Digene Corp. has agreed to pay Georgetown University $7.5 million to settle a patent infringement lawsuit over the biotech firm's lead product, a screening test for the most frequent cause of cervical cancer.
The Gaithersburg company will also pay Georgetown an undisclosed amount of royalties until 2014, according to its announcement yesterday. The test accounted for $90 million in revenue last year.
Georgetown had been seeking an 8 percent royalty on sales, but the university appeared to settle for less. Digene said total royalty payments to several patent holders, including Georgetown, would be 5 percent to 6 percent of product sales, an estimate the company has previously provided.
The lawsuit, filed last October, centered on two patents the university held relating to Digene's test for the human papillomavirus (HPV). The more important of the patents was for identifying one of the 13 cancer-causing HPV subtypes for which Digene's test screens. That particular subtype accounts for about 4 percent or 5 percent of cervical cancers.
The method for identifying the two most predominant subtypes, which account for about half to two-thirds of cervical cancer cases, is in the public domain and not subject to patents.
Digene's settlement with Georgetown is important because it preserves an exclusive patent, according to Charles M. Fleischman, Digene's president. The firm is facing a competitive threat from testing giant Roche Diagnostics, which could gain approval from federal regulators to sell its own HPV test by 2007.
"This settlement eliminated the threat of litigation, the cost of litigation, and it protects and extends our intellectual property profile," Fleischman said.
Georgetown University officials also welcomed the settlement, calling Digene a valuable partner.
"Georgetown University is delighted to have reached an amicable resolution of the dispute with Digene, and looks forward to a collaborative relationship moving forward," said Martin Mullins, the university's vice president of technology licensing.
Digene will take a $7.5 million charge for the fourth quarter of fiscal 2004, which ended in June. The firm's shares closed yesterday at $29.90, down 4 cents.