said Monday that it plans to appeal a jury verdict that requires the biotech firm to pay $500 million stemming from a contract dispute with the City of Hope cancer center in Los Angeles.
However, Genentech will take a $500 million charge in the second quarter to cover the jury award as its legal appeal winds through the court system, a process that could take anywhere from one year to four years, according to the company. Genentech said the $500 million charge will impact its actual earnings, but pro forma earnings will be unaffected.
Monday, a jury in Los Angeles County Superior Court awarded City of Hope $200 million in punitive damages. Last week, the same jury awarded the cancer center compensatory damages of $300 million. The contract feud between Genentech and City of Hope centers around disputed royalty payments tied to drug sales.
Genentech is expected to earn 22 cents in the second quarter, on a pro forma basis, according to Thomson Financial/First Call. The company will report results on July 10.
Shares of Genentech closed Monday up $1.90, or 5.7%, to $34.85.