Queensland biotech company Xing Technologies’ offices now sit empty, while shareholders have been left in the dark

Curing cancers using genetic sequencing, rapid tests for livestock diseases, a near infallible COVID-19 test, more refined medicinal marijuana — Xing Technologies promised so much.

The Queensland biotech company founded by prominent Brisbane oncologist and researcher Paul Mainwaring, rode a wave of favourable publicity in the late 2010s.

Headlines like “game changer” and “breakthrough” were regularly used to describe the Queensland company’s research involving patents owned by the University of Queensland (UQ).

Offering lab tests to detect genetic alterations in cancer patients’ tumours to enable more specific treatment was just one of Xing’s developing fields of research.

Business identities invested, including the founder of Herron Pharmaceutical Euan Murdoch, Mancorp Homes building company owner Mark Forster and retired pharmacist and former federal minister John Hodges.

Some of Dr Mainwaring’s patients also invested. One was Brisbane greengrocer Sam Coco who attributed his recovery from cancer to Dr Mainwaring.

In 2020 shareholders were told the company was valued at more than $200 million and some investments had gone up nearly 100 per cent.

A prominent politician dropped in and donned a Xing lab coat for a photo shoot in the laboratory and federal and international governments came on board with research funding.

The United States Food and Drug Administration backed the company’s testing technology with a $1.4 million grant in 2020 as did Australia’s Department of Industry with a $2.4 million grant for Xing’s development of a livestock testing device which could return rapid results on-farm, and the Queensland government offered to provide up to $1.49 million to develop a COVID-19 test.

“It could be a real game-changer,” Queensland’s then Innovation Minister Kate Jones said when announcing the funding in 2020.

Offices empty

Now, Xing’s gleaming two-storey offices at Seventeen Mile Rocks in Brisbane’s west sit empty, stripped of the expensive laboratory equipment and a liquidator is poring over the parent company’s books raising concerns in reports filed with the Australian Securities and Investment Commission (ASIC) about whether it had traded insolvent for more than a year.

Questions are also being asked about what government funding can be recovered and what happened to the cancer testing services which were provided through the Xing Technologies business.

The company’s “genius” founder Dr Mainwaring has faded from public view after being found to have engaged in professional misconduct over his treatment of an elderly cancer patient who died in 2018. 

And millions of dollars from investors may have been lost in the collapse which has divided those involved.

Some have claimed the failure confirms the difficulties of trying to establish a biotech company in Australia while others raised concerns about the management of the venture.

“We don’t seem like we are going to get anything back,” Mr Hodges said.

The Xing Group was founded by Dr Mainwaring in late 2017 to specialise in the “transformative diagnosis and monitoring technologies for cancer and disease”, according to the report compiled by Brisbane-based administrator Bill Karageozis.

Services offered included cancer care, rapid nucleic acid extraction, protein detection diagnostics and “nanoparticle capture agents to identify and prevent the spread of infectious diseases,” Mr Karageozis’s report states.

But less than a year after the company launched, one of Dr Mainwaring’s patients died in controversial circumstances.

The 76-year-old cancer patient was alleged to have suffered fatal side effects from immunotherapy treatment prescribed to him by Dr Mainwaring.

An investigation was undertaken by the Health Ombudsman and late last year the Queensland Civil and Administrative Tribunal (QCAT) found Dr Mainwaring’s actions to have constituted “professional misconduct” in relation to the treatment of the patient.

Within four months an administrator was appointed to Xing Holdings Group by a secured party – a company that had Mr Forster as a director.

Shortly afterwards the company was put into liquidation.

No warnings for shareholders

Smaller shareholders were baffled. Many contacted by the ABC say they had no warning Xing was in trouble and have been left asking how a $200 million company could fail so quickly.

The administrator, now liquidator, Mr Karageozis raised questions about the company’s management in his reports submitted to ASIC.

Mr Karageozis attributed the company’s failings to “poor strategic management of the business, trading losses and cashflow issues” in a report he compiled as administrator in late 2022.

The report states that from reviewing questionnaires completed by company officers, he believed the major reason for failure was due to an inability to generate sufficient cash flow.

He estimated that the company’s total liabilities were more than $6 million.

He alleged the company may have traded insolvent since June 30, 2021.

When he was appointed, Mr Karageozis said he was aware of claims against the company for $448,183 that appear to have occurred after the company allegedly became insolvent.

If appointed as liquidator, he stated he might institute proceedings against the directors responsible for the amount of $448,183 with an estimated potential recovery of 50 per cent after costs subject to directors having sufficient assets.

He alleged the directors might have breached duties for “care and diligence, obligation to keep financial records and failure to prevent insolvent trading”.

The allegations have been vigorously denied by current and former directors.

At the time of the company going into liquidation, two directors remained on the board, Dr Mainwaring and Mr Forster.

The ABC has been unable to contact Mr Forster who is one of the largest investors in the company.

Mr Karageozis in his report states that a company directed by Mr Forster had lodged a Proof of Debt (POD) for $3,510,000 from Xing Group with him.

Dr Mainwaring, who was reported to be overseas, provided the ABC with a short response via email to questions about his management of the company.

He wrote that “during the time period in question the board undertook due diligence, debt restricting and safe harbour enactment”.

Former directors have also denied all allegations of poor management of the company.

‘I know nothing about the finances’

Majorie Goward who was a director of Xing from February 2019 to May 2022 said she was unable to answer any questions about whether the company might have been insolvent since 2021.

“I know nothing about the finances,” she said.

Ms Goward said she had become a director because the company wanted to have a registered nurse on the board.

She said she did not invest any money.

The former CEO of the company and a director from its launch to August 31, 2021, Tom Esplin, vigorously denied the insolvent trading allegation.

Mr Esplin said the liquidator might not have considered the expected Research and Development (R&D) tax rebate which was “guaranteed by the government” and would have brought in between $1.5 and $1.75 million.

“It’s as good as money in the bank,” he said.

Businesswoman Carrie Hillyard who was a director from November 2020 to October 2021 said she resigned as a director “long before” the company went into administration.

Ms Hillyard said the board “had every expectation of income and an R&D tax credit”.

She said: “We were also in discussion with potential investors and had invoked safe harbour”.

The reports to ASIC have frustrated shareholders.

Several told the ABC they had no warning of the company’s collapse.

“There was a lack of information to shareholders by the company. I never had any contact with the receivers and that was a bit of a sore point,” Mr Hodges said.

‘No one likes to lose’

Mr Hodges said he had been told the company was developing “good technology and they would be early or first in the market with the products they were developing.

“But that didn’t seem to happen,” he said.

Mr Hodges described it as a blow to his retirement.

Another shareholder from interstate, who asked not to be named, said he received positive information about the company’s performance in 2020 including that it was valued at $260 million in an email from Mr Esplin.

Mr Esplin has since told the ABC he believed it was an accurate valuation of the company at the time.

The email obtained by the ABC said the company’s shares were valued at $10.20 a share and had been selling for $7 each.

The interstate investor said they had invested about $100,000 paying $1.50 a share in the company shortly after it started and believed they had now lost the lot.

“We have been told nothing about any of this. Can you send us the administrator’s report?’ they asked.

Another major investor, Mr Murdoch said he was “very disappointed” to hear the company had gone into liquidation because its technology had been “a diagnostic game changer”.

He said Australia had a “great record’ of inventing the technology but was poor at commercialising it.

“[The inventions] often end up being sold to overseas companies to make the investment to fully develop and commercialise the technology or go, as appears to be the case with Xing Technologies, into liquidation,” he said.

He called for more to be done “to support companies to fully develop their potential and build global companies based in Australia”.

‘I believed he was an incredibly talented person’

One of the company’s earliest investors, Sam Coco, this week said he was unconcerned about the money but disappointed about Dr Mainwaring’s fall from grace and the failure of his excellent cancer research.

He said he had been motivated to invest after being treated by Dr Mainwaring in the 2000s.

“I was diagnosed with cancer in 2000 and then in 2008 I had a major operation and two specialists gave me 12 months to live and I’m here today because he [Dr Mainwaring] was the one that specified what [treatment] would work,” Mr Coco said.

“I thought that’s why I put money in. I believed he was an incredibly talented person.”

Mr Coco said whatever had gone wrong was disappointing, “but you can’t take it away” from Dr Mainwaring.

“He looked for something which could have been achieved. I don’t know what went wrong.”

Liquidator Mr Karageozis this week confirmed he was still investigating whether the company had traded while insolvent.

He said there was interest by some in taking over the company but “they couldn’t get a deal”.

He said there were “lots of biological samples” that they had facilitated being sent to other laboratories as well as the company’s research.

Mr Karageozis confirmed he had filed proceedings in the court against Dr Mainwaring to try and recover money.

He said there was only a “low possibility” that shareholders would get anything back and that government bodies were also seeking money and had been listed as creditors.

This week a spokesperson for the Commonwealth Industry Department said it was registered as a creditor with the administrators.

While a spokesperson for the Queensland Industry Department said Xing had received $546,000 of a $1.5 million state government grant for the development of the Rapid COVID-19 test.

The grant was “paid by instalment upon reaching agreed project milestones,” the spokesperson said.

“Funding ceased in February, 2022 with the Queensland government retaining the outstanding balance of the grant when the future project milestones couldn’t be met.

“The Xing Group’s application included well-regarded Queensland bio and nano tech partners and was reviewed and recommended by an independent panel of health and commercialisation experts”.

The spokesperson said ASIC and bankruptcy searches were “part of a thorough due diligence process common to all Queensland government funding projects”.

Many of those connected with the company have expressed sadness at Dr Mainwaring’s fall from grace describing him as visionary and a genius but claimed they had been given no warning of the Health Ombudsman’s investigation into a patient’s death.