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Genomic Health Receives $800K Settlement from Incyte

By a GenomeWeb staff reporter

NEW YORK (GenomeWeb News) – Genomic Health has received $800,000 to settle a lawsuit it filed against Incyte, the genetic testing company disclosed in its first-quarter financial document filed with the US Securities and Exchange Commission.

In its Form 10-Q filed on May 10, Genomic Health said that in addition to the $800,000 payment it also has received from Incyte a "paid in full license for all its current and future products and services for intellectual property" stemming from the companies' LifeSeq Collaborative Agreement in 2001 to develop consumer health applications for genomics.

Last July, Genomic Health sued the Wilmington, Del.-based drug discovery and development company in the Superior Court of the State of California for the County of San Mateo, saying it had paid Incyte approximately $3.5 million in royalties for which it was not entitled. Genomic Health, based in Redwood City, Calif., wanted the money returned.

In its complaint, Genomic Health said it had made the royalty payments on the "mistaken belief" that its Onctotype Dx breast cancer assay was covered by US Patent 6,620,606, an Incyte patent covered by the LifeSeq deal.

According to Genomic Health, Incyte failed to pay a maintenance fee for the patent, causing it to lapse in 2007. Incyte did not tell Genomic Health of the lapse, though, and Genomic Health continued to pay royalty fees for the patent even after it lapsed.
Incyte filed a counterclaim alleging breach of contract and sought unspecified damages and to have the case moved to the US District Court for the Northern District of California.

In its 10-Q Genomic Health said that the companies entered into a settlement agreement on April 29. The $800,000 payment will be recorded on its next earnings report for the three and six months ended June 30, 2011, as a reduction to license fee expense within the cost of product revenues.

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