Taxpayer-backed Caldera Health, which was developing a urine test to detect prostate cancer, is being wound up after a decade-long slog.
Some $16 million of shareholders' funds were spent on research and development in a 10-year effort to develop a non-invasive, low-cost test, chairman Alastair MacCormick told the Herald.
But although the R&D drive was successful in late-stage trials, companies in the US, Europe and Japan have recently made similar breakthroughs and investors decided it was not financially viable to compete.
• Obituary: Scientist who seized every opportunity for medical research
• Simon Wilson: Should we screen? A tale of cancer, testosterone and springtime
• Simon Wilson: My cancer diary, one year on
• Kiwi entrepreneur's next big thing: Zapping cancer, cell-by-cell
Out-of-pocket backers include rich listers Christopher Reeve, who held a 34 per cent stake, and Sir Stephen Tindall, whose K1W1 fund had an 18 per cent holding.
Two Crown agencies also chipped in: the NZ Venture Capital Fund, through taking a 7 per cent stake, and Callaghan Innovation, which awarded Caldera a three-year Growth Grant, with a possible two-year extension, in 2014.
Neither agency would immediately say how much money it had lost (and nor would MacCormick), but Caldera's Callaghan grant was part of a $41m round spread across 23 companies.
MacCormick said NZVIF did not put more than $500,000 into Caldera.
NZVIF chief executive Richard Dellabarca refused to put a figure on his agency's investment, citing a confidentiality clause but did say it made its first investment early in the startup's lifecycle, in 2010.
"The early-stage innovative high growth part of the capital markets carries a high degree of risk, and unfortunately these outcomes occur," Dellabarca said.
'Mad scrum' - why analyst downgraded Sky, despite rugby rights win
Liquidator Peri Finnigan, of McDonald Vague, who was appointed yesterday afternoon, said 75 per cent of investors had voted for a voluntary wind-down.
Finnigan said Caldera had recently completed successful stage-three clinical trials. However, investors did not see scope for commercialisation.
She said some money would be recouped for investors from selling specialised laboratory equipment.
But it was not clear that Caldera's intellectual property was saleable.
The liquidator's initial analysis was that there were "other products on the market of similar or equal standing".
MacCormick agreed with that assessment. He told the Herald that after a nine-year programme of development, Caldera had developed a gene or molecular-based urine test that was better than the widely used PSA blood test, which produced a high number of false positives.
However, startups in the US, Europe and Japan had developed molecular-based blood and urine tests recently. Caldera's performance was better but only marginally.
Finnigan said total debt was still being assessed.
There were no secured creditors.
"The major creditors in this liquidation are the employees for current salaries, holiday pay and notice period and the consultants. There are also a small number of trade suppliers for laboratory consumables or services for clinical studies," she said.
Fifteen staff were on the payroll.
Caldera initially developed a tissue-based test, then sought to transition to an affordable, non-invasive urine-based test.
The startup was co-founded by biotechnology Jim Watson, whose personal battle with prostate cancer let him to develop the company's gene-based testing. Watson died in 2016.
Watson co-founded the company with Richard Forster, who had also been diagnosed with metastatic prostate cancer and died in January 2014.
The pair said they had been victims to flaws in the industry-standard PSA blood test for the cancer, which throws up both false positives and negatives and doesn't distinguish between aggressive cancers and benign strains, or a painful biopsy.