In rejecting an innovative settlement agreement of cases brought by individuals who claim they were, or could have been harmed by Interneuron Pharmaceuticals Inc.'s Redux dexfenfluramine, a federal judge last week ruled that IPIC cannot establish a cap on its liability in order to continue operating its business.

Judge Louis Bechtle of the U.S. District Court for the Eastern District of Pennsylvania set aside a settlement, which he had agreed to accept in September 1998 contingent on the parties demonstrating that it was fair. His latest action also requires the company to continue to defend itself against numerous state and federal lawsuits that it says could quickly drain its coffers, preventing it from attracting investment to develop new products.