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Why Accelerate Diagnostics Inc Is Soaring Today

By Brian Feroldi - Feb 24, 2017 at 12:11PM

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Shares jump after the FDA gives the green light to two of the company's products.

What happened

In response to receiving FDA marketing authorization for two products, shares of Accelerate Diagnostics (AXDX -2.27%), a company focused on the rapid diagnosis of infectious diseases, rose by 11% as of 11:15 a.m. EST Friday.

So what

Accelerate announced that the FDA has granted the company's de novo request to allow the marketing of the Accelerate Pheno system and Accelerate PhenoTest BC kit. The de novo classification process calls for an expedited FDA review of new devices that have a low-to-moderate risk and for which no predicate device exists.

Three doctors giving the thumbs up.

Image source: Getty Images.

The Accelerate PhenoTest BC kit promises to allow labs to significantly reduce the turnaround time of testing for infectious diseases. That's a big deal as the sooner that healthcare providers receive a diagnosis, the faster they can begin treatment. This is especially important when dealing with antibiotic resistant bacteria. Current testing processes often require a turnaround time of 48 hours or more. By contrast, the Accelerate PhenoTest BC kit can produce a result up to 40 hours faster than conventional technology.

Lawrence Mehren, Accelerate's CEO, was thrilled with the approval news. "We are excited to offer microbiologists and treating physicians earlier intelligence about the infections they fight on a daily basis," Mehren said.

Traders reacted positively to the FDA's decision, hence why shares are screaming higher on Friday.

Now what

According to the Centers for Disease Control and Prevention, roughly two million people in the U.S. are infected with antibiotic-resistant bacteria each year. Those infections lead to the death of approximately 75,000 patients annually, which is telling about the huge unmet medical need for faster diagnostic equipment. That shows there is a wide open market opportunity for the Pheno system.

The market for diagnostic equipment is highly competitive, so there's no guarantee of success here. Well funded companies such as BD and Danaher also have an eye on this market, so it is too early to tell if the system's speed will help give it an edge in the market.

Still, winning FDA is always good news, so it is easy to understand why traders are feeling bullish on Friday. 

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Stocks Mentioned

Accelerate Diagnostics, Inc. Stock Quote
Accelerate Diagnostics, Inc.
AXDX
$0.59 (-2.27%) $0.01
Becton, Dickinson and Company Stock Quote
Becton, Dickinson and Company
BDX
$251.10 (-2.01%) $-5.16
Danaher Corporation Stock Quote
Danaher Corporation
DHR
$243.60 (-2.16%) $-5.37

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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