By Lisa Seachrist

Washington Editor

Avoiding the expense and hassle of a second patent infringement trial, Genentech Inc. and the University of California agreed to settle the dispute for $200 million.

The lawsuit, which was initiated in 1990 over a patent for human growth hormone, was settled Friday as the University of California Board of Regents voted to accept the settlement. Genentech admitted no wrongdoing.

"It's been said when one side feels it's given too much and the other side feels it's gotten too little, you probably have a fair settlement," said Zach Hall, vice chancellor for research for the University of California system. "The kind of rancor that accompanies a trial like this is something we'd all like to avoid."

"Obviously, we are very relieved to put this whole litigation behind us," said South San Francisco-based Genentech spokeswoman Marie Kennedy. "All of this happened 20 years ago and now we can focus on what we do, which is develop innovative and important medicines to treat serious diseases."

Under the terms of the settlement, Genentech will pay the University of California a total of $200 million - $50 million of which is a contribution toward the construction of the first biological sciences research building at the new Mission Bay campus of the University of California, San Francisco (UCSF). The three inventors and two collaborators on the disputed human growth hormone patent will share approximately $85 million. The University of California general fund will receive approximately $30 million and the balance of the award - approximately $35 million - will go to support research throughout UCSF, in particular, large capital needs.

The lawsuit was filed in 1990, when the University of California sought more than $400 million in compensation for the alleged theft of technology developed at the university. The university was granted a patent in 1982.

During the trial, one of the original scientists to identify the growth hormone's genetic pattern, Peter Seeburg, now a director of the Max Planck Institute for Medical Research in Heidelberg, Germany, testified he stole cloned DNA samples from the university after he left to begin work at Genentech. Genentech was forced to admit the sample was stolen but claimed those sequences weren't used to develop its human growth hormone product, Protropin.

In July, a jury ruled that the university's patent was valid, but it deadlocked over claims that Protropin was based on research done by university scientists. The revelation, nonetheless, left Genentech with a black eye as both accuser and accused raised the issue of scientific integrity.

Protropin, used mainly to treat dwarfism, was the first drug to be marketed by Genentech following it founding in 1976. It was approved in 1985.

In August, U.S. District Court Judge Charles Legge ordered the two sides to enter into negotiations to settle the dispute while awaiting the second trial scheduled to begin in January. At the time of the deadlock, Legge had indicated the company's second-generation human growth hormone product, Nutropin, could become part of the lawsuit - a move that could have substantially increased the potential award to the university had the jury found in its favor.

Nutropin is approved as therapy to boost growth in children who suffer from short stature as a result of growth hormone deficiency, renal failure and Turner's syndrome. Total sales for Protropin, Nutropin and Nutropin AQ have been more than $2 billion.

Both sides claim the settlement preserves their historically productive relationship. Hall said, "This issue has been vexatious to both of us and we are happy to put it behind us."

Genentech's stock began the week trading near $70 a share but began to shoot up on Tuesday when rumors of the potential settlement began to emerge. Confirmation of that settlement continued the trend with Genentech's stock (NYSE:DNA) closed Friday at $87.062, up $5.50. (A 2-for-1 stock split took effect earlier this month.)