SOURCE: Genetic Technologies

Genetic Technologies

January 30, 2014 10:42 ET

Genetic Technologies Provides Corporate and Financial Update for Quarter Ended December 31, 2013

MELBOURNE, AUSTRALIA--(Marketwired - Jan 30, 2014) - Genetic Technologies Limited (ASX: GTG) (NASDAQ: GENE)

  • Total sales revenue for BREVAGen test increased 50% sequentially
  • Record 1,125 BREVAGen samples received during the quarter, up 23% sequentially
  • Total BREVAGen samples received during calendar 2013 of 3,041, up 280% year-over-year
  • $1.3M in total cash collected from customers in the quarter; cash balance of $8.2M at December 31, 2013

Molecular diagnostics company Genetic Technologies Limited (ASX: GTG) (NASDAQ: GENE) today announced a corporate and financial update for its quarter ended December 31, 2013.

Financial summary

Total cash receipts from customers during the quarter ended December 31, 2013 were $1.3 million. Domestic testing revenues for the quarter under review continue to exceed budget expectations and, as detailed below, testing throughput of the Company's flagship test BREVAGen™ in the December quarter continues to demonstrate growth and further expansion of the product in the US market. As reported in the Company's 2013 Annual Report, the revenues generated from the sale of the BREVAGen™ test are still recorded on a cash, not an accruals, basis. The Company anticipates that this treatment will change at the end of the 2014 financial year, with an appropriate upward adjustment to revenues being made at that time.

During the quarter under review, a total of $4,000,000 was received by the Company under its Share Purchase Plan ("SPP"), before the payment of associated costs. At the issue price of $0.072 per share, this resulted in the issue of 55,555,556 further ordinary shares in the Company. Also during the quarter, the Company drew down redeemable convertible notes generating $5,627,462 (being the Australian dollar equivalent of USD 5,000,000), before the payment of associated costs (refer below for details).

Cash at the end of the quarter totaled $8.2 million.

BREVAGen Breast Cancer Risk Test

Since launching its BREVAGen™ test in the US market in July of 2011, the number of test samples received in each of the subsequent ten quarters has increased. As announced on January 8, 2014, a record number of BREVAGen™ test samples were received during the quarter ended December 31, 2013. Total samples received during the quarter were 1,125, representing growth of more than 23% over the preceding September quarter (914 samples), reinforcing the continuing increasing trend in market traction. A total of 3,041 BREVAGen™ test samples were received during the 2013 calendar year as compared to 801 samples received during the 2012 calendar year, up 280% year-over-year.

The test samples received continue to come from a broad mix of US geographical sales territories, demonstrating the growing acceptance of the test across the wider market. Further, as a result of both increased test sample numbers and positive reimbursement changes since January 1, 2013, total sales revenue for the test received during the quarter under review increased by more than 50% as compared to the preceding September quarter.

As previously reported on December 6, 2013, Genetic Technologies announced that BREVAGen was featured in the online issue of Cancer Prevention Research Vol 6 (12): pp 1328 - 36 dated December 5, 2013. The publication profiles the cost-effectiveness of the BREVAGen™ test versus direct MRI screening for breast cancer risk. The study, entitled "Cost-effectiveness of a Genetic Test for Breast Cancer Risk," was a collaborative project between Genetic Technologies and Archimedes Inc. of San Francisco, a healthcare modeling and analytics organization.

Based on the study, BREVAGen™ was most cost-effective when given to patients classified as having an intermediate lifetime risk of breast cancer. For patients with a risk of 16% to 28%, the test resulted in savings of 0.023 quality-adjusted life years (QALYs) per patient at a cost of $163,264 per QALY. The cost-effectiveness of using the BREVAGen™ test for patients with an intermediate Gail risk score is similar to that of other recommended strategies, including annual MRI for patients with a lifetime risk of greater than 20% or BRCA 1/2 mutations. Importantly, the model showed that the BREVAGen™ test yields a 2.7% reduction in cancer deaths relative to the Gail score alone for patients with a lifetime risk of at least 10%.

The Company continues to actively progress research programs with leading international academic collaborators to confirm the utility of genomic risk assessment in other ethnic populations and to incorporate the full portfolio of currently known common breast cancer susceptibility variants into the BREVAGen™ test. Validation of the expanded test is expected in early in calendar 2014, with validation of the test for other ethnic populations expected to be completed in the first half of the 2014 calendar year. New versions of the BREVAGen™ test will subsequently be launched and offered in the US market.

LICENSING AND IP

In May of 2011, the Company announced that it had filed a third patent infringement law suit in the US, in the US District Court for the District of Colorado, asserting infringement of its primary non-coding patent against various parties. Since then, Settlement and License Agreements have been executed with Navigenics Inc., Hologic Inc., Eurofins STA Laboratories Inc., GeneSeek Inc. and 454 Life Sciences Corporation (and its affiliates).

On December 24, 2013, the Company reported that several significant cases now pending in the District of Delaware, including cases against Bristol Myers Squibb, Pfizer and Merial, have each been allocated to the same Judge. While they are still separate cases, this consolidation will offer certain efficiencies to the legal processes now under way, and could possibly also speed up the process for Genetic Technologies. During the quarter, the Company also announced that it had executed agreements with Reprogenetics LLC and Bio- Reference Laboratories, Inc.

The Company's licensing activities in Europe continue to progress, with a legal action now under way in the Netherlands against Hendrix Genetics NV, where rulings by the Courts are expected to be received during the current quarter, and with other actions in Europe now being planned by the Company. Genetic Technologies also reported during the quarter that in each year since 2005 the Company has received an agreed license annuity fee of AUD 1 million from Genzyme Corporation in USA. This payment has not yet been received for 2013, and as such, the Company is now considering its various legal options.

OTHER COMMERCIAL ASSETS

On December 18, 2013, the Company announced that entities associated with the Company's founder and largest beneficial shareholder, Dr. Mervyn Jacobson (collectively, the "Jacobson Entities"), had entered into transactions which, if completed, will result in the disposal by them of 105,937,500 shares in the Company. Subsequent to that date, the Jacobson Entities disposed of 30,000,000 shares in Genetic Technologies.

The Jacobson Entities and GTG entered into a binding Share Exchange Agreement ("Agreement") pursuant to which, subject to GTG shareholder approval, the Jacobson Entities will exchange a total of 75,937,500 shares in GTG at an agreed price of $0.08 per share for 4,500,000 shares in ImmunAid Limited ("ImmunAid") owned by GTG at an agreed price of $1.35 per share. The Jacobson Entities will not be able to vote at the GTG shareholder meeting to consider the approval of the Agreement.

ImmunAid and GTG have also executed an Option Agreement pursuant to which ImmunAid will, when completion occurs under the Agreement, grant to GTG options to acquire a total of 2,250,000 ordinary shares in ImmunAid. Each option will entitle GTG to acquire one ordinary share in ImmunAid at a price of $1.35 per share at any time for three years from the date on which the options are granted. In consideration for the options granted to GTG by ImmunAid, GTG will pay ImmunAid an option fee of $500,000, of which $351,618 will be satisfied by the forgiveness of outstanding debts currently owed to GTG by ImmunAid. GTG will pay the remaining $148,382 owed on the option fee in cash.

All of the transactions above are subject to the receipt by GTG of an acceptable independent valuation of the Company's 4,500,000 shares in ImmunAid and an accompanying independent expert's fairness report; the receipt of all necessary regulatory approvals; and the receipt of the approval of the Company's shareholders at an Extraordinary General Meeting to be convened as soon as practicable at which the Jacobson Entities will be unable to vote.

Assuming the transactions proceed as outlined above, the number of ordinary issued shares in GTG will fall by 12.7% from 597,926,082 to 521,988,582, following the cancellation of the shares acquired from the Jacobson Entities.

At the conclusion of the various transactions contemplated above, the Jacobson Entities will retain a total of 30,536,184 ordinary shares in GTG representing 5.85% of the Company's then total issued capital and Dr. Jacobson will continue his current role for GTG as Vice President, Global Licensing and IP and also as CEO of ImmunAid Limited.

CORPORATE MATTERS

As mentioned in the Company's previous Activities Report, subsequent to the end of the 2013 financial year, GTG raised a total of $6,500,000 via the issue of 90,277,778 ordinary shares at an issue price of $0.072 per share. On November 18, 2013, the Company received a further $500,000, before the payment of associated costs, from one of the Underwriters of the Company's Share Purchase Plan whose clients subscribed for a total of 6,944,444 shares at the same issue price of $0.072 per share.

On November 29, 2013, the Company received approval from its shareholders for the issue to Ironridge BioPharma Co., a division of institutional investor Ironridge Global IV, Ltd. ("Ironridge"), of redeemable convertible notes to raise USD 5,000,000 (the "Notes"). On December 23, 2013, the Notes were drawn down and the Company received $5,627,462 (being the Australian dollar equivalent of USD 5,000,000) from Ironridge, before the payment of associated costs. On December 31, 2013, Notes with a face value of USD 250,000 were converted in return for which Ironridge received 8,714,541 ordinary shares. On 20 January 2014, further Notes with a face value of USD 500,000 were converted in return for which Ironridge received 550,581 American Depositary Receipts (representing 16,517,420 ordinary shares). As a result of these conversions, the face value of the remaining Notes has been reduced to USD 4,250,000.

Chief Executive Officer

On January 7, 2014, the Company announced that the temporary corporate restructure that had been announced in October of 2013 regarding CEO Ms. Alison Mew had been extended to March 31, 2014. During this time, Mr. Thomas Howitt will continue in the role of Acting CEO in addition to his usual roles of CFO and Company Secretary.

Changes to the Board of Directors

On November 29, 2013, following the conclusion of the Company's 2013 Annual General Meeting ("AGM") of shareholders, Prof. Ian McKenzie and Mr. Grahame Leonard AM were appointed as Directors of the Company. At the conclusion of the AGM, two former Directors, Mr. Tommaso Bonvino and Mr. Benjamin Silluzio, ceased to be Directors of the Company. On December 12, 2013, Dr. Paul Kasian was appointed as a Director of the Company.

About Genetic Technologies Limited
Genetic Technologies was an early pioneer in recognizing important new applications for "non-coding" DNA (Deoxyribonucleic Acid). The Company has since been granted patents in 24 countries around the world, securing intellectual property rights for particular uses of non-coding DNA in genetic analysis and gene mapping across all genes in all species. Its business strategy is the global commercialization of its patents through an active out-licensing program and the global expansion of its oncology and cancer management diagnostics portfolio. Genetic Technologies is an ASX and NASDAQ listed company with operations in the USA and Australia. For more information, please visit www.gtglabs.com.

Safe Harbor Statement
Any statements in this press release that relate to the Company's expectations are forward-looking statements, within the meaning of the Private Securities Litigation Reform Act. The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees. Since this information may involve risks and uncertainties and are subject to change at any time, the Company's actual results may differ materially from expected results. Additional risks associated with Genetic Technologies' business can be found in its periodic filings with the SEC.

Contact Information

  • FOR FURTHER INFORMATION PLEASE CONTACT
    Mr. Tom Howitt
    Chief Executive Officer (Acting)
    Genetic Technologies Limited
    Phone: +61 3 8412 7000

    Laura Forman (USA)
    Blueprint Life Science Group
    +1 (415) 375 3340, Ext. 103