AgGenomics ties up A2 milk DNA profiling deal

AgGenomics, a joint venture company owned by Melbourne-based Genetic Technologies (ASX:GTG) and the Victorian government, has been selected as the exclusive Australian provider of DNA profiling services for the selection of A2 dairy cattle for New Zealand company A2 Corporation.

"It's a very substantial contract for us, a substantial step into animal genomics," said AgGenomics managing director Dr Glenn Tong. He said the agreement was likely to deliver more than AUD$500,000 in gross revenues to the company.

Essentially, the company will be testing hundreds of thousands of dairy cattle for the a2 allele of major milk protein beta casein. The a1 allele has been implicated as a risk factor for heart disease, type 1 diabetes and aggravation of neurological conditions and A2 Corp has performed animal studies supporting the link.

"Scientific research conducted in New Zealand, Australia and around the world implies a strong link between the consumption of the A1 protein and a number of undesirable biological responses," said A2's CEO, Andrew Clarke. "We believe that by excluding A1 from milk, any risks associated with its consumption can be avoided."

A2 launched its product in the NSW market in limited volumes earlier this year, and the company said demand for the product was outstripping supply. The licensing agreement will allow A2 to expand its supply of A2 milk by identifying A2 herds.

The deal is just one of a number of agricultural DNA testing contracts that are being handled by AgGenomics. The company was formed early in 2002 to provide commercial scale genetic and genomic testing services to the agricultural sector, and in the financial year ending in June 2003 brought in $1.4 million gross revenue. At this point, Tong said, revenues for the current year to date are tracking ahead of last year's results.

"It's taken us a little while to gain momentum, but in the last 6-8 months we have seen large contracts come our way," Tong said.

Among the projects currently underway at the company is a $2.1 million genetic marker discovery program in strawberries co-funded by Horticulture Australia. Other programs have included marker-assisted selection of wheat varieties, variety identification using DNA profiling, and ultra high throughput genotyping of wheat.

The company is also performing genomic testing on various aquaculture species including sand crabs, barramundi, prawns and oysters.

Tong said AgGenomics was looking at a number of international collaborations and contracts.

"There are many high-throughput genomics centres, but very few offer fully commercial services," he said. "We offer fee for service and collaborative research programs, but in both cases we offer flexibility with intellectual property rights, which many public research organisations don't."