Dive Brief:

• Hologic has received a $119 million U.S. government contract to help it scale up its COVID-19 test manufacturing capacity.

• HHS and the Department of Defense in a statement Friday said the money will equip Hologic to make 13 million COVID-19 tests a month in the U.S. by January 2022. Hologic was making around 6 million COVID-19 tests a month globally as of July. 

• HHS and DOD disclosed the Hologic agreement shortly before sharing news of a $12.7 million contract with InBios International. The agreement tasks InBios with expanding U.S. production of rapid point-of-care antigen and antibody COVID-19 tests.

Dive Insight:

HHS and DOD are repeat backers of Hologic's COVID-19 testing. In July, the government awarded Hologic a contract worth up to $7.6 million to support the expansion of capacity to make sample collection and processing consumables. The goal of the July contract was to increase output of COVID-19 tests from 4.8 million to 6.8 million by January. 

The new contract is more ambitious. Hologic will use the money to boost output at supplier facilities at seven locations across California, Maine and Wisconsin. Through the investments, Hologic aims to make 13 million COVID-19 tests a month in the U.S. by January 2022. The tests will run on the 1,100 Panther and Panther Fusion systems Hologic has installed in the U.S.

"We believe this expansion at least doubles [Hologic's] current COVID-19 test capacity in the US, and should enable the company to produce >55MM total molecular tests/quarter vs. the previously disclosed capacity of ~40MM/quarter," Cowen analysts wrote to investors following the news.

Hologic’s focus on increasing capacity at facilities run by its suppliers is in line with earlier comments on the constraints to further increasing its test output. In July, Hologic CEO Steve MacMillan identified “supply chain constraints on certain instrument components” as a barrier to further growth in testing output. Hologic will likely share a clearer picture of its current production capacity during its fiscal fourth quarter earnings call this Wednesday, Nov. 4.

By the time Hologic completes the expansion, COVID-19 may have been brought under control by the rollout of vaccines, thereby cutting demand for PCR testing. However, it is possible governments may want to build up national diagnostic capacity even as COVID-19 abates to ensure they are better prepared to manage future pandemics.

That thinking may be evident in the second contract disclosed by HHS and DOD in recent days. The government agencies awarded Seattle’s InBios $12.7 million to increase its production capacity by 20 times. InBios aims to hit that target, which will bring weekly output up to 400,000 units, by May.

The expanded facility will make two tests, the SCoV-2 Ag Detect Kit and SCoV-2 Detect IgM/IgG Kit. HHS described SCoV-2 Ag Detect Kit, which is not listed among the tests with FDA emergency use authorization, as a rapid point-of-care test for detecting antigens in nasal swab samples. 

InBios’ second kit detects IgM and IgG antibodies against the coronavirus. In June, InBios received EUAs for kits that detect either IgM or IgG antibodies. The combined kit is listed for export use only on InBios’ website. Antibody tests have played a limited role in the response to COVID-19 so far but that could change. Such tests may be used to show if a person has mounted an immune response to a vaccine and identify patients most likely to benefit from virus-neutralizing antibody therapies.