Brisbane-based rapid COVID-19 test maker Ellume has been plucked out of administration by competitor Hough Consolidated in a USD$38 million (AUD$57 million) deal, which will also give the buyer ownership of a fast-growing US subsidiary.
The deal also gives Hough access to Ellume's fluorescent immunoassay technology that can generate results in the space of 15 minutes, and were the product of a decade of research and development following to the swine flu pandemic of 2009-10, which allowed for a fast pivot to tackling COVID with more precise diagnoses.
Ellume Ltd, which has been in administration since 1 September, would be completely acquired by Hough as part of the agreement which requires approval from creditors - expected to be sought at a meeting that Business News Australia understands will be held before Christmas.
The sale also includes the US-based subsidiary of Ellume, which is 100 per cent owned by the Australian company but was not placed into voluntary administration alongside its parent.
As part of the binding implementation deed and funding agreement entered into by Ellume’s administrators John Park and Joanne Dunn of FTI Consulting, Hough would provide interim funding to enable the ongoing operations of the company.
Further, Hough would create a creditors’ trust to enable the transfer of shares in the company and to make distributions to creditors and employees.
If accepted by creditors, Ellume - founded by 2020 Brisbane Young Entrepreneur of the Year Dr Sean Parsons - would be able to offset some but not all of the $140 million it has in liabilities to creditors.
According to FTI, Ellume’s liabilities include $89 million owed to convertible note holders, $49 million to creditors, and $1.69 million of employee entitlements. As of 1 September, Ellume’s Australian arm had 215 employees.
This compares to confirmed assets worth about $39 million, including $1.5 million in cash, $37 million in plant & equipment assets, and $620,000 in debt owed to Ellume.
The company, fell into voluntary administration in September just months after opening a 20,000sqm facility in the US.
At the time, Dr Parsons said administrators were appointed in order to “help determine the best course of action to secure and strengthen a future for Ellume”.
That future could soon be in the hands of Hough Consolidated, which also makes rapid antigen tests for detecting COVID-19. These are sold at major Australian retailers including Officeworks and Woolworths, and online by e-commerce operators like Amazon.
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.
The company’s US arm then received a $304 million US Government contractto scale up production further which funded the establishment of Ellume’s US-based manufacturing facility.
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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