CEO sees GTG leading the way for Aust biotech

A major court victory against US firm Applera will put Genetic Technologies (ASX:GTG) in a leadership position in Australian biotechnology, the firm's CEO has predicted.

"Everyone has been waiting for an Australian biotechnology company to make a profit, and we now see ourselves powering ahead, and moving into something of a leadership position in the Australian industry," said GTG's CEO Dr Mervyn Jacobson. Jacobson returned to Melbourne from San Francisco yesterday morning, buoyant after the court win in which Applera's lawyers agreed to pay an undisclosed fee to license GTG's patented 'junk DNA' gene-testing technology, one of the broadest patents ever issued in the recombinant DNA technology field, and the only US patent on the use of non-coding DNA markers for gene testing.

GTG originally sued Applera, and two other US gene testing companies, Novelo and Covance, in March 2003, for refusing to take licences and pay royalties on its patented technologies. Novelo and Covance both submitted and took licences in November 2004, leaving Applera as the lone holdout.

With the prospect of a large backlog of unpaid licence fees and royalties, and more to come, Jacobson said GTG planned to pursue more licensing agreements, build its genetic testing business, and establish a greater presence in the US, the world's major biotechnology market. "There's so much business out there," he said. "We have to sign them up, one by one, because it's not common that a company volunteers to come forward and pay us full value. Everyone has a story, and each needs to be a separate, intense negotiation. "In some ways, it's comparable what happened with PCR in the 1980s. For those wanting to apply the method, ours is the only other patent, to my knowledge, where the patents apply to all genes in all species." Jacobson said he was astonished that, only now, 16 years after the filing of the original patents invented by his former partner and GTG co-founder Dr Malcolm Simons, was the world waking up to the significance of non-coding DNA in the human, animal and plant genomes. "I bought a copy of Forbes magazine the other day, and there was an article titled 'Treasures in the Trash'," he said. "In it, they claim that the earliest recognition of the significance of non-coding DNA was in 1994. They still haven't woken up to it -- even though they had previously run an article on GTG and Malcolm Simons." Bigger fish

Asked whether his company's success, and rise to prominence, made it a takeover target, Jacobson said he expected it would certainly come to the attention of multinational biotechnology companies.

"One or more of them may see us as a significant opportunity, rather than an opponent," he said. "They are entitled to do so, because under the rules of the public market, shares are available to the highest bidder. "But anyone attempting a hostile takeover would have a difficult time, because of the significant holdings of GTG shares in the hands of its founders, including myself and Fred Bart, and the original GeneType [GTG's precursor] stockholders. They might acquire 25 per cent, but then we'd need to talk."

Meanwhile, Jacobson signalled yesterday, the company now had mandate to obtain licence fees for its patents from "hundreds" of companies around the world.