Aussie biotech company Ellume in administration owes $140m

The Aussie company is struggling despite inking in a $300 million deal with Joe Biden two years ago.

An Australian biotech company that went into administration last month owes an eye-watering $140 million to creditors.

On the last day of August, Brisbane-based Covid test maker Ellume appointed John Park and Joanne Dunn of FTI Consulting as administrators.

It came after racking up more than $100 million in losses since 2020, due to a combination of Covid RATs becoming widely available in the US and also an expensive product recall. 

Now at a creditors meeting held on Monday, documents show that the firm owes $1.7 million to employees. Of that, $182,000 is owed in outstanding superannuation while $1.5 million is due to unpaid entitlements.

On top of that, administrators said Ellume owed $49 million to creditors.

Ellume has also racked up a massive debt with investors, who have convertible notes worth $89 million — meaning they invested that at an early stage of the company and expected to convert it into equity in the future.

The health and science company was founded in 2009 by Dr Sean Parsons and has 215 staff members across its US and Australian branches. A spokesperson said there were around 180 Australians employed by the company.

It’s worth noting that Ellume’s US subsidiary has not been impacted by the administration of the Australian division.

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An ad for an Ellume at-home Covid test.

Ellume won a $300 million contract with the US Government to supply at-home Covid-19 tests but less than two years later, it went into administration. Picture: NCA NewsWire / Dan Peled

The company has some assets still in its name, including $1.5 million sitting in the bank in cash, as well as equipment worth $37 million.

The administrators have not yet come up with a valuation for the company’s entire inventory.

A further $602,000 should be coming through the pipeline from debtors that owe Ellume money.

Administrators are hoping to sell or restructure Ellume to rescue the business, “if possible”, they wrote in their report.

At the moment, Ellume is being run “business as usual”.

The administrators are also waiting on a response from the US Department of Defence on Thursday to figure out where they stand in terms of the contract.

At its peak, investors valued Ellume’s worth at anywhere from $500 million to $1 billion.

Ellume has substantial assets and administrators are hoping they can sell the company.

Ellume shot into the public spotlight after signing a contract with the Biden administration in December 2020 to supply Covid rapid home testing kits to Americans.

The deal was supposed to net them $300 million but two years later they incurred significant losses.

According to results reported to the Australian Securities and Investments Commission, Ellume was struggling for some time, despite the massive deal it struck with the US.

In the 2020-2021 financial year, it lost $17 million.

In the most recent reporting period, Ellume lost a whopping $87.9 million.

Of those losses, Ellume shed an estimated $25 million after having to recall two million products.

Some of their tests showed false positives, prompting customers to take launch a class action against the company which forced them to pause manufacturing operations while they addressed the problem.

Ellume’s report said that the product recall had “significant impact on the operations and liquidity of the group”.

The firm’s survival was also not helped by the fact that earlier this year, the US government made rapid testing largely accessible and free, spending $1 billion on the venture, and putting Ellume largely out of business.

Originally published as Aussie biotech company Ellume in administration owes $140m