Shares in Biospherics Inc. dropped 38 percent yesterday, after gum giant Wm. Wrigley Jr. Co. disputed that it is seeking a patent to use a sweetener the Beltsville company developed.
More than 2.5 million shares traded hands as the stock dropped $4.593 to close at $7.531.
Biospherics President and Chief Executive Officer Gilbert V. Levin reacted angrily to Wrigley's denial of the patent filing, which his company announced in a press release Wednesday. Biospherics share price tripled after the release.
"This is nothing but semantics to create smoke screen about what their interests really are," said Levin.
He said he had spoken with a chief inventor at Wrigley yesterday and been assured that the company was sincerely interested in the nonfattening sugar substitute known as D-Tagatose. Wrigley, said Levin, was being coy about the filing so that competitors couldn't anticipate whether Wrigley might produce new gum products using the sweetener.
The dispute between the companies involves an application filed by Wrigley in December 1995 under what is known as the Patent Cooperation Treaty. That treaty permits the filing of one application to cover seeking patent approvals in multiple countries at once. The application was filed with the World Intellectual Property Organization (WIPO), which oversees the multinational patent applications.
In the filing, Wrigley lays out a potential mixture for gum products using D-Tagatose. The filing gives Wrigley until June 1998 to seek approval for a patent on the mixture. It essentially gives the company first crack at securing a patent on gums with D-Tagatose as an ingredient.
On Wednesday, Biospherics issued a press release about company developments in which they noted that a number of food producers have expressed interest in using D-Tagatose.
Last October, Biospherics licensed worldwide rights to use D-Tagatose in food products to MD Foods Ingredients of Denmark. Biospherics would receive royalty payments on food produced and sold with D-Tagatose as an ingredient.
Wednesday's release also noted that Wrigley had filed for a patent on using the sweetener in gum. That fact had landed in the public domain when WIPO published Wrigley's application in June following a waiting period.
Biospherics' announcement about Wrigley's interest sent shares in the company soaring Wednesday to close at a 52-week high of $12.125. More than 829,000 shares traded, 68 times recent daily trading averages.
Yesterday, Biospherics' stock price collapsed after reports that Wrigley was denying that it wasn't formally seeking a patent with D-Tagatose.
Christopher Perille, director of corporate communications for Wrigley, said the company viewed the filing as "only a provisional statement of general interest."
"We haven't followed up with any patent filing, and at present have no plans to do so," he added.
He said the company files "dozens" of Patent Cooperation Treaty applications annually involving new food ingredients. Wrigley follows through with seeking patent approvals in only a few instances, said Perille. Fewer still become commercialized products, he said. Definitive numbers were not immediately available.
"Money is what matters," said Chesapeake Securities analyst Luke Smith. "The evidence seems to show that people are
getting interested. Wrigley thinks it might be promising and they thought it was worthwhile to be the first name associated with Tagatose."
Levin said he was shocked by Wrigley's denial of the application.
"We aren't hyping anything," he said. "This has had a terrible effect on our stock."
Levin said his company has shipped Wrigley numerous samples of the sweetener for testing during the past two years and that key scientists at the gum giant have told him they are "very impressed" with it.
"This is a situation where you have a big, well-known company saying one thing and a little company saying another. People are naturally going to believe the big one," added Levin.
Referring to the published copy of Wrigley's application, Levin added, "If you read the language in here, they are going to pursue it. This is a formal patent application."
Pub Date: 9/05/97