Proactive Investors - Run By Investors For Investors

VSA Capital Market Movers - Genus

VSA Capital Market Movers - Genus

Genus: Second Update on US Court Case
Animal genetics firm Genus (LON:GNS) has delivered its second update on the ongoing US anti-trust court case against Inguran LLC (Sexing Technologies).
• Jury has found that two patents of Sexing Technologies regarding the sorting of particles (#8,206,987, #8,198,092) were valid and infringed by Genus ABS.
• Jury has also found that Genus ABS had materially breached confidentiality obligations under the 2012 semen sorting agreement between the two parties.
• A verdict on damages with regards to these matters is to be decided later this week.
• GNS awaits the court’s decision on a number of other motions related to the provisions of the 2012 semen sorting agreement and is considering post-verdict motions.
VSA Comment
This important trial for GNS began on 1 August and was expected to last up to three weeks. It concerns GNS’ sexed semen operations, which typically make up 5-10% of GNS’ total straw sales.

Following a mixed result in its first update yesterday (Sexing Technologies had maintained a monopoly since July 2012 but GNS had not suffered injury as a result of it), this second set of rulings is clearly not in favour of the company.

The best case scenario from this court case would have resulted in financial compensation (c£6m spent on legal costs since 2014) as well as the immediate go-ahead to launch its own in-house developed sexed semen technology (ramp-up in FY 2017, full impact FY 2018), saving GNS c£5m per year in operating costs (c1.5% of group operating costs).

It seems likely that GNS may now be ordered to pay damages. We had assumed that GNS would be allowed to continue to use the licensed technology from Sexing Technologies until its current contract expires in 2017. However, we are now waiting to see what the implications for its existing contract with Sexing Technologies, given GNS has been ruled to have breached confidentiality obligations, and also whether GNS will be free to launch its own sexed semen technology.

As we have previously said, whatever the result of this action, it is likely that there will be an appeal either way.

The GNS share price has had a significant post-Brexit run-up, increasing more than 30%, from a level that we already believed overvalued the company. We would continue to take the opportunity to take profits at the current level.

Disclaimer: This research report has been prepared by VSA Capital Limited and is solely for, and directed at, persons who are Professional Clients as defined under Annex II of the Markets in Financial Instruments Directive, Directive 2004/39/EC, or as defined in the FCA Handbook. Persons who do not fall within the above category should return this research report to VSA Capital Limited, New Liverpool House, 15-17 Eldon Street, London EC2M 7LD, immediately.
This research report is not intended to be distributed or passed on, directly or indirectly, to any other class of persons. It is being supplied to you solely for your information and may not be reproduced, forwarded to any other person or published, in whole or in part, for any purpose, without out prior written consent.
This research report is exempt from the general restriction on the communication of invitations or inducements to enter into investment activity and has therefore not been approved by an authorised person, as would otherwise be required by Section 21 of the Financial Services and Markets Act 2000 (the "Act"), as amended by The Financial Services and Markets Act 2012.
Neither the information nor any opinion expressed constitutes an offer, or an invitation to make an offer, to buy or sell any securities or any options, futures or other derivatives related to such securities.
The information and opinions contained in this research report have been compiled or arrived at by VSA Capital Limited (the "Company") from sources believed to be reliable and in good faith but no representation or warranty, express or implied, is made as to their accuracy, completeness or correctness. All opinions and estimates contained in the research report constitute the Company's judgments as of the date of the report and are subject to change without notice. The information contained in the report is published for the assistance of those persons defined above but it is not to be relied upon as authoritative or taken in substitution for the exercise of the judgment of any reader.
The Company accepts no liability whatsoever for any direct or consequential loss arising from any use of the information contained herein. The company does not make any representation to any reader of the research report as to the suitability of any investment made in connection with this report and readers must satisfy themselves of the suitability in light of their own understanding, appraisal of risk and reward, objectives, experience and financial and operational resources.
The value of any companies or securities referred to in this research report may rise as well as fall and sums recovered may be less than those originally invested. Any references to past performance of any companies or investments referred to in this research report are not indicative of their future performance. The Company and/or its directors and/or employees may have long or short positions in the securities mentioned herein, or in options, futures and other derivative instruments based on these securities or commodities.
Not all of the products recommended or discussed in this research report may be regulated by the Financial Services and Markets Act 2000, as amended by The Financial Services and Markets Act 2012,  and the rules made for the protection of investors by that Act will not apply to them. If you are in any doubt about the investment to which this report relates, you should consult a person authorised and regulated by the Financial Conduct Authority who specialises in advising on securities of the kind described.
The Company does and seeks to do business with the companies covered in its research reports. Thus, investors should be aware that the Company may have a conflict of interest that may affect the objectivity of this report. To view our policy on conflicts of interest and connected companies, please go to:
Investors should consider this report as only a single factor in making their investment decision.
The information in this report is not intended to be published or made available to any person in the United States of America (USA) or Canada or any jurisdiction where to do so would result in contravention of any applicable laws or regulations. Accordingly, if it is prohibited to make such information available in your jurisdiction or to you (by reason of your nationality, residence or otherwise) it is not directed at you.

© Proactive Investors 2019

Proactive Investors Limited, trading as “Proactiveinvestors United Kingdom”, is Authorised and regulated by the Financial Conduct Authority.
Registered in England with Company Registration number 05639690. Group VAT registration number 872070825 FCA Registration number 559082. You can contact us here.

Market Indices, Commodities and Regulatory News Headlines copyright © Morningstar. Data delayed 15 minutes unless otherwise indicated. Terms of use