GTG signs $5m deal with Swedish firm

Melbourne-based Genetic Technologies(GTG) has inked its biggest deal yet, with Swedish DNA company Pyrosequencing.

The deal, which grants the Scandinavian company access to GTG's non-coding DNA analysis and mapping patents, involves an 'equipment-for-licence' technology swap in addition to a cash payment and ongoing royalties.

The cash side of the deal will earn GTG a signing fee of $AUD833,000, with the ongoing royalties on GTG's patents due to bring in and estimated $2.16 million over the next 12 years.

The agreement will boost GTG's income stream, but will also allow the company to expand its genetic diagnostics business, thanks to the bundling of three sets of analytical equipment and seven new gene-based assays into the contract.

"Within the biotech industry people use many different forms of currency. This can be cash, stock, or equipment, or access to intellectual property. As a company, we are open minded and flexible about these things. We will take whatever is best for us," said Dr Mervyn Jacobson, GTG's executive chairman.

He described Pyrosequencing as the "manufacturers of a unique instrument", and said that the hardware would be ideal for GTG as it went on to expand its capability in the DNA testing field, and would also help open the door for further research.

The deal, described as a strategic alliance and cross-licensing agreement, is GTG's biggest licensing transaction to date, and also signals a major step for the company into the European R&D theatre.

"We are currently talking to other people in Europe, as well as Australia, America, South America and even in Japan. There are hundreds of companies who really must use our IP to achieve what they want. We shall be ramping up our deals," added Jacobson.

The company's key business is still firmly rooted in its technology licensing, but Jacobson affirmed GTG's ambition to expand its capability in the DNA testing arena, partly by finance brought in through future licensing agreements.

"Our first deals were with first comers; they got a generous break in the price they paid. Now we have established ourselves and people are happy to pay a premium for our technology. We still have another good 13 years left [in licensing] and we shall have achieved our objectives in that time," he noted.

The company plans to expand its DNA testing facility from its main business, paternity testing, to other areas such as plant and animal testing and other human DNA tests.

Jacobson reiterated his target of boosting the company to what he described as a "flagship facility" for DNA testing within the region, and hinted at new research in other areas in the testing and therapeutic fields.

"We have the patents that people want, and we are happy to take the powerful technology which those companies can make available to help us achieve our objectives."

"Equipment deals like this are not unique. We want success, but we are conservative. We value everything [companies] have to offer," he added.