In Amphion Innovations (LON:AMP) AGM statement, chief executive Richard CE Morgan told investors that the company has entered the current financial year with renewed confidence in its intellectual property (NYSE:IP) licensing program, following the re-issuance of the 502 patent in the US in August of last year.
The company looks to build value in high growth companies in the medical and technology sectors. Currently there are eight partner companies developing proven technologies targeting substantial commercial marketplaces in excess of US$1 billion. Each partner company aims to achieve a target exit value in excess of US$100 million.
The Amphion model has been refined to optimise the commercialisation of patents and other intellectual property within the partner companies. The partner companies collectively own or control over 200 separately identified pieces of intellectual property, a number which grows rapidly each year.
Consequently the company has focused on generating income from the IP licensing programme, whilst seeking alternative routes for new capital.
According to Amphion, its IP business ended 2009 on a strong note beating management’s goals. “Our IP programmes are now at the point where they have become an integral and key part of our business system and now we have the opportunity to strengthen the management of this part of the business and, we hope, take it to a higher level over the next year or two”. In particular, Morgan highlighted the appointment of John Caruso to head-up the IP licensing programmes.
Previously, the company had looked to a potential re-emergence of the IPO market to realise the returns on its investment in potential IPO candidates among its portfolio of partner companies, which would in turn help fund new investments and support its partners.
“We have to assume that with the fall in the appetite for risk in all major markets that the planning horizon for IPOs has also moved out another six to twelve months ... it is not easy to see how a sufficiently strong market will prevail to allow us to achieve exits in this way until the first half of 2011 at the earliest.”
The company said it is currently re-doubling efforts to find alternative financing mechanisms for both Amphion and its partner companies.
“Provided our IP programme continues to make progress, Amphion's need for capital at the parent company level will remain relatively small and we expect to be able to cover most of our operating costs from internally generated funds in 2010, just as we did in 2009. However, we anticipate needing to provide additional support to our partner companies and at the Amphion level we are looking for more strategic solutions to this funding challenge,” Morgan said.
Amphion is evaluating special-purpose financing structures to access additional capital. Separately, at partner company level, the company said it is focusing increased time and effort on corporate partnerships, monetization of IP and adapting the business plans to make them less capital intensive.
“We continue to have confidence in both the strength of the IP programme and the basic technology and market opportunities for each of our partner companies and we are working hard to preserve and extract as much value as possible from each one”, Morgan concluded.