Covid biotech Ellume Health placed in liquidation after rival buyer fails to pay up

Queensland biotech company Ellume Health, which just two years ago was riding high after winning a $300 million US government Covid contract, has been placed in liquidation after a takeover offer for the failed business fell through.

The Australian arm of the global business entered voluntary administration last August. It subsequently emerged that it owed creditors more than $140 million, including $1.7 million to staff, after raising more than $89 million in convertible notes in 2022. The company had been gearing up for an IPO or trade sale to give investors a quick exit.The 13-year-old Brisbane digital diagnostics biotech designed the first rapid self-test for Covid-19 detection authorised by the US FDA, for use without a prescription. CEO Dr Sean Parsons founded Ellume in 2009.

It early 2021, Ellume signed US$231.8 million (AU$305m) deal with the US Department of Defense to build a US factory producing up to 19 million of its home testing kits. The business previously received a US$30 million grant from the US National Institutes of Health to fast fast-track the development of its diagnostic tests.

But last week, a $56 million takeover bid from Gold Coast rival, Hough Consolidated, collapsed after it failed to meet deadline from the administrators to stump up a $1.25 million non-refundable payment as part of the Deed of Company Arrangement (DOCA).

Hough sought an extension to the DOCA from June 9 to July 14. The administrators had already extended their conditions for the payment, which also included demonstrating the company had the full amount owed in their lawyers’ trust account, by five days, from June 8 to the 13th.

The Gold Coast firm had planned continue to run Ellume in Australia and the US, retaining its employees. The deal would have also given Hough access to Ellume’s fluorescent immunoassay technology, the result of a decade of R&D following the swine flu pandemic of 2009-10. That work laid the groundwork for Ellume’s success with Covid-19 rapid antigen tests (RATs).

But Ellume had issues with its RATs and in late 2021 around 190,000 of the 3.5 million tests already shipped were recalled after multiple reports of false positives.

Hough has had its own Covid troubles, falling foul of regulators last year when the Therapeutic Goods Administration (TGA) issued eight infringement notices totalling $106,560 to Hough Pharma Pty Ltd for allegedly failing to provide information to the TGA to demonstrate the safety and performance of three COVID-19 rapid antigen tests.

While administrators John Park and Joanne Dunn from FTI Consulting thought they had a deal, they pulled the pin last week, shutting down operations immediately and placing Ellume in liquidation after the acquisition funds failed to materialise.

The liquidators will issue a report to Ellume’s creditors within 3 months on any estimated return to them.