Court documents unsealed in March suggest the collaboration was doomed from the beginning because of an unclear contract and poor communication. But biotechnology attorneys who reviewed the cases say the final blow came in July 2002 when ABI delayed the project for the second time because its reagents were not reliable (see Box 1, p. 837). The collaboration was apparently abandoned but not officially terminated by the firms. By January 2003, both companies had launched their own systems, promoting them above the floundering joint product and sealing deals to provide systems and genotyping services. By then, ABI had filed a patent infringement lawsuit against Illumina, which retaliated with a breach-of-contract suit.
Both sides are now open for losses, but the damage would be much more severe to the smaller Illumina; the firm stands to lose the rights to its core technology and perhaps $30 million in damages, a large blow to a company with $60.4 million in cash and investments as of 30 March 2003 and an annual cash burn rate of $26.4 million. In contrast, ABI could lose its $15 million investment in the deal and potentially shared intellectual property, which is peanuts compared with its financial situation on the same date: $521.3 million in cash and net income of $103.5 million for the previous nine months.
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