Subject: Du Pont and HEM Settle Lawsuits Over AIDS Drug 
Date: Published: 7/17/90 (78 lines)
Source:  Wall Street Journal.  Copyright Dow Jones & Co. Inc. 

    Technology:
    Du Pont and HEM
    Settle Lawsuits
    Over AIDS Drug
    ----
    By Richard Koenig
    Staff Reporter of The Wall Street Journal

    Du Pont Co. and HEM Research Inc. agreed to settle
 litigation stemming from the collapse of their joint venture
 with an experimental AIDS drug.
    Under the agreement, Du Pont will pay HEM $2.8 million,
 give up the 5% stake in HEM that it acquired in 1987 and
 relinquish certain marketing and royalty rights to the drug,
 called Ampligen.
    The agreement, announced yesterday by HEM, brings to an
 end the lawsuits that ensued after the close of a big
 clinical trial meant to determine whether Ampligen slowed the
 progression to acquired immune deficiency syndrome in
 patients infected with the AIDS virus.
    Du Pont, the Wilmington, Del., chemicals giant, had
 quickly allied itself with HEM after HEM researchers reported
 in the British medical journal Lancet encouraging but
 inconclusive results from a small trial of Ampligen.  Du Pont
 has since said in court papers that it invested more than $30
 million in HEM and its work with Ampligen, including the
 large trial, which involved more than 300 patients.
    But after Ampligen failed to show efficacy in the large
 trial, Du Pont alleged that it had been provided misleading
 information by HEM, a closely held company based in
 Philadelphia.  Du Pont said the damages sought in its suit,
 filed in a Delaware state court, far exceeded HEM's net worth
 of $8.5 million at the end of 1988.
    HEM, for its part, has contended that the plastic bags Du
 Pont used to package Ampligen, which is given intravenously,
 impaired the drug's potency.  During the initial trial
 reported in the Lancet, the drug was packaged in glass
 bottles.
    HEM countersued Du Pont, seeking $7.4 million it said it
 was owed by Du Pont, plus other damages under
 breach-of-contract claims.  Those claims, as well as Du
 Pont's, were dropped under the pact.
    E. Paul Charlap, HEM's chairman and chief executive
 officer, called the settlement a "favorable outcome" for HEM. 
 A Du Pont spokesman replied that "both sides had claims and
 counterclaims, and we came to this agreement."
    Even as the settlement was reached, though, another point
 of contention between HEM and Du Pont arose.  Although Du Pont
 is to give its unused vials of Ampligen to HEM under the
 accord, Du Pont destroyed raw material used to make the drug,
 an anti-viral agent fashioned from double-stranded
 ribonucleic acid.
    HEM officials estimated that the raw material could have
 been used to make enough Ampligen to treat some 3,000
 patients for a year.  "Obviously, this is going to cause this
 little company a lot of trouble" in expanding future trials,
 said William M. Mitchell, a consultant to HEM and a pathology
 professor at Vanderbilt University, adding that HEM had
 thought it might gain possession of the material.
    The Du Pont spokesman said, "We had asked" HEM about the
 raw material during settlement talks, "and they had no
 interest.  We had no use for it, so we destroyed it."
    About 30 people infected with the AIDS virus continue to
 be treated with Ampligen from glass bottles under HEM's
 auspices.  In addition, HEM said, it recently expanded its
 U. S. clinical trials in the use of Ampligen against a
 virus-caused blindness related to AIDS and is seeking
 clearance from the Food and Drug Administration to broaden
 its trials in AIDS-related disorders.

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