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Newly Split Celera and ABI Settle on Terms for Sharing Tech and IP, Divvy Up Dx Market

NEW YORK (GenomeWeb News) – Applied Biosystems and Celera may have split into two independently operated companies on July 1, but they will continue to share certain instruments, technologies, and intellectual property, according to documents filed today with the US Securities and Exchange Commission.
 
According to the terms of an operating agreement disclosed today, ABI will continue to partner on certain technology-development projects and will maintain some co-marketing arrangements with Celera, but will be restricted in its ability to sell some of its tools in the diagnostic market.
 
The agreement gives Celera “continued access” to ABI’s capillary electrophoresis sequencers and associated consumables and permits Celera to continue development of “a new FDA-compliant diagnostic instrument based on [ABI’s] CE technology.”
 
Kathy Ordoñez, previously president of Celera and now CEO of the independent firm, disclosed in January that Celera was developing a diagnostic version of ABI’s sequencer, but the company has not divulged further details on its development plans since that time.
 
According to today’s SEC filing, Celera will pay the costs of developing the new diagnostic instrument, including any “incremental costs” incurred by ABI.
 
In addition, the operating agreement permits ABI to sell its CE sequencers to “any end-user for any purpose,” as well as under original equipment manufacturer agreements, “except that it will not be able to OEM the CE sequencers for commercialization of human diagnostic tests for specified conditions for a period of three years after the date of the separation outside of Asia, Africa, the Middle East and South America.”
 
ABI also agreed that it will not commercialize these diagnostic tests anywhere in the world, or enter into an agreement with a third party to co-promote or co-market CE sequencers to be used with these tests outside of Asia, Africa, the Middle East, and South America for the same three-year period.
 
The operating agreement places “no restrictions” on the development or commercialization of next-generation sequencing instruments for either ABI or Celera.
 
In addition, ABI will be the “preferred supplier of Celera’s next-generation real-time instrument,” the filing stated. If Celera and ABI are unable to agree on terms for this instrument, “Celera will be given access to [ABI’s] intellectual property to the extent necessary to make or to have a next generation real-time system made for Celera by a third party.”
 
ABI is also permitted to sell real-time instruments to any end-user for any purpose, except for “restrictions” covered by an existing supply agreement between ABI and Abbott relating to Abbott’s m2000 system. With the exception of this supply arrangement, ABI “will not OEM real-time instruments to any third party for use in the human in vitro diagnostics, or HIVD, field unless the third party has obtained a license to [ABI’s] real-time intellectual property in the HIVD field.”
 
However, the agreement states that ABI's OEM real-time customers cannot commercialize human diagnostic tests for “specified conditions” on these instruments for three years after the date of the separation.
 
The agreement also covers reagents. Specifically, ABI agreed that it will not “knowingly commercialize” sequence-specific primers and probes for incorporation by a third-party product manufacturer into human diagnostic products, or to a clinical laboratory for performing ‘‘home-brew’’ human diagnostic testing for the specified conditions for three years after the date of the separation. This restriction does not apply to Asia, Africa, the Middle East, or South America.
 
ABI also agreed not to commercialize analyte specific reagents or human diagnostic kits for testing the same specified conditions for a period of three years after the date of the separation.
 
ABI and Celera also agreed to “work together” in licensing “specified intellectual property” of ABI to third parties in the human in vitro diagnostics field. “Revenues from these licenses will be shared equally between [ABI] and Celera,” the filing stated.
 
However, Celera will not commercialize products in forensics and applied markets that incorporate ABI’s intellectual property, unless it obtains a license to that IP “on standard third-party terms.”
 
The filing noted that the three-year time restrictions described in the agreement do not apply to the commercialization of “a competing product acquired as part of an acquisition” by ABI, nor would it prohibit an acquiror of ABI “from continuing to commercialize a competing product following an acquisition.”
 
ABI is in the process of being acquired by Invitrogen in a $6.7 billion deal that is expected to close in the fall. The combined company will retain the Applied Biosystems name but will be based at Invitrogen’s headquarters in Carlsbad, Calif.

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