Affymetrix Stock Rebounds on Court Ruling
Affymetrix Inc. shares jumped 32% on Thursday after the No. 1 maker of chips used in genetic research won an appeals court ruling in a patent dispute with Oxford Gene Technology Ltd., a British rival.
The British Court of Appeal, reversing an April finding by the British High Court, ruled that Affymetrix gained a valid license to Oxford Gene patents in an acquisition last year.
The ruling could help Santa Clara-based Affymetrix maintain its leading share of the gene chip market by keeping competitors from using a key technology, said Darren Mac, an analyst with Gruntal & Co.
“This was the largest overhang on the stock,” said Mac, who today raised his rating of the stock to “market outperform” from “market perform.”
Affymetrix shares soared $19.36 to close at $79.44 in Nasdaq trading. Before Thursday, Affymetrix shares had fallen 29% this year on concern about the patent litigation and competition from companies such as Corning Inc., Motorola Inc. and Mitsubishi Rayon Co.
Affymetrix is the world’s largest supplier of gene chips, small slides containing gene sequences used by drug makers and researchers to analyze genetic material.
Affymetrix gained rights to the Oxford Gene patents when it purchased laboratory equipment maker Beckman Coulter Inc.’s gene research business last year. Oxford Gene had licensed the so- called Southern patents to Beckman Coulter.
The Southern patents, named for the Oxford University inventor of the technology they cover, describe a method for making DNA arrays, or gene chips.
If the British appeals court had ruled against Affymetrix, the court could have forced the company to license some of its own patents to Oxford Gene, said Vern Norviel, vice president and general counsel for Affymetrix.
That could have made Affymetrix’s high-density gene-chip technology available to another competitor, Agilent Technologies Inc., which has a collaboration agreement with Oxford Gene, Mac said.
Agilent could then make chips rivaling Affymetrix’s, which contain tens of thousands of genes, Mac said.
The court decision, “gives us freedom to operate our business worldwide under the Southern patents if we ever need those patents,” said Edward Hurwitz, Affymetrix’s chief financial officer. “We feel good about this decision, and it’s binding and validating for us.”
The Court of Appeal denied Oxford Gene’s request to appeal to the highest British court, which is the House of Lords.
Oxford Gene, though, still may take its request directly to the House of Lords.
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Genetic Stock Jump
Affymetrix stock had been down 29% this year on concern about patent litigation. But fears were alleviated Thursday when a British appellate court issued a ruling in the DNA chip maker’s favor.
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Affymetrix shares, monthly closes and lastest on Nasdaq
Thursday: $79.44, up $19.36
Source: Bloomberg News
