Great Basin Scientific put out a press release this morning detailing a $5M NIH grant that it received in conjunction with Brigham Young University. The release reads:

The National Institute of Allergy and Infectious Diseases, part of the National Institutes of Health (NIH), has awarded a research grant to Great Basin Scientific (NASDAQ:GBSN; GBSNU) and Brigham Young University (BYU), to develop a rapid molecular diagnostic test direct from whole blood for carbapenem-resistant Enterobacteriaceae (CRE). The NIH research grant (R01AI116989) will play a key role in meeting the goals of President Obama’s recent National Action Plan for Combating Antibiotic-Resistant Bacteria.

BYU Grant Seems Meaningless to Company’s Financials

There are no details regarding how the $5 million is going to be disbursed, other than it appears to be for both entities (BYU & GBSN) and could vest over a 5 year period.

Through the course of our due diligence this morning regarding this partnership, we believe the following:

  1. This grant will not be recognized as revenue for GBSN
  2. To the best of our knowledge, this grant is for the partnership between the two of them and will be spent by GBSN and BYU
  3. The grant will likely offset some R&D costs
  4. The grant will not have an immediate material impact on GBSN’s financials

Lack of an accompanying 8-K with details specific to how the $5M could be disbursed and what it will be used for lead us to believe this development isn’t material from a financial perspective. Until such time as we see this, we’ll continue to look at the potential effect that this grant may have on revenue and will keep our members apprised of our findings.

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