A publicly-listed Melbourne-based health diagnostic company conducting researching into ovarian cancer and a number of other serious diseases has collapsed following the termination of a key funding agreement.
HealthLinx, a biomarker and diagnostic development business, has been placed in administration with David Ross and Shanon Thomson from Hall and Chadwick appointed as administrators earlier this week.
On February 26, 2010, HealthLinx shares peaked on the ASX at $0.18, but the price has since declined gradually until the business entered a trading halt on April 30 this year.
At the time, the stocks were worth just $0.001.
Ross told SmartCompany HealthLinx owes unsecured creditors approximately $400,000.
“The debt to unsecured creditors was not that extensive since it’s a listed company, but they just couldn’t pay it,” he says.
Ross says the objective of the administration process it to get the company back up and running.
“The whole objective is to preserve the value of the business and lift the current suspension,” he says.
When asked if the business was likely to be sold, Ross said there were a number of options available.
The company has been plagued with financial problems, and HealthLinx’s 2012-13 half-year financial report shows the company recorded a loss of $2.7 million – up 236% from the $825,997 loss it recorded in the previous corresponding period.
The company’s total revenue for the six months was only $22,067.
When the company’s shares were suspended late last month, the directors alerted the ASX they were considering the financial position of the business after a funding arrangement failed to eventuate.
In December 2011, HealthLinx entered into a funding agreement with La Jolla Cove Investors for it to provide up to $9 million over three years.
In mid-March, this agreement was terminated less than halfway through the agreed period. HealthLinx reported a settlement agreement and mutual release was executed without penalty.
HealthLinx went on to “seek alternative funding for its operational activities”, but these attempts failed and Ross says the termination of the funding arrangement signalled the collapse of the company.
“Obviously that was an indication it didn’t have the funds to continue on,” he says.
In August last year, the company tried to sell a number of its assets to Mane Cancer Diagnostics. But after due diligence and financing issues the sale agreement fell through in December 2012.
The business suffered further in late March this year when its non-executive chairman, Greg Rice, resigned. Rice had been “instrumental” in the formation of HealthLinx and a company statement said he was a co-inventor of many of the key patents which underpinned the company’s products.
The first meeting of creditors will be held on May 16, 2013.