Immunex Corp. and Cistron Biotechnology Inc. said Friday that theyhave settled a 1993 lawsuit alleging that Immunex misappropriatedthe DNA sequence encoding interleukin 1 beta (IL-1b) from Cistron.Under the agreement, Immunex will pay Cistron $21 million.

Under terms of the settlement, Immunex, of Seattle, admits to nowrongdoing and assigns certain IL-1b patents to Cistron, of PineBrook, N.J. Immunex will pay Cistron $11 million on Nov. 15, 1996.The rest of the settlement will be paid in installments of $3 million onNov. 15, 1997, 1998 and 1999 with a final $1 million payment onNov. 15, 2000.

"This was strictly a business decision," said Robin Shapiro, managerof corporate communications for Immunex. "It removes the time,expense and risks associated with a jury trial."

At issue in the original lawsuit was whether Immunex and two of itsfounders had copied the IL-1b sequence from researchers at the NewEngland Medical Center Hospitals. Cistron licensed the patent fromresearchers Philip Auron, Charles Dinarello, Andrew Webb,Alexander Rich, and Sheldon Wolff who had applied for a patent in1984 which was granted in 1988. The original patent containedseven mistakes in the DNA sequence that showed up in an Immunexpatent in 1992.

Cistron's lawsuit stated that since Immunex's patent claims includethe DNA sequence, "Auron et al are joint inventors" and co-ownersof the Immunex patent and "any U.S. or foreign applications orissued patents claiming priority there from or relating thereto." Thesuit also claimed that Immunex profited from the misappropriation.

Cistron declined the opportunity to comment on the settlement.However, Cistron maintained throughout the legal proceedings thatImmunex had stolen a trade secret. Immunex, on the other hand,claimed that because the work had been presented at scientificmeetings there were no trade secrets. Friday's settlement renderedboth of these positions moot.

Immunex will record a charge of $18 million to its 1996 earnings toreflect the value of the its obligation under the agreement.

Shapiro said the settlement won't unduly imperil Immunex's financialpicture as the company currently has $38 million in the bank, andthey are scheduled to receive a $56 million payment from majoritystockholder American Home Products, of Madison, N.J., in March1997 and $60 million in March 1998 as part of a governanceagreement.

The company reported a burn rate of $1.4 million in the third quarter,Shapiro said.

Ed Hurwitz, an analyst with Robertson, Stephens & Co. in SanFrancisco, agreed that the settlement will have little effect on eitherthe company's financial resources or its stock value. He pointed tothe fact that the stock is already trading at an all time low andspeculates that this current bad news is already reflected in the stock.

"Immunex made a smart business decision," Hurwitz said. "They paysome money and a contentious issue goes away."

The stock for both companies remained unchanged on the news. n

-- Lisa Seachrist Washington Editor

(c) 1997 American Health Consultants. All rights reserved.