Biotech Values

[DewDiligence]

Here’s a sample post of mine from the Yahoo MATK board from about two years ago:

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The Martek Mirage:
by: DewDiligence
08/08/03 08:12 pm
Msg: 4205 of 12698

…In theory, companies which add DHA and ARA from non-MATK sources might infringe on MATK’s “blending” patent. In practice, however, it won’t matter much.

As soon as the formula companies have access to an alternative source of the oils at a competitive price (from fish or otherwise), they will demand that MATK cut its royalty rate. Sure, MATK can respond by threatening to file suit against its own customers, claiming infringement of the blending patent. However, if MATK decides to go that route, what do you suppose would happen to MATK’s stock price when investors realize that legal expenses will consume most or all of MATK’s earnings?

More than likely, MATK would deal with such a predicament by quietly agreeing to a reduction in the royalty rate. And that’s why the gigantic projections for MATK’s earnings a few years from now are essentially a mirage.

Posted as a reply to: Msg 4172 by msmenhaden
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