A tiny British firm rocketed in value from less than zero to more than £20million in a year thanks to its role as middle-man in the largest government Covid deal on record.
Disruptive Nanotechnology Ltd, jointly owned by London chartered surveyor Charles Palmer and Northamptonshire shoe retailer Kim Thonger, was worth nothing at the end of 2019 – with debts of £3,592 and just £85 in the bank.
But a year later it had made profits of £20.5million, and had £18million cash in the bank, according to documents just filed at Companies House.
Pictured: Kim Thonger, the founder and chief executive of Disruptive Nanotechnology Limited
The two men – who are the only employees of the firm – had no background in health before the pandemic struck. But they helped the US-based Innova Medical Group win nine British contracts worth £3.7billion for lateral flow tests, by far the largest set of deals signed with any private company in the pandemic.
Innova accounts for almost half the £7.4billion spent on home Covid testing and it is the mainstay of Britain’s testing regime – though, as the Daily Mail reported last year, the US Food and Drug Administration has snubbed the firm’s lateral flow tests.
It urgently recalled Innova’s tests last year and told people to throw them ‘in the trash’ – and they are not used across the Atlantic.
Innova’s UK spokesman confirmed that the tests sold to Britain are of the same type but insisted they are effective, having satisfied British official requirements.
Experts in the UK have, though, questioned the quality of the Chinese-made tests.
London chartered surveyor Charles Palmer jointly owns Disruptive Nanotechnology Limited with Kim Thonger
Writing in the British Medical Journal last year, they said ‘the test missed infection in 60 per cent of people, and of greatest concern missed it in 30 per cent of those with very high viral loads’.
Official UK tests found just 58 per cent accuracy when people swabbed and tested themselves, although there were better results for high viral loads.
Meanwhile, British firms have complained they are forced to sell their tests abroad because they have not won the backing of the UK regulatory authorities.
With the help of the British taxpayer, Innova and its parent company have splashed out on two Gulfstream private jets,one costing £48million.
In October 2020, Innova chief executive Daniel Elliott spent £3million on a six-bedroom mansion with a sauna, wine cellar and cinema, the Los Angeles Times reported.
Innova, now one of the world’s largest testing firms, was founded by Charles Huang, 57, a Chinese American who went to university in Wuhan – the city where the pandemic began.
Disruptive Nanotechnology Ltd was worth nothing at the end of 2019 – with debts of £3,592 and just £85 in the bank. Pictured: A worker wearing PPE processes an Innova IVD lateral flow Covid-19 test
The Mail’s revelations come as the UK faces a chronic shortage of lateral flow tests, throwing Boris Johnson’s pledge to keep schools and businesses open into turmoil. Families are carrying out around 1.5milion lateral flow tests per day. Innova, which is backed by a private equity firm, was little more than a start-up before the pandemic struck.
The firm hit the testing goldmine by buying up millions of lateral flow tests being made by a company in China, Xiamen Biotime Biotechnology, early in the pandemic.
Key to securing the deals with the British government was the partnership with Mr Palmer and Mr Thonger.
Volunteers hand out boxes of Covid-19 rapid antigen Lateral Flow Tests in north east London today
Innova’s spokesman told the Mail in 2020 that to secure government contracts, ‘you need to find someone who has connections’, and that Mr Thonger and Mr Palmer had ‘made introductions’ to help Innova negotiate the UK test evaluation process.
Their firm was getting ‘a few pence’ on every test sold – but that sum runs into tens of millions and is rising. The accounts filed with Companies House last week only cover 2020 when Innova negotiated £978million of contracts – that figure has now risen to £3.7billion, so Disruptive Nanotechnology’s fortune is expected to grow further.
Before the pandemic, Mr Thonger, a Cardiff University graduate, worked in senior roles at Dune, DKNY and bootmaker Dr Marten’s. Mr Palmer runs his own commercial property agency.
Yesterday Mr Palmer declined to say exactly how much the deals had been worth to him and Mr Thonger on the grounds it was ‘commercially sensitive’.
Disruptive Nanotechnology’s spokesman said the firm ‘provides goods and services to hundreds of clients, across many sectors’
He said: ‘We’ve been central to the whole pandemic effort and helped save thousands of lives.’ He said he was living in the same house and driving the car he was using before the pandemic. Mr Thonger declined to comment.
Dr Huang studied for a masters and PhD at Strathclyde University, and last year thanked the institution with a £50million donation. He grew Innova from his investment firm Pasaca Capital, which he founded in 2016.
The UK Health Security Agency said ‘all tests go through rigorous assessments’. Innova, when asked about the US regulator’s claim that its tests were too insensitive, said they had been certified by the UK authorities.
Disruptive Nanotechnology’s spokesman said the firm ‘provides goods and services to hundreds of clients, across many sectors’.
Test companies cashing in
INNOVA MEDICAL GROUP
Value of contracts: £3.7bn Who are they: California-based firm founded by Charles Huang and his private equity company Pasaca Capital. Americans were told to destroy Innova’s tests but days later the UK placed a large order with the backing of regulators.
Tests: Xiamen Biotime Biotechnology tests, made in China. It also opened a new plant in Wales last year.
Value of contracts: £695m Who are they: US group founded by investment banker Banks Bourne. Its UK business tripled staff pay last year to an average of £245,000 each.
Tests: Orient Gene tests, made in China.
Value of contracts: £566m Who are they: Oxfordshire- based company founded by Luke and Ross Robertson. It was set up to distribute products by Swedish medical devices company Wing Plast and had net assets of £9.3m at the end of 2020.
Tests: ACON Biotech Flowflex test, made in China.
Value of contracts: £515m Who are they: Derby-based firm founded in 1996 and run by the Campbell family. It now exports its tests to 53 countries. It was the first and only UK firm to produce lateral flow tests for the Government.
Tests: Manufactured at a new factory in Nottinghamshire.