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Genetic
Technologies Limited
today announced it has
filed 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 $3.7
million for the nine-month period ended on that date.
Domestic testing revenues for the quarter under review continue to
exceed budget expectations and the revenue received for the Company's
flagship test BREVAGen(TM) in the March quarter grew more than 39%
over the preceding December quarter. As reported in the Company's
2013 Annual Report, the revenues generated from the sale of the
BREVAGen test are still recorded on a cash, not an accruals, basis.
The Company anticipates that this treatment will change at the end of
the 2014 financial year, with an appropriate upward adjustment to
revenues being made at that time.
BREVAGen(TM) breast cancer risk test
For the first time since the
launch of BREVAGen in July 2011, the number of test samples received
in the most recent quarter, was lower than that of the previous
quarter. The numbers of BREVAGen samples received in the first
quarter of CY2014 fell to 800 from the prior fourth quarter 2013 of
1125. The company believes that the reasons for this softening in
demand was a result of a combination of the beginning of the new
insurance year, an extremely severe winter during which physician
consultations dropped markedly across the board; together with the
implementation of the Affordable Care Act in the US, which affected
the "discretionary" health spend by patients. Nevertheless, the
numbers still represented a 99% increase over the same quarter in
2013 and the Company believes that the upward trend will resume in
the next quarter and beyond. This trend will be augmented by not only
additional geographic territories in large population density
locations, but a significant number of large breast care facilities
which are adopting BREVAGen as part of the care service they provide
their patients. The launch of the next generation BREVAGen later this
ca
lendar year, is anticipated to result in a further increase in test
volumes.
New Product Development
The Company is on track to introduce the next generation of BREVAGen
for launch in the fourth quarter of this calendar year. This new
version of BREVAGen will incorporate an expanded SNP panel, which
will increase the predictive power of the test and ensure the product
utilises the latest advances in scientific knowledge of the genetic
basis of breast cancer. Furthermore, the new test will be applicable
to additional ethnicities (African American and Hispanics) which will
expand the application of the test to a broader target population and
provide a test that clinics and breast centers will be able to apply
to a large proportion of their patients. The Company believes that
increased sample test volumes will be received by the laboratory as a
result of this new product introduction.
Reimbursement
As 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 this
regime was positive, with a low percentage of denials and appeals.
However, effective 1 January 2013, the AMA removed the code stack
claim process, requiring tests without a specific CPT code to be
claimed via an "Unlisted or Miscellaneous Code".
As a result of the change from "Stacked Codes" to a "Miscellaneous
Code" for insurance claims, the Company's reimbursement per test
(including write-offs and denials for non-coverage) has increased by
more than 30%. However, the use of a Miscellaneous code requires more
administration and time by the Insurance company to adjudicate the
claim and thus increases the time taken to receive the reimbursement.
OPERATIONS (cont.)
Cost effectiveness studies to improve reimbursement outcomes
Further to the publication in the journal of Cancer Prevention
Research Vol 6 (12): pp 1328 - 36 dated December 5, 2013, an
additional paper has been published demonstrating the cost
effectiveness of the BREVAGen test to direct chemoprevention.
On March 7, 2014, GTG announced the publication in the journal
Applied Health Economics and Health Policy Vol 12 (2): pp 203 - 17,
of a study entitled "Economic Evaluation of Using a Genetic Test to
Direct Breast Cancer Chemoprevention in White Women With a Previous
Breast Biopsy". This study was a collaborative project between
Genetic Technologies Limited and Archimedes Inc. of San Francisco, a
healthcare modelling and analytics organization. The study examined
the cost-effectiveness of utilizing BREVAGen to direct tamoxifen
chemoprevention.
An in-silico model of breast cancer and health care processes was
used to simulate a population of white women aged 40 - 69, who were
at elevated risk for breast cancer due to a history of benign breast
biopsy, in a virtual clinical trial. Women were assessed for risk of
developing breast cancer using the BREVAGen test to determine
eligibility for five years of tamoxifen therapy. The BREVAGen test
was most cost-effective when given to patients at an intermediate
risk of developing breast cancer (1.2 - 1.66% 5-year risk). The
results demonstrated that adding genetic information about breast
cancer susceptibility loci to current decision models for breast
cancer chemoprevention not only improves clinical outcomes (with an
average of 15 breast cancer cases prevented per 1,000 women), but is
also cost-effective, with an incremental cost-effectiveness ratio
below the benchmark number used by U.S. payers of $50,000 per
quality-adjusted life year (QALY) saved.
Clinical utility studies are currently being designed and will be
performed during the latter part of 2014. The data obtained in these
studies will be utilised in the direct contracting discussions with
Insurers and self-insured employer groups.
LICENSING AND IP
Non-coding Assertion Program
On 24 December 2013, the Company reported that several significant
cases pending in the District of Delaware -- including cases against
Bristol Myers Squibb, Pfizer and Merial -- had each been allocated to
the same Judge. While they remain separate cases, this consolidation
will 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 further
ExParte Re-Examination Certificate from the United States Patent and
Trademark Office ("USPTO") - dated 10 February 2014 (the
"Certificate"). This Certificate follows a third request by Merial
L.L.C. of Duluth, Georgia, who had asked the USPTO to undertake
further re-examination of various claims of the Company's U.S. Patent
No. 5,612,179 (the '179 patent), previously reported by GTG on 30
September 2013. The USPTO Certificate again confirmed the validity of
the patent claims, and no amendments were made to the '179 patent.
On 12 March 2014, the Company announced that the United States
District Court for the Northern District of California had issued an
Order denying a motion brought by Agilent Technologies, Inc.
("Agilent"), to dismiss the patent infringement law suit initiated
against it by GTG. This action had been filed by GTG in 2011, in the
District Court of Colora
do, but was then moved at the request of
Agilent to the District Court in the Northern District of California.
Thereafter, both sides filed motions to support their opposing legal
perspectives. Most recently, Agilent moved to have GTG's complaint
dismissed, 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 March
2014, 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 America
Holdings. In mid-April, the Court agreed that the Natera action could
be transferred to Northern District of California. GTG has also been
pursuing an action against Medical Diagnostic Laboratories LLC in the
District of New Jersey, and Glaxo-SmithKline LLC in the Middle
District of North Carolina. During the quarter, the Company reported
an agreement had been executed with Promega Corporation.
OTHER COMMERCIAL ASSETS
As part of the Company's strategy to focus on the expansion of its
cancer diagnostic franchise, work continues to sell, out-license, or
partner other assets and technologies in which the Group has an
interest.
ImmunAid(TM)
As previously reported, on December 18, 2013, the Company announced
that entities associated with the Company's founder and largest
beneficial shareholder, Dr. Mervyn Jacobson (collectively, the
"Jacobson Entities"), had entered into transactions which, if
completed, will result in the disposal by them of 105,937,500 shares
in the Company. Subsequent to that date, the Jacobson Entities
disposed of 30,000,000 shares in GTG.
The Jacobson Entities and GTG entered into a binding Share Exchange
Agreement ("Agreement") pursuant to which, subject to GTG shareholder
approval, the Jacobson Entities will exchange a total of 75,937,500
shares in GTG at an agreed price of $0.08 per share for 4,500,000
shares in ImmunAid Limited ("ImmunAid") owned by GTG at an agreed
price of $1.35 per share.
ImmunAid and GTG have also executed an Option Agreement pursuant to
which ImmunAid will, when completion occurs under the Agreement,
grant to GTG options to acquire a total of 2,250,000 ordinary shares
in ImmunAid.
On March 13, 2014 GTG released the notice of the Extraordinary
General Meeting of shareholders and Sample Proxy for the Meeting. The
notice of meeting also included the Independent Expert's Report which
was required to show all of the transactions above are fair and
reasonable to Non-Associated Shareholders.
OTHER COMMERCIAL ASSETS (cont.)
On April 17, 2014 the shareholders voted on the special resolution to
approve the selective capital reduction by GTG and the disposal by
GTG of shares in ImmunAid Limited. The resolution was passed on a
show of hands.
Based on the current number of ordinary issued shares in GTG of
664,769,002, the number of ordinary issued shares in GTG will fall by
11.4% to 588,831,502, following the cancellation of the shares
acquired from the Jacobson Entities.
At the conclusion of the various transactions contemplated above, the
Jacobson Entities will retain a total of 30,536,184 ordinary shares
in GTG representing 5.19% of the Company's then total issued capital.
CORPORATE MATTERS
On November 29, 2013, the Company received approval from its
shareholders for the issue to Ironridge BioPharma Co., a division of
institutional investor Ironridge Global IV, Ltd. ("Ironridge"), of
redeemable convertible notes to raise USD 5,000,000 (the "Notes"). On
December 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 were
converted in return for which Ironridge received 8,714,541 ordinary
shares. During the quarter ended March 31, 2014, further Notes with a
face value of USD 2,000,000 were converted in return for which
Ironridge received 2,193,117 American Depositary Receipts
(representing 65,931,240 ordinary shares). On April 10, 2014, further
Notes with a face value of USD 500,000 were converted in return for
which Ironridge received 550,581 American Depositary Receipts
(representing 16,517,420 ordinary shares). As a result of these
conversions, the face value of the remaining Notes has been reduced
to USD 2,250,000.
Chief Executive Officer
On January 7, 2014, the Company announced that the temporary
corporate restructure that had been announced on October 15, 2013
regarding 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 to
resume her position as the Company's Chief Executive Officer as from
Tuesday, April 1,2014.
In light of her return, Acting Chief Executive Officer Mr. Tom Howitt
relinquished this role on Friday, March 28, 2014. Further, the
Company advised that Mr. Howitt tendered his resignation as Chief
Financial Officer and Company Secretary and left the Company on that
date. The Company wishes to thank Mr. Howitt for his services during
his tenure of almost ten years.
Until such time as a replacement for Mr. Howitt can be found, current
GTG Financial Controller, Ms. Bronwyn Christie, was appointed as
Acting Chief Financial Officer.
On March 19, 2014, Ms. Bronwyn Christie was appointed as the Company
Secretary.
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