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Stratagene Directors Receive Options to Buy 200,000 Shares; Stock Hits 52-Week Low

Several Stratagene directors and executive managers recently received options to purchase roughly 200,000 shares of the firm's stock amid a precipitous decline in the stock's price, though the two events are unrelated.

Company officials have been mum on the reason for the steep and rapid decline in Stratagene's stock. However, the firm's shares have fallen steadily since Stratagene reduced its full-year revenue guidance by $2 million to a range of $98 million to $102 million on May 4 (see BioCommerce Week 5/10/2006).

Stratagene's shares have fallen nearly 50 percent in the past five weeks and closed Tuesday at a 52-week low of $6.08 (see graph). In the first four months of the year, Stratagene's shares hovered between a low of $9.50 and a high of $11.41.


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Whatever the reason is for investors selling off Stratagene's shares, company directors and certain members of executive management could benefit if the share price rebounds. Through a stock option program previously approved by shareholders, the directors and officers received options to purchase approximately 200,000 shares of the company's common stock (see table).

The options give them the right to buy the shares over a 10-year period with a 4-year vesting period, according to Stratagene CFO Steve Martin. "These are not able to be purchased at this time, [because] they're not vested," he told BioCommerce Week.

He noted that it was a "usual occurrence" for the company to grant options in June each year.

Meanwhile, the reasons for Stratagene's falling stock price are not entirely clear. Perhaps investors are concerned that Quest Diagnostics' acquisition of Stratagene molecular diagnostics partner Focus Diagnostics could jeopardize that relationship (see BioCommerce Week 5/24/2006). When asked at the time of the acquisition if Stratagene's relationship with Focus would change, Steve Martin told BioCommerce Week, "We believe that our opportunity with Focus is sound."

The firm also recently settled an ongoing patent dispute with Takara Bio related to PCR enzyme blends, with both companies agreeing to pay "reasonable" royalties to each other under certain licensed patents. Stratagene said in a statement that the settlement had "significantly strengthened its patent portfolio" in the PCR arena and that it would seek to establish a licensing program for competitors' products covered by the portfolio (see BioCommerce Week 5/17/2006).

However, Stratagene is still embroiled in patent disputes with Third Wave Technologies and Applied Biosystems, and President and CEO Joe Sorge said in a recent conference call that the firm hoped to settle with both of those companies out of court (see BioCommerce Week 5/10/2006).

Stratagene has appealed a judgment and damages of $15.9 million it was ordered to pay Third Wave for infringement of Third Wave's Invader QPCR products (see BioCommerce Week 12/22/2005). Stratagene officials declined to say whether the firm is currently engaged in settlement talks with Third Wave, but during the conference call Sorge expressed the desire for a quick resolution.

ABI parent Applera and Roche Molecular Systems settled a long-standing patent-infringement suit against Bio-Rad Laboratories unit MJ Research in February, enabling MJ to resume selling its thermal cycler products in the US (see BioCommerce Week 2/15/2006). The settlement left Stratagene as the sole defendant in the suit, which was brought by Applera and Roche in November 2004 (see BioCommerce Week 11/18/2004), and is scheduled to go to court later this year.

Sorge has since said that he hoped to settle with Applera and avoid a trial — but investors may be getting nervous over the potential outcome of the Third Wave appeal and the possibility of paying damages to ABI. As of March 31, Stratagene had cash and cash equivalents of $30.6 million, but included in that amount is $21 million that was set aside in January as collateral for a bond related to the damages owed to Third Wave.

— Edward Winnick ([email protected])

Name Position Transaction Date
Date Exercisable and Expiration Date
Number of Shares
Price
Robert Manion* Director June 1, 2006
May 31, 2016
14,500
$6.60
Carlton Eibl Director June 1, 2006
May 31, 2016
10,000
$6.60
Peter Ellman Director June 1, 2006
May 31, 2016
2,500
$6.60
Steve Martin CFO June 1, 2006
May 31, 2016
60,000
$6.60
John Pouk SVP, Global Sales and International Operations June 1, 2006
May 31, 2016
50,000
$6.60
John Reed Director June 1, 2006
May 31, 2016
10,000
$6.60
Nelson Thune SVP, Operations June 1, 2006
May 31, 2016
50,000
$6.60
* Manion also purchased 4,500 shares of Stratagene's common stock at prices between $6.60 and $7.41.
SOURCE: US Securities and Exchange Commission
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