The company making a new biofuel in Minnesota took a turbocharged ride on Wall Street on Wednesday after a judge ruled for the company in a patent dispute.
Shares in Gevo Inc., whose sole production plant is in Luverne, Minn., closed up 31 percent after a judge rejected a competitor's request for a preliminary injunction to halt its sales.
In her ruling, U.S. District Judge Sue L. Robinson of Delaware concluded that competitor Butamax Advanced Biofuels does not hold a valid patent on a yeast to produce the biofuel called isobutanol and that Gevo has not infringed on it.
"We are free to sell to anyone, everywhere," said Brett Lund, executive vice president and general counsel for Englewood, Colo.-based Gevo, in a conference call with analysts.
The ruling does not end the patent litigation between Gevo and Butamax, a Wilmington, Del.-based joint venture of BP and DuPont. But some analysts saw it as a good sign for the smaller company, which began trading publicly in February 2011 at $15 a share.
Many investors agreed. The stock soared from the market's opening, with a record 2.2 million shares traded -- 13 times its average volume. It closed at $7.75, up $1.83. The stock, which has been trading under $6 for weeks, was by far the biggest gainer on the Russell 3000 index.
Piper Jaffray & Co. analyst Michael Ritzenthaler, a chemical engineer who has studied the patent claims, has long predicted that Gevo will prevail in a legal battle that has provoked six lawsuits between the two companies, mostly over patents for genetically engineered yeast.
"To be clear there are several other turns left in this dispute," Ritzenthaler wrote in a note to investors, "but this case was meticulously considered, and the 27-page ruling is an impressive amalgamation of science and patent language that confirms the outcome we had expected."
