This at-home testing company is selling coronavirus kits

Everlywell CEO Julia Cheek joins Yahoo Finance’s Seana Smith, Melody Hahm, and Anjalee Khemlani to discuss how her company is selling coronavirus testing kits to health care workers on the frontline combating the outbreak.

Video Transcript

SEANA SMITH: We've been talking about the fact that health care workers around the country are facing severe shortages when it comes to masks, but also in diagnostic kits. Everlywell, they are one company. They are looking to help supply those diagnostic kits.

They're sending their first batch of kits to hospitals and health care systems. I want to bring in Julia Cheek the CEO of Everlywell. We also still have Anjalee Khemlani with us, and we are also joined by Melody Hahm. Julia, just walk us through just in terms of what exactly-- I guess, how your kit works, and who you are supplying your kit to at this point?

JULIA CHEEK: Absolutely. Thanks for having me. So it's really not so much you think of a kit, like a rapid test kit, right? This is a-- a packing piece that has the nasopharyngeal swab. It has instructions.

It has shipping materials for biohazard samples-- biohazard samples, and it has a saliva tube in it. And this is being packaged and sent out in bulk orders now. And we've received over 450 bulk orders from health care organizations on the front lines, and started fulfilling this morning directly to these frontline workers from their employers, for physicians themselves, for their patients, for home health agencies with homebound individuals that are high risk, and for nursing homes. And so that is really where our focus is now, and we shifted focus for a few reasons away from broad consumer access to allocating as much of our initial inventory as possible to frontline workers.

MELODY HAHM: Hey, Julia. So to that pivot, especially with the communication and dialogue coming out of the FDA, to be honest, kind of confusing consumers, and I'm sure startup founders, like yourself. Can you explain to us what that communication has been like because we know that initially there was that incentivization and really kind of spearheading with the Silicon Valley Community in particular, saying, hey, provide us with those solutions and options. And then on Friday, we heard from the FDA saying, none of these have been FDA approved. So walk us through that timeline, and where you are right now in communication with them?

JULIA CHEEK: Yeah, absolutely. So on March 8, we laid out a development incentive program after the FDA's EUA guidelines were published for CLIA certified labs. And our goal was to, with no recourse for us, just to grant a million dollars to labs that were able to meet the EUA guidelines demonstrated by the FDA, such that we were incentivizing more labs to get involved in the problem. And there's 250,000 CLIA certified labs. A portion of those meet infectious disease requirements, and it was important to bring to market a number of labs to aggregate capacity beyond just LabCorb and Quest.

So we did that independently, and then ultimately, had such an overwhelming response that we knew our platform could help bring these labs to market, so that their test could be able to be used for COVID testing. And so decided to be able to launch a product. Now our model, which is normally regulated by CMS and CLIA, relies on at-home sample collection, as it's fairly common for a variety of different sectors, Medicare, et cetera, not obviously for this particular test. And so a number of companies, who have the same model as we do, actually launched before us, after we announced, I think prompting the FDA to then say, hey, wait a minute.

You might have thought you were following guidance, but we actually didn't have guidance on this, and now we're going to say in a statement that the EUA does not cover at-home sample collection, although we are potentially exploring what that looks like. And so for us, as soon as we saw that guidance, it was important to us that we reach out and work directly with them. That plus the overwhelming response we had seen from health care workers, plus the White House's priority testing cohorts announced on Saturday, caused us to overall decide to make a shift.

And I fundamentally believe it was absolutely the right thing to do. And we're in active communications now with the FDA on what does the process look like for a self collected sample at home? Could we work with you on that? What do we need to provide from a study standpoint? And I'm hopeful to have an update soon.

ANJALEE KHEMLANI: Hey, It's Anjalee here. So really quickly. First of all, is this covered by insurance if it gets to the consumer, if it gets to the point of the consumer? And then secondly, with that process, with the FDA looking at possibly allowing consumers access to this, it seems like that part of the concern is that it's a very complicated situation already with the swabs right now. There are concerns about false results. So could you address that?

JULIA CHEEK: Absolutely. So on the cost side, this was something we had received feedback on, and was yet another point that made sense to shift towards health care organizations. The cost to us is $135 end to end for the process and for the testing. We priced this at $135 at no profit to us. Ultimately, we are a private company.

We do believe all testing should be free, but we can't offer it for free without reimbursement, and so now in this way, this is in working with the organizations we're working with, they have guaranteed that the patients will not pay. And much of this will also be facilitated to their frontline staff. So that is the cost for us. Overall, the cost of testing, as you've heard, involves a number of things.

It's running the assay, it's the components, it's the transport. It's everything involved in the process, and so it can run anywhere from $50 to over $200. I mean, it's a wide range that lots are pricing this at. So I think overall, we need a really great federal aid bill that can sponsor all that testing, and the government is committed to that. On the results side, it's a great question.

So you saw last night that the FDA actually updated guidance allowing for self swabbing in certain situations, which is drive-through clinics in a clinical setting, drive-through testing in a clinical setting. But they actually did something interesting, which is they changed the swab type. So the swab type is the mid-nasal swab type, which means it's much easier for an individual to correctly sample. And so that is something we're watching closely. We would love to be able to offer either a saliva or a different type of kit to the consumer because then you are able to much better guarantee a good collected-- a well collected sample.

MELODY HAHM: And when you talk about those guarantees, can you kind of quantify the accuracy we're talking about here, even as it's getting into the hands of medical professionals who are using this in hospitals and private practices? What is the efficacy here?

JULIA CHEEK: Yes, so we work with a number of labs that have submitted data under the FDA EUA. So when we talk about that data, it all complies with what the FDA has required for validation data, but it spans different laboratories, although it is all RT-PCR testing at this point. So, you know, I don't want to make a statement about one specific lab. That's their data, but all of it is under review by the FDA, and will be updated regularly to the FDA in order for them to issue that EUA, and many of them are either getting granted the EUA now because there's the two-week waiting period, or are imminently going to be getting that.

SEANA SMITH: All right, Julia Cheek, CEO of Everlywell. Thanks so much for joining us today.

JULIA CHEEK: Thanks for having me.