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Biotech / Medical : ARADIGM CORP. ARDM -- Ignore unavailable to you. Want to Upgrade?

To: Marvin Frank who wrote (22)	8/30/1998 7:38:00 PM
From: tnsaf	Read Replies (1) \| Respond to of 255

I haven't seen mention of this from the August 14 quarterly report. Jason --------------- PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS In June of 1998, Eli Lilly and Company ("Lilly") filed a complaint against the Company in the United States District Court for the Southern District of Indiana. The complaint made various allegations against the Company, arising from the Company's decision to enter into an exclusive collaboration with Novo Nordisk A/S, addressing the development and commercialization of a pulmonary delivery system for insulin and insulin analogs. Management believes that Lilly's claims are without merit and that this litigation will not have a material adverse effect on the results of operations, cash flows or financial position. The Company has sponsored various studies of the pulmonary delivery of insulin and insulin analogs using materials supplied by Lilly under a series of agreements dating from January of 1996. The Company and Lilly had also conducted negotiations concerning a long-term supply agreement under which Lilly would supply bulk insulin to the Company for commercialization in the Company's AERx Diabetes Management System, and a separate agreement under which the Company would license certain intellectual property to Lilly. These negotiations were terminated after the Company proceeded with its agreement with Novo Nordisk A/S. The complaint seeks a declaration that Lilly scientists are co-inventors of a patent application filed by the Company relating to pulmonary delivery of an insulin analog or, in the alternative, enforcement of an alleged agreement to grant Lilly an nonexclusive license under such patent application. The complaint also contains allegations of misappropriation of trade secrets, breach of fiduciary duty, conversion and unjust enrichment and seeks unspecified damages and injunctive relief. The Company recently filed an answer denying all material allegations of the complaint.