Chiron Announces Settlement with Roche in HIV Patent Dispute
11 September 2004 - 7:00AM
PR Newswire (US)
Chiron Announces Settlement with Roche in HIV Patent Dispute
Agreement Highlights Strength of Company's Intellectual Property
Estate EMERYVILLE, Calif., Sept. 10 /PRNewswire-FirstCall/ --
Chiron Corporation (NASDAQ:CHIR) today announced that it has
reached a settlement with F. Hoffmann-La Roche (Roche) in a dispute
over licensing fees and royalties that Chiron had asserted was owed
to the company under a licensing agreement related to its U.S.
Patent No. 6,531,276 (the "276 Patent"). The patent, which was
issued in the United States in March 2003, is directed to nucleic
acid testing (NAT) methods for HIV. "This settlement attests to the
strength of Chiron's intellectual property position," said Ursula
Bartels, Chiron's general counsel. "Because of Chiron's pioneering
science, many people around the world are more protected from
infection by HIV and other life-threatening viruses. The terms of
this agreement recognize the value of our HIV technology and the
validity of our U.S. patent." Under the terms of the settlement
agreement, which covers clinical diagnostics and blood screening,
Roche irrevocably stipulates to the validity and enforceability of
the patent. In addition, Chiron will retain all funds paid by Roche
while the matter was in dispute. Chiron will also receive a
lump-sum payment of $78 million in lieu of royalties beyond January
1, 2005. Roche may elect under the terms of the agreement to obtain
a partial refund and revert to paying royalties on the sales of its
products in North America. The amount of such potential refund
(initially $64 million) and the royalty rate that would be
applicable (between 19 percent and 11 percent) depend on when any
such election is made. The refund available and the applicable
royalty rate each decrease in equal quarterly increments over the
eight quarters of 2005 and 2006. As such, Chiron expects to
recognize $64 million of the payment as revenue over those eight
quarters. The remaining $14 million is nonrefundable and will be
recognized as revenue in the third quarter of 2004. This settlement
agreement leaves unaffected royalties that Chiron already receives
for its HIV technology from Roche and other licensees under
Chiron's ex-U.S. patents. In November 2003, Chiron initiated an
arbitration against Roche pursuant to the rules of the CPR
Institute for Dispute Resolution. The arbitration was held in June
2004. The agreement between the companies concludes the arbitration
process. About Chiron Through its global Blood Testing, Vaccines
and BioPharmaceuticals businesses, Chiron Corporation addresses
human suffering with more than 50 diverse products to detect,
prevent and treat disease worldwide. The company's consistent
success has come from its pioneering science, skill in delivering
innovations in biotechnology and disciplined business approach.
Chiron believes that science has the power to improve people's
lives and harnesses that power to transform human health. For more
information about Chiron, please visit http://www.chiron.com/. This
year, Chiron Vaccines celebrates 100 years of advancing medicine
with the anniversary of two founding companies. In 1904, Emil von
Behring and Achille Sclavo independently started companies in
Germany and Italy, respectively, dedicated to the research,
development and manufacture of vaccines to protect humanity from
infectious disease. As the fifth-largest vaccine manufacturer in
the world, Chiron remains dedicated to the legacies of von Behring
and Sclavo to prevent disease and develop new vaccines to improve
human health globally. This news release contains forward-looking
statements, including statements regarding intellectual property
protections, patent validity and enforcement, product development
initiatives, new product indications, new product marketing, and
in- and out-licensing activities that involve risks and
uncertainties and are subject to change. A full discussion of the
company's operations and financial condition, including factors
that may affect its business and future prospects, is contained in
documents the company has filed with the SEC, including the form
10-Q for the quarter ended June 30, 2004 and the form 10-K for the
year ended December 31, 2003, and will be contained in all
subsequent periodic filings made with the SEC. These documents
identify important factors that could cause the company's actual
performance to differ from current expectations, including the
outcome of clinical trials, regulatory review and approvals,
manufacturing capabilities, intellectual property protections and
defenses, stock-price and interest-rate volatility, and marketing
effectiveness. In particular, there can be no assurance that Chiron
will increase sales of existing products, successfully develop and
receive approval to market new products, or achieve market
acceptance for such new products. There can be no assurance that
Chiron's out-licensing activities will generate significant
revenue, nor that its in-licensing activities will fully protect it
from claims of infringement by third parties. In addition, the
company may engage in business opportunities, the successful
completion of which are subject to certain risks, including
shareholder and regulatory approvals and the integration of
operations. Consistent with SEC Regulation FD, we do not undertake
an obligation to update the forward-looking information we are
giving today. DATASOURCE: Chiron Corporation CONTACT: Chiron
Corporate Communications & Investor Relations, Media,
+1-510-923-6500, or Investors, +1-510-923-2300 Web site:
http://www.chiron.com/
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