Gevo Inc (GEVO)

[tykundegex]

So Gevo could see $25-$50MM in up-front fees for a licence deal, and as much again annually if the licensee does 250 million gallons as projected. And that's just one partner.

If this company can manage to avoid bankruptcy (seems plausible, any up-front license fees will help) AND avoid being delisted from the NASDAQ, then this is a multi-billion dollar company in the making.

A risky investment today, but one I'm comfortable making. I increased my position at the open today, and will do it again if there is more positive news in the coming months.

From the ccall transcript:

Well I mean based on the way that we the discussions we have had today with licensing partners that we believe are economics that they would be willing to bear, we can see our cost of 250 million gallons contemplated across products based plants, outside of the U.S.

We can see upfront payments totaling anywhere between call it $25 million to $50 million and then recurring revenues between technology licensing and sales and marketing fees. Ultimately when you get to the full 250 million gallons that can represents a recurring revenue base of something similar like $25 million to $50 million.

We do understand based on discussions with the Praj that in certain geographies that they play, there is a bit more of a resonance against the recurring royalty, they are comfortable to sales and marketing team and ongoing royalty is something that is less appealing to certain geographies or folks playing in certain geographies.

So that might land itself to higher upfront payments, an upfront prepaid royalty effectively but that kind of gives you a sense for the opportunity base here with Praj versus doing something with one-off licensing.