A Diagnostics & Imaging Week

Digene (Gaithersburg, Maryland) reported entering an agreement with Georgetown University (Washington) to settle litigation, currently pending in the U.S. District Court for the District of Columbia.

The litigation, initiated in October 2004, relates to a license agreement with the university for U.S. Patent No. 5,643,715 and corresponding foreign patents and applications relating to human papillomavirus (HPV) type 52, and to U.S. Patent No. 5,057,411 and corresponding foreign patents, relating to the use of the L1 gene sequence to detect specific HPV types.

Digene said it will record a charge of $7.5 million in settlement expenses in fiscal 4Q05 results.

Digene also will pay ongoing royalty fees to Georgetown University. Digene's total royalty and technology fees, inclusive of royalty fees paid to Georgetown University, are expected to be about 5%-6% of product sales, consistent with prior guidance. Except for the $7.5 million settlement expense, Digene said the transaction will not impact FY05 guidance.

Digene will make an initial payment to Georgetown University of $3.75 million, and make a second payment to of $3.75 million no later than Oct. 15, 2005. Digene will also pay Georgetown University royalties on future net sales of products covered by the license grant. Digene's obligation to make royalty payments will end on July 1, 2014 for U.S. Patent No. 5,643,715 and will end on Oct. 15, 2008 for U.S. Patent No. 5,057,411, unless earlier terminated.

The settlement "will enable us to focus our efforts and resources on the commercialization of the Digene HPV Test," said Evan Jones, chairman and CEO of Digene. "[W]e believe we have strengthened our rights under the settlement and license agreement."

"Georgetown University is delighted to have reached an amicable resolution ... and looks forward to a collaborative relationship moving forward," said Martin Mullins, vice president of technology licensing.

Digene manufactures DNA and RNA test systems for the screening, monitoring and diagnosis of human diseases, with a focus on women's cancers and infectious diseases. The company's hc2 High-Risk HPV DNA Test is the FDA-approved test for human papillomavirus, and is approved for both follow-up evaluation in women with inconclusive Pap results and for primary adjunctive screening with the Pap test in women 30 and older. Its portfolio also includes DNA tests for the detection of other sexually transmitted infections, including chlamydia and gonorrhea, as well as tests for blood viruses.

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