Government Operations Committee on May 1st, 2020

[The Chair, Conservative, Tom Lukiwski]

I will call this meeting to order. Welcome to meeting number eight of the Standing Committee on Government Operations and Estimates. Pursuant to the order of reference of Saturday, April 11, 2020, we are studying the government's response to the COVID-19 pandemic.

Before we start, I'd like to announce the schedule for next week's meetings. Our first meeting will be on Monday, May 4, at 2 p.m. It will last for two hours. The second meeting next week will be on Friday, from 11 a.m. until 1 p.m. Those times are Eastern Standard Time.

I would like to make a few comments for the benefit of our witnesses and our committee members, although I'm sure most of the committee members are quite familiar with the procedures by now.

Before speaking, wait until I recognize your name. When you are ready to speak, you can either click on your microphone icon or activate your mike by holding down the space bar. If you lift the space bar up, you will be automatically muted. When speaking, please speak slowly and clearly, and enunciate clearly. It will help our interpreters greatly if you do so.

I would also like to explain some of the guidelines regarding the interpretation channels. I've gone over this several times in the past, but for the benefit of new members, if you are going to be speaking primarily in English, go to the interpretation icon at the bottom of your screen and click on “English”. If you are primarily speaking in French, click on “French”. If you are going to be alternating between English and French, before you alternate please pause for a beat to allow the interpreters to change their channels, and then proceed in the language of your choice.

Before we get started, I would like everybody to click on the grid icon at the top right of your screen and click on gallery view. That will show you everyone who is participating in today's meeting, and you can see their videos as well.

Right now I would ask Mr. Whalen, even though we are slightly behind, to please make his opening remarks. Try to keep your comments as brief and concise as possible to allow as much time as possible for questions from our committee members.

Mr. Whalen, the floor is yours.

[Pat Whalen, Chairman and Chief Executive Officer, LuminUltra Technologies Ltd.]

Thank you, Mr. Chair.

First of all, I want to thank all of the committee members for the opportunity to be here today to speak about LuminUltra's role in providing essential COVID-19 testing supplies.

I will aim to keep this brief so that we will have ample time for questions, but I do want to provide a bit of a backstory about LuminUltra.

We are a molecular biology diagnostic testing company that focuses primarily on testing for micro-organisms in water. Just like people, water systems can get sick. They can get infected with different types of microbes, and we provide tools to essential businesses around the world to apply treatments and management techniques without which there would be a global economic cost in the hundreds of billions of dollars per year.

We are proudly headquartered in New Brunswick, here in Fredericton. We have operations in six countries around the world, including the United States, the United Kingdom, France, the Netherlands and Australia.

We are 100% Canadian owned between me and XVP Water Partners based out of Toronto. We have been in business for about 20 years, but we span all the way back to 1995 when we got our early beginnings. I was lucky enough to be one of the three founders of the company as a laboratory technician while I was still in high school.

Today we have grown to nearly 100 staff, the vast majority of whom are actually here in Canada. I would say that up until recently we have been largely unknown to Canadians because our business has been very internationally focused so far. We sell primarily to private interests, more of a B2B kind of business, in over 80 countries around the world. Our customer base is largely made up of Fortune 500 companies. These types of businesses are in the business of providing essential services, and we have been committed to making sure that we're able to continue to meet their needs while maintaining the safety and security of our staff, which is important to us. We have a very innovative, very adept team that has grown accustomed to innovating over the years. It is actually that culture of innovation that made us able to step into the fight against COVID-19, which started on March 20 when the Prime Minister put out the call to action to industry. We responded very quickly through the front doors that were provided.

Knowing that we had certain expertise that could be brought to bear on the testing side, through those doors we were in contact with the Public Health Agency of Canada. We had some very detailed, in-depth discussions with the folks out in Winnipeg and realized that we could provide much-needed chemical reagents to allow testing to proceed across Canada. That has resulted in our commitment to the Government of Canada to provide reagents for 25 million COVID-19 tests over the next year. As of today, we have already shipped one million of those tests from our facility in Fredericton to all of the provincial health laboratories across Canada.

The next steps, though, as we always have an eye to the future, are that we are engaged with various government agencies, including ISED, NRC and ACOA, on scaling up this production even further and expanding beyond simply providing those chemical reagents to also being able to provide a more comprehensive solution for COVID-19 testing. We're also looking at the opportunities to deploy testing beyond the clinical setting into environmental settings as well, where we would be able to provide some assurances that the environments in which we all live, work and play are kept safe and secure as we begin to relax physical distancing in the future.

Overall, I just want to say how immensely proud I am of our team, and also of the team at the Public Health Agency of Canada, which has been incredibly hard-working with long hours and lots of conversations. It is a great team to work with and we have really gone through this together to be able to very rapidly shore up these bottlenecks through that collaboration.

Again, I appreciate the opportunity to be here today and look forward to any questions.

Thank you very much.

[The Clerk of the Committee, Mr. Paul Cardegna]

I believe you are muted, Mr. Chair.

[The Chair, Conservative, Tom Lukiwski]

Hopefully, I'll get the hang of this before these meetings end.

Mr. Lem, the floor is yours.

[Paul Lem, Chief Executive Officer, Spartan Bioscience Inc.]

Thank you. I appreciate the invitation to attend today's meeting and talk about my company, Spartan Bioscience. It's an honour to address you, the members of Parliament on the government operations committee.

I am Spartan Bioscience's chief executive officer. I am responsible for setting the company's strategy and leading its implementation. I hold a medical degree from the University of Ottawa. My specialty lies in infectious disease and microbiology.

I started Spartan Bioscience 15 years ago, with a mission of bringing the power of DNA testing to everyone. I had a close family member who was diagnosed with leukemia. It took weeks to get DNA results back from the lab before he could start a life-saving drug. That gave me the idea of bringing these DNA analyzers out of the lab for everyone to use, in the same way that we take it for granted that we can test ourselves with blood glucose meters in our homes. Our vision is how to do the same with DNA testing.

Driven by our mission, Spartan has grown into a leading biotechnology company. We have developed the world's smallest DNA analyzer. Our technology has received FDA and Health Canada approval and has been validated by expert organizations such as the Centers for Disease Control and the Mayo Clinic. Our technology has also been published in prestigious medical journals, including The Lancet and the New England Journal of Medicine, one of the top medical journals. We believe that our fast, accurate, affordable and portable tests will make DNA testing accessible to everyone in fields as diverse as infectious disease, precision medicine, food and water safety testing and veterinary diagnostics.

Before the COVID-19 pandemic, we had applied our technology to a variety of fields. One of our first tests was a precision medicine test that is used by cardiologists for a drug called Plavix. It was the number two bestselling drug of all time after Lipitor. This drug is not activated properly by 30% of patients because they carry a mutation that prevents their liver from activating the prodrug and puts them at a much higher risk of cardiac complications. With our rapid test, cardiologists can help their patients avoid these side effects. Another one of our tests is for genetic pre-screening for Alzheimer's research that is able to identify the 20% of people who carry genetic risk mutations that increase their risk of developing Alzheimer's.

Finally, we've also applied our technology to environmental testing, specifically testing water systems in buildings for legionella bacteria. Legionella bacteria can contaminate water systems, including office buildings here in the Ottawa area. People who breathe in water contaminated by this bacteria are at risk of legionnaires' disease, a severe pneumonia that kills 10% of infected people. Our test is now one of the world-leading tests that's used by the CDC, the New York State Department of Health and Fortune 500 companies.

All of the tests I mentioned run on the same coffee-cup-sized device that we call the Spartan cube. The analogy I like using is that it's like a Keurig coffee machine: once you have the device, it can run different pods.

All of this experience in R and D over the last 15 years allowed us to answer the call for increased COVID-19 testing. With the support of the Government of Canada through the industrial research assistance program, we were quickly able to adapt the CDC's validated COVID-19 test and put it onto our validated platform.

To give you a sense of how fast the timeline has been, on March 20, the Canadian government recognized our ability to help with the pandemic and signed a letter of intent with us. The following day, March 21, we reached an agreement with the Government of Ontario for a contract for 900,000 tests. Then on April 11, we received Health Canada approval for our COVID-19 test and immediately started shipping to our federal and provincial partners.

Without the government support we have received to date, both at the federal level and the provincial level from Premier Ford’s government, we would not have been able to create our rapid tests, nor been in a position to ramp up production to help meet Canada’s testing needs.

We are a proudly Canadian company. We are excited that our technology will be an important part of fighting the COVID-19 pandemic in Canada. This COVID-19 test that we've developed is going to be ideal for use in decentralized settings, such as remote communities, indigenous communities, and potentially airports, border crossings, doctors' offices, pharmacies and clinics.

Now that we have our test ready for use, we’re working around the clock to ramp up production to make our tests more widely available to Canadians. Our suppliers have been putting in an extraordinary effort and we are fortunate that they are based here in the Ottawa area, so we're not subject to export bans or the shortage of things such as swabs. To date, we've already shipped out thousands of test kits, and we have plans in place to ship out hundreds of thousands of tests per week by July.

The last few weeks have been like nothing our company has ever experienced. The ramp has been incredible. I have to give a lot of credit to Prime Minister Trudeau, Minister Navdeep Bains, Premier Ford, Premier Legault and their officials for helping us ramp up so fast.

Thank you.

[The Chair, Conservative, Tom Lukiwski]

Mr. McCauley, you're up for six minutes, please.

[Kelly McCauley, Conservative, Edmonton West, AB]

Thank you, Mr. Chair.

Gentlemen, thanks very much. It's fascinating work that you're doing.

Mr. Whalen, you answered a lot of the questions in advance, but there was a comment by Dr. Lem about his supply lines. He said that he procures everything in the Ottawa area. What about for your company? Are you running into issues from supply lines out of the United States, China or other areas?

[Pat Whalen]

Thank you for the question, Mr. McCauley.

Having been in business for the better part of 20 years, and with primarily an international focus to date, we have quite an extensive supply line all around the world. Traditionally, the vast majority of our supplies would come from North American sources, Canada and the United States, with some supplementation from parts of Asia and parts of Europe. We have not encountered any serious problems with that existing supply chain, but with a mind to the future, we are working with our government partners, such as ISED and NRC, to try to move as much as possible of that supply chain within Canadian borders. We have an active program with them right now on doing exactly that.

I guess to answer your question simply, we have not encountered any significant issues thus far as a result of our very extensive supply chain, but nobody has a crystal ball, which is why we're going to try to shore it up to try to be 100% within the borders.

[Kelly McCauley, Conservative, Edmonton West, AB]

Walk me through, please, a “dummy's guide” to your product. You talked about reagents and then testing. What exactly is it that you are providing? Is it the chemicals that someone else is using for tests, or are you producing the whole test kit? Could you walk me through that?

[Pat Whalen]

At present, the focus is on the reagents. That has been the bottleneck. To perform these types of tests, you need to have, as has been mentioned, swabs. You need to have reagents. You need to have disposable plastic parts. You need to have equipment and you need to have trained personnel. Across Canada, within the provincial health laboratories, we have a very robust installed base of equipment and people, but there were bottlenecks up front in terms of the chemicals and in terms of swabs, which has been a big point in the media over the past several weeks.

We decided that our expertise could best be suited to helping with the reagent side of things, which had been the most unique and most critical bottleneck. That's where we focused our initial efforts, working with PHAC. As I mentioned, we're now looking at a larger, broader and more turnkey solution that provides all of those parts, which we have experience building. We have a lot of capacity and a lot of expertise on especially the reagent side.

[Kelly McCauley, Conservative, Edmonton West, AB]

Is the Government of Canada procuring from you and then distributing to the provinces, or do you have separate contracts with separate provinces?

[Pat Whalen]

The federal government is doing the primary procurement and then the distribution of the products to the different provincial health laboratories. We do have some interface, simply by virtue of shipping product to those provincial health laboratories, but the contract is with Canada.

[Kelly McCauley, Conservative, Edmonton West, AB]

Okay.

You mentioned that you're in six different countries. Are you doing the same ramp-up in those countries as well? They're all allied countries of ours, basically. Are you in the same ramping-up situation in those countries, or is it mostly just in Canada?

[Pat Whalen]

The vast majority of our production is actually in Canada, right here in Fredericton, and we intend to continue down that track. We're not currently ramping up anything in other countries. We're making Canada the focus. In fact, we're breaking ground on a brand new production facility that will increase our capacity by a couple of orders of magnitude to drive it even further.

[Kelly McCauley, Conservative, Edmonton West, AB]

When will that come online?

[Pat Whalen]

At the end of June.

[Kelly McCauley, Conservative, Edmonton West, AB]

Fantastic. Is there export potential for this once we get past Canadian needs?

[Pat Whalen]

Once we're absolutely 100% certain that we've met the needs of Canada, then we'll look at the potential for export, yes.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mr. Lem, that's a fascinating little cube. It reminds me of the Avengers' Tesseract cube.

Did the government reach out to you or did you reach out to them for this opportunity?

[Paul Lem]

It was the government that reached out to us. It was very apropos because we had already been developing our portable COVID-19 test in parallel. It was ready when the government called us.

[Kelly McCauley, Conservative, Edmonton West, AB]

How fast can you ramp up to large-scale production and what's needed? Is it just money? Is it space? Is it more—

[Paul Lem]

It's really a function of money, actually. I'll show you the different components of our test. We actually make all of the components: the swab, the actual test cartridge and then the device.

[Kelly McCauley, Conservative, Edmonton West, AB]

Mother's Day is coming up. I'm thinking of picking one up for my wife.

[Paul Lem]

That is our vision, to eventually get it into your bathroom.

In terms of ramping up the supply chain, what really helped was when we got the orders from the federal and provincial governments. I think we got about a 10% down payment. We immediately put that into our suppliers because there was a lead time of about 90 to 120 days to actually produce the moulds and then start spitting out those plastic parts that I showed you. We had—

[The Chair, Conservative, Tom Lukiwski]

I'm sorry, Mr. McCauley. We're completely out of time. I know you had one more question. I hope we'll be able to get to it in the next round of questioning.