Gen-Probe Incorporated has initiated an arbitration proceeding with respect to its collaboration with Bayer Corporation for nucleic acid diagnostic tests for viral organisms. Under the terms of the collaboration agreement, Bayer acquired the exclusive right to distribute nucleic acid diagnostic tests designed and developed by Gen-Probe for the detection of HIV, hepatitis and other specified viruses, subject to certain conditions. Gen-Probe's demand for arbitration states that Bayer has failed to fulfill the conditions required to maintain exclusive distribution rights. The arbitration demand seeks confirmation that the agreement grants Gen-Probe, in the present circumstances, a co-exclusive right to directly distribute the viral diagnostic tests that are the subject of the agreement.

"We commenced arbitration only after our efforts to initiate executive level mediation failed," said Henry L. Nordhoff, chairman, president and chief executive officer of Gen-Probe. "Contractual disputes concerning collaboration agreements are not uncommon and we are confident that the issues will be resolved equitably through the dispute resolution procedures contained in our collaboration agreement. We do not expect the contractual disputes to cause any interruption to product development, product delivery, or customer support."

Gen-Probe's arbitration demand was filed, pursuant to the terms of the parties' 1998 collaboration agreement, with Judicial Arbitration & Mediation Service in San Diego.