Proton therapy cancer unit debacle leads to $US32 million lawsuit

It was an ambitious venture that aimed to deliver the Southern Hemisphere's first lifesaving proton therapy cancer unit in Adelaide. 

But it has turned into a procurement debacle, and now the South Australian Health and Medical Research Institute (SAHMRI) is suing the technology firm behind the project for $US32 million ($48 million) over claims of misleading and deceptive conduct, the ABC can reveal.

The firm, ProTom International, said it would have delivered, and continued to stand ready to do so if its contract was revived.

After the 2018 state election, SAHMRI entered into an agreement with US-based ProTom to purchase its "compact" proton therapy system Radiance 330.

About $115 million in public funding was committed by the state and federal governments.

The unit was to be housed in a purpose-built bunker beneath a new building next to SAHMRI in Adelaide known as the Bragg Centre for Proton Therapy and Research.

The Australian proton therapy unit was to help 700 cancer patients annually, particularly children with certain cancers and adults with rare tumours.

But the project collapsed last year. 

It has led to questions about whether ProTom should have been awarded the contract in the first place.

A due diligence review by KPMG in 2017 — before the contract was signed — raised concerns about the technology firm's financial capacity, a "high risk of delinquency" and a lack of demonstrated success in delivering proton units.

Supreme Court documents have now detailed how the project unravelled.

In January last year, representatives, including from SAHMRI, went to Boston in the US to meet new ProTom CEO Paul Tso.

It was claimed Mr Tso said words to the effect that ProTom was "not making any money" and was "surviving off the $US3.2 million" paid by SAHMRI in December 2023, and that "ProTom could not deliver under the current contract", with the project running at a multi-million-dollar loss.

According to the court documents, ProTom later wrote to SAHMRI with a request for a further $US57.2 million to complete the project, which was on top of the $US49.5 million previously contractually agreed.

The research institute terminated the contract in October 2024 and has subsequently lodged a civil claim for damages in South Australia's Supreme Court.

Speaking to the ABC from Toronto, Canada, Mr Tso said he was disappointed SAHMRI had taken legal action, and mediation should have happened first, especially given the size of the contract, "the money involved and the timing involved".

"In any disputes between the parties, the party that initiates the dispute would have to suggest a neutral mediation company," Mr Tso told the ABC.

Mr Tso said the project's costs rose because of the pandemic, and claimed that after the request for the extra $57 million was sent to SAHMRI, that figure was revised down to $25 million.

"From the start of the contract all the way up until 2019, we are up to, in terms of our size of the work, we have all the component, all the software, everything geared up for," he said.

"However, as you know, I'm sure you yourself being affected by the pandemic, COVID-19, starting 2019 to 2022. The whole Australia close.

"There is no misleading whatsoever."

Australia without proton therapy service

Proton therapy units deliver beams with extreme precision into tumours to destroy cancer cells.

Australia remains without a service, which means patients must travel overseas at great expense to access treatment.

Mr Tso claimed it would cost up to $70 million more for SAHMRI to purchase a proton unit from another manufacturer, and it would be bigger, which would pose problems because the bunker had been purpose-built for his "compact" system.

"The project failed … not because of our technology. Our technology is proven," he told the ABC.

"We are treating cancer patients on a daily basis. The project can be easily revived.

"It's about determination. It's about full cooperation."

He said if the contract was revived, he could deliver his unit in 22 months.

"We are ready to be fully examined by any party that SAHMRI appoint to come and do [a] full forensic audit," he said.

Last month, federal Health Minister Mark Butler said the proton unit deal was done under the South Australian Liberal and federal Coalition governments.

He said "in hindsight", ProTom was "probably not the company to contract with" as it had only delivered one unit, which he claimed was a research-based, rather than clinical, service. 

But Mr Tso told the ABC his system had been in operation for the past five years at Massachusetts General Hospital in the US, with "25 to 30" patients treated each day.

The ABC has reached out to the hospital for comment.

Mr Tso also rejected criticism of ProTom that was expressed as part of the 2017 KPMG due diligence review.

"Comparatively, among all the big bidders, I don't want to name names, our proposal and our product is still ahead of the others," Mr Tso said.

"It's easy to say anything now after what happened. Of course, then people say, 'Yeah, I have told you this, I told you that', but if there was not a pandemic that causes three years downtime, the Australian cancer patient is already having the machine treating them."

The Supreme Court documents state SAHMRI is also the legal owner of equipment currently in storage in the US, including a Synchrotron — the machine that accelerates particles to direct proton beams to a tumour.

The research institute has sought possession of the equipment from ProTom International along with other parts in a warehouse in Slovenia.

Mr Tso claimed the equipment had been handed over.

The ABC sent SAHMRI questions about the civil case and Mr Tso's comments, including about the equipment.

In response, a spokesperson said they were "unable to comment on these matters" as they were before the court.

The case returns to court on December 16 and is likely to take some time to resolve.

In a further statement, Mr Butler said a proton therapy unit could be established interstate if no progress was made in South Australia.

"I'm continuing to work through this, including with South Australia to see whether they have a viable proposal to resurrect their ambitions to have a proton therapy unit here," he said.

"But, if not, we're going to have to go to other jurisdictions because this is not going to be a South Australian service or a state-specific service, this is going to be a national service."

In the meantime, a bunker sits empty in Adelaide and cancer patients needing proton therapy must continue to travel overseas for treatment, with no word on when an Australian service will finally be available.