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With Roche PCR License, Beckman Coulter Starts Developing New Molecular Diagnostics Platform

Beckman Coulter this week cleared a path to the molecular diagnostics market by licensing worldwide rights to Roche's real-time PCR patents for diagnostics use for $27.5 million plus royalties.

The agreement enables Beckman to develop its own RT-PCR-based diagnostic instruments and chemistries. It comes a couple of weeks after the company settled litigation with Applera and gained rights to patents for developing real-time PCR instrumentation for in vitro diagnostics. Beckman officials said the Roche license will enable it to immediately begin developing molecular diagnostic instruments and kits, and the firm expects to file for US Food and Drug Administration clearance and launch products in two to three years.

"This additional license from Roche gives our company the intellectual property required to meet the molecular testing needs of routine labs for an automated, fully integrated system," Beckman CEO Scott Garrett said in a statement.

According to Paul Whitlock, a Beckman spokesman, the firm will develop a new platform for molecular diagnostic testing. "From Applera, we're obtaining intellectual property that will be used in the development of the platform, and from Roche it's the RT-PCR license for the assays themselves," he told BioCommerce Week.

"This additional license from Roche gives our company the intellectual property required to meet the molecular testing needs of routine labs for an automated, fully integrated system."

Whitlock said the firm expects to "submit to the FDA for a clearance of those products that we develop. The license condition with Roche is that the products be for IVD use only" — which bars Beckman from using the technologies for research purposes.

Last year, Beckman launched its Vidiera NsP nucleic sample-preparation platform, which the firm marketed as a companion to its previously launched Vidiera NsD nucleic sample-detection system. Together, the systems represent Beckman's initial foray into the molecular diagnostics market.

But the Vidiera platforms do not run PCR-based tests, and the firm's efforts in molecular diagnostics had been limited to the sample-prep stage. With the licenses from Roche and Applera now in hand, the firm is free to develop its own PCR-based diagnostic instruments and chemistries.

Molecular Dx Entry Fee

As part of the deal, Beckman said that it will pay Roche a one-time license fee of $27.5 million and agreed to pay royalties on sales of all licensed products. There was no previous litigation between Beckman and Roche regarding the PCR patents, and the license erases the potential for such litigation.

Beckman settled litigation with Roche's PCR IP partner Applera a couple of weeks ago, which resolved a dispute over Beckman's capillary electrophoresis technology and Applera's allegations of breach of contract. Under the settlement, Beckman granted Applera licenses to its patents for replaceable gels for capillary electrophoresis instruments and DNA sequencers, and to its patent for a heated lid for thermal cyclers. In return, Applera agreed to pay Beckman $35 million to "release ... any and all claims of infringement relating to DNA sequencer and thermal cycler products."

Applera also agreed to grant Beckman licenses to its patents for nucleic acid sequencing and real-time PCR thermal cycling for use in the diagnostics market. Consequently, Beckman would pay Applera's Celera Genomic segment $20 million over 30 months for rights to use the technology in that market.

Beckman Files Delayed Q1 Report; Says Former
Employee's Allegations 'Not Substantiated'

In addition to announcing its licensing agreement with Roche, Beckman Coulter said this week that its Audit and Finance Committee has found that a former employee's allegations of financial "issues" were "not substantiated and that no adjustment to the company's financial statements was required."

The findings of the committee enabled the firm to file its delayed first-quarter 10-Q with the US Securities and Exchange Commission this week.

In May, Beckman had announced that it would not file its 10-Q for the quarter ended March 31 on time while its board examined a former employee's wrongful termination claim (see BioCommerce Week 5/17/2006). The employee, whom the company had not named, alleged in an April 17 letter that he was terminated for reporting "certain accounting and financial reporting issues" involving the obsolescence of about $25 million of inventory, accounting for returned equipment under lease, and disclosure of causes for change in expenses, the company said. Beckman said that its audit and finance committee had retained outside counsel and an outside forensic accounting firm to investigate the allegations.

Beckman posted first-quarter revenue of $569 million, a 1.2-percent decline from the $576 million reported in the first quarter of 2005. The firm posted net income of $41.4 million, a 27-percent gain over net income of $32.6 million in Q1 2005.

— EW

According to a delayed first-quarter 10-Q filing with the US Securities and Exchange Commission this week (see sidebar), the settlement will enable Beckman to record a $35-million gain and an $18.8-million research and development charge in the second quarter of 2006, which ended June 30.

Beckman will face a growing list of competitors in the molecular diagnostics field, some of which have developed their own DNA amplification technologies and many others that have licensed Roche's RT-PCR patents. Monte Wetzel, director of licensing for Roche Diagnostics, told BioCommerce Week that roughly 30 firms have taken RT-PCR licenses from Roche for human IVD uses.

He said roughly two-thirds of those licensees are smaller companies with the remaining third being some of the world's largest diagnostic players, such as Bayer. Due to confidentiality agreements, he couldn't disclose other licensees.

One of the competitors is molecular diagnostics firm Cepheid, which in June 2004 agreed to pay Roche roughly $20.7 million for non-exclusive rights to Roche patents covering the PCR process, reverse transcription-based methods, nucleic acid quantification methods, RT- PCR detection, and methods for the detection of viral and cancer targets. Under that agreement, Cepheid is permitted to make, use, and sell products based on these technologies for in vitro human diagnostics, except for human identify testing and pathogen detection for blood bank screening and plasma fractionation.

Around the same time, Cepheid expanded its license to Applera's core PCR patents to include real-time PCR for applications in thermal cyclers. In addition, Cepheid agreed to pay Applera $11.5 million over a two-year period to expand its rights under a previously existing thermal cycler supply agreement to include human diagnostics excluding HIV and hepatitis C applications. The firms amended that agreement three weeks ago, allowing Cepheid to sell two of its real-time thermal cyclers to detect, characterize, and monitor HIV and hepatitis C.

— Edward Winnick ([email protected])

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