FDA chides Cue Health for changing its home COVID test, tells consumers to throw them out

The FDA is recommending that anyone who still has any home COVID tests left from Cue Health should throw them away. 

According to the agency, its inspectors discovered that the diagnostics company had made undisclosed changes to its products in the time since receiving a green light from the FDA and that these changes “reduced the reliability of the tests to detect SARS-CoV-2 virus.”

“Do not use any Cue Health COVID-19 Tests for Home and OTC Use that you may still have. Dispose of the entire test cartridge in the household trash,” the FDA wrote in its notice to the public and urged users to take a different test if they previously received a negative result but still have symptoms.

The agency also handed Cue a warning letter late last week, which said the modifications the company made to its tests’ hardware and firmware could result in the device failing earlier than its nine-month expiration date. 

Cue said in a May 13 statement that it is “evaluating the letter and determining its response, with more information to follow in the next few days.” The company’s stock fell by about 15% on the news, down to about 12 cents. 

Though the San Diego-based Cue was first founded in 2010 with the goal of providing an easier, more portable molecular screener for diseases such as influenza, the arrival of the COVID-19 pandemic kicked its operations into high gear.

The company, a former Fierce 15 winner, raised $100 million in venture capital cash through a June 2020 funding round—amid federal contracts worth hundreds of millions more to help juice its manufacturing capacity, and while inking deals to provide tests to the NBA and Major League Baseball. 

The year after, it filed a $200 million Nasdaq IPO with a first-day high of over $22 per share and a valuation approaching $3 billion, with a pledge to expand its catalog far beyond COVID. The company aimed to become a full-service home diagnostic provider for diseases such as the flu and respiratory syncytial virus, as well as sexually transmitted conditions and more.

With its battery-powered, palm-sized reader and single-use PCR cartridges, Cue received emergency COVID authorizations from the FDA for both point-of-care testing by healthcare workers and for use in the home by the general public. 

Last summer, it claimed a full de novo clearance from the FDA for its over-the-counter coronavirus test—marking the first at-home test for any respiratory disease, and one celebrated by agency leadership as a trailblazer in “a new era of consumer access to diagnostic tests.”

However, Cue shortly came under investor pressure, as its share price continued to decline alongside the public’s demand for home tests or COVID tests of any kind. Last August, Tarsadia Investments, representing a group of family stockholders that had backed Cue during its pre-pandemic series B round, called on the company’s board to launch a strategic review of its business before Cue ran out of money.

In March, the company reported $70.9 million in 2023 revenues, alongside a net loss of $148.4 million.

Earlier this month, the company disclosed in a Securities and Exchange Commission filing the latest in a series of layoffs since January 2023: Cue plans to cut its global workforce by about half, letting go of 230 employees. 

Prior to that, the company saw the departure announcements of its co-founder and long-time CEO, Ayub Khattak, in March, followed by its chief financial officer Aasim Javed. Co-founder and Chief Product Officer Clint Sever now serves as CEO.

Cue had previously scheduled its 2024 first-quarter earnings release for May 13, but it has been delayed; its annual general meeting is scheduled for today, May 14.