Gen-Probe has announced that bioMerieux has exercised a second option to develop diagnostic products for certain undisclosed disease targets using Gen-Probe's patented ribosomal RNA technologies, pursuant to terms of an agreement first announced on October 6, 2004.
In exchange for the right to develop products for these targets, bioMerieux will pay Gen-Probe a $2.1 million license fee.
BioMerieux also retains an option to develop products for other disease targets by paying Gen-Probe up to an additional $0.9 million by the end of 2006.
BioMerieux exercised its first option in January of this year and paid Gen-Probe a $4.5 million license fee, $1.9 of which was recorded as license revenue in the first quarter.
Based on the two option exercises, Gen-Probe will record another $1.9 million of license revenue in the fourth quarter of 2005, since accounting rules require that revenue be recognized based on the total number of targets eventually selected.
This revenue recognition was expected and included in Gen-Probe's financial guidance for 2005.
The amount and timing of future license revenue that Gen-Probe records will depend on the number of additional targets, if any, selected by bioMerieux by the end of 2006.
Gen-Probe also will receive royalties on the sale of products that may be developed using the Company's intellectual property.