Nigerian court blocks 54gene asset sale amid founder-investor clash

A Nigerian Federal High Court has issued an injunction to block the sale of assets belonging to 54gene, a once-highly valued biotech startup, following a legal dispute between founder Dr. Abasi Ene-Obong and its largest investors, Cathay AfricInvest Innovation Fund and Adjuvant Capital. The ruling, issued after Ene-Obong filed a petition in July 2025, accuses the investors of orchestrating the company’s collapse through unilateral decisions and governance breaches. Assets targeted for sale included a biobank holding genomic data from 100,000 Nigerians, valued at $3 million [1].

Ene-Obong alleges that the investors sidelined the board, rejected a $110 million rescue package, and forced the Nigerian subsidiary into bankruptcy. He claims they also threatened to spread false fraud allegations against him and blocked his offer to buy them out. The founder emphasized the ethical importance of the biobank to African health research, stressing that the mission to leverage genomic insights for health outcomes must remain intact [1].

The startup, previously valued at $170 million, ceased operations in 2023 due to internal power struggles, failed fundraising, and governance disputes. After Ene-Obong resigned as CEO in October 2022, a board dominated by the two major investors forced a valuation drop to $50 million and imposed a 4x liquidation preference, ensuring investors would receive four times their investment before any common shareholders. The board also allegedly blocked revenue-generating contracts and transferred key assets to the Nigerian subsidiary to facilitate an asset sale without oversight [1].

The legal conflict began in 2022 when Ene-Obong secured $35 million in funding, only for the board to reject it and propose a $6 million acquisition split between cash and stock. The board later offered a loan facility with conditions including a new board chair and exclusive investment rights for the two firms, stripping common shareholders of veto power. The loan was secured against 54gene’s assets, including the biobank and intellectual property [1].

After Ene-Obong resigned, the investors appointed a Lagos-based lawyer as receiver of 54gene Nigeria and initiated asset sales. Ene-Obong attempted to buy back his stake for $3 million but was required to wire $100,000 in cash to an investor within 24 hours, a demand he refused. The reconstituted board then proceeded with the sale, raising concerns about the potential exposure of sensitive genomic data and national security risks [1].

Adjuvant Capital stated they act in the best interests of their partner companies and emphasized their commitment to global public health, while Cathay AfricInvest Innovation Fund did not comment [1]. The case underscores broader challenges in founder-VC dynamics, where control shifts can lead to operational paralysis and ethical dilemmas.

Founded in 2019 with the goal of closing the genomic data gap in Africa, 54gene raised over $45 million and developed a biobank of 100,000 Nigerians across 300 ethnic groups, alongside 40 genomic analysis tools. However, after the global demand for pandemic-related testing waned and its pivot to advanced diagnostics failed to gain traction, the company faced severe financial strain. It laid off over 85% of its staff, from 300 to 39, and underwent three CEO changes within a year [1].

The court’s decision to block the asset sale represents a critical legal milestone. It highlights the complex interplay of governance, capital, and ethics in Africa’s biotech sector, as the case continues to unfold [1].

Source: [1] Nigerian court blocks sale of 54gene's assets - TechCabal (https://techcabal.com/2025/08/01/54gene-collapse/)