In Colorado, Gevo has hit a roadblock after its victory in the Butamax litigation last month: a federal judge has ordered that Gevo hold on distributing its isobutanol into automotive fuel markets through any appeal process.
The court order did not preclude Gevo from selling isobutanol into its key chemicals and aviation fuel markets, however – and Gevo has not announced a timeline for entering the automotive fuel markets, where Butamax has focused.
“We anticipated Butamax’s appeal and were satisfied to see that in denying the preliminary injunction request of Butamax the judge’s opinion ‘that plaintiff (Butamax) does not hold a valid patent, nor would the defendant (Gevo) infringe if it did’ remains intact,” said Brett Lund, Executive Vice President and General Counsel.
“The judge did issue a temporary order while Butamax appeals to the Federal Court. Under the temporary order, Gevo remains free to operate in markets such as chemicals, jet fuel, marine fuel, small engine fuel and all other markets, except Gevo may not supply the automotive fuel blendstock market with biobased isobutanol from our Luverne facility during the appeals process. We disagree with that decision and have filed an appeal of the order. Testing for automobile fuels will continue, but with non-biobased isobutanol.”
Following Gevo’s victory in a preliminary injunction hearing, Butamax CEO Paul Beckwith indicated that Butamax will be pursuing an appeal.
Rob Stone of Cowen & Co writes:
“Late Friday (7/07), in response to an emergency motion by Butamax, the District Court issued a partial stay of its ruling that denied the preliminary injunction, while that ruling is on appeal. Specifically, GEVO is, for now, enjoined from activities related to automotive fuel blending. L-T legal risks remain, but we believe the stock is oversold, likely in reaction to the recent offerings. Investors may be overlooking: a new upstream partner, USAF jet fuel tests, and a bio-PET deal with Toray that completes the supply chain for Coca-Cola. We see 60%+ upside relative to the market in twelve months.”
“The only limitation placed on GEVO during the appeal is to “not deliver … bio-based isobutanol produced at the Luverne facility … for any use or purpose related to … automotive fuel blending.” These activities currently represent only 5% of the business. GEVO can still ship solvents to Sasol, develop butyl rubber, pursue other chemicals and plastics including PET, ship bio-jet to the USAF, develop marine and small engine products, and continue its research.”
