Questions Surround the Reliability of Quidel’s Rapid Tests for Swine Flu

The rapid spread of the swine flu pandemic, which has claimed more than 1,150 lives since the outbreak was identified in April, has many doctors and hospitals turn to rapid tests that can diagnose within minutes whether a patient has the flu. But the tests have a severe limitation, according to a report by the NYT. While the time it takes to diagnose the new swine flu strain is cut from a few days to only a few minutes or half an hour as a result of the rapid tests, these tests, given their low detection ability may fail more than half the time to identify swine flu infections, the NYT said, citing a newly published studies.

The rapid tests “are missing a ton of flu,” and they are detecting only 10% of the swine flu infections that could be picked up by a more sophisticated laboratory culture, said Christine C. Ginocchio, director of the division of microbiology, virology and molecular diagnostics at the North Shore-Long Island Jewish Health System in Lake Success, N.Y.

Last week the federal Centers for Disease Control and Prevention updated guidance urging doctors to be cautious in relying on the tests. The agency is expected to publish its own study of the rapid tests soon.

Manufacturers of the tests however, seem to object the findings – arguing that the products are helpful if used appropriately.  John D. Tamerius, senior vice president for clinical and regulatory affairs at Quidel Corporation (NASDAQ:QDEL), which describes his company as the leading maker of such tests, says that Quidel’s QuickVue flu test for the detection of Influenza Virus type A and type B antigens done directly from a self administered nasal specimen swab, could detect 80% of infections if nasal samples were taken correctly and if the test was given early in the course of the disease, when more virus was present. But in a letter to The New England Journal of Medicine in June, Navy researchers seem to disagree with Tamerius’ conclusion. The researchers described in their letter the poor sensitivity of the Quidel tests and pointed out the tests missed half the swine flu infections detected by a more sensitive technique.

The low sensitivity of the tests is becoming an increasing concern to health officials because a false negative reading might prompt a doctor not to prescribe antiflu drugs.

Meanwhile, spurred by rapid flu test sales  San Diego-based Quidel has seen its second-quarter revenue spike 70% to $16.1 million on a y/y basis. The co.’s  2Q net income came in at $0.6 million, or $0.02 per diluted share, compared to a net loss of $0.5 million, or $0.02 per share y/y.

QDEL shares, which closed above $13 on Thursday, have doubled since the flu outbreak started in April. The company, notes the Times, is now manufacturing tests as fast as it can. Quidel estimates that about eight million rapid flu tests in total were sold in the U.S in the ’07-’08 flu season. The number is likely to jump this year.

Earlier today Wedbush Morgan came out with a downgrade on QDEL to Underperfrom from Neutral following a series of recent publications questioning the sensitivity of the company’s rapid flu tests. Wedbush Morgan believes that at current valuation QDEL shares are overvalued as they do not price in the risk of a less rapid flu test utilization by clinicians if additional studies continue to question the performance of these tests.

Quidel shares lost $1.53, or 10.01%, to $13.75 in NASDAQ trading.

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