Blockchain rebels win Genetic Technologies – but the prize comes with a colourful past
Genetic Technologies is now on track to join the blockchain bandwagon, after shareholders voted on Wednesday to accept a proposed transition.
Coup leaders DigitalX director Peter Rubenstein and Samuel Lee still faced opposition, however.
Chief executive Eutillio Buccilli was voted off the board by 56.9 per cent of the votes to 43 per cent.
New directors Mr Rubenstein, Mr Lee, and Jerzy Muchnicki were voted in on similar margins.
The two directors holding out against the proposal quit on Tuesday ahead of the meeting.
Mr Rubenstein and Mr Lee want to turn Genetic Technologies (ASX:GTG) into a blockchain-based medical data management company.
They are yet to say how they intend to do this or why Genetic Technologies is the right vehicle, although it was suggested to Stockhead that its Nasdaq listing and a shared director with Mr Lee’s firm Blockchain Global were key reasons.
Genetic Technologies also has $22.2 million of tax benefits available in Australia and the US but these are likely to be lost in the event of a major business activity change.
The first move by the new directors was to suspend the business’ shares from trading in anticipation of a “strategic alliance” they had ready.
GTG’s colourful past
The new directors have picked a shell company with a colourful past.
Pre-2014 GTG was doing a nice line in animal genetic testing — for example ensuring race horses were sired by who the owners say they were.
In November 2014, a Victorian Supreme Court jury found then-chief Dr Mervyn Jacobson guilty of 35 counts of share manipulation with his Genetic Technologies shares in 2006.
The case against Dr Jacobson, then 72, centred around a conspiracy to prop up the company’s share price and fend off margin calls over his 40 per cent shareholding between him, his daughter Tamara Newing and her husband Geoffrey.
Mrs Newing spent $1 million given to her by her father to keep the share price above 35c.
In 2014 Genetic Technologies dumped the animal testing in favour of breast cancer diagnostics using a screening test with the mutant BRCA1 gene, a leading cause of breast cancer.
Myriad Genetics owned the US patent to the gene and licensed it to Genetic Technologies to use in Australia.
But in 2015 the High Court ruled that companies couldn’t own genetic information.
Genetic Technologies also came under fire for trying to force public research organisations to pay royalties to experiment with the BRCA1 and BRCA2 genes.
More recently the company has struggled to make the breast cancer diagnosis technology pay, and the board embarked on a plan to sell.
Colourful past … Miley Cyrus fans can’t forget the past, and neither will longstanding GTG shareholders.