Looking ahead to the expected settlement of the Applera action instigated by GTG to protect its Intellectual Property (the two previous lawsuits were settled to GTG's satisfaction late last year), I am optimistic that a stream of licenses - and significant revenue generation - will follow.
In Dr. Jacobsen's presentation late last year he stated that 80 active license discussions were underway at that time and hundreds more companies were being targeted for possible infringement of GTG's patented IP. Should Applera settle out of court as expected, the floodgates should open as companies see the wisdom of paying a license fee in preference to the more expensive legal route.
I see GTG's current situation as not dissimilar to that of QPSX and other companies currently using litigation as leverage to recalcitrant users of their IP. If the patents backing the litigation are sound and the legal case watertight, it is the only way to bring larger enterprises to the bargaining table. And once the legal status of the patents is clear, significant revenue streams will follow for both of these companies IMO.
From my research - and judging by the increasing willingness of companies and universities to pay GTG's license fees without arm-twisting - GTG should have an excellent year ahead, similar to that currently being enjoyed by Redflex shareholders (up around 40% in two months).
If even 10% of those 300 companies (and the database is growing rapidly) identified by GTG as requiring licenses cough up, the revenue generated would be in the region of US$30m (30 companies multiplied by US$300k per license - a relatively conservative estimate based on the average revenues generated thus far).
And this is only one of the revenue streams the company is pursuing aggressively. Its AgGenomics subsidiary (50.1% owned by GTG) enjoys rising revenues (A$1.4m by June 2003).
All in all, with A$15m cash, 280m shares on issue and a CEO with a massive vested interest in an appreciating share price (Dr. Jacobsen owns over 100m shares), this must be one of the best unsung growth prospects for 2004.
Of course as a holder I am not objective but I am confident that anyone interested enough to conduct independent research would arrive at a similar conclusion.
Any nay-sayers out there? No doubt investors burned by the biotech sector's fall from grace mid-2003 might feel less well-disposed towards GTG (the SP has fallen by almost 50% since then) but those prepared to keep the faith will be amply rewarded by GTG in the near term in my view.
Conduct your own research.
Gupper
GTG Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
(20min delay)