A Medical Device Daily

Phase Forward (Waltham, Massachusetts), a provider of data management solutions for clinical trials and drug safety, reported a settlement in its pending patent litigation with Datasci (Arden Hills, Minnesota).

Phase Forward said it would make a one-time payment of $8.5 million to settle the litigation without admitting any liability and to obtain a fully paid-up, non-exclusive, license to the patent on an ongoing basis.

The agreement dismisses a lawsuit filed by Datasci in June 2004 against Phase Forward and one of its customers, Quintiles (Research Triangle Park, North Carolina). As disclosed in a Phase Forward filing with the Securities and Exchange Commission (SEC), the lawsuit asserted that Phase Forward's InForm, Clintrial and Clintrial Integration Solution products and related services infringed a U.S. patent owned by Datasci (No. 6,496,827).

The settlement followed the Feb. 7 issuance of the company's fiscal 2005 earnings press release. Since the contingency existed as of Dec. 31, 2005, and the settlement was concluded prior to the issuance of Phase Forward's audited FY05 financial statements, the company is requ-ired to record the impact of the settlement in FY05. It said it would include the settlement amount of $8.5 million in its previously announced financial results for 4Q05.

In other legalities, the SEC filed a settled enforcement action in federal district court in San Diego charging Sanjiv Agarwala, MD, of Pittsburgh, with insider trading in the stock of Maxim Pharmaceuticals (San Diego) – now merged with EpiCept (Englewood Cliffs, New Jersey).

Agarwala, an associate professor of medicine and medical director of the melanoma program at the University of Pittsburgh Medical Center, from January 2000 through the fall of 2004 consulted for Maxim on the clinical trials of the company's cancer drug, Ceplene.

He agreed to pay $14,784 in disgorgement of illegal trading profits and loss avoided, plus prejudgment interest of $398, and a civil penalty of $29,568.

The SEC complaint alleges that as one of the researchers involved in the Ceplene clinical trials, Agarwala obtained material nonpublic information on three separate occasions, specifically, that Maxim had received FDA approval for a treatment protocol for Ceplene for malignant melanoma; that the results of a clinical trial for acute myeloid leukemia were positive; and that the results of a clinical trial for malignant melanoma were negative.

It further alleges that in April, May and September 2004, while aware of the material nonpublic information, Agarwala used his father's brokerage account to purchase or sell Maxim stock before the public announcements of that information.

The SEC said that Agarwala's profits and loss avoided from his insider trading were $14,784, and that he breached his duty to Maxim not to trade on the basis of confidential information.

Agarwala consented, without admitting or denying the allegations in the complaint, to the entry of a final judgment enjoining him from future violations of various antifraud provisions.

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