How Joe Hockey’s twist got Brisbane biotech Ellume $340m from the US government

It was during a Zoom call that Joe Hockey realised a small Brisbane company held the key to helping US overcome COVID-19.

Joe Hockey, former Ambassador to the US. Picture: Britta Campion

It was during a Zoom call that Joe Hockey realised a small Brisbane company held the key to returning the US back to some kind of normality and helping it overcome COVID-19. But to achieve that goal, first there needed to be a slight change of direction.

And it was that suggestion from Hockey — a former federal treasurer and Australia’s previous ambassador to the US — that enabled them to extract $US265m ($341m) from the US government, despite not receiving one dollar from the Morrison government.

A mutual friend of Hockey’s had set up the Zoom call between his advisory firm Bondi Partners and Brisbane biotech Ellume in April last year. Ellume had spent about a decade developing a rapid influenza test and was struggling to navigate the complex path to FDA approval.

“They said they had been pushing to get various tests ­approved by the FDA for some time but were finding it a hard slog,” Hockey tells The Weekend Australian.

“I said to them ‘what about COVID?’. The interesting thing is, if you have the flu, you don’t have COVID.

“My immediate reaction was that this would be invaluable to the US military and intelligence agencies. If a ship goes to sea, they want to know whether someone has the flu or not or whether they have COVID. But the bottom line is it needs to be a COVID test.”

Ellume’s chief executive, Sean Parsons, told Hockey it would take about a year to tweak the technology to become a COVID test. That was time they didn’t have.

“My reaction was ‘don’t worry about the flu test, throw everything you’ve got at the COVID test’,” Hockey says. And Parsons’ team didn’t disappoint.

Hockey now calls Parsons “one of the most impressive CEOs I have ever met”, with “a demeanour of a family doctor” combined with “excellent communication” and top business acumen.

This is why, earlier this month, Ellume won a $US235m contract with the US Department of Defence for the manufacture and rollout of its rapid COVID-19 test, which can detect the virus within 15 minutes, across the US armed forces. The cash follows Ellume not only receiving FDA approval late last year but the US National Institutes of Health granting the company $US30m to ramp up production.

But what was more remarkable, Hockey says, was that it was one of the few things to go smoothly in the torturous transfer of power between the Trump and Biden administrations.

“It is phenomenal — absolutely, ridiculously phenomenal — to get something through the FDA in six weeks, which is effectively what they did,” Hockey says. “It’s extraordinary to get the US government to throw in $US30m, when the Australian government hasn’t put in a dollar. Then to go in for a US Department of Defence tender, without the support of a Boeing or a Lockheed or a Northrop Grumman — doing it all on your own, from the other side of the earth. It’s unheard of,” Hockey adds.

“Put the reverse situation in, if there was a little company in Des Moine, Iowa, that had something that Australia wanted, how quickly could we get it through in Australia, let alone the US?”

CEO of Ellume Health Dr Sean Parsons. Picture: Glenn Hunt

So how did the seemingly impossible happen? The turning point came when Hockey was bunkered down in his apartment in Washington and he received a delivery.

At his doorstep was a box and inside the box were two of ­Ellume’s rapid COVID-19 tests that had rolled straight off the company’s production line in Brisbane.

The package perfectly suited the style of Hockey, who quickly realised during his tenure as US ambassador that Washington was a different world that required him to play by different rules. After all, Hockey famously restored the overgrown tennis court at the ambassador’s residence, using it as a centrepiece to conduct diplomacy.

And after receiving the Ellume tests, he found himself with a person who carried influence with the US government, on a golf course. He says he wasn’t lobbying — that’s not Bondi Partners’ role — the pair were just chatting.

“One Sunday afternoon at 4pm I dropped off a kit at someone’s home after talking about the initiative with them over golf, and they said ‘get me a kit’. It wasn’t lobbying. It was just talking about it.

“When they [Ellume] gave me the physical kit, the box, when they sent the box to my apartment in DC and when the box arrived, that was a pivotal moment for me. All of a sudden, something that looks fanciful and unreal became tangible. You could see it, touch it and it works.”

And that was the basic pitch for Ellume’s test. It spoke for itself to the point that Hockey described former US assistant secretary for health, Admiral Brett Giroir, becoming a “mentor” for Ellume.

“What we knew was how to forensically target key people in that environment, so raising awareness could be as simple as carrying one of the COVID tests around to someone’s home in DC and showing them and saying ‘it’s a no-brainer’,” Hockey says.

The only problem was that there are a lot of people in Washington and Hockey only had two tests. “They were so tattered by the time I handed them around, that when I was actually sending them to other people, I said ‘give it back to me’ and then they said ‘I want to keep it, get me a fresh one’. So we had to get more fresh ones over there.

“I’d have the test sitting there and I’d have people over for dinner or a drink — socially distancing of course — and say ‘get a load of this’. No matter how many Zoom calls you have, no matter how many decks you send to each other, the bottom line is you need a physical presence of some sort in order to move the dial.”

Then there was the other ­secret weapon — Parsons.

“It’s as much about the behaviour of the CEO than who you know because in America they form an opinion of who you are pretty quickly, and Sean Parsons was able to build trust without ever meeting people. It really is remarkable,” Hockey says.

“He’s young, early 40s, but he has got drive. He is an intensive care specialist and is technical but collegial. He is an excellent communicator.”

But for all those platitudes and success in the US, Parsons says he is still “swimming against the stream” in Australia, namely because local regulation prevents people from buying the over-the-counter test.

And if there was a need for such a test, it was displayed during Victoria’s third lockdown, which ended on Wednesday night. Parson says that, although Ellume has prioritised the US market, it could provide “tens of thousands” of tests for use on hotel quarantine workers.

“My impression is that the TGA [Therapeutic Goods Administration] bureaucracy are willing to review these things and have these discussions. But it’s a legislative barrier, not a regulatory barrier,” Parsons says.

“We can sell everything we make but we would be glad to support Australia and make it work. It would be some tens of thousands of tests a month, which is not that material in our production capacity.

“As part of a broader screening program, it just makes sense to catch those cases as soon as ­possible.”

Originally published as How Joe Hockey’s twist got Brisbane biotech Ellume $340m from the US government