Eastman Kodak Co. has filed for arbitration proceedings againstCetus Corp. in a dispute over rights to commercialize Cetus'polymerase chain reaction (PCR) technology.

"We intend to commercialize a whole family of diagnosticproducts," said Kodak spokesman Paul Allen on Tuesday. "It'sour belief that we have exclusive license to Cetus' PCRtechnology to develop a broad-based line of diagnosticproducts."

PCR allows the generation of billions of copies of any targetedgene sequence in hours. The market for PCR-based humandiagnostics is projected to reach $1.5 billion by 1998.

Kodak, of Rochester, N.Y., is basing its argument on a three-yearresearch and development agreement with Cetus signed in1986. That agreement covered in vitro human diagnostics. Theoriginal contract contained an arbitration provision.

Kodak has no PCR products, but markets immunodiagnosticassays based on monoclonal antibody technology developedunder the agreement. In 1989, Cetus and Kodak decided not torenew the agreement.

Cetus, of Emeryville, Calif., plans to argue that Kodak has rightsto only a limited number of PCR products, but won't elaborateon the criteria it will use in its arguments before the arbitrator.

Cetus is concerned with the effect a ruling could have on F.Hoffmann-La Roche Inc. of Nutley, N.J. Cetus has granted Rochean exclusive license to develop in vitro human diagnosticapplications of PCR, but those rights are expressly subject toany Kodak rights.

"We think that Cetus will prevail and that Kodak has limitedrights," said Paula Frakes, a Roche spokeswoman. Roche is not aparty to the proceedings.

Kodak has said it would pay Cetus a royalty on any products itsold, so regardless of the outcome, Cetus will receive income onits PCR technology. Cetus said it has not calculated the potentialimpact on its royalties.

It's unlikely that an arbitrator would grant Kodak exclusiverights, said Jim McCamant, editor of the Medical TechnologyStock Letter in Berkeley, Calif. And if Kodak gets limited rights,he said, Cetus and Roche don't have much to worry about."Kodak's failure to perform when they were Cetus' partnerindicates they're not a threat in the market," he said.

Cetus has already defended its PCR technology from a challengeby Du Pont. Cetus won a major patent victory in February whena federal jury in San Francisco upheld Cetus' PCR patents. DuPont subsequently agreed to remove its PCR products from themarket.

Cetus stock (NASDAQ:CTUS) closed down 13 cents on Tuesday at$16.25.

-- Karen Bernstein BioWorld Staff

(c) 1997 American Health Consultants. All rights reserved.