Arbitrator Voids Beckman’s Sale of HPV IP to Ventana;
Beckman Says Business Not Impacted
Beckman Says Business Not Impacted
An arbitration panel has ruled that Beckman Coulter violated the terms of an original cross-license agreement between Institut Pasteur and Digene when it sold its human papillomavirus intellectual property to Ventana, Digene announced this week.
The International Center for Dispute Resolution of the American Arbitration Association ruled that Beckman’s sale of the business to Ventana in September 2002 is “void,” claiming the transaction violated an agreement between the Institut Pasteur and Digene that prevented Beckman from supplying unfinished HPV 35 materials to third parties, Digene said.
In a statement, Digene CEO Evan Jones called the ruling “an important positive step forward for Digene in its efforts to defend its intellectual property portfolio.”
According to a statement released by Beckman Coulter, the arbitration panel also ruled that the company “was permitted, as part of its sale of its HPV business to Ventana, to assign the HPV licenses Beckman Coulter had previously received from Institut Pasteur.”
Beckman said that business and those licenses “are and have been properly in the hands of Ventana” since September 2002. Beckman added that the arbitrator’s findings mirror those of an April 2005 decision by the International Chamber of Commerce in Paris “in a challenge brought by Institut Pasteur to the same transaction.”
However, Beckman said the panel “did find that it was improper for the company to have sold HPV cell paste, a reagent, to Ventana prior to the close of the [acquisition].” These sales occurred before September 2002 and were valued at less than $10,000, and “Digene has requested no damages from Beckman Coulter in this regard,” Beckman said.
Finally, the arbitration panel “questioned the validity” of a supply agreement between Ventana and Beckman Coulter, struck at the time of the 2002 acquisition, which allows Beckman to become a customer of Ventana for HPV materials.
However, Beckman said it “has never purchased HPV materials under this supply agreement and has no plans to do so,” and added that the company “has stated it plans to terminate the supply.”
Beckman added that while the arbitrator found the sale of the unfinished HPV materials was improper, the company was allowed to assign the licenses to Ventana.
No actions are pending against Beckman regarding any aspects of the transactions and its business will not be impacted by the arbitrator’s ruling, Beckman said.
Ventana purchased Beckman Coulter’s HPV business and corresponding assets in September 2002. Beckman acquired the assets from Institut Pasteur though a 1991 sublicense agreement.
Ongoing litigation filed by Digene against Ventana was stayed until after the outcome of the arbitration, though it was unclear whether a date has been set for those proceedings.
Beckman’s Q2 Sales Slip as Profits Drop 19 Percent
Beckman Coulter this week reported a slight decrease in second-quarter sales accompanied by a 19-percent drop in net income.
Total receipts for the three months ended June 30 declined to $616.3 million, from $618.8 in the same period last year. Beckman had initially forecast revenues to be between $620 million and $645 million, and the company blamed the lower-than-expected revenues on lagging sales in the Asian market.
Research and development costs rose 50 percent to $75 million from $50 million year over year.
Net income for the quarter dropped 19 percent to $44.6 million from $55.2 million in the prior-year period.
As of June 30, Beckman Coulter had $59.4 million in cash and cash equivalents.
Beckman CEO Scott Garrett said that the "revenues in the Far East were disappointing due to a combination of factors” including slower-than-expected transition to a direct sales model in China and the fact that “hospitals are delaying purchases due to an expanding Chinese government review of overall hospital buying practices.”
Garrett said that Beckman expects to be “back on track with [its] double-digit growth trend” by the beginning of 2007.
Millipore Q2 Revenues Rise 12 Percent, Net Income Up 21.2 Percent
Millipore last week reported that its second quarter revenues had risen 12 percent to $273.8 million from $245 million year over year.
Sales for the firm’s Bioprocess Division grew 13 percent to $166.9 million for the quarter, while sales for its Bioscience Division climbed 10 percent to $106.9 million.
Millipore reported second-quarter net income of $29.1 million, or $.54 per share, a 21.2-percent gain on net earnings of $24 million, or $.47 per share, in the comparable period a year ago.
The firm’s R&D spending rose 13.9 percent in the quarter to $19.7 million from $17.3 million year over year.
Millipore finished the quarter with $1.24 billion in cash and cash equivalents.
The firm completed its $1.4 billion acquisition of Serologicals last month.
Bruker Licenses HDC Technology for ClinProTools Product Line
Bruker BioSciences this week said it has obtained a non-exclusive worldwide license from Health Discovery Corporation to use its support vector machine (SVM) technology in Bruker Daltonics’ ClinProTools clinical proteomics product line.
ClinProTools is a bioinformatics product for biomarker panel analysis, biofluid profiling, multivariate data analysis, classical statistics, and sample classification.
SVMs are supervised classification algorithms that can analyze high-dimensional mass spectrometric data from a plurality of sample cohorts and “complement” the use of other classification algorithms, such as Bruker’s Supervised Neural Network, its QuickClassifier, modified genetic algorithms, and others,” according to Bruker.
The agreement provides for an up-front fee and royalties based on sales. Financial details were not disclosed.
Qiagen’s PCR Kit for Herpes Cytomegalovirus Gets CE Mark
The European Union awarded the CE Mark to Qiagen's molecular diagnostic kit for detecting the herpes cytomegalovirus, the company said this week.
Qiagen developed the Artus CMV PCR kit for early detection of the virus. The kit is designed to be used on Applied Biosystems' PRISM 7000, 7700, and 7900HT SDS systems, various Roche LightCycler instruments, and the Corbett Rotor-Gene 3000.
For example, the test can detect in parallel four herpes viruses — CMV, EBV, VZV, and HSV-1/2 — on the LightCycler in a single run, Qiagen said.
Agilent to Manufacture siRNAs for Calando
Agilent Technologies will manufacture siRNAs for Calando, Calando said last week.
Agilent will manufacture the active siRNA component for Calando’s targeted siRNA anti-cancer therapeutic, CALAA01. Agilent will also provide Investigational New Drug-enabling services such as pharmacokinetic and toxicity studies and cGMP production.
Calando is a majority owned subsidiary of Arrowhead Research. Founded in 2005, it creates, develops and sells technologies for the therapeutic use of RNAi.
Financial details of the agreement were not disclosed.
Bayer to Buy Hamilton Sample Prep System for Molecular Dx Platform
Bayer Healthcare this week said it will buy a customized Microlab STARlet sample-preparation system from Hamilton Company as part of its plan to develop a new platform for performing molecular diagnostics.
The two companies will work together to customize the platform to meet the requirements of Bayer’s quantitative PCR technology.
Financial terms of the deal were not disclosed.
Affymetrix Plans to Restructure Costs as Q2 Revenues
Decline 4.7 Percent and Profit Swings to Loss
Decline 4.7 Percent and Profit Swings to Loss
Affymetrix this week reported a 4.7-percent slide in second-quarter revenues as it veered from a $7.8 million profit in the year-ago period to a $10.1 million net loss.
In a conference call, CEO Stephen Fodor said that 2006 has been the “single most challenging year” in Affy’s 13-year history, “compounded by increased competition, especially in the genotyping market.”
As a result, and with the aim of reducing costs, Fodor said Affy will restructure its “corporate, general, and administrative expenses while continuing our strong focus on sales, product R&D, and product launches.”
The results caused shares in the company to drop sharply to levels not seen since 2003. The firm’s shares have dropped 13.8 percent since the results were announced, closing at $19.48 on Tuesday.
Affy’s total revenues slipped to $80.1 million for the quarter ended June 30 from $84.1 million in the second quarter of 2005.
Product sales declined to $61 million from $69.2 million in the comparable period of 2005, while product-related revenue increased to $14.4 million from $10.9 million in the year-ago period. The sale of products to Perlegen Sciences increased to $2.2 million from $1.9 million in the second quarter of 2005, and revenues from royalties rose to $2.4 million from $2.0 million in the prior-year period.
R&D spending increased to $21.6 million from $20.8 million in the year-ago period, while Affy’s total costs increased 15 percent to $89.2 million from $75.5 million in the second quarter of 2005.
Affymetrix posted a net loss of $10.1 million for the second quarter, compared to net income of $7.8 million in the year-ago period. The company said that its GAAP net loss for the quarter includes the effects of stock-based compensation expense related to the US Securities and Exchange Commission’s FAS 123R regulation. Excluding the impact of FAS 123R, Affymetrix said that its non-GAAP net loss for the quarter would be $6.2 million.
In addition, Affymetrix disclosed that its board of directors’ audit committee has been conducting an internal review of its stock option grant practices from January 1, 1997, through May 31, 2006. This review has revealed “certain documentation lapses” in that period, “including one instance where the company has determined that the option grant date should have been recorded differently,” Affymetrix said in a statement.
The company added that the review “does not indicate that there was any pattern or practice of inappropriately identifying grant dates with hindsight in order to provide ‘discounted’ or ‘in-the-money’ grants,” and that it does not anticipate the outcome of the review to impact its second-quarter results.
As of June 30, Affymetrix had $76 million in cash and cash equivalents.
According to Fodor, the company now has two objectives: to increase revenues with new products in the genotyping market, expression arena, and clinical diagnostics, and to decrease operational costs.
“Since we have entered into a period of operating loss, our general and administrative cost structure has become out of line for the revenue base of the company,” Fodor said during the conference call. “During this quarter we will reduce our expenses by restructuring corporate, general, and administrative expenses while continuing our strong focus on sales, product R&D, and product launches.”
In addition, Fodor said Affy has “opened a search for a senior level commercial operations leader. Our objective is to transition our established markets into long-term growth opportunities.”
On Tuesday, investment bank Thomas Weisel downgraded the stock to “Peer Perform” from “Outperform,” saying the company’s earnings outlook lacked clarity, while Infinium Securities downgraded the stock to “Underperform” from “Neutral.”
Additionally, Lehman Brothers and PiperJaffray lowered their price targets for the company — Lehman to $25 from $39 and PiperJaffray to $21 from $27, according to Marketwatch.com.
According to Marketwatch, J.P. Morgan analyst Tycho Peterson said: "Flummoxed by the continued spate of revenue and earnings disappointments, a tempered outlook and lack of any meaningful visibility around the timing and magnitude of a turnaround, we expect investors will remain hesitant to re-embrace [Affymetrix's] story.”