IT WAS A BIG COURT WIN for little IGEN International. On January 10, a jury in federal district court in Maryland decided that IGEN could terminate its licensing agreement with Roche Holding AG.
The jury also awarded IGEN a total of $505 million, $105 million in compensatory damages and $400 million in punitive damages. In 1992, Roche licensed biotechnology from IGEN for use in its Elecsys diagnostic product line. It its lawsuit, IGEN claimed that Roche had breached the licensing agreement in a number of ways, including “placing products based on IGEN’s technology with customers other than hospitals, clinical reference laboratories, and blood banks, the only fields permitted by the agreement.”
Laboratory customers using Roche’s Elecsys® 1010, 2010, and E170 Systems will want to carefully track further developments in this case. The court victory gives IGEN the right to terminate the licensing agreement. Legal experts say that IGEN’s case is strong and should hold up on appeal. Both Roche and IGEN state the licensing arrangement will continue until appeals have been heard. This process could take up to 18 months.
Officials at Roche were rather sanguine about the court loss. “It [immunodiagnostics] is not one of the most dynamic markets in diagnostics,” stated Heino von Prondzynski, head of Roche Diagnostics in an interview with Reuters. “The growth potential is in other areas, such as genomics and proteomics. This is where we’ve invested heavily.”
However, some financial analysts who closely track Roche Holdings were of a different opinion. “This is a huge win for IGEN and puts pressure on Roche to resolve this,” stated Daniel Owczarski, an analyst at Gruntal and Co. “IGEN’s technology is core to Roche’s diagnostics business, and that is now at risk. I think we will see some serious discussion between them to come to some agreement.”
Analyst Denise Anders at Bank Julius Baer believes that Roche diagnostic products using the IGEN patents generate between $250 and $300 million in annual sales. Contract cancellation rights were estimated to be worth as much as $2.0 billion.
Annual Sales at IGEN
In contrast, IGEN’s annual sales total $31.5 million. The technology at issue is IGEN’s Origen technology, which uses light to detect the targeted biological substance. Roche’s major application of the Origen technology was in immunoassay analyzers.
In the short term, laboratory customers using Roche’s Elecsys systems should see no changes. There is another 18 months of legal appeals ahead and both companies will engage in serious discussions on how to resolve this situation. However, it should not be overlooked that IGEN’s decisive court victory gives it the upper hand as Roche looks for a solution.