Biotech buoyed by court ruling

Acquisition on schedule

‘‘We are very pleased with this result, and with the termination of this litigation,” Daryl Faulkner, Digene CEO, said in a statement. ‘‘The court’s dismissal of this petition with no option to amend and re-file clearly recognizes the merits of our position.”

Digene spokeswoman Shelly Decker said the company had no further comment.

However, the court ruling is moot, say Gen-Probe officials, because their company has been accepted into ongoing legal arbitration concerning licensing rights of HPV test products.

Gen-Probe was ‘‘going to withdraw the suit anyway, because we were successful in being inserted into arbitration, which is going on,” said spokesman Mike Watts. ‘‘This ruling today is moot because we got what we wanted, to be included.”

Even so, Gen-Probe plans to appeal the court’s dismissal of its complaint, Watts said.

The ruling follows Friday’s announcement by Qiagen NV that its shareholders approved the Digene deal.

Qiagen, which makes genetic testing equipment and has an office in Germantown, agreed on June 3 to acquire Digene for a combination of cash and stock valued at $1.6 billion.

Digene sells the only federally approved screening test for most strains of HPV, the virus that causes most cases of cervical cancer. Others, including Roche, Gen-Probe and Third Wave Technologies, are developing similar tests. Digene has been the target of a flurry of court disputes concerning intellectual property and distribution of the test.

In the latest case, Gen-Probe filed a request in December in California Superior Court to declare its agreement with F. Hoffman-LaRoche Ltd. and Roche Molecular Systems Inc. for certain HPV-related materials to be a permissible activity under a cross-license agreement between Roche and Digene.

However, the court sided with Digene, ruling that Gen-Probe is not a party to the cross-licensing agreement and dismissed the case, saying there is ‘‘no actual controversy between Digene and Gen-Probe.”

In a statement last week, Faulkner said he expects Digene to prevail in the arbitration case.

‘‘The arbitration panel’s decision does not change our assertions or approach in the arbitration,” he said. ‘‘We believe in the merits of our position and look forward to continuing the arbitration with both Roche and Gen-Probe.”

Digene’s request for arbitration with the American Arbitration Association’s International Centre for Dispute Resolution in New York is based on its claim that Roche breached the companies’ agreement by granting a sublicense to Gen-Probe.

Digene’s expected annual revenues of $202 million for its 2007 fiscal year that ended June 30 would be up 34 percent from $151 million the previous year. Qiagen’s revenues of $466 million in 2006 was 17 percent more than its $398 million in 2005. Digene has 570 employees; Qiagen, 1,990.

Publicly held Gen-Probe, which develops and markets diagnostic and other products, reported revenues of $354.8 million for 2006, with net income of $59.5 million.