Executive Summary

CAMBRIDGE BIOSCIENCE SUES MICROGENESYS FOR INFRINGEMENT of its gp120 patent. Cambridge charged in a civil suit filed Jan. 3 in Connecticut Federal Court that MicroGeneSys is "selling purified patented products and conducting commercial vaccine research using the purified protein without a sublicense from Cambridge BioScience." Cambridge offered non-exclusive sublicenses under the patent, in the summer of 1988, to manufacturers conducting R&D in the areas of AIDS diagnostics, therapeutics and vaccines. Cambridge holds the exclusive license to the patent for the AIDS virus envelope glycoprotein 120, which was issued on Feb. 16, 1988 to Harvard College. The protein was originally discovered and purified by two researchers at the Harvard School of Public Health, Myron Essex, DVM, PhD, and Tun-Hou Lee, PhD. Cambridge maintains that MicroGeneSys refused to sublicense the technology, following an August 1989 offer from Cambridge. Current holders of sublicenses are Abbott Laboratories, Diagnostics Pasteur, Baxter Healthcare, Behring, Becton Dickinson and SmithKline Beecham. Under the terms of the agreements each sublicensee pays $150,000 for the first field of application of the technology (such as diagnostic or therapeutic) and $50,000 for each field of use thereafter. Pre-September 1989 sublicensees to the technology pay Cambridge BioScience a base royalty of 4% of their net sales; subsequent sublicensees will be required to pay a base royalty of 5%. Cambridge is seeking treble damages, attorneys' fees and costs and expenses, in addition to compensatory and punitive damages, and injunctive relief. MicroGeneSys has been conducting human clinicals on an AIDS vaccine, VaxSyn HIV-1 (p24), since last year. In a registration statement for an initial public offering filed in late 1988, MicroGeneSys said it had received and was considering an offer to sublicense Cambridge's technology.