GENETIC TECHNOLOGIES LIMITED — Capital/Financing Update 2004

Jun 14, 2004

15 June 2004

The Manager Company Announcements Office Australian Stock Exchange Limited Exchange Centre 20 Bridge Street Sydney NSW 2000

Dear Sir.

GTG Proceeds with its Strategic Alliance with Perth-based Foundation

Genetic Technologies Limited (ASX-GTG) previously informed the market in October, 2003, that it was exploring the establishment of a broad strategic alliance with the CY O'Connor ERADE Village Foundation ("CYO"), based in Perth, Western Australia. The CYO is a leading centre of biotechnology innovation in WA, and is associated with the University of Western Australia, under the direction of Professor Roger Dawkins.

GTG is now pleased to report that all aspects of this multi-faceted relationship between GTG and the CYO have now been agreed, and the strategic alliance will now commence forthwith. The CYO will now actively help GTG to pursue its commercial objectives and GTG will now support the CYO as its major research engine in WA. Specifically:

• The CYO is now assigning to GTG all its current intellectual property (IP) rights in genetics and genomics. This includes patents already issued and held by the CYO, new pending patents based on new inventions made by the CYO, and many new inventions and concepts now being researched at the CYO.
• GTG will now support the ongoing genetics and genomics programmes of the CYO, which include many highly innovative projects in the field of human and animal genetics. Initially, 5 projects will be selected for priority attention and GTG will provide \$4.5M to CYO, spread over 5 years, to help fund such research and the development of new IP. In return, GTG becomes the primary commercialising vehicle for all new inventions, patents, IP and business opportunities arising at the CYO in the field of genetics or genomics.

• Since our earlier report to the market in October, 2003, GTG has commissioned an independent report and valuation, which has meanwhile confirmed the significant value - in excess of \$20M - of the new IP now being acquired by GTG.
• It is expected this new IP will significantly strengthen the GTG patent portfolio generally, and will also create new commercial opportunities for GTG in the future, both in relation to licensing and also new tests being developed.
• In consideration, GTG will now issue shares and pay royalties to the CYO, subject to the independent valuation and appropriate approvals.
• GTG and the CYO will also jointly explore the establishment of a state-of-the-art genetic testing service in WA, particularly with regard to (i) human diagnostic services, (ii) transplantation services, (iii) forensic testing, and (iv) the genetic testing of livestock.
• To permit the CYO to proceed with such opportunities, GTG now grants to the CYO a broad license to the GTG non-coding patents and in consideration, the CYO will pay to GTG a signing fee of \$2.5M.
• In practice, GTG has agreed the IP being acquired from CYO is worth not less than \$15M, and the CYO agrees the license being acquired from GTG is worth not less than \$2.5M. Combining such consideration, GTG will now issue to CYO a total of 16,666,667 GTG shares, based on a deemed value of 75 cents per GTG share.
• The CYO has agreed these shares will not be released to the market for 12 months from 4 December 2003, and thereafter, they may be released, but at the rate of not more than 20% per year.
• In summary, GTG and the CYO intend to work closely together and to actively support each other's efforts as a priority.
• GTG and the CYO also intend to work closely with the public health and university $\bullet$ sectors in WA, and particularly with University of WA, consistent with their commitment to the further development of public/private partnerships.

The CY O'Connor ERADE Village Foundation also incorporates the Immunogenetics Research Foundation and the Institute of Molecular Genetics and Immunology Incorporated of Perth, Western Australia.

Professor Dawkins is a world authority in tissue typing and genomics. For example, the CYO has developed new methods for DNA matching to achieve improved survival rates in transplantation and has also developed improved methods for gene discovery.

Yours faithfully,

Dr Mervyn Jacobson Executive Chairman