Shareholder Suit Settlement Tentatively OKd : Liability: Newport Pharmaceuticals and its insurer agree to pay about $5.7 million in two complaints alleging that the company misled investors.

Newport Pharmaceuticals and its liability insurer have tentatively agreed to pay about $5.7 million to settle two shareholders’ lawsuits alleging that the company misled investors in promoting an anti-AIDS drug in 1985 and 1986, the company said Monday.

The civil lawsuits, which make identical complaints, were filed separately in state and federal courts in September, 1986. They accuse the company and several of its officers and directors--among them founder and former chief executive Alvin Glasky--of fraud and violations of securities laws.

Newport has denied the allegations.

The settlements would compensate those who bought Newport common stock between May 15, 1985, and Feb. 21, 1986. The terms call for Newport to pay $1 million cash and to issue shares of company common stock with a market value of between $1.75 million and $2.1 million.

In addition, the plaintiffs would receive payments of $2.9 million from a company insurance policy that covers Newport’s officers and directors.

A condition of the settlement proposal is that it get the approval of a group of corporate senior note holders and of the U.S. District Court in Los Angeles, said Judith Woodward Archbold, an attorney for Newport.

“In connection with the settlement, the court has not made and will not make any determination as to the liability of any defendant, and the company continues to deny any fault . . . ,” the company said in a statement.

But Leonard Simon, attorney for the plaintiffs, said his clients continue to believe, as the lawsuits allege, that Newport Pharmaceuticals’ officials personally profited by selling company stock at prices that were “artificially inflated” after they issued “false and misleading” statements about the drug Isoprinosine.

According to the lawsuits, the price of Newport stock increased by more than 50% between April and September, 1985. That was the six-month period before the company filed for Food and Drug Administration approval to market Isoprinosine as a medication for people with conditions that often precede the onset of acquired immune deficiency syndrome.

During that period, the suits allege, Newport insiders were “reaping large profits for themselves” by selling their stock.

Newport stock plunged more than 50% on Feb. 21, 1986, the day that the FDA told Newport that Isoprinosine had been rejected as a pre-AIDS treatment. The FDA also criticized Glasky for misrepresenting results of clinical tests of the drug in public statements earlier that month.

Newport’s public statements “were too optimistic, and it turned out the drug wasn’t approved at the time and it still isn’t approved,” Simon said Monday.

Archbold said the FDA last year recommended that there be more clinical tests of Isoprinosine in the United States. But, she added, Newport “can’t afford to do them unless it gets additional public or private funding and support from the AIDS research community.”

Meanwhile, she said, Newport, which lost $2.6 million for the first half of this year, is striving to become profitable by developing its mail-order pharmacy business.