Genetic Technologies chief defends Myriad deal

Genetic Technologies' (ASX: GTG) executive chairman Dr Mervyn Jacobson is surprised and disappointed by recent criticism of the deal he brokered with US genetic testing giant Myriad Genetics.

The deal provided the US company with access to GTG's non-coding DNA patents in return for exclusive rights to Myriad's genetic susceptibility tests in Australia and New Zealand.

GTG announced the deal in late October, bringing $AU1.85 million in upfront fees plus ongoing royalties to the Melbourne-based company. Current plans are to have the new testing service for genetic susceptibility to inherited disorders including certain forms of breast and ovarian cancer, as well as other diseases including colon cancer, melanoma and hypertension, up and running in the next three to six months.

According to Jacobson, the deal took 18 months to put together, and Myriad was specifically targeted as a potential licensee for GTG's patents, as Jacobson wanted to bring the genetic susceptibility testing into Australia as a public service to the medical community.

"I fully expected it would meet with the support and approval from all sections of the community including the healthcare and biotechnology sectors," he said.

But throwing a spanner in the works was the Royal College of Pathologists of Australasia (RCPA), who immediately condemned the deal, saying that the decision had the potential to put vital tests out of the reach of many Australians.

And last week the Western Australian Health Minister Bob Kucera also criticised the exclusive agreement, suggesting that the licensing agreement would let GTG operate as a monopoly, providing "testing for full gene sequencing" at direct cost to patients.

Kucera also claimed that the costs of the testing service would be in the ballpark of $AU4500, based on the fees charged by Myriad in the US.

Jacobson said he was riled that both the RCPA and Kucera were making assumptions and criticisms of the deal without bothering to check the facts or talk to GTG.

"It's just dishonest for a health minister to make statements about our company without ever contacting us or checking his facts," he said. For one thing, GTG has not yet even decided on a fee structure for the tests, Jacobson added, as it was still in the process of setting up the infrastructure for the new service.

Jacobson said any claim that the deal would stifle research was totally untrue and offensive, especially given that GTG was itself a research organisation.

"We have never prevented anyone from using our non-coding patents for research purposes," he said. "But we will not allow anyone to use GTG patents for commercial testing in breach of our rights."

Claims that testing under GTG and Myriad's patents would be incomplete or piecemeal were also false, Jacobson said.

"The fact is that it is current testing which is incomplete," he said. The deal would allow the full scope of both companies' patents to be applied to tests.

"The testing we intend to make available in Australia and New Zealand is expected to replace what today is being performed, I regret to say, inefficiently, incompletely and illegally."

Myriad's patents cover testing for the presence of the BRCA1 and BRCA2 breast cancer susceptibility genes, among other genes. While Myriad has turned a blind eye to testing for these genes in Australia over the last few years, saying that it would wait until it had a presence in the country before cracking down on patent infringers, this is likely to become an issue for other testing services as GTG sets up its own exclusively licensed service.

According to Jacobson, this has also meant that tests have been done "rather poorly", with limited access and inordinately long waits for results -- sometimes exceeding six months.

"In our case we intend to offer testing services widely to make it readily available to families that want to be tested, and will have results in 30 days or less," he claimed.

Jacobson said that while the RCPA had criticised the deal, individual members he had spoken to had supported the company's agreement with Myriad.