Genetic Technologies Limited (ASX: GTG; NASDAQ: GENE, “Company”,
“GTG”), a global leader in Genomics tests in health, wellness and
serious disease, has signed an agreement to acquire the
direct-to-consumer eCommerce business and distribution rights
associated with General Genetics Corporation (GGC) and its
associated brands trading as EasyDNA (‘EasyDNA’ or ‘EasyDNA
Acquisition’), from BelHealth Investment Fund LP (‘BelHealth’), as
majority owner for US$4 million in cash and GTG ADRs.
Highlights
- Strategically, this Direct-to-Consumer acquisition provides
Genetic Technologies the foundation to grow its portfolio of
serious disease tests across well-established websites in 40
countries
- In CY20, EasyDNA had total revenue of US$4.63 million through
online retail sales of its at-home DNA tests
- EasyDNA currently sells paternity, oncology and health &
wellness genomics-based laboratory tests through agreements with 12
laboratories in North America, AsiaPac and Europe
- Under the terms of the agreement, GTG will acquire all of GGC
and EasyDNA’s websites, brand identities, laboratory testing and
distribution agreements associated with their EasyDNA business for
US$4 million comprising of US$2 million in cash on completion,
US$1.5 million paid in GTG ADRs and US$500k in cash to be held in
escrow payable to BelHealth on the first anniversary of closing
following conditions precedent being satisfied
- EasyDNA revenue has grown by 11% in the last two years, and GTG
will target opportunities for further growth.
GTG signed an agreement to acquire the brand and distribution
rights for EasyDNA from BelHealth. The EasyDNA acquisition will
provide GTG the platform to build its direct-to-consumer offerings
and wellness division. This acquisition provides an established
revenue stream with US$4.63 million in unaudited revenue for CY20
and a stable outlook for future growth and the ability to leverage
existing direct-to-consumer marketing avenues for future product
sales.
Simon Morriss, Chief Executive Officer of GTG, said, “We are
excited to announce the acquisition of EasyDNA. The strong
alignment of this brand and platform with GTG’s planned expansion
into wellness testing was critical to our decision to acquire the
business of EasyDNA.”
EasyDNA generates revenue from the sale of test kits to
customers via its network of websites. Tests are typically
performed via an oral swab sent directly to the customer from
external laboratory partners. The laboratory processes the tests
and transmits the results to EasyDNA, with test results
communicated to customers by email.
Morriss continued, “We look forward to integrating the EasyDNA
team into our business and working closely with them to continue to
build upon their existing product portfolio and the brand
recognition they have already achieved. EasyDNA is a leader
paternity testing and animal genomics, and their breadth of
available products also extends into the important wellness
category, providing multiple highly attractive growth opportunities
for GTC moving forward.”
The agreement provides for the acquisition of all brands,
websites and reseller agreements associated with EasyDNA. This
includes over 70 websites in 40 countries and six brand identities.
EasyDNA revenue contributions are strongly weighted to five
countries: Australia, UK, France, Canada and the US, where it
received 68% of its CY20 revenue, with the UK as the largest market
contributing 20% of total revenue. EasyDNA has current agreements
with 12 NATA and associated international certified
laboratories.
“With several of our existing tests already CE marked, gaining
established sales channels into the EU provides a solid foundation
for rapid growth,” added Morriss. “Further, with notable recent
progress on our Predictive Panel Risk Test, covering six different
cancers, having a strong distribution platform in place with global
reach will significantly strengthen our roll out strategy as we
move this exciting test into commercialization.”
Additionally, GTG will be onboarding EasyDNA’s existing team,
retaining the skills and expertise of its employees based in Malta
and Australia. This includes the retention of Kevin Camilleri,
founder and CEO of EasyDNA, who will be heading up GTG’s Direct to
Consumer Division following the completion of the acquisition.
Except for this, no changes will be made to the GTG board and key
management personnel.
Under the terms of the agreement, GTG will acquire 100% of
EasyDNA’s brands and assets within the General Genetics Corporation
business for a purchase price comprising upfront consideration of
US$2 million plus US$1.5 million in GTG ADRs. The number of ADRs to
be issued will be calculated based on 30-day Volume Weighted
Average Price (VWAP) of the ADRs on the NASDAQ for the 30 days
prior to and including the completion date of the agreement
(‘Consideration ADRs’). The issue of new ordinary shares underlying
the Consideration ADRs will represent 2.3% of the issued share
capital and will be issued under GTG’s Listing Rule 7.1 capacity.
An additional US$500k cash consideration will be held in escrow for
up to 12 months and paid subject to the completion of conditions
precedent1.
The total cash consideration of US$2.5 million will be funded
from GTG’s existing cash reserves. The scrip component ensures
long-term alignment for GTG and will be subject to a lock-up
agreement for the first six months following their issuance. The
Consideration ADRs are subject to a lock-up agreement whereby
BelHealth’s will not be able to trade in GTG securities for six
months after completion.
The transaction is subject to satisfying customary closing
conditions. It is anticipated that these conditions will be met on
or before 31 July 2021.
GTG will continue to assess further acquisition targets with a
focus on assets that enhance its core platform offerings; extend
its product offering; open access to new customers; and expand its
position in key geographic markets.
___________________________1 Conditions precedent incorporate
receipt of all standard documentation and statements of consent
from all parties, no material change to the business or financial
situation, no breach of warranty; receipt of all employment
contracts; confirmation of signing all agreed contracts and
confirmation of no legal proceedings.
|
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Investor Relations (AUS) Stephanie Ottens Market
Eye M: +61 434 405 400 E:
stephanie.ottens@marketeye.com.au |
Investor Relations and Media (US) Dave Gentry1 800
RED CHIP (733 2447) Cell: 407 491 4498 E:
dave@redchip.com |
About Genetic Technologies Limited
Genetic Technologies Limited (ASX: GTG; Nasdaq: GENE) is a
diversified molecular diagnostics company. GTG offers cancer
predictive testing and assessment tools to help physicians
proactively manage patient health. The Company’s lead products
GeneType for Breast Cancer for non-hereditary breast cancer and
GeneType for Colorectal Cancer are clinically validated risk
assessment tests and are first in class. Genetic Technologies is
developing a pipeline of risk assessment products.
For more information, please visit www.gtglabs.com
About EasyDNA
EasyDNA was 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.
For more information, please visit www.EasyDNA.com
About BelHealth Investment Fund LP
BelHealth Investment Partners is a healthcare private equity
firm focused on lower middle market companies with a unique
combination of investing, executive management and entrepreneurial
experience. BelHealth acquires majority positions in
entrepreneur-owned companies that it believes would benefit from
its extensive operating and private equity investment expertise.
BelHealth partners with executives and provides growth and
expansion expertise both organically and through add-on
acquisitions, capital to fund its investment strategy, and domain
knowledge in targeted healthcare sectors.
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