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Micromass Pulls High-End Q-TOFs After Losing Patent Dispute to ABI/MDS Sciex

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Micromass’ patent dispute with Applied Biosystems and MDS Sciex has spilled over into the Q-TOF arena, as the Waters subsidiary announced last week that it would suspend shipment of its Ultima line of Q-TOF mass spectrometers in the US because of fears that it too was covered under the disputed patent.

Although a jury’s decision March 15 in the Federal District Court of Wilmington, Del., initially seemed to apply only to Micromass’ high-end triple quadrupole mass spectrometers, the company said that its high-end Q-TOF instruments used similar front-end ion tunnel technology “that could be construed” as covered under the ABI/MDS Sciex patent. The judge for the case has yet to rule in the matter, but Micromass said it was acting immediately to avoid the appearance of “willfully” infringing on the patent, an action that could lead to steeper fines. A jury found Micromass liable for $47.5 million in damages.

For proteomics researchers in the US, this means that the Q-TOFs affected by the decision — the Q-TOF MALDI, Q-TOF API, and Q-TOF Global — will not be available for purchase until at least June, when Micromass plans to release modified versions of the instruments lacking the ion tunnel technology under dispute. In a conference call, Waters managers admitted that the re-engineered instruments might not have the same sensitivity as the spectrometers being pulled, but said they hoped to have the modified instruments ready for demonstration at the American Society for Mass Spectrometry meeting June 2-6 in Orlando, Fla.

Micromass’ decision to withdraw the current versions of the Q-TOF instruments also poses problems for researchers in the US who have already purchased the mass spectrometers, which initially went on sale last summer.

Brian Mazar, director for investor relations at Waters, said the company would not replace the already installed instruments with re-engineered versions, but would continue to service and provide support for the Q-TOFs the company has already delivered to customers.

For Micromass, the impact on earnings is non-trivial. Although Mazar declined to disclose the number of Q-TOFs affected by the ruling that the company has already sold, but said that sales of the instruments accounted for about 2.5 percent of the company’s 2001 sales revenue, or about $21 million. With the list prices for the high-end Q-TOFs affected by the ruling ranging from $400,000 to $475,000, this means the company sold at least 49 of the Q-TOFs in question last year.

Waters has made a $75 million pre-tax provision to account for the cost to future sales and to replace the Q-TOF and triple quad instruments already in the field, with each instrument family responsible for about half of the pre-tax provision.

At the crux of the dispute is a front-end ion guide technology patented by ABI and MDS Sciex — and ostensibly developed independently at Micromass — that uses a hexapole at certain pressures to channel the ions into the mass analyzer.

Although Micromass claims it did not willfully infringe on the ABI/MDS Sciex patent, US Patent No. 4,963,736, its high-end triple quad and Q-TOF instruments also employ the hexapole as an ion guide at the pressures covered under the patent. To extricate themselves from their position of infringement, Micromass said it will re-engineer the Q-TOFs to use the hexapole at pressures not covered under the patent.

Although Waters executives admitted that the changes necessary to bring the Q-TOF Ultima line of mass spectrometers into compliance with the patent restrictions are likely to reduce the performance of the instrument, they did not provide specifics on the reduction in sensitivity, in part because the re-engineered instruments will still contain technical improvements from the Q-TOF Ultima product line not affected by the patent dispute. “It’s difficult to quantify the performance loss,” said Douglas Berthiaume, Waters’ CEO. “The Q-TOF Ultima has other improvements so we don’t know where we’ll land.”

Waters also maintained that the factors affecting customer decisions to buy Q-TOFs extended beyond questions of sensitivity, and that its competitive position in the Q-TOF market “will still be pretty strong.” Indeed, according to Phil Andrews, a professor of biological chemistry at the University of Michigan and director of the Michigan Proteome Consortium, his lab opted to buy a Q-TOF MALDI and Q-TOF API from Micromass instead of from the ABI/MDS Sciex joint venture because of Micromass’ superior software.

But Andrews, who received his mass spectrometers from Micromass in December, added that he was worried about the effects of Micromass’ decision on his lab, and hoped he would continue to receive the necessary support to keep the instruments running until they were replaced with re-engineered models. In addition, he felt concern for the company’s overall financial well-being, given the hefty fines recommended by the court.

“If I had stock [in Waters] I would sell it,” he said.

— JSM

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