Brisbane Covid testing company Ellume goes into administration

An Australian medical startup has gone into administration just two years after making international headlines for striking a multimillion-dollar deal with US health authorities.

An Australian Covid-19 rapid testing company has gone into administration just two years after making international headlines for securing a multimillion-dollar deal with US health authorities.

On Thursday, the Australian division of Brisbane-based biotech Ellume went into voluntary administration.

Ellume was founded in 2009 by Dr Sean Parsons and according to an Ellume spokesperson, employs 180 people in Australia.

The biotech company’s operations in the US are understood to be separate and are not affected by the appointment of administrators.

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 have reportedly racked up massive losses.

According to reports lodged with ASIC since 2020, the company has lost $100 million due to a combination of Covid RATs becoming widely available in the US and also an expensive law suit that didn’t rule in their favour.

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The Brisbane headquarters of biotech company Ellume, which has gone into administration. Picture: NCA NewsWire / Dan Peled

According to results reported to the Australian Securities and Investments Commission, Ellume was in the red 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 2 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.

Dr Sean Parsons, who heads Ellume, has put the company into administration. Picture: Glenn Hunt

In a statement to news.com.au, chief executive and founder Dr Sean Parsons said: “We set out to spark a revolution in the way infectious diseases are diagnosed.

“I am incredibly proud of Ellume’s achievements in what has been an unprecedented, challenging, and dynamic time.

“We are entering into a voluntary administration process for the Australian business to help determine the best course of action to secure and strengthen a future for Ellume.”

John Park and Joanne Dunn of FTI Consulting were appointed as the administrators.

Mr Park said in a statement to news.com.au “The administrators will seek to maximise the chances of Ellume exiting the administration process in an orderly fashion.

“The administrators intend to trade the company on a business-as-usual basis, while we conduct an independent assessment of the financial position and ongoing viability of the business.”

A creditor’s meeting will be held in mid-September.