Australian government fund under fire for investment in NZ's Rex Bionics

The company's exoskeletons are designed to help wheelchair users. Photo / Rex Bionics

An Australian Government fund is facing tough questions after pouring millions into a struggling New Zealand biotech company.

The Sydney Morning Herald reported today that Australia's Bioscience Managers, appointed as the manager of the Turnbull government's $250m Biomedical Translation Fund, invested roughly $6m into Kiwi firm Rex Bionics.

This despite the fact Rex Bionics employs only one person in Australia and is running no clinical trials in that country.

The Sydney Morning Herald reports that all research, development and manufacturing for the firm, which manufactures exoskeletons for wheelchair users, remains in New Zealand.

The criticism has arisen because the fund is required to invest in businesses that either have most of their employees and assets in Australia, or plan to use the whole of the initial investment in Australia.

Rex Bionics was founded in New Zealand in 2007, before listing on the London Stock Exchange's AIM market in 2014.

The Herald earlier reported that Rex has been a beneficiary of Callaghan Innovation funding, receiving research and development grants totalling $2.9m before it listed in 2014.

The company quickly hit a few speedbumps, seeing its share price drop from 138 British Pence to 70p because of delays in its plans for commercial sales.

Thereafter, the company fell into further trouble, as the struggle to sell its $150,000 exoskeletons continued.

By 2017, the company announced it would leave the London stock exchange as shares plunged to 6.5p.

The fate of the company led Financial Times columnist Kate Burgess to refer to it as a "sorry tale" and the product as bearing "a striking resemblance to The Wrong Trousers, the Aardman animation that closes with characters Wallace and Gromit paying off their debts while the troublesome Techno Trousers climb out of a bin and stomp off alone into the sunset".

In her column, Burgess also noted that the company had sold just seven units in the year to March 2015 and three in the six months to September – meaning it had all but run out of cash.

As the struggles continued, the company said it would probably need external funding to keep operating after struggling to raise capital to pay for a prototype it had been working on.

It was at this point the Australian fund BioScience Managers threw the company a lifeline in exchange for control of the firm.

Dr Jodie Marquez, an Australian scientist who studied the company's products, told the Sydney Morning Herald while it was celebrated as an Australian firm, it never was.

"This was always New Zealand's. But now we're claiming it as Australian, we've invested in it," she said.

Rex chief executive Charles Carignan responded to questions from the publication, saying the company was now based in Melbourne and there were plans to increase staff numbers in Australia.

He further explained that restrictions on travel over the past year had made it difficult to further those plans.