- PharmAust (PAA) appoints liquidators from Grant Thornton Australia to administer the creditor’s voluntary winding-up proceedings for PAA’s subsidiary, Epichem
- Epichem did not receive a new contract from DNDI, cutting funding into developing new treatments for neglected diseases
- This is causing the company to operate at a loss and forces PharmAust to fund the shortfall, but it is engaging with external advisors to navigate restructuring options
- The shift in producing pharmaceutical operations overseas negatively impacts Epichem and PAA reports the decision was made “in the best interest” of shareholders and will not affect current operations
- Shares in PAA are down 4.94 per cent, trading at 7.7 cents at 1:37 pm AEST
PharmAust (PAA) has appointed joint and several liquidators, David Hodgson and Andrew Hewitt from Grant Thornton Australia, to administer the creditor’s voluntary winding-up proceedings for PAA’s subsidiary, Epichem.
The company announced that Epichem’s success can be significantly attributed to its long-standing research contract with DNDi (Drugs for Neglected Diseases Initiative). However, this contract, which funded Epichem’s research into developing treatments for neglected diseases, was not renewed beyond March 2023.
Consequently, Epichem is currently operating at a loss, with PharmAust stepping in to cover the shortfall.
Epichem operated as a Contract Research Organisation (CRO) relying heavily on pharmaceutical companies, which was negatively impacted by the COVID-19 pandemic.
A shift in producing pharmaceutical operations overseas has led to many CROs moving operations, creating a decline in local opportunities which has also negatively impacted Epichem.
Moreover, the Australian pharmaceutical industry has seen a shift towards overseas operations in recent years due to the high cost of running CROs in Australia, which has also affected Epichem’s ability to secure contracts.
There has also been a lack of funding, opportunities for contracts and a reduction in Australian employment opportunities which led to the company’s voluntary administration.
PharmAust has engaged with external advisors to navigate the options surrounding Epichem and how to potentially restructure the business.
The company said the decision was made “in the best interest” of shareholders and is not expected to impact the company’s current operations.
PAA shares were down 4.94 per cent, trading at 7.7 cents at 1:37 pm AEST.