Why Accelerate Diagnostics Inc Is Soaring Today

By Brian Feroldi Markets Fool.com

What happened

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In response toreceivingFDA marketing authorization for two products, shares of Accelerate Diagnostics (NASDAQ: AXDX), a company focused onthe rapid diagnosis of infectious diseases, rose by 11% as of 11:15 a.m. EST Friday.

So what

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

Image source: Getty Images.

TheAccelerate 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, theAccelerate PhenoTest BC kit can produce a result up to 40 hours faster than conventional technology.

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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 approximately75,000 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 asBD 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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Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.