Spartan Bioscience files for creditor protection

OTTAWA – Spartan Bioscience, which developed a rapid COVID-19 testing device that attracted the attention of health officials across Canada, announced that it has filed for creditor protection after discovering a problem with the technology.

Spartan Bioscience’s interim CEO Jennifer Ross-Carriere said through a spokesperson that the company has paused shipments of its COVID-19 testing cube while it works to resolve the “recently-identified issue.”

“As a result of this pause in shipment, Spartan is seeking protection from creditors working to restructure the company and refine the performance of the COVID-19 test in the field,” said the statement from Ross-Carriere.

Spartan says it is laying off 60 employees, or around 70 percent of its workforce.

“We are incredibly committed to our technology, customers and partners, and will provide updates as soon as we can. Spartan remains committed to our vision of putting our world-leading mobile DNA-testing technology to work in the fight against COVID-19,” said Ross-Carriere.

Spartan’s device, which the company says is about the size of a coffee mug, has been described as a potential game-changer by health officials, with the company claiming it could deliver on-location results in less than an hour using a polymerase chain reaction (PCR) to get results.

The device was authorized for use by Health Canada on Jan. 22. Spartan said Health Canada’s authorization remains in place while it works with the federal agency to resolve the issue.

According to an article in the Ottawa Citizen, 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 trustee Ernst & Young 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.