A great investigative article from the Australian Financial Revue on Saturday 16th August by Terry Plane. "A National Disgrace".

The piece suggests that the Sydney proton therapy centre, "remains years away from operation". Proton Therapy Australia have recently appointed Thames Capital (thamescapitalgroup.com.au) to raise the final tranche of funding for our project. Once secured, the Sydney facility could be operational by 2028 - well in advance of Adelaide's projected timeline.

A precis of the AFR article is given below :-

Teddy Marchmont is six now, but late last year, when he was five, he was diagnosed with medulloblastoma – a brain tumour. Big brother to two younger boys, Teddy underwent surgery in Newcastle in November. Post-surgery, Teddy was given a devastating prognosis: he had six weeks to begin radiation treatment, or his chances of survival would be very limited.

Medical acquaintances of his parents, dentist Robbie and school teacher Beth, had sharper advice. They emphatically recommended that Teddy get proton therapy, urgently. The advice was wrapped in both hope and despair. The hope was that proton therapy, which is far more precise than typical radiation treatments, so best suited for the smaller brains of children, could kill the cancer without damaging Teddy so much he could be permanently disabled. The despair was that, 30 years after it was accepted as the best treatment available, there was still no proton therapy available in Australia.

The Marchmont’s investigated the Medical Treatment Overseas Program, an Australian government scheme that assists patients needing treatment unavailable in this country. “MTOP was horrible to deal with,” Robbie Marchmont says now. “The paperwork to apply was more than a hundred pages. And we were told it would take eight weeks to get a response.” In fact, it was almost five months before Teddy was approved for assistance.

The Marchmont's quickly decided they couldn’t wait for MTOP. They felt the only option was to take Teddy overseas as a private patient. Robbie contacted a radiation oncologist in Jacksonville, Florida, and four weeks into his worst-case prognosis Teddy’s head was at the end of a proton therapy beam. Every day for 30 days he had a general anesthetic that knocked him out for 40 minutes, which covered the two to three minutes his tumour was irradiated.

As a private patient in the US the cost was “well over $360,000”, which Teddy’s parents funded from their own resources, topped up by a crowd-funding campaign. Since returning home, Teddy’s had follow-up chemotherapy, his latest scans are clear and the Marchmont's are optimistic.

“Ted will beat this thing,” says his father. “He’s tenacious. And he’s had the best treatment possible. We haven’t left a stone unturned for him. But where is Australia’s proton therapy system?”

Beth and Robbie Marchmont with, from left, children Bobby, Teddy and Hank at their home in Boomerang Beach, NSW, this week.  Adam Yip

It’s a question being asked by many more than the Marchmont's.

In Australia, proton therapy radiation is recognised as the preferred and most effective treatment for many pediatric tumours, for adults with ocular melanoma or tumours at the base of the skull, the vertebral column or bony pelvis, and adenoid cystic carcinomas. For patients under 25 years, it’s recommended for other cancers, including retinoblastoma, some bone or soft tissue sarcomas, and rarer tumours including those that typically affect the adrenal glands (neuroblastoma) and kidneys (nephroblastoma). These are some of the specific cancers that Medicare is already set up to pay rebates for – if only the treatment was available. And for many patients proton therapy is the only viable treatment available.

Senior Sydney radiation oncologist Professor Michael Jackson, who also researches proton therapy at the University of Wollongong, says Australia is frustratingly far behind the rest of the world. “There are very clear benefits, particularly for children with tumours, and for patients with head and neck tumours.

“We need at least one centre in Australia, with the hope that in the longer term each major capital city will have its own system.” Proton therapy is preferred because it significantly reduces the side effects compared to photon therapy, which is the radiation system used in most of Australia’s major hospitals and cancer treatment centres. The proton-generated radiation beam is finer and far more precise.

For instance, treating a brain tumour with a traditional photon system will hit the tumour with some of its beam and continue through to the other side of the patient’s head, leaving scar tissue and possibly brain damage. This is particularly so in paediatric patients.

But it’s estimated that almost 100 per cent of a fine proton beam’s energy will hit the target, due to what’s known as the “Bragg peak”, the point on the Bragg curve where the beam’s energy release is at its greatest. That point is where the beam ends, maximising its effectiveness and greatly reducing scarring and side effects.

These principles, which laid the foundation for proton therapy, were discovered by physicist William Bragg in 1904 while he was professor of physics and mathematics at Adelaide University. In 1915, Bragg and his son Lawrence won the Nobel Prize for Physics for their work in developing X-ray crystallography.

After World War II, physicist Robert Wilson, a member of the Los Alamos team that developed the atom bomb, released an academic paper in which he suggested “fast protons” could be used for medical purposes. The first proton therapy trials on patients occurred in California and Sweden in 1954. But it wasn’t until 1991 that Massachusetts General Hospital (MGH) purchased a commercial system for common treatment of cancer patients.

Thirty-four years later, with more than 120 operational systems around the world, Teddy Marchmont’s story illustrates one of the great shortcomings of Australia’s lauded health and medical insurance systems. Despite years of talk, Australian patients still need to go overseas for treatment – if they can afford it. Plans for proton treatment facilities in Sydney, Melbourne and Brisbane have so far come to nothing.

In 2016, the Victorian government committed $50 million to a proton project for the Peter MacCallum Centre, but over time those funds were diverted to other projects. The common wisdom in oncology circles is that in Brisbane the public spending focus is on Olympics-related projects, and in Sydney, a private consortium is raising funds for a new centre at inner suburban Waterloo, but it remains years away from operation.

But it’s in Adelaide that we find the mother of these missed opportunities, and an abiding irony. There, just up North Terrace from the university where William Bragg made his nuclear scientific breakthroughs and beneath a shiny glass tower named for the Braggs, a three-level basement bunker designed specifically for a proton therapy system lies empty.

The story behind the Adelaide situation – some say fiasco, some say scandal – is tortuous. It involves a visionary Russian engineer, an American manufacturer with Chinese investors, lawsuits, claims of broken contracts, and South Australian bureaucrats accused of putting politics ahead of the greater good. And it began more than 25 years ago …

The campaign to install a proton therapy system in Adelaide started in 1998, when Dmitri Sivan approached senior officials in South Australia’s Olsen government, telling them the state needed one. There was, he says now, a “lack of interest”. So, he wrote to them. They responded by referring him to the Royal Adelaide Hospital.

Sivan is a Russian-born engineer and former assistant professor of mechanical engineering at Adelaide University who has lived in Adelaide since 1981. Sivan was promoting proton therapy because he had a contact in Siberia who was producing a synchrotron, a powerful electron accelerator, or particle collider, that deflects electrons through a magnetic field and along a beam-line at almost the speed of light.

A few years later, Sivan was in the US. Through a mutual acquaintance, he was introduced to Steve Spotts, founder and CEO of medical equipment manufacturer ProTom International. Michigan General Hospital, which doubles as the medical school for Harvard University, and a hospital in Michigan, were ProTom’s first customers. Dan Potenza, MGH’s current chief engineer who manages the hospital’s proton systems, says their original ProTom system is still “treating patients every day and has done for many years. It runs just fine”.

With a working system and a ready supplier, back in Adelaide Sivan wrote the certification documents needed to allow the ProTom system to be operated in Australia. Sivan says that more than a decade after he’d first pitched the idea, it felt like momentum was finally starting to build – with support from an unexpected source.

Simon Toovey was a senior executive at leading Adelaide property developer Commercial & General (C&G) when he sought out the city’s top cancer research figures in 2014. It was known that, who now runs his own business and declined to comment for this article, had a family member with a cancer that could be treated with proton therapy. And he had an offer that could bring the dream of proton therapy much closer to reality – if the doctors could organise a proton therapy system, he would deliver a building to house it.

The government at the time, led by Jay Weatherill, was supportive. It was decided that the South Australian Health & Medical Research Institute (SAHMRI) should be the instrumentality for acquisition, signalling it would be used for both treatment and research. SAHMRI, SA Health and C&G subsequently issued a joint call for tenders. Four manufacturers – Belgian company IBA,  Hitachi, Varian (US) and ProTom International – tendered. The decision was made collectively by the SAHMRI board and CEO Steve Wesselingh, Michael Penniment for SA Health and C&G. And in 2016 ProTom was announced as the winner.

The assessment criteria of the bids were technical capability, commercial viability and research and development potential. ProTom, which offered an R&D centre in Adelaide as stage two of its involvement, won hands down on that element. That its system would be cheaper and smaller were additional benefits. Its price was $US49.5 million ($68 million). It’s known that one other bidder quoted $100 million, but a person close to that bid says their system “would have been operational in 2021”. An executive from the same bidder wrote to C&G to express disappointment: “The ProTom installation will be grossly delayed, far exceeding contracted timeliness and with significant budget overruns.”

It was also known that not all bidders could provide a system that fitted into the Bragg Centre bunker that C&G had committed to build. The bunker’s size was, in turn, constrained by the dimensions of the land on which it was to be built – government land wedged between North Terrace and a railway corridor.

On April 11, 2017 a contract was signed by Wesselingh and his chairman Raymond Spencer for SAHMRI and Steve Spotts from ProTom. The radiation oncology team from the RAH was over the moon.

The deal to pay for the ProTom system was brokered by former crossbench and balance-of-power senator Nick Xenophon, after he asked Weatherill for a health portfolio wish-list. He says he then spoke with then-prime minister Malcolm Turnbull. “He wanted to get several pieces of legislation through. I was going to vote for them anyway, but I withheld my vote until I got the money for the proton therapy centre.”

The $68 million was transferred from then-health minister Greg Hunt’s budget. “We transferred the money because they said they wanted it,” Hunt says now. “And because proton therapy is important health technology and Australia should have it. Patients are suffering.”

As things have transpired, signing the deal and getting the money from the government would be the easy parts. The devil was in the details of the contract and, ProTom believes, a reluctant bureaucracy.

From his home in Texas, Steve Spotts has had plenty of time to analyse the deal and the unexpected roadblocks that would emerge. His conclusion, he tells AFR Weekend, is that the terms of the contract were draconian, and it was almost set up to fail unless everything went perfectly.

“They put ProTom in the position of being the bank. The payment stream was non-viable from day one. It was unfair.” Spotts argues the payment terms were upside-down, but shareholders agreed to back the deal because ProTom was competing against other proton therapy manufacturers.

“But it put huge stress on our company.” His shareholders also believed the contract was worth the risk because they were dealing with a stable government in an advanced country. “When you’re dealing with a government you take some comfort,” one ProTom director says.

Spotts formed the view that SA Treasury, which was sitting on the funds transferred from the Commonwealth, didn’t like the deal in the first place. When the Liberals returned to power in SA in 2018 under leader Steven Marshall, administration of the contract was assigned to Treasurer Rob Lucas, not SAHMRI or health minister Stephen Wade.

“Politics always seemed to get in the way,” Spotts says. “It just slowed things down. They dragged their feet. The South Australian Treasury had a stranglehold on the project.”

He says Treasury failed to honour its contractual obligation to make milestone payments on time. “The first payment they made was $6 million. We had expended $US20 million by that stage.” This statement was corroborated by an independent consultant to the project who commented on condition of anonymity. “Unquestionably ProTom has spent more than they’ve received,” they said.

Then came COVID-19. International supply chains and foreign exchange rates were disrupted. ProTom needed funds. But at an in-person meeting in an open-plan office at Treasury in mid-April 2021 the tension between the company and the state government cracked into a fissure that ProTom has not been able to breach.

In front of a room full of Treasury public servants, the senior official handling the ProTom contract stood up and screamed at Spotts: “Go to your f---ing Chinese investors and get them to put in more money!” According to one witness, Spotts was visibly taken aback and junior Treasury staff switched suddenly from interested observers to intently focused on their computer screens. The meeting ended shortly thereafter and the relationship has failed to recover.

(Spotts was in Adelaide in February this year on a private visit and went to North Terrace to see the completed Bragg Centre for the first time. There were signs on the front door proclaiming proton therapy coming in 2025. “It was heart-breaking,” he says. The signs have recently been removed.)

Then came war. Russia invaded Ukraine in February 2022. For ProTom, with its Russian synchrotron and Chinese investors, geopolitics slipped a two of clubs into the dud hand Treasury had dealt them. Spotts stepped down as CEO of ProTom that year and was replaced, briefly, by Bill Behnke, before ProTom chairman and lead investor Paul Tso became CEO in 2023. Tso says that in spite of several approaches in 2023 and 2024 he has been unable to gain a place in the diary of current Treasurer Stephen Mullighan, who cancelled the Radiance 330 contract last October.

Dmitri Sivan remains on ProTom’s website as vice-president of scientific and international relations. He says that trying to make an appointment with Mullighan or anyone at SAHMRI is like dealing with Major Major in Catch 22: “Make an appointment with me when I’m not here.” Mullighan’s office declined to comment on this claim.

Speaking from his home in Canada, Tso says he took over day-to-day running of ProTom because the company was “bleeding money”. He says that through an Adelaide lawyer, it has lodged an itemised account with the SA government for payment of another $US38 million ($58.5 million) to allow completion of the Bragg Centre project.

“We want to address the issue with SAHMRI,” he says. “We didn’t just wake up one day and want more money. It’s a reasonable demand and we’ve presented the evidence. This is strictly business. I’m a businessman and investor. I have no clue about the technical side of proton therapy, but I’m quite good with numbers. SAHMRI has no clue about how international business is conducted.”

Tso says that to date ProTom has been paid $US38 million, but “our costs have been way more than that”. “We have acquired components. Some components are radioactive. We’ve paid for storage, for maintenance. We are way under. I’ve said let me sit down in front of the South Australian government and SAHMRI. They’ve refused. We’re not even able to explain our position. They know we have a plan to complete the project. SAHMRI is legally entitled to the device and we’re a law-abiding company. I’m happy to sit in a parliamentary inquiry so everyone can hear what went on. I’ll fly to Adelaide tomorrow. We have nothing to hide.” Tso says if allowed, ProTom could have the synchrotron installed and operating within 18 months.

The SA government has filed proceedings in the Supreme Court against ProTom International for alleged breach of contract. Tso says his company lacks the funds to defend the suit or launch a countersuit. But the government is facing a suit from major property firm Dexus, which bought the Bragg Centre from C&G, in which it’s claimed the government breached a floor-space lease agreement. The building is partially occupied, with five of its 12 floors allocated to SA Health.

One June 6 this year SA’s auditor-general Andrew Blaskett reported to parliament on his and his staff’s inquiries into the proton therapy fiasco. He was critical of consecutive state governments and found that there’d been “gaps” in risk evaluation, assessment, documentation, effective oversight and risk management and mitigation, on a project that was “high risk with significant cost and national consequences”. He reported that $61.7 million of the federal funding had been paid to SAHMRI and a further $36.8 million of state funds for relocation of the Train Operations Control Centre and site preparation. On those figures, SA Treasury is still sitting on about $7 million of the funds transferred by minister Hunt.

Treasurer Mullighan has reaffirmed the Malinauskas government’s commitment to having a proton therapy system installed in the Bragg Centre bunker. “We’ll start again with a capable and competent provider. We came to the conclusion that ProTom International wasn’t capable of supplying a unit.” He says the contract was cancelled after a team of five public servants travelled to ProTom’s headquarters in Boston and concluded the company couldn’t complete the job.

“We’re looking for a supplier that can deliver and fit a device into the bunker.” The government has had an assessment done on modifications required at the Bragg Centre to accommodate a different proton therapy system, and the plan was to issue a “selective tender to companies we believe can deliver”.

“There’s still a bit of work to do with the federal health department.” That will involve convincing minister Mark Butler that the Commonwealth should tip in more money for the project. Non-government executives in close contact with the project agree that extra funding will be greater than the $US38 million sought by ProTom.

 Teddy’s father Robbie says Australia’s lack of proton treatment is “a cost to the economy, to people, to the health system. Doctors are working without the tools they need.” Adam Yip

Sivan says that if someone paid the money, he could have the Radiance system installed in less time than a new provider could install a replacement. “I can find 10 ways to finish the project,” he says, “but they all take money. All quotes have a shelf life and the original [ProTom] quote was at 2016 prices. The delays have been caused by the South Australian government. They shot us in the leg, stabbed us in the back and gagged us, then said keep running.”

According to Tso, ProTom is still running, and in June sold a Radiance 330 to a hospital in South Korea.

Nick Xenophon, himself undergoing treatment for a brain tumour, says the installation of a proton system at the Bragg Centre is “too important to let it slip through our fingers on a contractual argument”. And his fellow former federal politician Greg Hunt says the SA government should “sit down with ProTom and sort this out; it’s important technology and Australia should have one”.

A very senior executive, who was close to the ProTom negotiations but asked to remain anonymous, says the government “should deliver what they bought” after “exacerbating the situation”. He feels “devastated” by the apparent failure of the project. “A child is dying in South Australia every single day the project is delayed.”

But few are as well qualified to cast judgment on the situation as Teddy Marchmont’s father, Robbie.

“We’re shooting ourselves in the foot. The alternative [photon therapy] is the child will probably end up on the NDIS [from brain damage associated with the treatment]. It’s a cost to the economy, to people, to the health system. Doctors are working without the tools they need.

“It’s a national disgrace.”