Replies to post #6342 on Biotech Values

[DewDiligence]

Re: SNMX

>>Why should that turn you off?<<

In general, I don’t like it when companies sit on news because that creates opportunities for leaks. In this case, SNMX's timing the GRAS-application PR to exactly coincide with the IPO lockup expiration shows management to be unduly self-serving, IMHO.

[the_busy_ant]

But then why would management be pushing the 1-4% mentioned?

I don't know. Maybe they're telling the truth ;)
It just seems to me that old-style food companies will have razor thin margins and they won't be able to give up a 1% royalty. The only way they could is if

a) the flavor enhancers substantially expanded their markets (very unlikely) and/or
b) the flavor enhancers substantially reduced production costs (i don't know enough about the business of food production to comment on this one)

This also reminds me a little bit of the genomics 'revolution' of the late 90's. You have a new fancy high-throughput screening process that will revolutionize the industry going up against the old-fashioned stuck-in-their-ways flavor chemists. Not to say that the genomics companies didn't shine for a while, but it pays to remember who won that fight.

Going back to the 2-4% royalty. I'd love to hear EXACTLY how they phrase this. I've seen business development people turn bulls*** and loop-hole threading into an art-form.

[rkrw]

ant's experience probably points to the majority of snmx royalties being closer to 1% than 4%. It does sound like snmx has real deals and hard terms so I'm not concerned that this is bait and switch and the royalties will be far less.

Sounds like the promise of the tech is that even after paying a small royalty the mfg would be saving money by using less of offending ingredients. Whereas the same wouldn't necessarily be true of toothpaste? We're also at a time where there's great concern about the (un)healthy aspects of processed foods and drinks and in turn potential for competitive marketing advantages.

I think it's a pretty great thing if they (or anyone) can develop compounds to allow packaged food mfg to do things like cut fructose levels in soda (much debate about a link to climbing diabetes rates), cut sodium in canned soups (loaded with salt) and so forth without sacrificing taste. Recent wsj article about some sort of popular new artificial sweetener that's doing so well, the mfg can't keep up with demand. So there's no doubt there's a real market. I think this is worth keeping an eye on, esp as it's the only pure play.