In Colorado, Gevo CEO Pat Gruber called the legal settlement with Butamax “arguably the most important development for our company since Gevo went public in early 2011. This is a win-win agreement for both Gevo and Butamax and now enables us both to get on with making isobutanol a commercial reality and a big business.”
Gruber highlighted key impacts of the settlement for Gevo including: SG&A expense savings expected to be over $7.5 million per year; Removing legal uncertainties which should help accelerate agreements with customers, licensees and partners; providing Gevo and its licensees access to all isobutanol markets, while leveraging both Gevo’s and Butamax’s capabilities and development efforts in the jet fuel and on-road gasoline markets, respectively
“Over the past four years, the dispute has proven to be a significant drain on our resources, in particular our cash. Since 2011, we have spent over $35 million on litigation-related expenses and incurred significant additional costs related to patent-related matters in the interest of defending our freedom to operate. It will be very good to now be able to dedicate 100% of our resources to growing the business. In addition, the uncertainty surrounding the dispute has acted as a headwind for Gevo and our commercialization efforts. The legal issues were complicated to explain and the perception of potential risk caused some partners and customers to stand on the sidelines. This uncertainty is now gone. On the back of the news of the settlement, many of our existing and potential customers, licensees and partners reached out to us to congratulate us on the settlement and to express their excitement in working with Gevo going forward. We are hopeful that with this settlement in hand, we should be able to accelerate our discussions with our potential partners, including licensees,” added Gruber.
“The cross license is a great outcome for Gevo as it provides access to all isobutanol markets for Gevo and its licensees. For our core, near-term markets, namely jet fuel, marine and off-road gasoline blendstocks, isooctane and solvents we can access these royalty-free, and in some cases, we may eventually generate royalties if Butamax looks to sell into certain of these markets. We believe that these core markets represent several billion dollars of value for isobutanol.
“To date, the on-road gasoline blendstock market has not been a near-term focus for Gevo because we believe that it will take significant resources and time to develop this market. Butamax has already made meaningful progress of gaining requisite EPA approvals. As Butamax gains these approvals and opens up the on-road gasoline blendstock market, we will be cheering them on because this is a potential longer-term market opportunity for Gevo. If, in the future, Gevo and our licensees look to access this market, we will pay Butamax a royalty which is set at a rate typical for licenses of this type,” said Gruber.