Kevin Clark is frustrated: Why is the diagnostic test his company makes for COVID-19 antibodies approved in Europe and selling by the millions there, but stalled for approval at the U.S. Food and Drug Administration?
He curses. He stops himself. “Sorry,” he said. “My inner redneck comes out sometimes.”
Clark, a down-to-earth 35-year leader in the drug and diagnostics manufacturing space, is the CEO of NowDiagnostics, based in Springdale, Ark. His company is one of hundreds across the country that has produced a device that could help in the COVID-19 pandemic.
NowDiagnostic’s is a slip of plastic that uses a few drops of blood to detect COVID-19 antibodies, returning a result within 15 minutes.
“It performed as well as some of the big companies’ tests on the market,” said Christopher Farnsworth, instructor of pathology and immunology at Washington University. When it hit delays in the United States, NowDiagnostics paid him and three other researchers across the country to validate its test results. The Wall Street Journal reported that members of the Walton family are investors in the company, though Clark declined to identify the investors when Times of Entrepreneurship visited.
Clark has been through the drug development process before, having ushered more than 125 products through the FDA’s approval process over his career. This time around, since May 29, he’s heard nothing but silence.
An FDA spokesman said by email that there are hundreds of tests in the pipeline for approval.
How Important Are Antibody Tests? Nobody Knows, Right Now
One of the big challenges of responding to a new health crisis is that it’s not clear what part of the health system will be important, and when. Though many people are pinning their hopes on the fast manufacture and distribution of effective vaccines, a realistic approach to this pandemic (or the next one) likely involves a webbed response of detection, testing, tracing, treatment and prevention.
Coping with the COVID-19 pandemic and preparing means identifying the pain points in the system, said Tom Kalil, chief innovation officer at Schmidt Futures, and a former Obama Administration official. Schmidt Futures is a venture investor – a “facility” — set up for public benefit by former Google CEO Eric Schmidt and his wife, Wendy Schmidt. “It would be a huge waste if we do not learn from this experience. There will be a policy window that opens up. How do we want to be better prepared next time?”
He said there is an increasing effort in the policy and philanthropic communities to develop a prioritized list of what to do. “It would be a good way of honoring those lives,” he said.
Clark, who was CEO of several large generic manufacturers before striking out on his own as an entrepreneur, lives in the camp of realists. He points out that COVID-19 is a fast-mutating coronavirus. Like the common cold but much more dangerous, it will be hard to get a handle on. Testing, tracing and quarantines will be part of our lives for a while, he said. “We can do that,” he said in an interview in his office.
Antibody tests detect whether people have had COVID-19, though it’s not clear for how long immunity lasts afterward. But they are helping health systems confirm diagnoses and helping researchers figure out such issues as whether populations are approaching herd immunity. Eventually, they could help people and employers figure out how to navigate their daily lives while the pandemic still rages.
NowDiagnostics’ path through the pandemic illustrates some of the issues the United States’ health care innovation system is encountering in its stumbling response.
NowDiagnostics’ Story
Clark has been in the diagnostics industry since the mid-1980s. Born in Springdale, he thought he’d become a veterinarian. But the vet he worked for in college told him he’d be bored – and at the same time, the opportunity opened up at the University of Arkansas to research diagnostics for autoimmune diseases. He started his own company, ImmunoVision, in 1987 and sold it to IVAX Corp. After a series of acquisitions, he became CEO of Ivax Diagnostics, which he sold to a generic drug manufacturer in India. He led a team of about 1,200 people around the world.
But in 2013, a bigger opportunity came along: over the counter test kits. He jumped at opportunity to bring a new technology to market.
Most tests require reagents to reach a diagnosis – meaning that you have to add something to a blood sample to see a reaction. NOWDiagnostics’ blood tests use a drop of blood (its saliva tests use a drop of saliva) to measure antibodies and antigens – proteins — to come up with a result. They do not require extra reagents, are ease to use (with Clark’s help, I took one), and provide laboratory quality results in 10-15 minutes.
NowDiagnostics was founded in 2014 with Jeremy Wilson, with $1.5 million from NewRoad Capital Partners, Wilson’s firm. Wilson had been COO of digital marketing agency Rockfish and previously worked in finance at Walmart.
Clark has been leading a team of about 50 from a nondescript office in an industrial park near Springdale. The company has raised $69 million total. By 2015, NOWDiagnostics had received approved to sell pregnancy test for use as a moderate complexity test in the United States. By 2019, NOWDiagnostics had received approval to sell their pregnancy tests over the counter in Italy, and was seeking approval to sell the pregnancy tests in the United States for use at the point of care.
“In Europe, the process is much faster,” Clark said, noting that each country has a version of the FDA. With reciprocal approvals from other countries, the workload the population of Europe is shared over more agencies.
Over-the-counter urine tests are notoriously unreliable. Blood tests are more accurate and can offer earlier detection. “This technology gets simple enough to use over the counter but is sensitive enough to give lab quality,” he said.
In February, as the pandemic hit, Clark pivoted the company to work in producing rapid tests for COVID-19 antibodies and antigens.
Antibody tests are different than tests for the virus itself. A PCR test, done by nasal swab, offers evidence of the DNA of the virus. An antibody test looks for evidence that the body has produced an immune system response to the virus – meaning that someone has or has had the virus and recovered
It’s not clear yet whether antibodies confer long-lasting immunity – which is a problem also for the vaccines under development. They work by teaching the body how to produce antibodies.
The FDA’s Missteps
Early in the pandemic, the FDA relaxed the rules for antibody tests: It said companies did not have to prove that they worked before putting them on the market.
By early April, inaccurate tests had flooded the market: they were “crappy,” the CEO of the Association of Public Health Laboratories told CNN. More than half were manufactured by companies in China. The FDA backtracked and re-instituted its approval process, which has resulted in about 40 tests approved for use in a central lab facility.
Some experts argue that the United States has been losing ground when it comes to biotech innovation. Other countries are investing more per capita in research and development. Federal funding for research and development is now below 1957 as a share of GDP, according to the ITIF. Government funding for university research as a share of GDP slid to 28th of 39 nations, with 12 governments investing more than double the United States investment.
The pandemic is raising questions about the quality of the U.S. legal and regulatory systems, too. For instance, U.S. patent law has become progressively less friendly to small companies, according to Mark Schultz, Goodyear Tire & Rubber Company Chair in Intellectual Property Law. Problems in the FDA and CDC are also emerging.
A global marketplace for innovation could be a good thing for public health. For instance, a Swiss company, Quotient Ltd. (QTNT), was approved by the FDA last week. One of its customers, Bloodworks Northwest, is seeking to source convalescent blood plasma taken from donors whose blood contains SARS-CoV-2 virus antibodies, for use in treating COVID-19 patients, according to Quotient.
But Clark has also been happy to bring NowDiagnostic’s production home. NOWDiagnostics tests are developed using materials manufactured in the US. “Indeed, many of essential materials required to produce the tests are sourced from the Arkansas,” he said by email. And, he’s been able to fill the science jobs at NowDiagnostics with talent from the University of Arkansas.
The First Point Of Care Test Approved In the US Came From China
Waiting to be sure its tests were accurate, NowDiagnostics didn’t join the flood of companies that hit in the market in the first few months of the pandemic. It applied for approval in the European Union for use in laboratory settings and was approved by early August, with approval for the point of care — doctors’ office — expected in the coming days, Clark said. The company applied for emergency use authorization in the United States on May 29th. It’s still waiting.
Last week, almost three months after NowDiagnostics’ test was approved in Europe, the FDA cleared the first point-of-care antibody test for use in the United States. It’s manufactured by Assure Tech, based in Hangzhou China. Assure is represented in the United States by Azure Biotech, an in vitro diagnostic company in Houston, Fierce Biotech reported.
The sensitivity (days from infection after which it detects antibodies) and specificity (number of false positives) of NowDiagnostic’s tests were slightly lower than those reported by Assure, according to Farnsworth, 100% versus 98% specificity. Both tests were 100% accurate after 14 days. The level needed for approval is 95%. NowDiagnostics tests have also been validated in Europe.
Even after approvals beginning to flow for use of the tests in setting like doctors’ offices, it’s unclear when NOWDiagnostics tests will be approved for over the counter use in the United States, which is where the biggest sales would come – perhaps at $20 a test, Clark said., Clark said. For people with underlying conditions, those who want to travel or essential workers, knowing that they have the antibodies could provide peace of mind.
Sales Boom – To Europe
Meanwhile, NowDiagnostics has ramped up production to supply its European and global customers. In mid-August, Clark had cleared out a warehouse space in the middle of NowDiagnostic’s building, to make room for a production line that he hoped would be rolling out tests for the American market. In September, NowDiagnostics was selected as Endeavor entrepreneurs. Their company was one of nine selected, out of 1,310 companies from 37 international markets to be members of the New York City-based global network of mentors.
Instead of working for the U.S. market, production has doubled every week for customers in Europe, Africa and the Middle East, with a goal to produce two million a month by the end of the year, Clark said by a followup email.
He’s tried pulling every string he knows, so far, to no avail. “NOWDiagnostics continues to seek guidance and support from congressional delegates,” he added diplomatically by email. “These interactions are a wonderful source of encouragement and remind us how fortunate we are to live and work in the great state of Arkansas. Moreover, our local community of NW Arkansas continues to support our research efforts with the shared vision of changing healthcare in the US and abroad.”
This story was corrected from its original version to reflect the number of tests NowDiagnostics is selling in Europe and clarified on the point of the company’s motivations for hiring outside researchers, and updated to reflect the Wall Street Journal’s reporting.
This story was produced as part of the Arkansas Reporting Project, focusing on entrepreneurship in Northwest Arkansas and the Arkansas-Mississippi Delta, sponsored by the Walton Family Foundation.
