Why Testing Is the Best Treatment for the Market and Economy

It's clear the next stage of coronavirus coverage is going to focus on testing.

Testing for COVID-19 is the crucial step toward protecting healthcare workers, meat packers, checkout clerks, and other frontline workers.

It's an essential component in all of the many plans for how to restart our economy.

It's something we desperately need much more of as a nation.

Unfortunately, it's also something that we, as a nation, have done a poor job of at many stages during this pandemic.

Maybe it's only to be expected, then, that there's a lot of confusion around "testing" - what it is, what it could do for us, why we still don't have enough of it, and so on.

But as America continues to "reopen," it's a big factor in keeping us from shutting down again. So let's clear up some testing misconceptions today - and look at two great stock recovery plays at the same time...[mmpazkzone name="in-story" network="9794" site="307044" id="137008" type="4"]

What Exactly Are We Testing For?

"COVID-19" or just "COVID" has caught on as the name of the invisible bug that's stalking the globe right now. And as a common-use descriptor, that's fine.

But it's important to remember that strictly speaking, COVID-19 is the name of the disease that the "SARS-CoV-2" virus can cause in people it infects. SARS-CoV-2 is the new coronavirus that first started spreading between humans in Wuhan some time in November.

When we talk about "testing" right now, we mean testing for signs that someone is infected with the SARS-CoV-2 virus. But as you'll see below, some newer tests instead look for signs that someone has in the past been infected with SARS-CoV-2.

We don't test for COVID-19. If you have severe COVID-19, you'll know it. The symptoms are hard to miss: fever, pains, severe difficulty breathing, and so on. Milder cases of COVID-19 are easier to mistake for a common cold or a mild flu. In any event, the point of testing is to help limit the spread of the virus, so we test for the virus.

Why Does the Distinction Between SARS-CoV-2 and COVID-19 Matter?

One of the key reasons why this pandemic spread so far and so fast is that most people who get infected by SARS-CoV-2 develop COVID-19 days or weeks later, if they get any symptoms at all.

But even without the fever, dry cough, trouble breathing, loss of smell, and the other symptoms that make up the COVID-19 disease, these asymptomatic people still spread the SARS-CoV-2 virus to others.

This is why it's not enough to simply ask people to stay home when they feel bad. By the time people start feeling bad, they may have already been spreading the virus for days or weeks.

This is where a lot of the confusion surrounding children and younger adults has come from. There's been a lot of talk of people under 50 "not being at risk" and "not getting sick." Let's be clear - young and middle-age adults are getting severe COVID-19 symptoms, and there have been many tragic cases of younger adults dying. But it is true that rates of hospitalization and mortality rates increase significantly with age.

However, for those thinking that they are young and don't have to practice social distancing, hear this well - people under 50 are just as likely to catch the SARS-CoV-2 virus and spread it further. Younger people may actually be more likely to catch and spread the virus, as they may meet with more people in their ordinary life than older people.

In any event, younger people are still a chain in the transmission of the virus. Importantly, we have no scientific explanation for who doesn't get symptoms and who gets severe ones for any age group. And yes, in-shape people are also getting sick and dying from this virus. And even if you don't get symptoms, you can spread it to someone who will get sick.

Why Is Testing for SARS-CoV-2 So Important?

To save lives and return to anything resembling our lives and economy before this pandemic, we need to break the chain of the SARS-CoV-2 transmission.

The best plan for breaking that chain is to isolate the people infected with the SARS-CoV-2 virus from those who don't have it.

Because many - possibly most - people who catch the virus show no symptoms, isolating people who appear sick won't do much.

Instead, we have to perform mass testing of as many people as possible. And we have to repeat these tests often, as long as the virus keeps spreading, to catch new outbreaks.

Mass testing, isolation, and treatment of the infected, and tracing and testing everyone they've met, will eventually stop the virus from jumping from person to person. That's what South Korea and especially Taiwan did, and it's also what's worked so well in Australia and New Zealand.

How Do These SARS-CoV-2 Tests Work?

Almost all the tests currently in use in America that look for current infection with SARS-CoV-2 use variations of a technology called polymerase chain reaction (PCR), a mainstay of biological research. PCR was originally invented in 1983 by American chemist Kary Mullis, something he shared the Noble Prize in Chemistry for 10 years later.

The process starts with swabbing a person's nose, throat, or mouth. For full accuracy, the nasal swab should be taken from all the way back in the person's nose, where it meets the throat.

As you can imagine, people describe this part of the process as "uncomfortable" to say the least. It also puts the person giving the test at risk, because having something touch the back of your nose will often cause people to cough or sneeze - right at the person holding the swab.

The swab is then treated to preserve it. To make it safe for the transport back to the lab, the preservation solution also kills any viruses and bacteria that may be in the sample.

At the lab, two sets of reagents are added to the sample, and it's inserted into a PCR machine. These machines can handle many samples at once but can take hours to days to finish their work.

Without going into too much detail, the reagents added to the sample do all the work:

  • They turn the genetic code of the SARS-CoV-2 virus from RNA into the easier-to-work-with DNA.
  • They split that DNA open.
  • They bind to a bit of that DNA that the test maker has identified as being unique to SARS-CoV-2.
  • They make millions and millions of copies of just that bit of DNA.

Once the sample has run out of reagents and DNA, the process stops. At this point, if the SARS-CoV-2 virus was in the sample, the sample will now be absolutely chock-full of the targeted bit of DNA and will have little else in it. This can easily be determined with a variety of quick methods.

Now, the reason this takes time is that all these steps have to be done in the right order. So the reagents chosen for each step only work at very specific temperatures. That's where the PCR machine comes in - it heats and cools the samples at the appropriate times.

Is That the Only Kind of Testing We're Doing?

No, there are also some newer tests you may have heard of, called "antibody tests." Instead of testing for whether a person's sample has bits of the SARS-CoV-2 virus in it, these tests look at the antibodies in a person's blood.

If someone has been infected with the SARS-CoV-2 virus in the past and fought it off, then their body will have produced antibodies against the virus. This is how the virus was defeated, and in theory, how the person is now immune to the virus.

Roche Holding AG (OTCMKTS: RHHBY), which according to the Cleveland Clinic makes one of the most accurate PCR tests for SARS-CoV-2, also received FDA authorization for an antibody test on Monday, May 4.

The hope for these antibody tests is that they will tell us who has antibodies that make them immune to SARS-CoV-2. These people should in theory be able to go back to work without risk of getting infected and spreading the virus.

However, there is a lot we still don't know here. For one, SARS-CoV-2 is very similar in many ways to other coronaviruses, which cause common colds. Early antibody test prototypes often mistook antibodies against the common cold for antibodies against SARS-CoV-2.

Moreover, we don't know how long these antibodies will last. If the antibodies and the immunity fades after a few months, as happens with the common cold coronaviruses, then these antibody tests will only be a temporary solution.

To make matters even worse, early research suggests that the amount of antibodies our body produces against SARS-CoV-2 - even for survivors of severe COVID-19 - varies a lot from person to person. We don't know yet if that means some people are immune and some are not, or whether some will stay immune for longer, and so on.

Can We All Just Get Tested for SARS-CoV-2 Now and Get It Over With?

Unfortunately, there are bottlenecks and limitations to almost every step of the PCR tests we currently have.

For example, some research suggests that the SARS-CoV-2 virus moves from the nose and throat down to the lungs about a week after infection, which is why nasal swabs may not show a sign of the virus despite people clearly having COVID-19. This limits the accuracy of the test.

Then there's the problem of compatibility. Every test manufacturer makes their tests with slightly different reagents that may be certified to work at slightly different temperatures, and in different PCR machines.

Because different labs will have different PCR machines, this means not all tests can be analyzed in all labs. And because the temperatures required may be different, test samples from some manufacturers may not be able to be analyzed at the same time as tests from another manufacturer.

It also takes time to ship these tests from the testing site back to a lab for processing. Not to mention that we simply do not have enough lab technicians, lab equipment, or lab space to do PCR tests on every American.

Finally, as every country in the world is ramping up testing, there is a huge and growing shortage for the reagents and even the swabs needed for these tests. As many of these are sourced from China, shipments have been slow, delayed, and sometimes the quality has been questionable.

As Dr. Deborah Birx of the White House Coronavirus Task Force said on April 17, "There will never be the ability on a [PCR] test to do 300 million tests a day or to test everybody before they go to work or to school."

Unfortunately, the PCR process is also prone to errors and contamination. That's why the accuracy of tests varies quite widely from manufacturer to manufacturer, as well as based on how the swab is taken.

According to Dr. Alan Wells, a professor of pathology at the University of Pittsburgh, current tests "miss a number of patients - anywhere from 5% to 30%" depending on the test. That number is going to have to come down to make mass testing truly effective.

What's the Difference Between All the Active Infection Tests?

As you've seen, the tests all differ in terms of what equipment they can run on, what reagents are used, what temperatures they need, and how long the full process takes. That time can range from hours and days, down to just minutes in one particular type of test you may have heard about.

The test that takes only minutes is the ID NOW test made by Abbott Laboratories (NYSE: ABT). Using an advanced variant of the PCR technique, this technique runs at a constant temperature, which is quicker and easier to accomplish in a small machine. In fact, the ID NOW machine weighs just 6.6 pounds and is about the size of a toaster.

This means these ID NOW tests by Abbott can be analyzed on the spot, and the machine tells you in five minutes if the sample has the virus and takes 13 minutes to return a negative result.

This is a game changer, and it makes Abbott a leader in testing for SARS-CoV-2 right now.

Can Everyone Get the 5-Minute Test?

Abbott's five-minute ID NOW test is most famously used at the White House, where U.S. President Donald Trump and staff around him are regularly tested for SARS-CoV-2.

Unfortunately, the 5-minute test only works on Abbott's toaster-sized machines. The company says it's performing 50,000 tests a day on the ID NOW platform, but to scale this up for mass testing of the American population, we'd need hundreds of thousands of the machines and many more test kits.

There's also the concern that with higher speed comes lower accuracy. In the Cleveland Clinic's testing, the Abbott ID NOW platform only detected the SARS-CoV-2 virus in 85.2% of infected samples.

That's below the 95% golden standard for testing. For comparison, the CDC's test was 100% accurate, Roche's tests were 96.5% accurate, and Cepheid's test that takes 45 minutes was 98.2% accurate.

Now, the company disputes these results because the Cleveland Clinic stored the samples in transporting liquid first, rather than inserting them into the machine directly. Clearly, more research on whether that affects results is needed. And Abbott announced that the FDA has approved new instructions so that transporting liquid is not used. We don't yet have independent tests of the accuracy levels with the new instruction set.

In the meantime, the speed and convenience of the Abbott test is likely to make it a frontrunner until a new technology comes to solve the many problems of PCR-based testing. I like its stock (NYSE: ABT) and that of Danaher Corp. (NYSE: DHR), the parent company of test-maker Cephid. I believe they will both be winners in a world that will have testing be an everyday occurrence in the near future.

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About the Author

D.R. Barton, Jr., Technical Trading Specialist for Money Map Press, is a world-renowned authority on technical trading with 25 years of experience. He spent the first part of his career as a chemical engineer with DuPont. During this time, he researched and developed the trading secrets that led to his first successful research service. Thanks to the wealth he was able to create for himself and his followers, D.R. retired early to pursue his passion for investing and showing fellow investors how to build toward financial freedom.

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