GTG firms up O'Connor partnership

Genetic Technologies (ASX:GTG) has sealed its broad strategic alliance with Perth-based biotech research agency, the CY O'Connor ERADE Village Foundation (CYO), foreshadowed in October last year.

The CYO, headed by Prof Roger Dawkins, is an affiliate of the University of Western Australia.

Dawkins is a world authority on tissue typing and genomics. His CYO team has developed new methods of gene matching within the human leucocyte antigen (HLA) complex to improve the success of organ and bone marrow transplantation, and has also developed novel methods for gene discovery.

Under their alliance, effective from today, the CYO has assigned GTG rights to all its existing and pending patents in genetics and genomics, as well as future IP emerging from current research.

In return, GTG will support the CYO's human and animal genetics research projects. In its announcement to the ASX, the company said it would provide $4.5 million to fund five priority projects nominated by the CYO over the next five years, and to develop any IP emerging from them.

GTG becomes the primary vehicle for commercialising all CYO's discoveries in genetics and genomics.

After foreshadowing the alliance last October, GTG commissioned an independent report that valued the IP it would acquire from CYO at more than $20 million.

On the basis that the new IP is worth not less than $15 million, GTG will issue the CYO with 16,666,666 GTG shares at 75 each, and pay royalties. The CYO has agreed not to release any of the shares to the market until December 4 this year, and then only at a rate of 20 per cent per year.

GTG has also granted a broad licence to the CYO to use its patents on non-coding DNA sequences, for a $2.5 million fee.

GTG's CEO, Dr Mervyn Jacobson, said the new IP would significantly strengthen GTG's patent portfolio, and create new commercial opportunities through licensing, and development of new genetic tests.

GTG and the CYO plan to jointly establish a state-of-the-art genetic testing facility in Perth, offering human diagnostic services, tests for organ transplantation, forensic services, and livestock genetic tests.

Jacobson said many of the CYO patents complemented those in GTG's existing portfolio, and scientists from the two organisations were already collaborating in areas of mutual interest. Both have an interest, for example, in developing DNA tests to identify merino sheep carrying genes for black wool, a costly problem in the wool industry.

'Community benefit'

Jacobson described the alliance as the most significant example yet of his company's commitment to responsible use of its technology for community benefit, through public-private partnerships.

"CYO is a charitable trust, affiliated with the University of WA; we're a commercial, publicly listed company. These partnerships are worth pursuing, because we're both trying to do some good in the same society," he said.