GTG promises more licensing revenue in coming year

Melbourne biotech Genetic Technologies (ASX:GTG) has released its financial results for 2002-03 financial year, showing a 29 per cent revenue drop to AUD$9.26 million and a net loss of $4.16 million, an improvement over last year's $8.8 million loss.

"It's going in the right direction, and the same trend is likely to continue this year," said executive director Dr Mervyn Jacobson. He said the company was hoping to be cash flow neutral if not cash flow positive by the end of the 2003-04 financial year.

GTG made a number of licensing deals for its non-coding DNA analysis patents over the course of the year which brought in $5.5 million in license fees compared to $1.5 million in license fees in the previous year. According to Jacobson, the company expected more licenses to be granted this year. In addition, royalties and annual fees from previously granted licenses would begin to flow in to the company, he said.

A second area of growth for GTG was its genetic testing services, encompassing paternity testing, plant and animal genetic testing, cancer susceptibility testing and athletic performance. The company is also undergoing the process of accreditation as an independent forensic DNA testing service.

Revenues from the genetic testing services almost doubled, rising from $1.6 million to almost $3 million. Jacobson said he expected this revenue to grow even more in the current year, as the company got its cancer susceptibility testing and athletic performance testing underway. Initial revenues from the sale of tests acquired through GTG's deal with Orchid Biosciences would also be a possibility.

GTG had $5.82 million in cash remaining at the end of June 2003, but bolstered that recently with a $10 million placement to institutional investors. Jacobson said the company was expecting to spend around $1 million expanding its licensing program, including setting up offices in Europe and the US, and $2 million developing its rapidly expanding genetic testing services. A further $1 million would be spent on the company's research programs including the RareCellect foetal cell recovery project, the ImmunAid HIV treatment project and the parasitology program.