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Facing 'Unfathomable' Demand, Quidel Ramps Up SARS-CoV-2 Test Production


NEW YORK – Quidel is massively ramping up production of its molecular diagnostic and antigen tests to meet skyrocketing demands for SARS-CoV-2 testing in the US.

In a call with investors on Thursday the firm outlined its manufacturing strategies and guided for an expected windfall third quarter. Quidel also provided details on Friday related to $71 million in National Institutes of Health funding to support planned expansions.

Quidel currently sells three Emergency Use Authorized SARS-CoV-2 detection products; an instrument agnostic RT-qPCR kit in the Lyra line, a Lyra direct kit that does not require extraction, and a rapid antigen test that runs on the firm's Sofia and Sofia 2 immunoassay analyzer instruments. The viral antigen test — which detects an active infection through interaction with a protein on the outside of the virus — was the first such test to get EUA, in early May.

In the second quarter, Quidel's total revenues jumped 86 percent to $208 million, including $52.7 million in Lyra SARS-CoV-2 molecular diagnostic sales and $56.3 million in revenue for its Sofia SARS Antigen test, the firm said.

Nevertheless, referring to the ongoing need for antigen tests specifically, Quidel CEO Douglas Bryant said on Thursday that the demand is "unfathomable."

Quidel's guidance for $375 million in Q3 revenues takes into account antigen test demand, good visibility in ordering patterns for the Lyra SARS-CoV-2 molecular assays, and assumes minimal supply chain disruptions, he said.

The firm has ramped up manufacturing capacity for the Lyra RT-qPCR kits to 500,000 kits per week.

And, "Demand for our Sofia rapid antigen point-of-care test continues to be strong, sustained, and frankly, more than we can satisfy," Bryant said. As a result, Quidel is expanding manufacturing capacity for its antigen test cassettes from approximately 84 million to more than 220 million per year.

The preliminary contract from the National Institutes of Health's Rapid Acceleration of Diagnostics - Advanced Technology Platforms (RADx-ATP) is meant to aid in the scale up those efforts.

Specifically, in a statement issued on Friday Quidel said that — subject to entering into the definitive agreement, with key deliverables and identified milestones — the $71 million would directly support the upgrade and addition of new manufacturing lines, and help in outfitting a larger distribution center needed for the greatly expanded yield of rapid diagnostic assays.

On Thursday's call, Bryant noted that instrument supply is currently a limiting factor in the scale-up, and Quidel is essentially only supplying its current Sofia immunoassay customer base with SARS-CoV-2 antigen tests. "Our main constraint right now in terms of expanding beyond our current traditional customer is mainly the instrument," he said.

Quidel has had conversations with potential new customers, he said, particularly in the retail pharmacy space, but they require many hundreds of instruments and Quidel will likely not be able to supply that until September.

The current installed base of Sofia is in the range of 50,000 instruments, Bryant said. Quidel has ramped up manufacturing to build 2,500 new instruments per month, and by September it should be able to make between 7,500 to 10,000 per month.

This hinges at the moment on ramping supply of an undisclosed element for a part of the instrument, however. "If we can get that done, we can potentially get to 10,000 faster than we thought," Bryant said.

The firm also announced this month that it received an order from Health and Human Services for 2,000 Sofia and Sofia 2 instruments and 750,000 Sofia SARS Antigen tests over the next few months.

On the call, Bryant said that Quidel's theoretical maximum manufacturing capacity given its current plant and equipment is 1.8 million tests per week, or about 7.2 million tests per month.

"Managing the supply chain to achieve that output consistently is the variable, and is difficult given the timing of delivery of all components that we need each week," Bryant said. The likelihood of achieving that output level on a consistent basis is "not super high … at least not at this time," he said, in part because output is highly dependent on receiving all components and shipments, and certain items have been "quite inconsistent."

And, in addition to meeting current demands, "We are worried about what happens when we go online with the next four automated manufacturing lines … I've got to feed that," Bryant said.

The firm is looking into manufacturing its own swabs, and had secured alternative swab supplies, with much of that volume coming online this month. And, one of the antibodies that it had been sourcing externally will now be manufactured internally.

The firm's efforts to vertically integrate a number of components has already led to improvements, Bryant said, adding, "That's all I can say about that without telling our competitors what they should be worried about."

Although an increase in output of tens of thousands of tests is massive, the need for frequent, rapid testing in places like schools, factories, and offices, is even more massive, and is likely more than Quidel and the competition can supply, Bryant said.

Currently, the only other rapid antigen test with EUA is from Becton Dickinson. It runs on the Veritor system. BD has said it expects to make 10 million antigen tests through the end of the summer, and scale to manufacture 2 million tests per week thereafter. Also, an assay from Abbott is expected to debut in the next month or two. Those companies are larger than Quidel, so may have better ability to scale, Bryant commented.

But, even assuming all three firms together could ship at their maximum publicly disclosed capacities, compared to what HHS said the agency wants shipped in September, "We still won't meet the demand," Bryant said.

Indeed, specifically in the point-of-care segment, where people want test results in 15 minutes, Bryant struggled to even describe the demand. "I don’t have the right word. Huge doesn’t sound like a big enough word. It's unfathomable," he said.

According to Bryant, the demand "will far exceed what all of the manufacturers in the rapid antigen space can produce for at least the next several quarters."

In terms of other tests in the pipeline, Bryant said Quidel is now working on two multiplexed antigen tests. One targets influenza A, influenza B, and SARS-CoV-2, and the other targets flu A/B, SARS-CoV-2, and respiratory syncytial virus. The latter is being developed in collaboration with the US Department of Health's Biomedical Advanced Research and Development Authority, Bryant said.

The FDA provided guidance for multi-analyte testing in a call on Wednesday, noting that in determining whether to authorize a test, it will consider whether the other targets will aid in differential diagnosis, whether the other targets are already authorized, and how the panel fits into current public health recommendations.

For its multi-analyte flu/COVID test, "Assuming that we can find the samples reasonably quickly and get the numbers that are required, I don't see what difficulty we would have in getting an EUA," Bryant said.

Quidel is currently running studies of the assay and expects to submit it for EUA soon. The multi-analyte assay uses the same manufacturing lines as the Sofia flu and Sofia antigen tests, Bryant said, so the combo test can potentially increase the firm's manufacturing capacity.

With its focus on coronavirus testing, Quidel does not plan on building more influenza-only assays beyond its current inventory. "We're building SARS antigen kits," Bryant said. In the event of a heavy flu season, the firm will likely deplete its warehoused flu tests and need to ask customers to switch to flu/COVID combo tests.

Quidel is also making progress on its Savanna sample-to-answer molecular platform and its low-cost rapid immunoassay platform dubbed "Sniffles," and it plans to have beta instruments ready in approximately the next six months.

The firm finished the quarter with $72.6 million in cash and cash equivalents, but Bryant said the firm's M&A goals have evolved somewhat with the pandemic experience.

Quidel is now considering opportunities representing what it perceives as the future of healthcare, such as telehealth and health IT. "We're trying to be thoughtful in our approach …  the money is not burning a hole in my pocket, as my mother would say," Bryant noted.