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In Face of Jury Verdict, Stratagene Advances Molecular Dx Plans with Reference Lab Pact

Following through on a promise to investors following a lost patent-infringement battle, Stratagene has advanced its plans to participate in the molecular diagnostics market by penning an alliance with a reference lab that will use its FullVelocity technology to develop and market diagnostic assays, the firm said this week.

Up to this point, Stratagene's FullVelocity quantitative PCR technology has been used solely for research applications. But this agreement with reference lab Focus Diagnostics is the first of several molecular diagnostic collaborations the firm is planning, according to Stratagene officials.

"The arrangement with Focus is the formal initiation of the development process to commercialize molecular diagnostic assays for in vitro diagnostic applications," Steve Martin, Stratagene's CFO, wrote in a response via e-mail to questions from BioCommerce Week this week. "The intent is to develop, obtain [US Food and Drug Administration] approval, and commercialize … diagnostic test kits" — though a timeframe for seeking regulatory approval was not disclosed.

Up to this point, Stratagene's FullVelocity quantitative PCR technology has been used solely for research applications. But this agreement with reference lab Focus Diagnostics is the first of several molecular diagnostic collaborations the firm is planning.

Stratagene believes its opportunity to compete in the molecular diagnostics arena was enhanced by the March expiration of certain PCR patents held by rival Applied Biosystems and Roche. The deal with Focus takes Stratagene one step closer to that goal.

But a key issue hanging over the company — and a possible concern for potential partners — is a patent infringement battle with Third Wave Technologies, a fight that Stratagene has been losing so far.

Focus on the Deal

According to Martin, the FullVelocity platform has been with Stratagene for "some time" and certain embodiments of the technology have been sold commercially into the research marketplace during 2004 and 2005. To date, FullVelocity has been used with other QPCR components by customers in research-use-only applications, he said.

Herndon, Va.-based Focus, which operates a national reference lab that offers more than 1,200 infectious disease tests, received a non-exclusive license to the FullVelocity technology, and Stratagene said it intends to help the company develop molecular diagnostic kits and products. Stratagene will manufacture any diagnostics products that arise from the collaboration, and Focus will commercialize these products globally.

Charlie Harwood, Focus' CEO, declined to comment on the Third Wave patent-infringement issue. But the company's decision to use FullVelocity in its own diagnostics can be viewed as a vote of confidence in the technology's future in the market. He also declined to say whether the company had evaluated Third Wave's Invader before choosing FullVelocity.

However, Harwood said the company had evaluated real-time PCR platforms "as well as probably most of the molecular technologies that are out there, and were very pleased with the Stratagene chemistry." He cited the technology's speed and the ease of test development as important characteristics guiding his firm's choice.

According to Martin, Focus will sell and market diagnostic assays to third parties and also use the products in its own reference lab. Focus intends to develop home-brew laboratory tests using Stratagene's technology and reagents, as it provides diagnostic services to its customers, he said.

Stratagene said the FullVelocity technology could be used to identify infectious diseases, cancer, genetic diseases, and as the basis for drug-sensitivity assays. But Martin declined to say whether other future partners would be allowed to develop competing products to those sold by Focus.

Additional Molecular Dx Partnerships Planned

Stratagene officials have stated several times this year that the company intends to sign on multiple diagnostic and clinical lab partners for the FullVelocity technology. The company has been in negotiations for most of this year with an unnamed large diagnostics partner to further develop the firm's MX3005 QPCR instrument for molecular diagnostic applications (see BioCommerce Week 7/21/2005).

The partner was initially going to develop a new and bigger version of the MX3005 instrument, but has since opted to use Stratagene's off-the-shelf instruments. Stratagene "continues to expect to enter into an arrangement for a long-term opportunity, but is not able to indicate when a deal may be announced," Martin said.

Joe Sorge, Stratagene's chairman and CEO, said at the UBS Global Life Sciences Conference in late September that the firm expected the alliance to be signed before the end of this year, and that the partner was in the final stages of validating the chemistry (see BioCommerce Week 10/6/2005).

Martin noted that the firm has continued to discuss opportunities with a number of diagnostic companies about developing molecular diagnostic products, but "the details or timing of specific arrangements is not determinable at this time."

Legal Baggage

In its IP battle with Third Wave, Stratagene lost one of the cases, but it has countersued Third Wave for allegedly infringing its US patents covering FullVelocity. Stratagene has five US patents issued on the technology with additional patents pending.

A US District Court in Wisconsin issued an injunction in late September preventing Stratagene from selling certain of its FullVelocity QPCR and QRT-PCR products. The injunction came a month after a jury in that same court had ordered Stratagene to pay Third Wave Technologies $5.29 million in damages for patent infringement (see BioCommerce Week 9/8/2005).

Stratagene intends to appeal the jury's verdict, which Sorge called "beyond our comprehension" and "not well-connected to logic." He said the verdict and injunction would have no impact on the firm's plans to play in the molecular diagnostics market — a market valued at anywhere from $1.2 billion to $2.5 billion annually.

Sorge told attendees of the UBS conference that the firm plans to capitalize on its non-infringing FullVelocity technology to develop molecular diagnostic products. Stratagene said that the embodiments of FullVelocity being employed in the agreement with Focus do not infringe Third Wave’s patents.

— Edward Winnick ([email protected])

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