Rival’s Challenge to Patent Triggers Calgene Stock Fall
Calgene’s stock fell in heavy trading Tuesday as investors reacted to news that a rival is challenging Calgene’s patent on its genetically engineered tomato.
ICI Seeds, a Delaware subsidiary of London-based Imperial Chemical Industries, said the U.S. Patent Office had initiated a review, called interference, of Calgene’s patent. Calgene stock was among the most active in NASDAQ trading, falling at one point to $9.625 before recovering somewhat to close at $11.50 a share, off $1.125.
The Davis, Calif.-based agricultural biotechnology company had been coasting along the last few months on a succession of positive events. Most recently, a Food and Drug Administration policy announcement seemed to set the stage for Calgene’s tomato to become the first genetically engineered food to be made available to consumers.
Calgene’s patent, granted Jan. 31, 1989, remains in force, as do the company’s plans to begin selling the engineered tomato next year. Analysts said they believed that Calgene’s patent position is strong and that it will prevail in the review.
But the sudden jolt Tuesday left Calgene Chief Executive Roger Salquist fuming. “I’m outraged,” he said, calling ICI’s announcement of the interference a “cheap shot.” “They are trying to put out bad news . . . to confuse the issue in the investing public’s mind. They are trying to force us to negotiate and give them a license by attacking our stock price.”
After the FDA announced in early June that it would review genetically engineered foods no more stringently than other food products, Calgene’s stock began to rise, climbing past $15 a share before settling into the $12-$13 range.
Sutro & Co. analyst Margaret McGeorge said that while “Calgene has a very strong patent position . . . the stock market is very jittery. Anything the least bit confusing or that in any way smells of being significant can have an exaggerated effect on the stock.”
In April of this year, Calgene was granted a broad patent covering the antisense technology used in developing the tomato and other products. In the case of the tomato, the technology is used to “turn off” the gene that causes the fruit to begin rotting.
Calgene’s 1989 patent covers engineering of the tomato gene that determines when the fruit begins to rot. It began the patent application process in 1985 and completed it in October, 1986. A month later, ICI Seeds submitted its patent application on the same gene.
In an interference proceeding, the patent office reviews the claims and supporting data submitted by opposing applicants to determine which is the true inventor.
