It is also important to note, that all eight of the comprehensive breast centres that the Company recruited to start using BREVAGenplus® are providing patient samples to the Company. Given the recruitment success of the company, investors can have more confidence in Genetic Technologies assertions that more comprehensive breast centres are to follow.
The company has recently and consistently stated that it is now focusing on publishing yet to be published data from completed studies with BREVAGenplus® and embarking on new studies that can also be published. Peer-reviewed studies demonstrating the clinical utility and cost effectiveness of BREVAGenplus® are crucial to marketing BREVAGenplus® to physicians and in negotiating coverage and payment amount with insurers. While the company appears to have always recognised this, the cash to pursue a publication strategy has been lacking until recently.
Conclusion: The current 4C indicates that Genetic Technologies is in the best shape it has been in for a while and, in our opinion, they are now doing everything right.
More positive signs
Recommendation: Buy recommendation with a 12-month price target of 6.2 cents per share maintained.
Event: Genetic Technologies released its April – June 2015 quarterly report late last month (July). The report showed that the company finished the period with $18.3m in cash. Cash receipts from customers were $650k (previous Q: $363k), while cash burn from operations came in at $1.8m (previous Q: $2.6m. BREVAGenplus® samples received finished the quarter at 425 (previous Q: 512).
Comment: Q4 FY15 was clearly a good quarter for Genetic Technologies, with cash receipts up substantially on the previous quarter (79.1%) and cash burn from operations down significantly (-30.8%). Importantly, the decline in tests received, resulting from issues previously mentioned, is abating, with the decline dropping to 17.0% between Q3-Q4 FY15 from 34.3% between Q2-Q3 FY15.
In our last update, we flagged that we felt the ratio represented by the following equation was a good measure of the company’s progress:
Receipts from customers / (Staff costs + Other working capital)
That measure came in at 13% in Q3 FY15 and improved to 26% in the current quarter (Q4 FY15). Obviously, this is a promising result.
A considerable amount of time can pass between Genetic Technologies receiving a patient a BREVAGenplus® patient sample and receiving the cash payment for performing the test, due to the vagaries of the US healthcare system. While this gap will decrease over time, it means that ratio, above, may decline over the next one or two quarters as payments for tests received during the weaker quarters (Q’s 3 & 4) are received.
The current quarter (Q1 FY16) is likely to mark the turnaround in tests received, since we believe Genetic Technologies US sales force is now back up to full strength and many of the new sales representatives have had the chance to settle in, having been in their new jobs for a few months now.
It is also important to note, that all eight of the comprehensiv
These are key patents on the new SNP's discovered. That means any genetic company such as Myriad or 23andme that want to test these SNP's must pay Genetic Technologies royalties. It sounds like they are very important SNP's too:
"The particular SNPs in question were amongst the first of the breast cancer susceptibility loci to be consistently and robustly confirmed across multiple genome-wide association studies, such that their inclusion in BREVAGenplus provides the test with an additional significant proprietary competitive advantage over other SNP-based tests that might be developed."
Cash burn is now $10 million a year (was $15 million last year). So they have enough cash for 2 years plus a standby private placement of $20 million which could last them another 2 years. Sales of BrevagenPlus was weaker but expected. But the next two quarters should be better with the new breast cancer centers.
2 very important scientific validations studies are going to be released in the next 2-6 months. Q1 2016 in Australia is this quarter U.S.
"Further scientific validation studies of BREVAGenplus have recently been completed and the Company expects to announce the results along with the anticipated publication of the first such study by the end of Q1 FY16. Supplementary scientific analysis supporting these studies is nearing completion, with follow-up results expected to be released Q2 FY16."
Also, BrevagenPlus tests are expected to increase greatly over the next 2 quarters and costs are supposed to drop significantly.
"With an additional number of new breast health centres expected to follow suit later in calendar year 2015, the Company reiterates that it expects sales growth to accelerate in the second half of calendar 2015 and beyond."
Yes, scientific validation studies for a breast cancer genetic test + increase sales it could get very interesting for this company over the next 6 months. The way biotech companies have run recently, this could go to $100 very soon IMO.
Cancer Expert Recommends Genetic Testing for All Women Over 30
Should you get genetically tested for breast and ovarian cancer? Right now the medical community recommends it only for women who have a family history of the cancer. But that philosophy could change now that one of cancer’s leading experts, Mary-Claire King, has revised her opinion on screening. “Based on our 20 years’ experience working with families with cancer-predisposing mutations in BRCA1 and BRCA2, it is time to offer genetic screening of these genes to every woman, at about age 30, in the course of routine medical care,” King wrote in the Journal of the American Medical Association on Monday. “Women with cancer-predisposing mutations in BRCA1 and BRCA2 are a high-risk group in whom special screening and counseling can be focused.”
King, who discovered BRCA1 and who just won the prestigious Albert and Mary Lasker Foundation Award, added, “To identify a woman as a carrier only after she develops cancer is a failure of cancer prevention.”
King came to her conclusion after studying Ashkenazi Jewish men and women living in Israel, a population at higher risk of BRCA1 and BRCA2 mutations.
Why did GENE breakout today? Catalysts to take it back over $10 soon are:
From the last the PR:
"Further scientific validation studies of BREVAGenplus have recently been completed and the Company expects to announce the results along with the anticipated publication of the first such study by the end of Q1 FY16."
Q1 2016 (in Australia) is already upon us. They should be releasing this important study in the very near future. The data could be compelling enough to get investors VERY excited to push the stock to $20-30.
Expect costs to plummet in the earning report coming out in the next few weeks.
"With a strong balance sheet and costs firmly under control, management is now able to focus on managing the business and driving commercial growth."
Also, if they show they are back on track with BrevagenPlus sales with some of these breast centers selling the test, it could breakout hard on this alone.
On the flip side....
(Second rate products) - BrevagenPlus about to be clinically and scientifically validated.
(worthless patents) -We don't know that yet. Federal Judge going to rule to accept appeal this fall and then judgement early 2016. Imagine if that is overturned? huge money for GENE.
(no respect in the industry) - BrevagenPlus validated in journals
(another questionable management team) - new CEO was a former executive at GE (if I recall right).
You underestimate their chances.
Penny stock for now. When it hits $1 in Australia that should put the price of GENE around $120. Perhaps the AUD will go back to parity with the USD and it will be $150. :)
Yep. I'll give you that about being disappointed. But don't worry, GENE is about to catch up to the overall market performance. This new management that is running the show runs a tight ship. That is the difference between then and now. $100 is a coming. Much sooner than you think.
HUGE NEWS. We are entering the perfect storm folks:
1) BrevagenPlus starting to increase sales exponentially with major breast centers on board.
2) Within a year of clinical studies showing BrevagenPlus effective in predicting breast cancer (#1 killer in women) HUGE.
3) Personalized Genetic testing catching fire
4) More and more scientists and doctors recommending ALL women get tested for BRCA testing.
5) Hundreds of millions of dollars has invested into creating and marketing BrevagenPlus. Once insurers are on board to reimburse for BrevagenPlus, a test that can save lives from Breast Cancer...massive profits will finally be realized.
6) Results from first studies sound good which could send the stock price to $20 easily!
$100 could be cheap in a year or so!
Going forward, Genetic Technologies should be able to get back to effectively managing its business and driving growth in a controlled fashion, as their strong balance sheet now allows. The BREVAGenTM concept has already demonstrated market acceptance even in a sub-optimal form (validated for Caucasian women only). Re-igniting sales and, subsequently, demonstrating significant growth in kits received with the much more optimal BREVAGenplus® (with applicability toward Caucasian, Black and Hispanic women) and the company’s now considerable experience in the US market is a relatively low hurdle.
Nonetheless, money must be spent to make it. A good guide to the company is likely to come from a metric that measures both sales revenue and associated costs. In our view, the ratio represented by “receipts from customers” divided by the sum of “staff costs” plus “other working capital” is probably the best metric for tracking the company’s progress. This ratio is currently 13% and should improve going forward. “Advertising and marketing” and “research and development” spend are also important components, but their benefits lag the expense and, hence, why we have excluded them when calculating this key metric.
It is a positive that Sheridan-Ross has chosen to appeal one court’s ruling regarding the ‘179 patent and should the appeal be successful, Genetic Technologies is likely to be a in a position to settle the several outstanding lawsuits it has against a number of large companies. Combined, such settlements could see the company bolster its cash position by a high six figure sum. It is highly likely, however, that Genetic Technologies patent assertion program would end there.
Conclusion: Genetic Technologies has the funds available to ensure BREVAGenplus® has the best possible chance at success. Importantly, the cost benefits of the company’s ongoing restructuring and fiscal responsibility of current management have been demonstrated. In our opinion, the company is primed t
Event: Genetic Technologies released its January – March 2015 quarterly report late last month (April). The report showed that the company finished the period with $20.2m in cash. Cash receipts from customers were $363k, while cash burn came in at -$2.6m. BREVAGenplus® samples received finished the quarter at 512, declining from 800 in the pcp. Finally, legal counsel (Sheridan-Ross) for the company has chosen to appeal a US court decision which has halted Genetic Technologies patent assertion program.
Comment: Genetic Technologies ended Q2 FY15 with only $1.3m or approximately six weeks cash on hand. Consequently, the company’s capital raising initiatives were, by far, its most significant achievement for the quarter. Importantly, the amount of cash raised will be enough to allow the company to complete its near-term restructuring, implement its medium term strategy and give BREVAGenplus® every chance for success.
Evidence from the company’s quarterly report indicates that is has gotten a handle on costs. Other working capital, which we believe almost exclusively represents the company’s US operations, decreased 21% on a constant currency basis relative to the PCP. Moreover, savings from the sale last year of the Australian heritage genetic testing business are coming through, with staff costs down 38% relative to the PCP.
We are also of the belief that the company’s pre-raising cash position was severely limiting its ability to undertake cost-out initiatives (e.g. pay out redundancies) and implement its new strategy. It also appears to have indirectly taken its toll on BREVAGenplus® kits received (down 36% on the PCP), with a number of US sales representatives believed to have left early in Q3 FY15 rather than await their fate in the restructuring. Ultimately, though, this has probably worked in the company’s longer term favour, with the accelerated natural attrition enabling it to more easily restructure once it had strengthened its balance sheet.
This quarter saw an uptick in sales. You will wake up one day this summer and GENE will be up 200%. The market makers in the stock have been walking it down and accumulating. By the time October numbers come out the stock is going to be primed for end of year run to $20. New CEO is purely focused on getting insurers on board in late 2016 on BrevagenPlus. The value on the stock could be close to $50 when this happens. Perhaps even a $100 a share because of breast cancer being the primary killer for women. Don't underestimate the bull in this stock.
BrevagenPlus data studies
Acquisition for another genetic test (Ovarian, Colon Cancer)
Agreement with Insurers next year following studies
Medicare submit for BrevgenPlus next year
Non coding patent Federal trial early next year with big Pharmas.
Selling or partnering prenatal genetic test RareCellect
More Breast centers signed by end of year
2000 BrevagenPlus tests sold in Quarter 4
23 and Me IPO'ing soon will set the sector ablaze
There is a lot of things happening. It's year end in Australia and the company is staying quiet. Stay tuned for big news. They have been at this for 4 years now with BrevagenPlus and they have learned a lot.