- Cue Health has won a $28 million federal contract to create a test that detects and differentiates between four respiratory viruses in 25 minutes.
- The U.S. Biomedical Advanced Research and Development Authority award covers development of a molecular multiplex test of influenza A and B, respiratory syncytial virus and COVID-19.
- Winning the contract boosts Cue Health’s attempts to diversify beyond its collapsing COVID-19 business. The company plans to launch the respiratory panel for the 2024-25 virus season, and through a mix of menu expansion and cost cutting, aims to break even in 2025.
Cue has experienced whiplash changes of fortune since the pandemic began, first growing rapidly as its SARS-CoV-2 test brought money into the business, and then laying off hundreds of people as the bottom fell out of the COVID-19 market. The company is now racing to expand the menu of tests that run on its at-home and point-of-care diagnostic platform.
Amid analyst skepticism about its ability to pivot, the diagnostic company has won a contract to work on a test of four respiratory pathogens. The new test will run on the existing Cue Health Monitoring System.
The contract covers the development of over-the-counter and point-of-care tests. In either setting, the multiplex test would be designed to help patients and healthcare professionals quickly determine the viral cause of a respiratory infection from similar symptoms and enable targeted treatment.
“We expect this test will arm individuals and their providers with actionable information that can reduce community spread, increase the efficacy of treatment and help lead to better health outcomes,” Cue CEO Ayub Khattak said in a statement.
Cue disclosed the contract shortly before reporting its second-quarter financial results. During the quarter, Cue achieved its goal of reducing its annualized costs by $150 million. The milestone, which Cue met ahead of schedule, helped the company to end the quarter with $128.6 million in cash and cash equivalents.
“[Cue] believes this cost reduction allows the company to maneuver through the dynamic macro environment as new products continue to work through the pipeline by executing on their priorities of regulatory approvals, commercialization of new molecular tests, key development programs, and growing traction in Cue Pharmacy and Cue lab,” analysts at Goldman Sachs wrote in a note to investors.
The company is forecasting sales of $11 million to $13 million for the third quarter. The midpoint of the forecast is below the expectations of the Goldman team and the consensus of analysts. Even so, with easier year-on-year comparisons ahead, Cue expects to return to growth in the second half of 2023.