New alliance gives GTG stronger grip on gene testing

Genetic Technologies (ASX:GTG) has formed a strategic alliance with the Perth-based CY O'Connor ERADE Village Foundation that is intended to strengthen GTG's already formidable -- and controversial -- grip on gene testing using non-coding DNA sequences.

The alliance gives the charitable research foundation, founded by Prof Roger Dawkins, full access to GTG's gene-testing patent portfolio, for an up-front free of AUD$2.5 million.

The foundation incorporates the Immunogenetics Research Foundation and the Institute of Molecular Genetics and Immunology Incorporated of Perth, Western Australia.

Under their agreement, the foundation will assign all its existing IP to the Melbourne biotechnology company, along with any patents emerging from new research discoveries.

GTG's executive chairman Dr Mervyn Jacobson described the alliance as a "nice synergy" that effectively gave GTG an auxiliary research engine in Perth, whose discoveries have the potential to increase the company's profitability,

For its part, the foundation acquires a commercial vehicle for its IP, with the potential to generate an increasing stream of funding for its research programs.

In a statement, GTG said it would actively support the foundations' genetics and genomics research program. GTG will issue shares to the Foundation, and pay royalties from successfully commercialised IP.

Jacobsen said the partners would jointly investigate the establishment of a state-of-the-art genetic testing service in Perth, 51 per cent owned by GTG, providing human diagnostic services, transplantation tissue-matching, forensic testing, and genetic testing of livestock.

"If it all goes as anticipated, it will make the foundation the third largest stockholder in GTG," he said. "It's a beautiful alignment of interests, a model agreement that shows how even charitable research organisations can use commercial structures to their benefit in future."

The foundation and GTG would also work closely with the public health and university sectors in Western Australia, consistent with their support for the development of public/private partnerships.

'World authority'

Jacobsen described Dawkins as a world authority on tissue typing and genomics. The foundation has developed new methods for DNA matching to achieve improved survival rates in transplantation.

In the mid-1980s, Dawkins advanced the concept of 'haplotype blocks' -- large segments of chromosomes, containing large numbers of genes, which are ancient and highly conserved between distantly related species.

Dawkins' idea, that large numbers of genes are conserved in functional blocks which escape the constant process of gene-reshuffling between generations, led GTG co-founder Dr Malcolm Simons to the revolutionary gene-testing system that now forms the core of GTG's patent portfolio.

Simons saw that highly conserved DNA markers in non-coding DNA could be used to predict an individual's susceptibility to disorders like cancer, diabetes and cardiovascular disease.

Jacobsen said the non-coding DNA and haplotype block patents were complementary, and more powerful when used together.

"There are many agencies and companies around the world who need to license GTG's patents, who also need a license for the Dawkins patents -- Genetic Technologies now provides them with a one-stop shop," he said.

Disincentive to challenge

Jacobsen said the alliance could also be a disincentive for companies seeking to challenge GTG's controversially broad patents on non-coding DNA.

Companies facing the already considerable burden of challenging patents embodying multiple claims, and already approved in many jurisdiction, would find it even more daunting to challenge different families of patents developed by different inventors, he said.

Jacobsen said that in the wake of the furore over the breadth and supposed obviousness of the GTG patents during the International Congress of Genetics in Melbourne in July, the Irish patent office in August had finally issued the company's patents, filed in 1991.

"Even now, with all the hindsight on obviousness, and with all the prior art carefully examined again by yet another jurisdiction, our patents are still being issued," he said.