Hologic's Second Molecular Test Gets EUA to Detect Coronavirus

Hologic, Inc. HOLX recently announced the receipt of the FDA’s Emergency Use Authorization (EUA) for its Aptima SARS-CoV-2 assay, which can be used to detect SARS-CoV-2, the virus causing coronavirus. Notably, this test will run on the company’s flagship Panther system.

For investor’s note, this is Hologic’s second molecular test to receive EUA after the Panther Fusion SARS-CoV-2 assay in March for the detection of SARS-CoV-2.

Later in May, Hologic is planning to pursue a CE Mark for diagnostic use of the Aptima SARS-CoV-2 assay in Europe.

With the latest approval, Hologic aims to gain foothold in the Molecular Diagnostic business globally. Notably, the Molecular Diagnostic business is a component of its broader Diagnostics arm.

More on the Product

Per Hologic’s announcement regarding the Aptima SARS-CoV-2 assay on Apr 29, the assay will be distributed as a Research Use Only version to various hospitals, and public health and reference laboratories certified under the Clinical Laboratory Improvement Amendments (CLIA) to perform high complexity tests. However, these labs may utilize the assay for clinical testing on Hologic’s Panther system only after completing the performance verification testing.

Significance of the Approval

The fully-automated Panther system, on which the Aptima SARS-CoV-2 assay will run, can provide the initial results in three hours. It can also process more than 1,000 coronavirus tests in 24 hours. The company believes that by developing a second test that can be produced in much larger quantities and run on a much wider installed base of instruments will fast-track the delivery of test results. This will enable people to decide whether they can resume work or need to be quarantined.

Further, using the Aptima assays does not require additional sample preparation steps or commercial reagents from other vendors. This is expected to help reduce the competition for raw materials as well as increase the global testing capacity. Hologic has also validated its Aptima Multitest Swab Specimen Collection Kit for testing with the Aptima assay to help lessen shortages of commonly-used sample collection swabs and transport media.

Industry Prospects

Per a report by Grand View Research, the global molecular diagnostics market size was valued at $9.2 billion in 2019 and is expected to reach $18.2 billion by 2027, at a CAGR of 9%. Factors like progress in molecular diagnostics and the growing prevalence of infectious diseases are likely to drive the market.

Recent Developments in Molecular Diagnostics

Of late, Hologic has been making progress in its Molecular Diagnostics business.

The company announced during its fiscal second-quarter earnings in April that its global Molecular Diagnostics revenue performed impressively and witnessed the division’s highest growth rate since 2012. This was contributed, in part, by the robust sales of its Panther Fusion SARS-CoV-2 assay (its first molecular diagnostic test to detect the SARS-CoV-2) amid the coronavirus pandemic. Notably, it received the FDA’s EUA for the assay in March.

Hologic has also announced the commercial availability of new product offerings within the Panther Scalable Solutions portfolio in the United States and Europe. These latest optional configurations will enable laboratories to scale their instrumentation to meet demand for testing.

Price Performance

Shares of the company have gained 15.9% in the past year compared with the industry’s 7.7% rise and the S&P 500’s 0.8% growth.

Zacks Rank & Key Picks

Currently, Hologic carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Aphria Inc. APHA, Surmodics, Inc. SRDX and Owens Minor, Inc. OMI.

Aphria has a projected long-term earnings growth rate of 24.6%. It currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Surmodics’ long-term earnings growth rate is estimated at 10%. The company presently sports a Zacks Rank #1.

Owens Minor’s long-term earnings growth rate is estimated at 8.3%. It currently carries a Zacks Rank #2.

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