CHARLOTTE, N.C., July 26, 2024 (GLOBE NEWSWIRE) -- Genetic Technologies Limited (ASX: GTG; NASDAQ: GENE, "Company", "GENE"), a global leader in genomics-based tests in health, wellness and serious disease and the parent company of geneType, has conducted an operations review and announces that it intends to transition to a capital light operations model - which is anticipated to result in an immediate material reduction in operating costs. This capital light operations model is intended to focus on sales growth (particularly in the Company's largest market in the United States) and move the Company's operations to an outsourced / collaborations approach (rather than the more expensive current in house laboratory operations).
- Transition to a capital light operating model; with lower cost operations
- Continued focus on the Company's core business of "EasyDNA" and "GeneType"
- Working capital funded by short term $800,000 secured loan (from lenders including Directors)
- Active Channel partners in the USA with geneType sales growth
- EasyDNA sales of $7m and growing
Please note that this transition in operating model will not impact on the Company's core business of EasyDNA and GeneType. The Company's existing partners, distribution channels and manufacturing capabilities are not affected.
The Company intends to fund working capital requirements with (i) a secured loan facility of $800,000; plus (ii) launching an Entitlement Offer.
Core business focus: In moving to a capital light operations model and the resulting costs reduction, the Company will continue to focus on its core businesses and revenue growth.
EasyDNA and AffinityDNA project growth, EasyDNA currently turning over more than $7 million globally. There will be no disruption to current operations as we forge ahead with our ambitious growth strategies.
GeneType serious disease risk test platform, backed by over $50 million in R&D investment, is primed for commercialization across new and established U.S. sales channels. Our unique noninvasive patent portfolio integrates genetics and clinical risk into comprehensive reports, addressing both genetic predispositions and environmental factors contributing to serious diseases.
USA Sales and Distribution: The Company's growth strategy is based on its existing extensive channel partners in the U.S., including Stayhealthy and Wellworx - with the aim of driving both B2B and B2C sales via the "Gene by Gene" high throughput lab in the United States. Reporting of results will remain cloud based and controlled by GENE to enable scale up and potential licensing whilst maintaining protection of our IP as required.
A Leaner Future: In implementing the capital light operations model, to reduce our operating costs, the board will assume executive roles, bringing extensive commercialization expertise to drive our U.S. market expansion. This restructuring allows our global leadership team to focus squarely on maximizing opportunities in the USA. As a result of this change, our current CEO, Simon Morriss will transition out of the organisation in September. In the transition to a leaner capital light operations model, we will also be moving our Melbourne laboratory and transitioning to an outsourced / collaborations approach - with third party contractors providing a portion of our laboratory testing. The redundancy costs of the transition are to be paid from the loan facility outlined in more detail below.
We would like to thank Simon for his dedication, hard work and approach in assisting with this operations review and cost reduction.
The board members have agreed to defer their director fees until year end (at the earliest) and, subject to shareholder approval, to take their director fees in equity.
The transition (with the cost reductions) is anticipated to reduce the Company's monthly cash burn from approximately $800,000 down to below $200,000 - with our annual burn anticipated to come under $2.5 million. The Company is targeting to be cash flow positive by the end CY 25 or shortly thereafter.
Loan facility: The Company has received commitments for a short-term loan of $800,000, secured partly on anticipated balance of R&D refund due late September.
The loan has customary terms (including events of default) with a repayment date being the earlier of (i) receipt by the Company of the balance of its 2024 R&D refund; and (ii) 31 December 2024. The loan is secured (ranking behind any existing secured creditors) and there is an effective annual interest rate of 20%. The lenders including board members have committed to apply part or all their loan entitlements to the first $500,000 under the Entitlement Offer (see further details below).
Funding under the loan will be used for working capital and for the initial costs (including redundancies) of the transition to a capital light operations model.
The Company remains determined in our vision to be a leader in personalized preventative genomics, drive innovation in genetic testing and expand our global footprint, delivering sustained value to our shareholders and stakeholders.
Authorised for release by the Board of Directors.
For inquiries, contact:
Peter Rubinstein
E: investors@genetype.com
About Genetic Technologies Limited
Genetic Technologies Limited (ASX: GTG; Nasdaq: GENE) is a diversified molecular diagnostics company. A global leader in genomics-based tests in health, wellness and serious disease through its geneType and EasyDNA brands. GTG offers cancer predictive testing and assessment tools to help physicians to improve health outcomes for people around the world. The company has a proprietary risk stratification platform that has been developed over the past decade and integrates clinical and genetic risk to deliver actionable outcomes to physicians and individuals. Leading the world in risk prediction in oncology, cardiovascular and metabolic diseases, Genetic Technologies continues to develop risk assessment products. For more information, please visit www.genetype.com
About EasyDNA
EasyDNA is an online marketplace established in 2007 in Malta and 2008 in Australia developing an online network of over 70 websites in over 40 countries. EasyDNA's network of online retail sales platforms offers fast and affordable home DNA testing that is reliable and confidential. They also offer a number of lifestyle and health and wellbeing tests, and animal testing relating to allergies and tolerances. EasyDNA is a pioneering provider of genetic testing services, dedicated to delivering accurate and confidential results to individuals and organizations worldwide.
Forward Looking Statements
This announcement may contain forward-looking statements about the Company's expectations, beliefs or intentions regarding, among other things, statements regarding the expected use of proceeds. In addition, from time to time, the Company or its representatives have made or may make forward-looking statements, orally or in writing. Forward-looking statements can be identified by the use of forward-looking words such as "believe," "expect," "intend," "plan," "may," "should" or "anticipate" or their negatives or other variations of these words or other comparable words or by the fact that these statements do not relate strictly to historical or current matters. These forward-looking statements may be included in, but are not limited to, various filings made by the Company with the U.S. Securities and Exchange Commission, press releases or oral statements made by or with the approval of one of the Company's authorized executive officers. Forward-looking statements relate to anticipated or expected events, activities, trends or results as of the date they are made. As forward-looking statements relate to matters that have not yet occurred, these statements are inherently subject to risks and uncertainties that could cause the Company's actual results to differ materially from any future results expressed or implied by the forward-looking statements. Many factors could cause the Company's actual activities or results to differ materially from the activities and results anticipated in such forward-looking statements as detailed in the Company's filings with the Securities and Exchange Commission and in its periodic filings with the ASX in Australia and the risks and risk factors included therein. In addition, the Company operates in an industry sector where securities values are highly volatile and may be influenced by economic and other factors beyond its control. The Company does not undertake any obligation to publicly update these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
