EKF admits defeat with Selah acquisition

EKF Diagnostics Holdings all but admitted defeat in its experiment with personalised medicine on Wednesday, as it let go of its wholly-owned subsidiary Selah back to the founders.

The AIM-listed medical diagnostic business confirmed it had reached agreement to sell the US-based developer of molecular diagnostics to co-founders Michael Bolick and Jeremy Stuart.

EKF paid $35.6m (£21.18m at the time) in shares for Selah when it acquired the business in April 2014. Selah reported a loss after tax for the first year under EKF ownership of £0.6m, and made an unaudited loss for the 11 months up to 30 November 2015 of £2.6m.

At 31 December 2014, Selah's intangible assets in EKF's balance sheet were valued at £41.4m, which would now be written off. It had net liabilities of £3.6m.

EKF was talking up the deal in terms of cost savings, saying it would save in the region of £2m by completing the deal. It admitted the consideration paid by Bolick and Stuart was nominal, however, though the agreement with the pair contained consideration provisions "in favour of EKF".

"In the event that Selah secures further equity funding within 12 months from today's date, EKF will obtain a 10% equity interest in Selah", the board said in a statement.

Alternatively, if no external funding was obtained but Selah or its operations were sold, EKF would pocket 10% of the proceeds.

EKF's non-executive chairman, Ron Zwanziger, said the transaction was the right step for the company to take going forward.

"Today's sale of Selah, with the associated cost savings, is another step towards re-establishing EKF as a profitable, cash-generating point-of-care diagnostics business", he said.