Biotech Firm Settles in Patent Dispute : Pesticide: Mycogen, based in San Diego, has paid a Danish company for a toxin used in a product that kills Colorado potato beetles.
San Diego-based Mycogen, which is developing biotechnology-based crop protection products, has paid $4.3 million to end a patent dispute with Denmark-based Novo Nordisk, the companies said Monday.
The dispute involved Bacillus thuringiensis, known as B.t., a naturally occurring agent that is at the core of Mycogen’s M-Trak, a bio-pesticide that kills Colorado potato beetles. The settlement does not involve any of Mycogen’s other proprietary technologies or products, Mycogen spokesman Andrew Barnes said Monday.
Mycogen uses genetic engineering to incorporate the B.t. toxin into a “capsule” that is applied to crops that are attacked by beetles. With the agreement, Mycogen conceded that one strain, B.t. “san diego,” which Mycogen claimed was proprietary, is actually B.t. “tenebrionis,” for which Novo Nordisk holds a patent.
Mycogen’s stock was unchanged at $13 on Monday in over-the-counter trading, and analysts described the settlement as sensible for both companies.
“It’s not good news, obviously, because it turns out Mycogen doesn’t have the intellectual property assets it thought it did,” said Jim McCamant, editor of the San Francisco-based Medical Technology Stock Letter. “But (the cash payment) is not going to break them . . . they’ve paid an advance royalty and can continue to sell their products.”
Mycogen will use $70.3 million in cash on hand from recent public offerings to pay the settlement, Barnes said. The settlement includes a $3-million, non-exclusive license that allows Mycogen to continue selling M-Trak in the U.S.
Barnes said sales of M-Trak have been “minimal” because the product was only recently introduced. “Now, with the settlement, we’re free to get on with conducting our business,” Barnes said. The agreement does not affect five other Mycogen products now on the market, Barnes said.
Novo Nordisk, which has a research and development operation in Davis, recently introduced a competing Potato Beetle toxin, a spokesman said Monday.
Researchers at Mycogen and other biotechnology companies are studying thousands of varieties of B.t. to determine which of the naturally occurring agents are toxic to crop pests. Researchers expect to eventually uncover toxins that are effective against mites, worms, flies and other pests.
Novo Nordisk, with interests in health-care, biotechnology and industrial markets, projects that the world-wide market for all B.t.-based bio-pesticides will grow to $115 million by 1995, up from $60 million in 1991. In contrast, farmers are spending more than $500 million annually on traditional insecticides.
Mycogen reported $685,000 in net income and $12.4 million in revenue for the second quarter ended June 30. However, all but a small percentage of those sales were generated by the acquisition of Soilserv, which provides crop protection services.
