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Lilly, Emisphere settle protracted dispute

September 25, 2007
Eli Lilly and Co. has agreed to pay $18 million to settle a bitter dispute it had with New York-based Emisphere Technologies Inc. Emisphere announced the settlement agreement this morning but gave no details.

The agreement still needs approval from U.S. District Court Judge David Hamilton in Indianapolis.

In January 2006, Hamilton ruled that Indianapolis-based Lilly breached its contract with Emisphere as the two worked to develop oral versions of Lilly's injectible osteoporosis drug Forteo. Since then the companies continued litigating over whether Lilly had breached Emisphere's patents and whether it owed damages.

"Lilly is not admitting any wrongdoing. We continue to believe that those claims were without merit," said Lilly spokesman Mark Taylor. "We've entered into [the settlement] to avoid any additional costs related to litigation."

Taylor said Lilly has already set aside reserves that are comparable to the payout it will give Emisphere, so no additional financial charges will be taken.

Lilly first sued Emisphere in October 2003 to avoid paying $3 million for its research, because, Lilly contended, Emisphere had not successfully reached a required milestone.

Emisphere officials later claimed that Lilly had used Emisphere's technology as part of a secret research project while the firms partnered on another project. Lilly claimed it had only used research Emisphere had already made publicly available.

In April 2006, Hamilton forbid Lilly from using Emisphere's patents.

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