Rejection Latest in String for Company

For Newport Pharmaceuticals, the Food and Drug Administration’s refusal Friday to approve Isoprinosine for use as an AIDS treatment is the latest in a string of rejections and controversies that date back 16 years.

Since it set up shop in 1968 and began testing and producing Isoprinosine, the Newport Beach company has promoted it first as a memory enhancer and then as a potential cure for a variety of diseases including influenza, a rare type of encephalitis, genital herpes and, now, as a treatment of pre-AIDS conditions.

At one time, the drug was even suggested as a potential cure for the common cold, and company executives projected a market for the drug in the hundreds of millions of dollars.

The fortunes of Newport Pharmaceuticals are tied exclusively to Isoprinosine, and the company has paid dearly for putting all its eggs in one basket. Until last year, the company had posted losses for each of its 18 years in business. For its fiscal year ended April 30, 1985, however, the company reported net income of $647,000, largely because of internal cost-cutting measures.

Nearly a decade ago, when AIDS was virtually unknown and genital herpes was among the most feared of all sexually transmitted diseases, Newport Pharmaceuticals asserted that Isoprinosine was effective in treating that illness. But in 1977, the FDA rejected the company’s application to market Isoprinosine for use against the disease.

Some industry observers say that Newport Pharmaceuticals’ problems with the FDA date back more than 15 years to when the company heavily publicized its initial testing of the drug and suggested that it could be used to enhance memory and learning capabilities. The publicity campaign angered the drug agency, which has never approved Isoprinosine for any use.

One of the company’s biggest disappointments came in 1979, when Morton-Norwich Products, a major Chicago-based drug firm, dropped out of a proposed joint venture to produce and market Isoprinosine, eliminating a major source of funding for Newport Pharmaceuticals. A Morton-Norwich official said in 1981 that his firm pulled out of the deal because of problems in getting the drug through the regulatory process.