Genetic Technologies Offers Activities Report for Qtr. Ended Mar. 31st

GeneticTechnologies Limited (NASDAQ: GENE) today announced it hasfiled its Quarterly Activities Report for the Quarter ended March 31,2014 in accordance with the ASX.Total cash receipts from customers during the quarter ended March 31,2014 were $1.4 million taking the equivalent figure to more than $3.7million for the nine-month period ended on that date.Domestic testing revenues for the quarter under review continue toexceed budget expectations and the revenue received for the Company'sflagship test BREVAGen(TM) in the March quarter grew more than 39%over the preceding December quarter. As reported in the Company's2013 Annual Report, the revenues generated from the sale of theBREVAGen test are still recorded on a cash, not an accruals, basis.The Company anticipates that this treatment will change at the end ofthe 2014 financial year, with an appropriate upward adjustment torevenues being made at that time.BREVAGen(TM) breast cancer risk test For the first time since thelaunch of BREVAGen in July 2011, the number of test samples receivedin the most recent quarter, was lower than that of the previousquarter. The numbers of BREVAGen samples received in the firstquarter of CY2014 fell to 800 from the prior fourth quarter 2013 of1125. The company believes that the reasons for this softening indemand was a result of a combination of the beginning of the newinsurance year, an extremely severe winter during which physicianconsultations dropped markedly across the board; together with theimplementation of the Affordable Care Act in the US, which affectedthe "discretionary" health spend by patients. Nevertheless, thenumbers still represented a 99% increase over the same quarter in2013 and the Company believes that the upward trend will resume inthe next quarter and beyond. This trend will be augmented by not onlyadditional geographic territories in large population densitylocations, but a significant number of large breast care facilitieswhich are adopting BREVAGen as part of the care service they providetheir patients. The launch of the next generation BREVAGen later thiscalendar year, is anticipated to result in a further increase in testvolumes.New Product DevelopmentThe Company is on track to introduce the next generation of BREVAGenfor launch in the fourth quarter of this calendar year. This newversion of BREVAGen will incorporate an expanded SNP panel, whichwill increase the predictive power of the test and ensure the productutilises the latest advances in scientific knowledge of the geneticbasis of breast cancer. Furthermore, the new test will be applicableto additional ethnicities (African American and Hispanics) which willexpand the application of the test to a broader target population andprovide a test that clinics and breast centers will be able to applyto a large proportion of their patients. The Company believes thatincreased sample test volumes will be received by the laboratory as aresult of this new product introduction.ReimbursementAs mentioned in previous Activities Reports, until the end of 2012,insurance claims for BREVAGen were submitted using the so-called"code stack" of CPT methodology codes. Reimbursement under thisregime was positive, with a low percentage of denials and appeals.However, effective 1 January 2013, the AMA removed the code stackclaim process, requiring tests without a specific CPT code to beclaimed via an "Unlisted or Miscellaneous Code".As a result of the change from "Stacked Codes" to a "MiscellaneousCode" for insurance claims, the Company's reimbursement per test(including write-offs and denials for non-coverage) has increased bymore than 30%. However, the use of a Miscellaneous code requires moreadministration and time by the Insurance company to adjudicate theclaim and thus increases the time taken to receive the reimbursement.OPERATIONS (cont.)Cost effectiveness studies to improve reimbursement outcomesFurther to the publication in the journal of Cancer PreventionResearch Vol 6 (12): pp 1328 - 36 dated December 5, 2013, anadditional paper has been published demonstrating the costeffectiveness of the BREVAGen test to direct chemoprevention.On March 7, 2014, GTG announced the publication in the journalApplied Health Economics and Health Policy Vol 12 (2): pp 203 - 17,of a study entitled "Economic Evaluation of Using a Genetic Test toDirect Breast Cancer Chemoprevention in White Women With a PreviousBreast Biopsy". This study was a collaborative project betweenGenetic Technologies Limited and Archimedes Inc. of San Francisco, ahealthcare modelling and analytics organization. The study examinedthe cost-effectiveness of utilizing BREVAGen to direct tamoxifenchemoprevention.An in-silico model of breast cancer and health care processes wasused to simulate a population of white women aged 40 - 69, who wereat elevated risk for breast cancer due to a history of benign breastbiopsy, in a virtual clinical trial. Women were assessed for risk ofdeveloping breast cancer using the BREVAGen test to determineeligibility for five years of tamoxifen therapy. The BREVAGen testwas most cost-effective when given to patients at an intermediaterisk of developing breast cancer (1.2 - 1.66% 5-year risk). Theresults demonstrated that adding genetic information about breastcancer susceptibility loci to current decision models for breastcancer chemoprevention not only improves clinical outcomes (with anaverage of 15 breast cancer cases prevented per 1,000 women), but isalso cost-effective, with an incremental cost-effectiveness ratiobelow the benchmark number used by U.S. payers of $50,000 perquality-adjusted life year (QALY) saved.Clinical utility studies are currently being designed and will beperformed during the latter part of 2014. The data obtained in thesestudies will be utilised in the direct contracting discussions withInsurers and self-insured employer groups.LICENSING AND IPNon-coding Assertion ProgramOn 24 December 2013, the Company reported that several significantcases pending in the District of Delaware -- including cases againstBristol Myers Squibb, Pfizer and Merial -- had each been allocated tothe same Judge. While they remain separate cases, this consolidationwill offer certain efficiencies to the legal processes now under way,and could possibly also speed up the process for GTG.On 12 February 2014, the Company announced it has received a furtherExParte Re-Examination Certificate from the United States Patent andTrademark Office ("USPTO") - dated 10 February 2014 (the"Certificate"). This Certificate follows a third request by MerialL.L.C. of Duluth, Georgia, who had asked the USPTO to undertakefurther re-examination of various claims of the Company's U.S. PatentNo. 5,612,179 (the '179 patent), previously reported by GTG on 30September 2013. The USPTO Certificate again confirmed the validity ofthe patent claims, and no amendments were made to the '179 patent.On 12 March 2014, the Company announced that the United StatesDistrict Court for the Northern District of California had issued anOrder denying a motion brought by Agilent Technologies, Inc.("Agilent"), to dismiss the patent infringement law suit initiatedagainst it by GTG. This action had been filed by GTG in 2011, in theDistrict Court of Colorado, but was then moved at the request ofAgilent to the District Court in the Northern District of California.Thereafter, both sides filed motions to support their opposing legalperspectives. Most recently, Agilent moved to have GTG's complaintdismissed, arguing the relevant GTG patent covers natural phenomena-- or laws of nature -- that are not entitled to patent protection,and that the Court should therefore dismiss the action. On 9 March2014, the Court issued an Order denying Agilent's motion to dismiss.GTG has also pursued actions in Delaware against several entities --Natera, Inc, HistoGenetics, LLC and Laboratory Corporation of AmericaHoldings. In mid-April, the Court agreed that the Natera action couldbe transferred to Northern District of California. GTG has also beenpursuing an action against Medical Diagnostic Laboratories LLC in theDistrict of New Jersey, and Glaxo-SmithKline LLC in the MiddleDistrict of North Carolina. During the quarter, the Company reportedan agreement had been executed with Promega Corporation.OTHER COMMERCIAL ASSETSAs part of the Company's strategy to focus on the expansion of itscancer diagnostic franchise, work continues to sell, out-license, orpartner other assets and technologies in which the Group has aninterest.ImmunAid(TM)As previously reported, on December 18, 2013, the Company announcedthat entities associated with the Company's founder and largestbeneficial shareholder, Dr. Mervyn Jacobson (collectively, the"Jacobson Entities"), had entered into transactions which, ifcompleted, will result in the disposal by them of 105,937,500 sharesin the Company. Subsequent to that date, the Jacobson Entitiesdisposed of 30,000,000 shares in GTG.The Jacobson Entities and GTG entered into a binding Share ExchangeAgreement ("Agreement") pursuant to which, subject to GTG shareholderapproval, the Jacobson Entities will exchange a total of 75,937,500shares in GTG at an agreed price of $0.08 per share for 4,500,000shares in ImmunAid Limited ("ImmunAid") owned by GTG at an agreedprice of $1.35 per share.ImmunAid and GTG have also executed an Option Agreement pursuant towhich ImmunAid will, when completion occurs under the Agreement,grant to GTG options to acquire a total of 2,250,000 ordinary sharesin ImmunAid.On March 13, 2014 GTG released the notice of the ExtraordinaryGeneral Meeting of shareholders and Sample Proxy for the Meeting. Thenotice of meeting also included the Independent Expert's Report whichwas required to show all of the transactions above are fair andreasonable to Non-Associated Shareholders.OTHER COMMERCIAL ASSETS (cont.)On April 17, 2014 the shareholders voted on the special resolution toapprove the selective capital reduction by GTG and the disposal byGTG of shares in ImmunAid Limited. The resolution was passed on ashow of hands.Based on the current number of ordinary issued shares in GTG of664,769,002, the number of ordinary issued shares in GTG will fall by11.4% to 588,831,502, following the cancellation of the sharesacquired from the Jacobson Entities.At the conclusion of the various transactions contemplated above, theJacobson Entities will retain a total of 30,536,184 ordinary sharesin GTG representing 5.19% of the Company's then total issued capital.CORPORATE MATTERSOn November 29, 2013, the Company received approval from itsshareholders for the issue to Ironridge BioPharma Co., a division ofinstitutional investor Ironridge Global IV, Ltd. ("Ironridge"), ofredeemable convertible notes to raise USD 5,000,000 (the "Notes"). OnDecember 23 2013, the Notes were drawn down and the Company received$5,627,462 (being the Australian dollar equivalent of USD 5,000,000)from Ironridge, before the payment of associated costs.On December 31, 2013, Notes with a face value of USD 250,000 wereconverted in return for which Ironridge received 8,714,541 ordinaryshares. During the quarter ended March 31, 2014, further Notes with aface value of USD 2,000,000 were converted in return for whichIronridge received 2,193,117 American Depositary Receipts(representing 65,931,240 ordinary shares). On April 10, 2014, furtherNotes with a face value of USD 500,000 were converted in return forwhich Ironridge received 550,581 American Depositary Receipts(representing 16,517,420 ordinary shares). As a result of theseconversions, the face value of the remaining Notes has been reducedto USD 2,250,000.Chief Executive OfficerOn January 7, 2014, the Company announced that the temporarycorporate restructure that had been announced on October 15, 2013regarding CEO Ms. Alison Mew had been extended to March 31, 2014.On February 24, 2014, the Company was pleased to advise that Ms.Alison Mew had confirmed that she would return to full-time work toresume her position as the Company's Chief Executive Officer as fromTuesday, April 1,2014.In light of her return, Acting Chief Executive Officer Mr. Tom Howittrelinquished this role on Friday, March 28, 2014. Further, theCompany advised that Mr. Howitt tendered his resignation as ChiefFinancial Officer and Company Secretary and left the Company on thatdate. The Company wishes to thank Mr. Howitt for his services duringhis tenure of almost ten years.Until such time as a replacement for Mr. Howitt can be found, currentGTG Financial Controller, Ms. Bronwyn Christie, was appointed asActing Chief Financial Officer.On March 19, 2014, Ms. Bronwyn Christie was appointed as the CompanySecretary.