Government Operations Committee on May 1st, 2020

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Thank you very much.

Mr. Lem, your kit is very interesting to see. It would be nice to make these tests available at hot spots, such as borders, seniors' homes and other places. As I understand it, your aim is to make this a self-diagnostic test.

You've already answered one of my questions about whether you've ever done any such testing for COVID-19. I just want to make sure of one thing. Do you only do the kits or do you do the testing as well, whether it's for DNA or for COVID-19?

[Paul Lem]

It's a self-contained kit. Think of it like a blood glucose meter. This gives you everything you need, and you can plug it into a laptop or a tablet, and it will tell you your COVID-19 result. You need nothing else external. It's all self-contained.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

So your company doesn't do COVID-19 or DNA analysis.

[Paul Lem]

That's correct. The DNA analysis is automatically done by an on-board microprocessor with our special algorithms, so it does everything. This is why this is the future of diagnostics, because right now you have to ship those swabs off to a central lab and PHD has to analyze the results. That's why it takes days or even a week to get the results back.

We've seen with blood glucose meters and home pregnancy tests that eventually technology gets so affordable and easy to use that people can administer them themselves. That's the vision of our company.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Does the kit you offer also allow for DNA analysis or does it only focus on the COVID-19 test?

[Paul Lem]

Yes, COVID-19 is a virus, and our test cartridge extracts the genetic material from the COVID-19 virus, amplifies it up a billion times and then detects it, analyzes it and gives the user what the result is automatically.

[Julie Vignola, Bloc, Beauport—Limoilou, QC]

Therefore, it does not analyze the DNA of the user, but only the DNA of COVID-19.

[Paul Lem]

That's correct, so there are no privacy concerns from analyzing the human DNA. It only looks for the presence or absence of the coronavirus genetic material.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much.

Unfortunately, we're out of time.

We'll now go to Mr. Green for six minutes, please.

[Matthew Green, NDP, Hamilton Centre, ON]

Thank you very much, Mr. Chair.

This is certainly a fascinating glimpse into the supply chain and the federal government response to COVID. I want to echo and share my deep appreciation to both of you for your respective contributions in this time of crisis. It's significant, and I know Canadians who are tuning in are going to be watching with equal interest.

I can't, though, shake the future prospect of recurring epidemics like this, and I just want to explore something. We've heard today from Mr. Whalen about the order of magnitude in scaling up his business. We heard about the procurement of chemical reagents. I'm just wondering, for either of you, if you were previously contracted with the government in any way. Have you had government contracts before?

[Pat Whalen]

I'm answering first. Sorry, Dr. Lem.

The answer to that is no, not in Canada. We have had government contracts in other jurisdictions.

[Matthew Green, NDP, Hamilton Centre, ON]

Mr. Lem?

[Paul Lem]

For our company, we had a government contract for legionnaires' disease testing with the same small device and the same cartridges.

[Matthew Green, NDP, Hamilton Centre, ON]

I don't know the appropriateness, but I'm going to put the question anyway. Were these both single-source contracts in terms of your capabilities and this emergency protocol we have now?

[Pat Whalen]

I can't speak to whether the supply of reagents is a single source. There are other companies out there that provide similar things. I think we were simply able to provide a custom material that PHAC was looking for to be able to fuel the provincial health laboratories. As far as dealings with other parties, I can't speak to that.

[Paul Lem]

For us, to the best of our knowledge, there are only five FDA-approved portable DNA analyzer companies in the world. We're the only ones in Canada. There are two in the U.S. and two in Europe. What we heard from our provincial customers was that there are soft export bans on our competitors, so that their home countries are keeping all their supply for themselves. I think that's how we got the contracts with the federal and provincial governments.

[Matthew Green, NDP, Hamilton Centre, ON]

It's critically important, because there's been an ongoing conversation about the national emergency strategic stockpile supply. I heard Mr. Whalen talk about the term of his contract. I heard him talk about perhaps March 31, 2021.

In your modelling, have you started to envision what it would look like in terms of requirements to replenish domestic stockpiles before you start to shift into export? Has that been a condition or a feature in your contract with the federal government, that you do provide that support going forward into whatever phase of this comes next?

[Pat Whalen]

I would say it's something that we have certainly thought about on our side, which is why we're looking at a more permanent solution to scale up our production. We are thinking about that on our side. We have not yet engaged in any substantive discussions with anybody at PHAC or other agencies about a longer-term engagement, but we're very much open to it when and if the time comes.

[Paul Lem]

For our company, we've been highlighting to the government that we are facing overwhelming demand from foreign governments—I think there are over 20 of them—and foreign corporations that want to buy all of our supplies starting in the summer, once we have more. Right now, PHAC is creating a model regarding how much of their supply they're going to want. This is where I think it's going to be important that Canada establish some sort of stockpile or something like that, because otherwise, if we offered our supply right now, we could sell a billion dollars' worth worldwide within a week.

[Matthew Green, NDP, Hamilton Centre, ON]

I have to share that concern with you, in terms of basic economic supply and demand and where we are right now with this crisis.

I'm a little concerned about the ability to import the necessary chemicals, whatever the production inputs might be. Have you found volatility in that market? If so, in terms of shortages and costs, how has it put an upward pressure on the price per unit that you all are offering our government?

[Pat Whalen]

Speaking for our side, I can say that, based on that international supply chain we had already established and the supplier relationships that we had established, we were lucky to be able to get out in front of the supply chain aspect early on and be able to stockpile material ourselves. To date, we have not had any serious constraints in that regard, but things are changing daily, weekly, monthly and quarterly at this point. We are working around the clock on that supply chain challenge and, as I mentioned, working to try to get that Canadian domestic supply ramped up as well.

[Paul Lem]

Similar to what Mr. Whalen said, I think our big advantage is that we make our swabs and our cartridges here in Ottawa, and we own all the intellectual property and designs around them, so we can then bring on contract manufacturers like Sanmina and specify that we want them to actually manufacture, for example, in Mississauga.

[Matthew Green, NDP, Hamilton Centre, ON]

Have your per unit costs of your products changed since the pandemic began?

[Paul Lem]

They have, given the scale. I think starting in the summer our cost of goods is going to go down, and that's why we've already been negotiating with the government. For example, we will be dropping the price of our devices by 50% starting in mid-summer.

[Matthew Green, NDP, Hamilton Centre, ON]

Mr. Whalen.