Cue Health’s $200 Million Nasdaq IPO: Where Will the Ball Roll Next?

Cue Health is on a roll. The maker of COVID-19 test kits has enjoyed partnerships with the likes of Google, the NBA, and Mayo Clinic. It has now made its public debut on the Nasdaq Exchange under the ticker “HLTH.”

In the Friday offering, Cue issued 12.5 million shares of common stock at an opening price of $16 a share. While the proceeds could net $200 million for Cue, an extra 1.875 million shares could be up for grabs should the deal’s underwriters take up the company’s offer. The demand was certainly healthy, as the share price quickly jumped to a high of $22.55 before closing at $20, a 25% increase from the opening price.

Cue’s Integrated Care Platform

Cue is banking a lot on its portable monitoring system. Their kit consists of a reusable reader, a single-use cartridge, and a wand for collecting samples.

In the case of COVID-19, users take a nasal swab with Cue’s wand and put it in the cartridge, which can be slotted into the reader for analysis. Results are available in 20 minutes and are viewable via a mobile app. Users can do the test at home.

Cue is developing its proprietary platform to handle more types of samples taken from urine, saliva, and blood.

Big Clients Boost Cue’s Profile

Founded in 2010, Cue spent most of the decade in research mode. In June 2018, the company began collaborating with the US Government’s BARDA (Biomedical Advanced Research and Development Authority). They initially focused on developing a molecular test for influenza, but everything changed when COVID-19 emerged.

At the start of the pandemic in early 2020, Cue shifted gears and began developing a COVID-19 test kit. In March that year, their efforts convinced BARDA to help accelerate FDA approval for their test kit.

Three months later, the FDA gave Cue its first emergency use authorization (EUA) for the use of its kit in the professional setting. A second EUA, issued in March 2021, allowed their kit to be used free of prescription. 

In the months following the first EUA, big names would reach out to Cue on a near-monthly basis. The National Basketball Association (NBA) came first in line, enlisting Cue’s help to test their basketball teams, fans, and vendors within the “Bubble” established by the NBA at Disney World Resort in Orlando, Florida. Next came Henry Schein, a leading distributor of dental supplies, which wanted to be Cue’s exclusive distributor in the dental market.

In October, the US Department of Defense (DoD) awarded a massive $480.9 million contract to Cue, which included an order for 6 million Cue COVID-19 test kits. 

The Mayo Clinic in November became a customer and collaborator. On top of making purchases of its kits, the medical center agreed to work with Cue to develop go-to-market solutions for diagnostic testing services. In January 2021, a Mayo Clinic study found Cue’s COVID-19 test matched results from PCR testing 97.8% of the time. The findings were published in the Journal of Diagnostic Microbiology and Infectious Disease. 

As the cherry on the cake, Google started sending Cue’s test kits to its US employees in April 2021. An ongoing partnership between the two companies may unite their technologies to form an advanced biothreat detection system for respiratory diseases. 

How Cue Will Keep the Ball Rolling

Obviously, a company that relies on a single commercial product will amount to nothing if it’s no more than a one-trick pony. This is why Cue is eager to expand its roots.

Cue estimated the market opportunity for diagnostics at approximately $85 billion, of which $30 billion may come from at-home and point-of-care testing. They expect the market for point-of-care diagnostics to expand to $51 billion.

The company seeks to tap into the market by offering more types of care for different aspects of health and diseases, such as respiratory health, sexual health, women and men’s health, and cardiometabolic health.

Cue has five other test kits in late-stage development. These cover influenza, RSV (rhino syncytial virus), fertility, pregnancy, and inflammation. The company expects to submit the test kits for FDA clearance in the second half of 2022.

On top of its two EUAs from the FDA, Cue’s COVID-19 test kit has been approved for professional use in the European Union, Canada, and India. The company hopes to secure more authorizations and clearances worldwide.

Author

Joy Lin

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