Roche Diagnostics has agreed to turn over its 60 U.S. physician office customers to Igen International Inc., a move that will potentially increase Igen's revenues by $2 million annually.
The agreement, announced yesterday, sent the stock of Gaithersburg-based Igen up $1.625, to $16.875 per share.
Roche agreed to transfer the customers to comply with a 1998 preliminary injunction issued by the U.S. District Court in Maryland, Igen said. The move is part of a larger, ongoing legal battle between the two companies over customers and royalties.
The dispute goes back to 1997, when Igen sued Boehringer Mannheim GmbH for violating a contract by selling diagnostic tests based on Igen technology to physicians' offices. Igen develops and markets products to detect and measure a variety of substances.
Roche inherited the dispute when it acquired Boehringer.
John Putnam, an analyst with Gruntal & Co. in Chicago, said Roche's agreement to turn over the customers is a "legal and moral victory" for Igen.
"Financially, it's not a big deal. But it's an important milestone in the larger court battle that Igen and Roche are locked in," he said. "People view this as another step to resolving this situation."
Luke Smith, an analyst with Chapin, Davis, a Baltimore brokerage, said this latest development was long overdue. Igen's stock has been depressed by the court wrangling because investors don't "like to get involved in legal struggles. It just seems endless."
Indeed, Igen has other claims against Roche. Igen maintains that 225 Roche customers outside the United States should also fall under the court's injunction. If the court agrees, those customers would add an estimated $8 million in annual revenues to Igen.
Igen also is seeking royalties.