Genetic Technologies Limited (ASX: GTG, NASDAQ: GENE) today
reported their quarterly activities report for the quarter ended 30
September, 2011.
OPERATIONS
Total cash receipts from customers during the quarter ended 30
September 2011 exceeded $2.3 million. Together with the $10.9
million in net funds raised from the placement of 60 million shares
in late July, the Company’s cash reserves had increased to more
than $14.8 million at the end of the quarter.
Gross revenues generated by the Company’s testing operations,
excluding those forecast for sales of the new BREVAGenTM breast
cancer risk test, were slightly ahead of budget for the first
quarter of the 2011 financial year.
Launch of BREVAGen™ breast cancer risk test
In June 2011, the Company launched its new, predictive risk test
for the tens of millions of women at intermediate risk of
developing breast cancer, BREVAGen™, in the US market.
The Company’s US-based subsidiary, Phenogen Sciences Inc.,
(http://www.phenogensciences.com) began its progressive roll-out of
BREVAGen™ to obstetricians and gynaecologists in eight territories
accessing more than 20 metropolitan areas in the US during the
third quarter of 2011, with anticipated territory expansion in the
coming months. BREVAGen™ is the first clinically validated breast
cancer predictive risk assessment tool that combines a woman’s
genetic information with clinical data to assist physicians in
developing personalized risk management plans.
Over the first 90 days of the launch, the Phenogen sales team
made more than 2,800 sales calls, reaching 800 physicians,
representing good penetration into its initial tier one targets.
During this same timeframe, 600 test kits were placed in targeted
accounts, resulting in early adopter BREVAGen™ use within two weeks
of launch.
The Company has commenced processing re-imbursements on initial
BREVAGen™ test sales. As part of a longer term insured lives
contracting and credentialing strategy, the Company has also
commenced the credentialing process with the top-10 preferred
provider organisations (PPOs) in the US, which represent more than
60 percent of covered lives in the US. In early October, the first
PPO contract was finalised with additional contracts anticipated to
be completed by the end of the December quarter.
How BREVAGen™ works
The BREVAGen™ predictive risk test is administered in a
physician’s office using a simple, non-invasive “cheek-swab.”
Following analysis in a CLIA-certified laboratory, physicians
receive a comprehensive predictive risk assessment report to review
with the patient. The patient’s risk of breast cancer is calculated
by combining their relative risk score from seven genetic markers,
called SNP’s (single nucleotide polymorphisms), with their Gail
score (factors that comprise the patient’s clinical make-up
including current age, age at menarche, age at live first birth,
race/ethnicity, etc.).
The BREVAGen™ test provides five-year and lifetime predictive
risk assessments to more accurately evaluate the patient’s risk for
developing breast cancer, regardless of family history or previous
indeterminate test results.
Clinically validated, proven superior risk assessment
BREVAGen™ has been proven superior in determining breast cancer
risk compared to the Gail score alone.1 In the U.S. Women’s Health
Initiative (WHI) Clinical Trial, 3,300 women underwent breast
cancer assessment utilising the BREVAGen™ test. Of those 3,300
women, 1,664 were diagnosed with breast cancer and 1,636 were in
the breast cancer-free control group.
OPERATIONS (cont.)
Launch of BREVAGen™ breast cancer risk test (cont.)
BREVAGen™ is clinically validated to reclassify approximately
64% of women in the intermediate Gail breast cancer risk group
(being those with a 1.5% to 2.0% five-year risk), with
approximately 28% being reclassified as higher risk candidates for
breast cancer.1 A preventive treatment plan based on this would
prevent about 50% of cancers in this group. In addition, more than
36% in this group will be re-stratified down, avoiding unnecessary
treatment, side effects and costs. Therefore, approximately two out
of three patients in the intermediate Gail risk group will have a
more accurate risk assessment to guide their future care.
1 Mealiffe M., Stokowski R.P., Rhees B.K. et. al. J Nat Cancer
Inst. 2010; 102(21): 1618-1627
Australian market
In the medical division, brand awareness continues to increase
with interest in our test portfolio through attendance at leading
oncology conferences such as “M.O.G.A” and familial breast cancer
at “Kconfab’.
In forensics, a substantial project was completed on time for
the Western Australian Police Force; whilst the current series of
work has been completed for the NSW Police Force.
Increased media coverage concerning dangerous / restricted dog
breeds and our involvement with key government / animal welfare
agencies resulted in higher levels of sales for the Company’s BITSA
test (breed identification) and the possible use of the test in
arbitration to solve claims of breed identification. New direct
marketing campaigns timed for the spring puppy selling season have
been successful in winning back old customers and increasing the
sales for current ones. This effort was concentrated using online
media and electronic communication to give customers immediate
feedback on receipt of canine disease and trait tests.
LICENSING AND IP
The Company’s intellectual property portfolio, which includes
the patents acquired from Perlegen Sciences Inc., continues to
strengthen, with 117 patents now granted and a further 90
(including divisional and provisional patents) pending.
Assertion programs
On 26 May 2011, the Company announced it had filed a further
patent infringement law suit in the US, this time in the US
District Court, Western District of Colorado, asserting
infringement of its primary non-coding patent against the following
parties:
- Agilent Technologies Inc.;
- Bristol-Myers Squibb Company;
- Eurofins STA Laboratories Inc.;
- GlaxoSmithKline PLC;
- Hologic Inc.;
- Merial LLC;
- Navigenics Inc.;
- Neogen Corporation / GeneSeek
Inc.;
- Pfizer Inc.; and
- 454 Life Sciences Corporation.
This suit is in addition to a six-party suit filed in January
2011 in the U.S. District Court for the Western District of Texas
for infringement of the same technology. The Company is pleased to
report that the counterparties to the Texas suit are in active
settlement discussions. Subsequent to filing the suit in Colorado,
Settlement and License Agreements have been executed with both
Navigenics Inc. and Hologic Inc.
LICENSING AND IP (cont.)
Assertion programs (cont.)
All infringement suits are prosecuted by the Company’s Colorado
based law firm Sheridan Ross P.C. and, due to arrangements
previously put into place, should not have a material adverse
impact on Genetic Technologies’ finances.
Other licensing activities
In addition to the licenses granted as part of the Company’s
formal assertion program as detailed above, aside from the US law
suits, the Company itself is actively pursuing licenses in respect
of its non-coding technology in the US and other jurisdictions,
principally in Europe. During the September quarter, the Company
executed a Settlement and License Agreement with Attomol GmbH of
Lipten, Germany under which that company has been granted
non-exclusive rights to a number of GTG patents, including
non-coding analysis and gene mapping.
RESEARCH AND DEVELOPMENT
As part of the Company’s strategy to place a stronger emphasis
on the expansion of its cancer diagnostic franchise, its research
programs are being progressed with a view to out-licensing,
co-development or partnering the respective technologies.
- The RareCellect™ project has
been presented to a variety of industry players. Discussions with a
number of large international companies interested in pursuing
potential commercial collaborations are continuing, with several
parties now undertaking advanced due diligence on the RareCellect™
data and samples.
- Stakeholders associated with the
ImmunAidTM project are now actively exploring
collaboration / partnership discussions with third parties with a
view to expediting the development and potential commercialisation
of the ImmunAid™ technology. During the quarter under review, the
patent portfolio associated with the project continued to expand
with a key patent having been secured in Europe.
CORPORATE MATTERS
On 27 July 2011, GTG announced that it had issued by way of
private placement to US and Australian institutional and
sophisticated investors a total of 60,000,000 ordinary shares in
the Company. The shares were issued in accordance with ASX Listing
Rule 7.1 and, as such, shareholder approval was not required. The
issue of the shares, which was made at a price of $0.195 each,
raised a total of $11,700,000, before the payment of associated
costs. Following the issue, the number of shares in GTG that were
on issue had increased to 464,605,152. Proceeds from the placement
will be used to fund potential acquisition growth in the molecular
diagnostics field focusing on woman’s cancer and management, and to
accelerate the roll-out of its breast cancer risk test BREVAGenTM
in the US.
On 3 October 2011, the Company announced the appointment of Dr.
Mervyn Cass as a Director of the Company.
Also on 3 October 2011, GTG granted a further 1,000,000 options
over ordinary shares in the Company to a senior employee. Each
option, which was granted at nil cost, entitles the holder to
acquire one ordinary share in the Company at a price of $0.20 at
any time up to, and including, 31 July 2016. As at the date of this
Report, there were 19,275,000 options outstanding.
On 12 October 2010, the Company released its Notice for the 2011
Annual General Meeting of shareholders which is to be held at
10.00 am on Monday, 21 November 2011 in the
“Treetops” Room at Melbourne Museum. On 14 October 2011, the
Company released its 2011 Annual Report to the Market. Copies of
both documents can be found on the Company’s website at
http://www.gtglabs.com
Signed on behalf of Genetic Technologies Limited
Dated this 26th day of October, 2011
DR. PAUL D.R. MacLEMAN
Chief Executive Officer
----------------------------------------------------------
Rule 4.7B
Appendix 4C
Quarterly reportfor entities
admittedon the basis of commitments
Introduced 31/3/2000. Amended 30/9/2001, 24/10/2005.
Name of entity
GENETIC TECHNOLOGIES LIMITED ABN
Quarter ended (“current quarter”)
17 009
212 328 30 SEPTEMBER 2011
Consolidated statement of cash flows
Current quarter
(September 2011)
$A
Year to date
(three months)
$A
Cash flows related to operating activities 1.1
Receipts from customers
2,350,178 2,350,178
1.2
Payments for (a) staff costs
(1,985,196) (1,985,196) (b) advertising and marketing
(80,438) (80,438) (c) research and development
- - (d) leased assets
- -
(e) other working capital
(1,693,031) (1,693,031) 1.3
Dividends received
- - 1.4 Interest and items of a
similar nature received
137,799 137,799 1.5 Interest
and other costs of finance paid
(13,755) (13,755) 1.6
Income taxes paid
- - 1.7 Grant and other income
- - Net operating cash flows
(1,284,443) (1,284,443)
Consolidated statement of cash flows (cont.)
Current quarter
(September 2011)
$A
Year to date
(three months)
$A
1.8 Net operating cash flows (carried forward)
(1,284,443) (1,284,443) Cash flows related to
investing activities
1.9
Payment for the acquisition of: a) businesses (item 5)
-
- b) equity investments
- - c) intellectual
property
- - d) physical non-current assets
(34,674) (34,674)
e) other non-current assets
- -
1.10
Proceeds from the disposal of: a) businesses (item 5)
-
- b) equity investments
- - c) intellectual
property
- - d) physical non-current assets
-
-
e) joint venture interest
- - 1.11 Loans to other
entities
- - 1.12 Loans repaid by other entities
- - 1.13 Other (provide details if material)
-
- Net investing cash flows (34,674)
(34,674) 1.14 Total operating and investing cash
flows (1,319,117) (1,319,117) Cash flows
related to financing activities 1.15 Net proceeds from the
issue of shares
10,903,011 10,903,011 1.16 Proceeds
from sale of forfeited shares
- - 1.17 Proceeds from
borrowings
- - 1.18 Repayment of borrowings from
third parties
- - 1.19 Dividends paid
-
- 1.20 Repayment of finance lease principal
(12,146)
(12,146) Net financing cash flows 10,890,865
10,890,865 Net increase / (decrease) in cash held
9,571,748 9,571,748 1.21 Cash at beginning of quarter
/ year to date
5,104,667 5,104,667 1.22 Exchange rate
adjustments
189,687 189,687
1.23
Cash at end of quarter 14,866,102 14,866,102
Payments to directors of the entity and associates of the
directors
Payments to related entities of the entity and associates of
the related entities
Current quarter
$A
1.24 Aggregate amount of payments to the parties
included in item 1.2
79,206 1.25 Aggregate amount of loans
to the parties included in item 1.11
- 1.26 Explanation
necessary for an understanding of the transactions
The amount included at Item 1.24 includes $61,389 paid to
Directors during the quarter in respect of fees and superannuation.
The amount also includes $17,817 in commissions and consulting fees
paid to a former Director and substantial shareholder in respect of
services rendered to the Company by that individual.
Non-cash financing and investing activities
2.1 Details of financing and investing transactions
which have had a material effect on consolidated assets and
liabilities but did not involve cash flows
None during the
quarter under review 2.2 Details of outlays made
by other entities to establish or increase their share in
businesses in which the reporting entity has an interest
None
during the quarter under review
Financing facilities available
Add notes as necessary for an understanding of the position.
(See AASB 1026 paragraph 12.2).
Amount available
$A
Amount used
$A
3.1 Loan facilities
- - 3.2 Credit standby
arrangements
Hire purchase facility
2,500,000
55,732
Reconciliation of cash
Reconciliation of cash at the end of the
quarter(as shown in the consolidated statement of cash flows)to the
related items in the accounts is as follows:
Current quarter
(September 2011)
$A
Previous quarter
(June 2011)
$A
4.1 Cash on hand and at bank
1,866,102
1,985,257 4.2 Term deposits
13,000,000
3,119,410 4.3 Bank overdraft - - 4.4 Commercial Bills of
Exchange - -
Total cash at end of quarter (item 1.23)
14,866,102 5,104,667
Acquisitions and disposals of business entities
Acquisitions
(Item 1.9(a))
Disposals
(Item 1.10(a))
5.1 Name of entity
Not applicable Not
applicable 5.2 Place of incorporation or registration
5.3 Consideration for acquisition or disposal (note)
5.4 Total net assets 5.5 Nature of business
Compliance statement
1 This statement has been prepared under accounting policies
which comply with accounting standards as defined in the
Corporations Act (except to the extent that information is not
required because of note 2) or other standards acceptable to
ASX.
2 This statement does give a true and fair view of the matters
disclosed.
Sign here:
............................................................ Date:
26 October 2011
Chief Executive Officer
Print name: Dr. Paul D.R. MacLeman
Notes
1. The quarterly report provides a basis for informing the
market how the entity’s activities have been financed for the past
quarter and the effect on its cash position. An entity wanting to
disclose additional information is encouraged to do so, in a note
or notes attached to this report.
2. The definitions in, and provisions of, AASB 107: Statement of
Cash Flows apply to this report except for any additional
disclosure requested by AASB 107 that are not already itemised in
this report.
3. Accounting Standards. ASX will accept, for example,
the use of International Financial Reporting Standards for foreign
entities. If the standards used do not address a topic, the
Australian standard on that topic (if any) must be complied
with.
+ See chapter 19 for defined terms.
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