Some of you have asked why G2 conducts contract research (CR)? The answer to that question is rather simple: it's a cash flow strategy.
Remember those 100 licensed varieties in the first 10 years? That's our product development target. But it's more than that. At the end of the first decade, we plan on covering G2's annual operating expenses out of licensing revenue (royalties). But between now and 2017, we will depend on CR to cover most of our operating expenses.
Stated differently, until the G2 pipeline is full, and licensing revenues are flowing, CR will provide the bulk of G2's cash flow. Since filling the pipeline is expected to take 8 to 10 years, this makes G2's CR strategy a key part of the plan.
To encourage companies in the horticultural trades to place CR projects with G2 --- when they might otherwise consider us as an upstart, err, start-up competitor --- we are linking G2's CR strategy directly to the development of our proprietary genetics.
How? We intend to offer first-look, first-choice for our proprietary genetics, the G2-bred products, to our CR clients. If none of our CR clients choose to license a G2-developed product, we may then choose to take it to market directly.
What does this mean to you?
It means quite simply, that if you expect to license a G2-developed product in the future, you should be considering how to conduct CR with G2 in the present.
This is a business, after all.
