The U.S. is investing $481 million in California-based start-up Cue Health to boost manufacturing of its coronavirus test that produces results in about 20 minutes and without needing to be processed at a lab, U.S. agencies announced Tuesday.
Cue, which is backed by Johnson & Johnson among other investors, will increase production from several thousand test kits per day now to 100,000 per day by March, according to the Department of Health and Human Services. It added that the U.S. will acquire 6 million tests and 30,000 lab instruments used to process the tests.
Cue Health CEO Ayub Khattak told CNBC that the company will likely be "more than halfway" to that goal by the end of the year.
"Cue's tests provide results in about 20 minutes with the kind of accuracy provided by lab tests that can take several days, adding to our dramatically expanding supply of rapid tests that can support safe reopening," Alex Azar, secretary of HHS, said in a statement.
Cue is a molecular test and it uses an in-house nasal swab, called the Cue Sample Wand, collected from the lower part of the nose, HHS said. That's different from some other rapid molecular tests that use nasopharyngeal swabs inserted deep into the nose.
Test results can be delivered directly through the Cue Health mobile app, HHS said. Khattak added that the digital test results will make it easier to share tests with proper health officials and potentially conduct contact tracing to help reduce the spread of the virus.
"Today's announcement of millions of additional rapid tests further demonstrates that the Administration is sparing no effort or expense to save lives and help our country safely open, re-open, and stay open," White House spokesman Michael Bars said.
Khattak said HHS made the award to Cue Health based on preliminary data from an independent study of the accuracy of the test carried out by the Mayo Clinic. The study has not yet been published.
"The Cue testing system is highly sensitive and specific, and nearly equivalent to the best large referral laboratory systems," Adm. Brett Giroir, assistant secretary of health who leads the government's testing effort, said in a statement. "This investment will allow Cue Health, Inc. 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."
The company announced on June 12 that it received an emergency use authorization for the test from the Food and Drug Administration. The regulatory agency authorized the test to be used "anywhere under the supervision of qualified medical personnel," the company said.
Khattak said in a phone interview that the test is already in use by a number of clients, including the National Basketball Association, which successfully played out its season this year by creating a "bubble" in Orlando, Florida. The test is "the official point-of-care test for the NBA," he said.
He added that the company hopes to eventually get the test authorized for use totally at home.
"Our North star all along has been home use for the platform," he said in a phone interview. "We think we're in a position to go and get that additional regulatory expansion for home use. It's certainly what we'd like to do."
Cue Health developed the test in partnership with the Biomedical Advanced Research and Development Authority, which is part of HHS. The partnership began in 2018, when BARDA awarded $14 million to Cue to develop a molecular influenza test with the option to extend the agreement up to 60 months for a total of $30 million. Early in the pandemic, BARDA expanded its partnership with Cue to develop a test for the coronavirus.
"I think that there's a really nice arc to this," Khattak said of the partnership. "They recognized the potential. They worked on it. They had an option in there that anticipated possibly coronavirus. That got activated and we got the product out into the market."