Verdict boosts Igen stock 10%

Shares reach $42.15, 52-week high, after $505 million award

January 12, 2002|By Gus G. Sentementes | Gus G. Sentementes,SUN STAFF

Igen International Inc.'s stock rose nearly 10.6 percent to a 52-week high of $42.15 yesterday, the day after the Gaithersburg company won a $505 million judgment against Roche Diagnostics GmbH.

A federal jury in Greenbelt found Thursday that Roche Diagnostics broke a 1992 contract by underpaying royalties to Igen and by selling Igen's patented diagnostic test to markets not included in the agreement.

Roche, the world's largest diagnostic testing company, plans to appeal the $505 million award to Igen, which had sales of $31.4 million in fiscal year 2001.

While Roche's shares have plummeted over the past year, Igen's stock has risen steadily in the belief it would prevail in its breach-of-contract case against the Swiss company.

Igen won on a number of counts, but the most important was the right to terminate its exclusive contract with Roche, said John M. Putnam, an equity analyst with Gruntal & Co.

The verdict, Putnam said, "gives [Igen] more opportunity to sell more product in the long run, to advance its technology more."

Igen licensed its technology in 1992 to Boehringer Mannheim GmbH - a company that Igen sued in 1997 and was later acquired by Roche.

Igen's technology uses chemical compounds that emit light upon detecting certain biological substances. The technology is used in lab tests for a range of ailments, including cancer, heart disease and osteoporosis.

The worldwide diagnostic testing business is growing at 2 percent a year, Putnam said. If Igen develops a test that becomes standard, then "all of a sudden you could have a $200 million product," he said.

Roche officials and a company attorney could not be reached for comment.

In an interview with The Sun on Thursday, Heino Von Prondzynski, head of the Roche Group's $6 billion-a-year diagnostics division, said that he was pleased with the verdict's fairness.

Igen attorneys had asked the jury for $709.7 million in compensatory damages, plus punitive damages that would bring the award total to over $1 billion. The jury awarded $105 million in compensatory damages and $400 million in punitive ones.

Officials from both companies said that business will go on as usual. An existing court order bars any license termination until all appeal proceedings are completed.

The prospect of a lengthy appeals process is "no problem at all," said Igen's Chief Financial Officer George V. Migausky. He thinks the jury's award won't be whittled down by Roche during the appeals process.

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