or populations with low rates of infection.
Quest Diagnostics has submitted clinical data to the FDA that showed that none of the total submitted specimens from a population with a prevalence rate of 1-10% would have been incorrectly determined to be negative, post pooling.
Per management, the pooling technique will enable the company to optimize its testing capacity amid continuous spread of the pandemic. A timely access to improved laboratory testing is crucial.
Further, the three latest EUAs expanded the use of the self-collection kit for the Quest SARS-CoV-2 rRT-PCR test beyond the EUA, granted on May 27. The company expects the new EUAs to expand the usage of self-collection in the United States. However, self-collected specimens that were not observed by a healthcare professional are not eligible for pooling.
Per a report by Grand View Research, the global molecular diagnostics market was valued at $9.2 billion in 2019 and is anticipated to reach $18.2 billion by 2027 at a CAGR of 9%. Factors like rising prevalence of infectious diseases and technological advancements are expected to drive the market.
Given the market potential, the EUAs are likely to boost Quest Diagnostics’ business.
Other COVID-19-Related Progress
Of late, Quest Diagnostics has been witnessing a few developments in its fight against the pandemic.
The company, in May, launched a suite of Return to Work services built around large-scale workforce COVID-19 testing.
In May, Quest Diagnostics received EUA for the Self-Collection Kit for COVID-19, which can be used by individuals to self-collect a nasal specimen at home or in a healthcare setting when deemed to be appropriate by a healthcare provider.
In April, the company announced that customers can purchase COVID-19 antibody testing for themselves online without visiting a doctor's office through QuestDirect, effective immediately.
Quest Diagnostics received an EUA in March for the Quest Diagnostics SARS-CoV-2 RNA, Qualitative Real-Time RT-PCR ("Quest SARS-CoV-2 rRT-PCR") test for the qualitative detection of nucleic acid from the SARS-CoV-2 in upper and lower respiratory specimens collected from individuals who are suspected to carry COVID-19 infection by healthcare providers.
Shares of the company have gained 27.6% in the past year compared with the industry’s 2.8% growth and S&P 500's 8.7% rise.
Zacks Rank & Other Key Picks
Currently, Quest Diagnostics carries a Zacks Rank #1 (Strong Buy).
Other top-ranked stocks from the broader medical space include Exact Sciences Corporation EXAS, Laboratory Corporation of America Holdings LH or LabCorp and QIAGEN N.V. QGEN.
Exact Sciences’ long-term earnings growth rate is projected at 30%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
LabCorp’s long-term earnings growth rate is estimated at 7.5%. The company presently sports a Zacks Rank #1.
QIAGEN’s long-term earnings growth rate is estimated at 22.3%. It currently flaunts a Zacks Rank #1.
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