Genetic Diagnostics Technologies Corp.

Genetic Diagnostics Technologies Corp.

August 31, 2005 17:49 ET

Genetic Diagnostics Announces the Success of the Independent Validation of the Triplex Assay™ Technology

TORONTO, ONTARIO--(CCNMatthews - Aug. 31, 2005) -

(Not for dissemination in the United States of America)

Genetic Diagnostics Technologies Corp. (TSX VENTURE:GDD) ("Genetic Diagnostics" or the "Corporation"), formerly Vensearch Capital Corp., is pleased to announce the success of the Independent Validation of the Triplex Assay™ technology of Genetic Diagnostics Inc. ("GDI").

The results of the Independent Validation are as follows:

# of
Sample Group Correct Calls Sample Size % Correct Calls Sample Type
1 25 29 86.2% Bacteria
2 18 33 54.5% Bacteria
3 7 12 58.3% Human DNA
Average = 66.3%

Excellent results were obtained in the first group of samples for the non-amplified bacteria, Bacillus subtilis (globigii). In the third group, non-amplified human genomic DNA was tested for the one base pair Factor V Leiden mutation. Due to the extremely low number of copies of human DNA that were present in the samples, it is believed that liquid handling automation will be required in order to get the necessary accuracy when the samples are prepared.

"The Triplex Assay™ is an exciting technology that has tremendous potential", said Dr. James Brunton, Director, Infectious Diseases, the University Health Network, who supervised the validation.

"We are delighted about the successful completion of the Independent Validation", said Jeffrey Dawson, board member of the Corporation and former CFO of Vensearch Capital Corp., the predecessor to the Corporation.

The Corporation completed its Qualifying Transaction with GDI effective June 30, 2005 and investors in the private placement of GDI received one common share of the Corporation and one-half of one warrant of the Corporation exercisable at a price of $0.55 per share until August 7, 2006 (the "Private Placement Warrants"), for each unit purchased. The balance of the shareholders of GDI received shares exchangeable into common shares of the Corporation only upon success of the Independent Validation.

The Corporation had earlier anticipated a product launch for the Triplex Assay™ in the second quarter of 2005, and product launch is now expected in the fourth quarter of 2006. As a consequence, subject to the receipt of all necessary regulatory approval and the approval of the shareholders of GDI, GDI and the Corporation have entered into a letter agreement pursuant to which certain elements of the exchange transaction with the shareholders of GDI have been modified to reflect this delay as follows:

Original Terms Amended Terms
-------------------------------- ----------------------------------
US$811,000 in debt to be paid US$811,000 in debt converted into
immediately upon the successful 1,105,909 common shares of the
completion of the Independent Corporation on the basis of $0.88
Validation. of debt per share, subject to
available prospectus exemptions
and regulatory approval, as well
as 552,955 warrants of the
Corporation exercisable at
$0.55 per share for six months
(the "Series 1 Warrants") and
552,955 warrants of the
Corporation exercisable at $1.00
per share for twelve months (the
"Series 2 Warrants").

19,003,394 common shares of 9,501,697 common shares of the
the Corporation to be issuable Corporation to be issued to the
to the holders of the class A holders of class A and class B
and class B exchangeable shares exchangeable shares, as well as
of GDI. 4,750,848 Series 1 Warrants
exercisable at $0.55 per share
and 4,750,848 Series 2 Warrants
exercisable at $1.00 per share.

488,000 series 3 warrants of the 244,000 Series 3 Warrants to be
Corporation exercisable at $0.55 issued to warrantholders of
per share (the "Series 3 GDI, as well as 122,000 Series
Warrants") to be issued to 1 Warrants exercisable at $0.55
certain warrantholders of GDI. per share and 122,000 Series 2
Warrants exercisable at $1.00 per

938,896 series 4 warrants of the 469,448 Series 4 Warrants to be
Corporation exercisable at issued to optionholders of GDI,
$0.44 until January 14, 2007 as well as 234,724 Series 1
(the "Series 4 Warrants") to be Warrants exercisable at $0.55
issued to option holders of GDI. per share and 234,724 Series 2
Warrants exercisable at $1.00
per share.

Further, the number of stock options available to be granted by the board of directors of the Corporation will be reduced as the Corporation will have fewer common shares outstanding than anticipated. As a result, the number of stock options to be granted to the officers, employees and consultants of GDI will be reduced by 50%. All of these adjustments are subject to the approval of the GDI shareholders, optionholders, warrantholders and debt holders, as well as the approval of TSX Venture Exchange Inc. and the receipt of any required securities commission approvals.

Jeffrey Dawson stated "We believe that the adjustment to the terms of the deal with GDI are fair in the context of the extended date of product launch".

"We are satisfied with the results of the Independent Validation to confirm the promise of the Triplex Assay™", said Stephen Johnston, the CEO of the Corporation. "While we were not initially happy with the suggestion of a discount for GDI, we believe that with the addition of the Series 1 Warrants and Series 2 Warrants, the shareholders of GDI will be in a good position when we deliver the value that the Triplex Assay™ is capable of."

After the completion of the Independent Validation share exchange described above, the Board of Directors of the Corporation will consist of Stephen C. Johnston, G. Scott Paterson, Richard M. Hurwitz, Jeffrey A. Dawson, Dr. Gerry Hatch, James Beatty and a nominee of G. Scott Paterson, Richard Hurwitz and
Jeffrey Dawson.

After the completion of the Independent Validation share exchange described above, the Corporation will have 35,987,606 common shares outstanding, the 7,525,000 Private Placement Warrants, the 5,660,527 Series 1 Warrants, the 5,660,527 Series 2 Warrants, the 122,000 Series 3 Warrants and the 469,448 Series 4 Warrants. The Corporation also has consolidated net working capital of approximately $4,300,000.

There will be a conference call on Thursday, September 1, 2005 at 9:00 a.m. (Toronto time) to discuss the contents of this press release. The dial in number is (416) 340-8010 and toll free in North America is 1-866-226-1793.

About Genetic Diagnostics

Genetic Diagnostics, based in Toronto, is a development stage DNA diagnostics company that has licensed and continues to further develop a revolutionary diagnostic platform that it intends to commercialize in Canada and the United States.

Trademark use and the Triplex Assay™ technology are licensed from Ingeneous Corp.

Except for historical information contained herein, this news release contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially. Factors that might cause a difference include, but are not limited to, market acceptance of principal products, the impact of competitive products and technologies, the possibility of products infringing patents and other intellectual property of fourth parties, and costs of product development. Neither Genetic Diagnostics nor GDI will update these forward-looking statements to reflect events or circumstances after the date hereof. More detailed information about potential factors that could affect financial results is included in the documents filed from time to time with the Canadian securities regulatory authorities by Genetic Diagnostics and GDI.

The TSX Venture Exchange Inc. has neither approved nor disapproved the contents of this press release.

Contact Information

  • Genetic Diagnostics Technologies Corp.
    Stephen Johnston
    (416) 360-3469