By Debbie Strickland
After a series of patent-related legal setbacks that could ultimately doom its Ceprate stem-cell separation device, CellPro Inc. finally had a good day in court, winning a stay against enforcement of provisions of a permanent injunction that sharply restrict sales outside the U.S.
"It's very good news for CellPro," said Mark Handfelt, the company's vice president and general counsel. "It takes a lot of the short-term financial pressure off the company."
CellPro's shares (NASDAQ:CPRO) Monday jumped 37.5 percent to $3.438, a gain of $0.938 over Friday's close.
The stay is the latest development in a patent infringement suit CellPro lost last year and is now appealing. The case centers on two patents covering CD34 monoclonal antibodies and stem-cell selection technology developed at Johns Hopkins University, in Baltimore, and licensed to Becton Dickinson & Co., of Franklin Lakes, N.J., and Baxter Healthcare Corp., of Deerfield, Ill.
In addition to the injunction curtailing sales, CellPro was ordered to pay $7 million in damages plus a portion of profits to the three plaintiffs: Baxter Healthcare, the chief U.S. operating subsidiary of Deerfield, Ill.-based Baxter International Inc.; Johns Hopkins University; and Becton Dickinson.
Issued in July 1997, the permanent injunction, among other things, required CellPro to cut non-U.S. sales of disposable Ceprate-related products by 25 percent per quarter, with fourth-quarter 1996 levels as the starting point.
"[The stay] means we will be able to sell in the rest of the world without regard to the phase-down limitations which were imposed by the district court," said Handfelt. "We will be able to ramp back up to at least the level we were at in the last quarter of 1996."
The stay further indicates the appeal has "a substantial likelihood of success on merits" in the case of foreign sales, he added. Oral arguments in the appeal are expected in May.
The stay that bolstered CellPro's spirits also contained some good news for the Bothell, Wash., firm's opponents, according to Baxter spokeswoman Deborah Spak.
"If anything, there is a slight benefit [to the plaintiffs]," she said.
Under the original injunction, she said, CellPro had to pay the plaintiffs 60 percent of incremental profits, but with the new order, all revenues have to be put into an escrow account.
"It seems like it would hurt CellPro," she said.
Baxter's own Isolex cell-separation device is selling well in Europe, she said. The FDA is reviewing the product, now owned by a joint venture Baxter formed with Vimrx Pharmaceuticals Inc., of Wilmington, Del.
CellPro's attempts to license the technology from the plaintiffs have been unsuccessful, according to filings with the Securities and Exchange Commission.
As of Dec. 31, 1997, CellPro had $25.6 million in cash, cash equivalents and marketable securities, following a nine-month net loss of $16.6 million. *