I didnt say all patents had expired and as you will note from...

I didnt say all patents had expired and as you will note from the Qiagen announcement they executed a settlement agreement and a license. My issue is that I do not believe that GTG has fulfilled its continious disclosure requirements and that if the major patent on which it has earnt most of its licensing revenue has expired it should have reported as such. This has long been a problem with GTG, too much hype (which is announced) and very little delivery on the promise (which isnt announced). If the patent were still on foot, revenues would be for prior infringement and future use, which is a much larger number (normally) than pure infringement which only has a litigation cost to it from an infringers perspective. It certainly would give me comfort re a longer term business model (something that in 10 years they have been unable to build despite over $60m in license revenue).

As such GTG are not going to sign multi million dollar licenses on a regular basis, they are going to (hopefully) sign a larger number of smaller settlements where the cost of settling is cheaper than the protracted cost of litigation. These licenses however take time as they are subject to a slow legal process. No company that is currently using the technology has an impetus to settle for fear its current products could be the subject of a license fee.

I still maintain that GTG does not have a sustainable business model without licensing revenues. Brevagen is years away from being cashflow positive and the local operation is losing money, especially given the cost structure of its Australian operation. How can you have annual salary cost in excess of $5m a year when the non licensing revenue from the same operations is way less than this. This doesn't even include the material costs to run the local operation. I can't imagine that the licensing business has much of a cost base (although it would be normal for the no deal/no fee lawyers to take 50% of any fees generated)so if you remove licensing completely from the Sept 1/4ly you get a cash burn of somewhere between $2m and $2.5m a quarter. Given it only has $3m in cash that is a perilous position.

While I am sure the December quarterly will show much better numbers, it would be interesting to see what the licensing numbers were and extract them from the overall numbers to really see if GTG is sustainable. I very much doubt it. I would really like to see GTG cut some of its local costs to be far more in line with a company of its size.

So back to my original point if GTG is running a licensing program on the back of an expired patent (which it clearly is), how is it going to generate the cash it needs to remain around long enough for the rest of its businesses to generate positive cashflow? Remember that despite the $60m in licensing revenue over the last 10 years, it has still lost $90m in shareholders funds so it clearly doesn't have a sustainable non licensing business.