I welcome GTG for cautioning investors re the timing of licensing revenues into the future. On my reading they generated cash of nearly $11m during the quarter. Of this and based on numbers in the commentary, $6.8m came from Europe and $2.2m from other areas (being the $4.7m now quoted less the $2.5m quoted in the September quarterly). This means that of the $11m in revenue, some $8.8m came from licensing meaning just $2.2m came from testing. Given the Company spent some $5m during the quarter, it is obvious to see just how reliant the solvency of GTG is on licensing. What would be useful to know is just how much the lawyers are getting of the licensing revenue to know just how much the testing business is losing.
It was also pleasing to see they are embarking on some cost cutting, something that the numbers continually reinforce.
I still hold my reservations re this stock given its dependance on an asset that has limited life and value but at least the licensing revenue is giving it some breathing space for the moment. As to critical mass, the numbers clearly don't show that yet (and you would be stupid to rely on one quarters numbers to assert this - something even the company's announcement clearly tries to hose down). I think the lack of excitement in share price shows that. I will however give credit to the Company's new strategy of getting better credentialled licensing resources in place.
GTG Price at posting:
11.5¢ Sentiment: Hold Disclosure: Not Held
