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The Australian arm of COVID-19 at-home test kit manufacturer Ellume has fallen into voluntary administration, with FTI Consulting appointed to find a way forward for the Brisbane-based business.
Ellume, which was founded by CEO Dr Sean Parsons and recently opened a 20,000sqm facility in the US, says its US subsidiary is not subject to the voluntary administration and will continue to trade as usual throughout the appointment.
Control of Ellume USA remains with its directors.
Dr Parsons says the appointment of FTI will determine the best course of action for the Australian business, which has never managed to get its rapid test kits for COVID-19 approved for sale at home by the Australian Therapeutic Goods Administration (TGA).
“We set out to spark a revolution in the way infectious diseases are diagnosed,” Dr Parsons said.
“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.”
FTI Consulting says a meeting of creditors will be held in mid-September.
“The administrators will seek to maximise the chances of Ellume exiting the administration process in an orderly fashion,” voluntary administrator John Park said.
“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.”
Founded initially to develop simple-to-use diagnostics tools for common infectious diseases, Ellume grew rapidly during the COVID-19 pandemic with its app-enabled rapid test kit that targeted the premium end of the market and was approved by the US Food and Drug Administration (FDA) in December 2020.
At the time, it was manufacturing around 100,000 rapid COVID-19 tests per day from its 4,400sqm facility in Brisbane, which was backed by a $40 million investment from the US National Institutes of Health (NIH) to scale up production.
Its first shipment of tests was sent to the US one month later, with the company aiming to export around 20 million tests to the country by the end of 2021.
The company’s US arm then received a $304 million US Government contract to scale up production further which funded the establishment of Ellume’s US-based manufacturing facility.
In November last year, the company hit a speed bump after 2 million COVID-19 home tests were recalled in the US after it was discovered they were delivering ‘false positive results’.
Dr Parsons apologised for the error, and confirmed the company had isolated the cause and confirmed it was limited to specific lots of tests.
Ultimately, the situation led to Ellume being hit with a class action law suit, with two US consumers alleging the company failed and refused to refund purchasers of recalled COVID tests, and that the company was unjustly enriched at the expense of the plaintiffs.
Ellume said the class action claims were “wholly without merit”, and that it intended on mounting a “vigorous defence”.
On the back of the company’s rapid growth, Dr Parsons told Business News Australia in April that it was working on developing a flu-COVID combination test.
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