Licensee Won’t Try to Market Pre-AIDS Drug : Medicine: The Newport Pharmaceuticals International representative in Scandinavia withdraws the application for Isoprinosine because of new requirements for more testing.

Newport Pharmaceuticals International Inc. said Wednesday that the Scandinavian licensee of its Isoprinosine drug has decided not to seek approval to market the drug as a pre-AIDS medication to several Western European countries.

The Laguna Hills company Wednesday also announced earnings of $290,000 on revenue of $20.9 million for the second quarter, contrasted with a loss of $2.2 million on sales of $14.5 million in the corresponding period last year.

Newport Pharmaceuticals said its Scandinavian licensee, Leo Pharmaceutical Products, has decided to withdraw the drug application because of new conditions imposed by several members of the European Community, including a requirement for additional testing. Newport Pharmaceuticals has said previously that it would not finance further clinical studies of the drug for pre-AIDS treatment.

Applications seeking approval to use the drug could be pursued separately by Newport Pharmaceuticals’ various licensees in each European country, based upon the clinical studies previously done by Leo Pharmaceutical, said Judith W. Archbold, Newport Pharmaceuticals vice president and general counsel.

The withdrawal will not affect Newport Pharmaceuticals’ overall revenue because international sales of the drug constitute a fraction of its overall business, she said. Exports accounted for 10% of the company’s annual sales in 1990, she added.

“We view this as merely a lost opportunity to expand our existing market in Western Europe,” Archbold said.

Isoprinosine is approved for treatment of genital herpes and warts, measles and other infectious viral diseases in one or more European countries, she said.

In its quarterly report, Newport Pharmaceuticals credited its earnings turnaround to increased sales at its America’s Pharmacy Inc. subsidiary, a mail-order house that provides prescription drugs to corporate providers, insurers and health-maintenance organizations.

API, which represents 89% of Newport Pharmaceuticals’ revenue, reported a 50% quarterly sales increase, to $18.7 million, over the same period in 1990. API’s operating profit for the quarter was $905,000.

The company attributed API’s growth to new customers and increased use of prescription programs by existing customers, which include Beckman Instruments Inc. in Irvine and Lincoln National Corp., an insurance company in Fort Wayne, Ind.

For the first six months, Newport Pharmaceuticals’ net income was $584,000 on sales of $41.3 million, contrasted with a loss of $2.6 million on sales of $27.8 million a year earlier. API’s operating profit for the period was $1.6 million.

Earlier this month, a federal District Court in Los Angeles approved the settlement of two related class-action lawsuits brought against Newport Pharmaceuticals in 1986. The suits alleged that the company misled investors in promoting Isoprinosine as a pre-AIDS treatment drug.

The company, in settling the suits, neither denied nor admitted wrongdoing. It has paid a total of $1.875 million, plus interest payments of $952,000. Of these amounts, $1.25 million was paid in cash and the balance was in shares of the company’s common stock.

This settlement cost was recorded in the company’s fourth-quarter 1990 results.