Life Out-licenses Technology Rights - Analyst Blog

Recently, Life Technologies (LIFE) provided rights to some companies related to its proprietary CHO (Chinese Hamster Ovary) cell lines to produce recombinant proteins meant for use as therapeutic agents and vaccines. The company has adopted a policy to provide access to know-how for the production of recombinant proteins thereby focusing on bioproduction, therapeutics, diagnostics, veterinary medicine and vaccines, which are areas of strong potential.

 

Management views this licensing program to be a part of a broader strategy under which the company's intellectual property, technology and product portfolio can be monetized.

 

Life Technologies is a global biotechnology tools company which provides systems, consumables and services. The company earns revenues from three divisions – Molecular Biology Systems (MBS), Genetic Systems (GS) and Cell Systems (CS). During the second quarter of 2010, total sales of Life Technologies came in at $906 million.

 

Life's strong presence in the instrumentation and genomic research markets should allow it to benefit significantly from the US Government's economic stimulus package under which the life sciences research market will receive funds in excess of $10 billion. With the federal government funding between 15 and 20% of Life's business, the company estimates that the revenue opportunity provided by the National Institutes of Health (NIH) stimulus funding could be more than $100 million over the next several months.

 

Life Technologies Corporation enjoys a strong position in the life sciences market and we believe robust performance from its core business along with new product launches will help drive revenues, going forward. Meanwhile, lower expenses and cost-cutting along with increased revenues should help drive the bottom line. We are also impressed by Life's focus on stem cell research which holds immense potential in the long term. However, we are also concerned about the situation in the European market where funding might be curtailed due to the economic slowdown.

 

We have a Neutral rating on the stock, which also corresponds to a Zacks #3 Rank (short term hold recommendation).