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OTC COVID-19/Influenza Test Approval Comes Too Late to Save Lucira Health

by Glenn S. Demby | Mar 31, 2023 | Essential, Inside the Lab Industry-lir, Laboratory Industry Report

No company better embodies the vicissitudes of running a COVID-19-focused diagnostics business during the pandemic period than Lucira Health.

The pandemic has been an economic whirlwind like nothing the diagnostics industry had ever experienced before with unprecedented demand for COVID-19 testing driving the creation of new businesses while sending others to ruin. In some ways, it turned out to be the worst of both worlds. The companies that had to fold up shop because they had no COVID-19 products to sell are likely gone for good; meanwhile the companies that did cash in are struggling to survive now that the COVID-19 revenues have dried up.

No company better embodies the vicissitudes of running a COVID-19-focused diagnostics business during the pandemic period than Lucira Health. Lucira’s riches to rags story came to a cruelly ironic end in February when the FDA granted the firm a major clearance for an over-the-counter (OTC) SARS-CoV-2/influenza combination test. But what should have been celebrated as a major triumph was marred by the fact that the company had filed for bankruptcy just 48 hours earlier.

The Rise of Lucira Health

Remember not too long ago when coronavirus cases were surging and home-use SARS-CoV-2 tests almost literally flew off the shelves? It was Lucira Health, a publicly traded company known for its innovative molecular diagnostics products for infectious diseases that secured the first FDA clearance for such a product. It happened in November 2020 when the FDA issued Emergency Use Authorization (EUA) for the Lucira COVID-19 All-In-One Test Kit, a single-use test using real-time loop-mediated isothermal amplification to detect SARS-CoV-2 RNA in symptomatic patients.¹

Costing about $50 a pop, the Lucira kit was perfectly positioned as a faster, more cost-effective alternative to PCR testing. Adding to the attraction was that the FDA also granted EUA for use of the kit at the point of care in hospitals, emergency rooms, urgent care centers, doctor’s offices, and other CLIA-waived settings.¹

“A test that can be fully administered entirely outside of a lab or healthcare setting has always been a major priority for the FDA to address the pandemic,” noted Jeff Shuren, MD, JD, director of the FDA’s Center for Devices and Radiological Health (CDRH) in a statement issued at the time of the approval announcement.²

The FDA approval and rising demand for COVID-19 at-home testing enabled Lucira Health to raise $160 million in a February 2021 IPO.³ This was no Johnny-come-lately. In 2018, the Emeryville, California-based company then known as Diassess won a contract from the U.S. Department of Health and Human Services’ (HHS) Biomedical Advanced Research and Development Authority (BARDA) of up to $21.9 million to develop diagnostics for the flu, including a rapid test kit for home use.⁴

The Clock Strikes 12 on Lucira Health

On February 24, 2023, Lucira once more demonstrated its at-home testing prowess when the Lucira COVID-19 & Flu Home Test became the first at-home assay for detecting and differentiating between influenza A, influenza B, and SARS-CoV-2 to receive EUA clearance for nonprescription OTC use.⁵ However, the victory was bittersweet. Just two days earlier, Lucira filed for Chapter 11 bankruptcy protection.⁶

Ironically, the FDA was a big part of the reason that Lucira had to resort to Chapter 11. The problems began in May 2022 after Lucira announced that the COVID-19 & Flu Home Test had received CE clearance in Europe and submitted the product to the FDA.⁷ The expectation was that the agency would grant EUA clearance no later than August. But it didn’t happen. Months dragged by without an FDA decision.

As Lucira waited, COVID-19 testing demand steadily declined as did the price of the company’s stock. Saddled with excess inventory and non-cancellable purchase commitments to the company that manufactures its tests, Lucira had to record a $107.2 million charge against its 2022 third quarter earnings.⁸ In October, the company launched a corporate restructuring plan, laying off 25 percent of its staff and searching for a potential buyer. In December, Lucira got a piece of unwelcome mail—a delisting notice from Nasdaq.⁹

Finally, on Feb. 22, it filed for bankruptcy, listing assets of approximately $146 million and debts of $85 million as of Dec. 31.¹⁰ “We regret that we had no option but to file for Chapter 11 bankruptcy and that this occurred days before we received regulatory authorization,” stated Lucira Health president and CEO Erik Engelson in a company press release. “Unfortunately, we were unable to bridge what became a protracted authorization cycle time within our current capital structure and it remained unclear to us when the regulatory authorization would come through, despite working closely with FDA.”¹¹

Takeaway

Having banked so heavily on COVID-19 test products, Lucira Health was obviously in deep trouble with or without FDA inaction. But bad timing and foot dragging by the agency in approving the combo test certainly didn’t help. Even a couple of weeks might have spelled the difference between viability and bankruptcy. According to Engelson, the company had produced inventory necessary to support a launch at the start of the severe respiratory season. Regrettably, by the time the FDA cleared the combo test, that window had already closed.