On Friday, Abbott Laboratories received an emergency use approval from the U.S. Food and Drug Administration (FDA) to launch a small, portable COVID-19 test kit that can return results in between five and 13 minutes.
The Chicago-based medical device maker plans to supply 50,000 tests per day across the U.S. starting April 1. “This is really going to provide a tremendous opportunity for front-line caregivers, those having to diagnose a lot of infections, to close the gap with our testing,” John Frels, head of research and development at Abbott Labs’ diagnostics unit, told Bloomberg. “A clinic will be able to turn that result around quickly, while the patient is waiting.”
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The portable test technology was built on Abbott’s ID Now platform, a widely adopted point-of-care system (weighing only seven pounds) in the U.S. used to detect respiratory diseases including influenza.
In response to Friday’s FDA news, Abbott Labs’ shares jumped over 10 percent Monday morning, making it the hottest stock on Wall Street at the opening of the week. However, market observers caution that, amid the gloomy and highly uncertain market climate right now, investors should curb their optimism when buying in biotech and pharmaceutical stock.
“There is simply too much optimism in the stock market, and in many cases investors are buying without doing research,” Nigam Arora, an investor and founder of The Arora Report, which publishes four financial newsletters, wrote in a column for MarketWatch on Monday.
Taking Abbott Labs as an example of investors’ hasty buying, Arora wrote,”Abbott Labs has come up with a coronavirus test that takes five minutes. The revenues from the coronavirus test will dwarf those that Abbott is likely to lose due to issues related to coronavirus. [So] investors are running up the stock.”
Abbott shares saw its first round of rally last week, after the company’s non-portable of the COVID-19 test system, m2000 RealTime, won the FDA approval to be used in hospitals and labs. m2000 RealTime takes longer than the portable kit to return results, but the system can process up to one million tests a week. Between the two systems, Abbott plans to run at least five million tests a month.