Canadian firm Spartan filing for creditor protection amid inconsistencies with rapid COVID-19 test

An Ottawa-based biotech company, Spartan Bioscience Inc., is filing for creditor protection and temporarily laying off staff following concerns about the consistency of the company’s rapid COVID-19 tests.

Spartan told CTV News on Tuesday that about 60 of its 90 employees and a number of students and interns would be laid off as the company deals with the issue.

The “performance-related” issues the company started seeing after the rapid test was launched last year, coupled with a lack of resources that larger biotech companies have, “has left us in a position where we have a strain on our cash,” Spartan interim Chief Executive Officer Jennifer Ross-Carriere said in an interview.

“So as a result we've had to follow creditor protection. That allows us to do some restructuring so that we can take a breath and work on optimizing our products and getting back out there for Canadians.”

The rapid tests were approved by Health Canada in late January, and Ross-Carriere said the company is working with the agency on a fix.

The made-in-Canada device was intended to provide quick results using the polymerase chain reaction (PCR) testing method – which the majority of COVID-19 tests use – on the spot or at the “point of care,” without needing to send anything to a lab.

The hand-held DNA analyzer was expected to provide a testing solution to remote and Indigenous communities where there has been difficulty accessing timely COVID-19 test results because of their locations and resources.

While Ross-Carriere said the company’s test and technology worked “very well” in clinical trials in a controlled setting, there were more inconclusive results when they were used out in the real world.

“When you get out in the field you obviously get variables, you know, people swab differently, they do things differently,” Ross-Carriere said.

“Some customers were reporting a higher level of inconclusive results than we would like to see. And so we made the decision to pause shipment in production so that we could investigate those issues and those root causes and optimize the product further.”

Although Ross-Carriere acknowledged they need to do more work to improve the device’s performance, she said she doesn’t consider this a strike against the company.

“This is a fix,” she said. “It happens. It's a bump that happens when you get out in the field. We do have a test that's authorized by Health Canada, we're working closely with the regulators on the fix to the test, but the test is there, the technology is good and we know it’s a great test.”

The interim CEO added that Spartan is a small Canadian startup and they don’t have the “unlimited resources” that some of the big manufacturers have to address the issues quickly.

“That's limited our ability to work really quickly, and it really underscores the need for investment in bioscience in Canada so that companies like ours can be successful,” she said.

However, Ross-Carriere said the Canadian government remains a customer of theirs and they will work closely with the government moving forward.

Despite the setbacks, Ross-Carriere said the company isn’t dead and they’re using this restructuring time to look at the “root causes” of the issues and to come up with a plan to fix them.

“We really want that success story for Canada and so it’s devastating to see some of our colleagues be furloughed as part of this restructuring process,” she said.

“But we're very proud of what we accomplished and we're looking forward to investing in that technology and hopefully having some of these employees come back.”

With files from BNN Bloomberg