GTG cleans slate, opens door to new business deals

Melbourne company Genetic Technologies (GTG) has introduced a twist in its licensing strategy by offering companies the chance to be forgiven for past transgressions of GTG's non-coding DNA patents.

The first 'covenant not to sue' has been granted to US company Orchid Biosciences.

"This is the first of a new variety of agreement where someone says 'we may have infringed in the past but we're not infringing anymore'," said GTG executive director Dr Mervyn Jacobson. He explained that the agreement "wipes the slate clean," covering the company for past infringements, while providing an option to take up a license to use GTG's patents in the future if required.

As with recent agreements with US firm Myriad Genetics and Swedish company Pyrosequencing, GTG has walked away from the deal with exclusive access to genetic testing technologies not previously available in Australia, in addition to cash. The total package, according to Jacobson, is worth around $US2.1 million ($AUD3.2 million), although the precise financial terms are subject to a confidentiality agreement. And if Orchid decides to exercise its option, more fees and royalties will be payable.

The package includes exclusive licenses to Orchid's paternity-SNP panel for paternity testing services, forensic-SNP panel for forensic testing services, as well as an exclusive license to market, distribute and sell the Elucigene range of diagnostic kits for genetic testing, and a non-exclusive licence to the company's Primer Extension patents. GTG will pay license fees and royalties to Orchid for future revenues generated using these technologies.

"What they're giving us are new business opportunities. GTG will have exclusive access [to Orchid's technologies] in Australia, New Zealand and south-east Asia," said Jacobson. "We're very pleased to be able to bring this powerful new technology to this part of the world. It's also an incredible commercial opportunity for us."

The technologies will complement GTG's existing paternity testing services, and allow them to continue their expansion into forensic testing services. Jacobson said that the company has recently initiated the process of acquiring accreditation as a forensics laboratory.

The Elucigene license offers the company even more opportunities, he said, as in addition to being able to use them in their own testing service, the company would act as a distributor of the diagnostic kits to other testing services in the region.

"The deal adds a lot of different aspects to our plans going forward," said Jacobson. "We have an incredible list of global alliances being put together."

At the time of writing, GTG's share price (ASX: GTG) had risen 10 per cent to $AUD0.44.