(Reuters) - Shares of Chembio Diagnostics Inc slumped more than 60% on Wednesday after the U.S. Food and Drug Administration (FDA) revoked the emergency use authorization for its COVID-19 antibody test kit on concerns about its accuracy.
The FDA found from data submitted by Chembio and an independent evaluation that the company’s test kit shows higher false results compared to expectations and the authorized labeling for the device.
The company’s antibody test was one of the first to get the FDA’s emergency use authorization (EUA) in April.
“The risk to public health from the false test results makes EUA revocation appropriate to protect the public health or safety,” the agency said in a statement.
Several brokerages cut their rating on the stock, with Benchmark lowering its 2021 revenue estimate for the company by more than $400 million to $47.4 million.
Chembio shares have more than doubled in value this year, buoyed by the company’s efforts to get the coronavirus test on the market, even as economies continue to grapple with the uncertainty caused by the pandemic.
Antibody tests are used to determine if a person has been previously exposed to the novel coronavirus and developed antibodies that could prevent reinfection, and not used for diagnosis.
Shares of Chembio, whose test continues to be approved for use in Brazil and the EU, were down 61.3% to $3.84 before the bell.
Reporting by Vishwadha Chander in Bengaluru; Editing by Subhranshu Sahu