NEW YORK (GenomeWeb News) – Life Technologies officials said this week that the company has formed a licensing team that will focus on offsetting declining royalty revenues for its PCR-related intellectual property and other IP.
During a conference call to discuss the company's third-quarter financial results, Life Tech Chairman and CEO Greg Lucier said that the company has assembled a team of the "best licensing people" from its Applied Biosystems and Invitrogen businesses.
The team has been together for around six months and is already beginning to produce results, Lucier noted.
In particular, the effort has been able to slow a drop-off in royalty revenues from Life Tech's PCR patent estate that had previously been predicted to decline by $30 million in 2009 but has so far only declined by $20 million.
Life Technologies generated $51 million in royalty revenues in fiscal 2008, according to SEC filings.
Lucier said the falling royalty revenues are due to "natural year-over-year declines" in the PCR patent estate, but noted that the patent family "extends over a very long period of time — all the way out into 2017 as I recall. So we're going to have these PCR royalties with us for a long time … though they do go down between now and that time I just mentioned."
For the third quarter, Life Technologies had projected a royalty revenue drop-off of approximately $12 million to $15 million, but CFO David Hoffmeister said during the call that the decline came in at around $7 million instead.
"This is a direct result of our licensing team finding a number of new customers for our intellectual property," Hoffmeister said.
For the fourth quarter, Life Technologies expects the royalty revenue decline to be in the range of $5 million to $8 million. For 2010, the company projects a further drop-off of $10 million to $15 million, and in 2011 the decline should be in the range of $20 million.
Eileen Pattinson, head of investor relations for Life Technologies, said during a separate Q&A session with analysts that these projections are based only on the company's existing patent estate and assume that the firm is not granted any new patents in that time.
Pattinson added that the new licensing team, which is "going out specifically to win new business in our patent portfolio for PCR and all of our other IP," may "be able to fill some of that gap."