RESEARCH TRIANGLE PARK, N.C. … Poultry vaccine maker Embrex (Nasdaq: EMBX) has settled its breach of contract litigation against Wyeth, its Fort Dodge Animal Health division and related parties.

Under the settlement terms, Embrex and Fort Dodge dismiss all claims currently pending between them in return for payment to Embrex by Fort Dodge of $5 million.

This lawsuit, filed by Embrex in April 2002, alleged that Fort Dodge and Wyeth failed to meet their contractual obligations to develop, manufacture, register and market Bursamune, a poultry vaccine, in Europe, the Middle East and Africa. Three months later, Wyeth filed its own breach of contract suit against Embrex.

“This settlement … is a good outcome for Embrex and its shareholders, Embrex President and Chief Executive Officer Randall L. Marcuson said in a statement. “It partially redresses the absence of revenues and royalties Embrex anticipated receiving from Fort Dodge’s sales of Bursamune to poultry producers in Europe, the Middle East and Africa, as well as related Inovoject system placements and utilization. Furthermore, it allows Embrex management to remain focused on executing its strategy of continued Inovoject system placements, as well as the development and introduction of several significant new projects and products during the next one to three years.”

Embrex expects that the $5 million will be accounted for as other income in the second quarter of 2003, with an anticipated after tax impact of approximately $3.3 million at an estimated 35 percent tax rate.

“Because the costs associated with further litigation will be avoided, we are revising our full-year pretax income targets upwards to $5.7 million to $6.9 million, exclusive of the impact of the Fort Dodge settlement, from the previous targets of between $4.8 million and $6 million,” Marcuson said.