A Federal High Court in Lagos has issued an injunction stopping the sale of 54gene’s assets, temporarily preventing the dissolution of one of Africa’s most high-profile biotech startups. Among the assets listed for sale is the sensitive genomic data of 100,000 Nigerians, reportedly valued at $3 million. This legal move comes as part of a broader court battle initiated by the company’s founder, Dr. Abasi Ene-Obong, who accuses 54gene’s largest investors of engineering the company's downfall.
Allegations of Investor Misconduct Surface
In a petition filed in July 2025, Dr. Ene-Obong alleges that Cathay AfricInvest Innovation Fund and Adjuvant Capital, two key investors, orchestrated a hostile takeover of 54gene by sidelining its board and rejecting viable rescue efforts. He claims the investors blocked a $110 million funding offer, shut down profitable business lines, and threatened reputational damage through unfounded fraud allegations. According to Ene-Obong, these decisions not only undermined the company’s operations but also risked placing highly sensitive national data in private hands without oversight.
A Rapid Rise and Sudden Fall
Founded in 2019, 54gene aimed to close the massive gap in global genomic data by providing researchers with access to African DNA, a mission that resonated across the biotech sector. The company rapidly gained investor confidence, raising over $45 million and delivering critical pandemic support through COVID-19 testing infrastructure in Nigeria. At its peak, 54gene was valued at $170 million and seen as a model for how African innovation could lead on the global biotech stage.
A Pivot Gone Awry
The company’s revenue surged during the COVID-19 pandemic due to diagnostics, but following vaccine rollouts and declining demand, revenues fell sharply. Investors demanded a $100 million Series C round, against Ene-Obong’s advice for a smaller bridge round to maintain operations. When the large raise failed, tensions escalated, eventually leading to Ene-Obong’s resignation in October 2022 under pressure, and a new board structure heavily influenced by investors.
A Disputed Takeover and Shifting Valuations
Following his exit, Ene-Obong alleges that investors moved all intellectual property and operational control to the Nigerian subsidiary, enabling an asset sale without board accountability. He also claims the board rejected $35 million in post-resignation funding offers, instead pursuing a $6 million acquisition deal that included a controversial 4× liquidation preference for preferred shareholders. The company’s valuation reportedly dropped from $170 million to $50 million, with demands that investors receive four times their capital before other shareholders.
The Legal Fight Over Genomic Data
The heart of the current legal dispute centers on the fate of the genomic data of over 100,000 Nigerians, which 54gene had collected with promises of ethical stewardship. Ene-Obong argues that selling this data to external buyers under financial duress, without proper national oversight, presents a major risk to personal privacy and national security. He emphasizes that 54gene’s mission was always rooted in ethical responsibility and that current decisions threaten that legacy.
A Broader Reflection on Startup Governance in Africa
The 54gene saga has become a case study in the complex dynamics between startup founders and venture capital investors, particularly in high-stakes sectors like biotech. While investors assert they acted in the company’s best interests, critics argue that heavy-handed tactics and board dominance undermined founder autonomy and long-term vision. The case raises difficult questions about governance, accountability, and what it means to balance commercial returns with public good—especially in fields dealing with sensitive health data.
The injunction granted by the Lagos court has delayed the sale of 54gene’s assets, but the legal and ethical debates surrounding the company’s collapse are far from over. As the case awaits further judgment, its outcome could have wide-reaching implications for biotech governance, data ownership, and founder-investor relationships in Africa’s emerging innovation economy. Whether 54gene becomes a cautionary tale or a precedent-setting case for startup protections will now rest with the courts.
Source: techcabal