Abbott soars 10% after its 15-minute COVID-19 test wins FDA approval

People stand in line at a clinic in Long Beach, California offering quick coronavirus testing for a fee, on Monday, June 29, 2020.

Brittany Murray/MediaNews Group/Long Beach Press-Telegram via Getty Images

• Abbott surged 10% on Thursday after the FDA granted emergency authorization for its 15-minute COVID-19 test.
• Aside from the quick testing results, the new test is also significant because it will cost only $5.
• The test, BinaxNOW, can be used at "massive scale" and does not require lab equipment to deliver results, according to Abbott.
• Abbott plans to ship up to 50 million tests per month by October.
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Abbott is set to shake up the COVID-19 testing landscape after receiving emergency authorization for its new COVID-19 test from the FDA on Wednesday.

Abbott's test, BinaxNOW, is a COVID-19 diagnostic test that can deliver results in 15 minutes without the use of lab equipment. The test will cost just $5, according to Abbott.

Shares soared as much as 10% to $113.72 on the news in Thursday trades.

The new COVID test will be accompanied by a free smartphone app that will display a user's test results, which can then be displayed when asked at social gathering places like schools and workplaces.

Read more: David Baron's fund has returned 400% to investors in the past decade using 20 stocks or fewer. He shared with us the 3 stocks he snapped up in 2020 — and the 3 travel and entertainment bets he loves going forward.

Abbott anticipates shipping tens of millions of BinaxNOW tests in September, and plans to ramp up monthly production of the tests to 50 million by October.

Jim Cramer said in a tweet on Wednesday that Abbott's new COVID test is a "game changer" that could help the economy reopen quicker as rapid testing for the disease becomes widely available.

According to Abbott, the BinaxNOW test delivered sensitivity of 97.1% and accuracy of 98.5% in a clinical study.

Abbott isn't the only company that received FDA emergency authorization for a potential game-changing COVID-19 test this week. 

On Tuesday, small-cap diagnostics company Fluidigm received FDA approval for its saliva-based COVID-19 test, allowing patients to avoid the more invasive nasal swab test that has been used since the outbreak began earlier this year.

Read more: The CEO of a $1 billion ETF provider explains how the COVID-19 crisis completely upended investors' most reliable sources of steady returns — and shares where to find income as dividends and bond yields dry up

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