Less than three months after regaining Health Canada approval for its portable COVID-19 testing technology, Spartan Bioscience has again halted shipments of its product after acknowledging an unspecified technical glitch.
The result: insolvency and much uncertainty about its future.
“This is not a patient safety issue,” said Jennifer Ross Carriere, interim CEO of Spartan,”and we are working hard to resolve it.”
Spartan withdrew its DNA-testing device a year ago after initial test kits ordered by the federal government and several provinces provided sub-standard results. The Ottawa firm had spent months re-engineering its lab-in-a-box so that the swab would collect bigger COVID-19 samples. Health Canada granted approval again on Jan. 22.
Whatever the technical issue, the consequences of the second stoppage have been far more severe. Spartan had been spending rapidly to accommodate what it believed would become a $200 million-a-year business. With its revenues suddenly cut off for an undetermined amount of time, the company was forced Monday to file for protection from its many creditors while it sorts out its options.
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Greg Adams, associate partner with the trustee Ernst & Young, said Spartan hopes to find a new investor or a buyer in the coming weeks or months and, in the meantime, will introduce measures to cut costs.
A list of creditors compiled by E&Y shows at least $72 million worth of claims, including $16.6 million for Health Canada, $9.8 million for the Ontario Agency for Health Protection & Promotion, $8.8 million for CHU de Québec-Université Laval and $1.7 million for a couple of Alberta agencies.
Also on the hook are Business Development Canada ($8.8 million) and Casa-Dea Finance Ltd. ($6.9 million). Sanmina, which has been gearing up to manufacture large volumes of Spartan’s testing kits, is owed $6.25 million. Promega Corp., a specialist in various aspects of DNA testing and extraction, has a claim of nearly $3.8 million.
Spartan’s balance sheets were not immediately available so it’s not known how many assets are available to offset the amounts owed.
Certainly Spartan had been burning through cash at a significant rate. Last January, in anticipation of a favourable Health Canada ruling, the firm had been producing 60,000 test kits per week with the intention of more than tripling that amount by the end of February. It’s not clear it got that far before technical issues emerged. However, Health Canada and provincial agencies clearly forwarded large sums of money in order to secure deliveries.
Depending on the nature of the technical fix that needs to be applied, it’s possible a new investor can be found to rescue Spartan’s business — and that its creditors could recoup at least part of the money owed to them.
Whatever the ultimate result, this has been a severe setback for what had promised to be a rare Canadian success story in the COVID-19 testing industry, which is dominated by life science multinationals such as Roche and Baxter.
“We believe Canada needs more innovation in the biosciences sector,” said Carriere. “We are incredibly proud of our team for quickly designing and manufacturing the only made-in-Canada rapid diagnostic PCR COVID-19 test.”
Turns out Health Canada was right to take its time testing Spartan’s technology last year. A new investor or owner, assuming one can be found, will now face even more skepticism.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
TORONTO – Canada’s main stock index was little changed in late-morning trading as the financial sector fell, but energy and base metal stocks moved higher.
The S&P/TSX composite index was up 0.05 of a point at 24,224.95.
In New York, the Dow Jones industrial average was down 94.31 points at 42,417.69. The S&P 500 index was down 10.91 points at 5,781.13, while the Nasdaq composite was down 29.59 points at 18,262.03.
The Canadian dollar traded for 72.71 cents US compared with 73.05 cents US on Wednesday.
The November crude oil contract was up US$1.69 at US$74.93 per barrel and the November natural gas contract was up a penny at US$2.67 per mmBTU.
The December gold contract was up US$14.70 at US$2,640.70 an ounce and the December copper contract was up two cents at US$4.42 a pound.
This report by The Canadian Press was first published Oct. 10, 2024.
