GTG reaches agreement with Nanogen

Genetic Technologies (ASX: GTG) has announced a licence agreement with Nanogen (NASDAQ: NGEN), following the company's agreement last week with US company Sequenom.

Nanogen is a San Diego-based company focussing on providing genome-based microarray technology to the diagnostics industry. The company's NanoChip Molecular Biology Workstation is marketed to research groups worldwide and Nanogen is continuing development of diagnostic applications for the platform.

GTG will receive approximately $620,000 in cash and securities in exchange for a non-exclusive license limiting Nanogen to applications of GTG's intron sequence patents to genetic research and human diagnostics only.

"It is not equivalent to the broad licence granted to Sequenom last week," said Dr Mervyn Jacobson, GTG's executive chairman.

Nanogen will not receive any rights to use the patents for applications in plants or animals and does not have rights to use the gene-mapping technology also patented by GTG.

"It's a more valuable license for us," said Jacobson.

"It covers about a sixth of what was given to Sequenom, but cost almost as much," he claimed, explaining that should Nanogen decide to expand its applications, it would be required to negotiate another licence.

Jacobson said that the licences granted so far have helped to validate GTG's patents.

"I would regard the first few licenses as initiating the momentum," he said.

"The first money is the hardest to get."

Future licences may also require royalties or annual fees be paid to GTG, in addition to the upfront licence fee, said Jacobson.

GTG is continuing licensing discussions with several other US companies.

"The negotiations are running hot," he said, indicating that more announcements may be on the way soon.

Jacobson is currently in the US, in part to further licence negotiations. GTG is also in the process of listing on the Nasdaq exchange.