International Ltd. They believe Corange will renege on a multi-million dollar deal, according to Bloomberg.

The collaborative diagnostics deal with CellPro Inc. of Bothell, Washington State, is an agreement that was struck by a previous Corange administration.

The new Corange administration may not now provide a scheduled $60-million payment to the American company, due this month.

CellPro said that they've heard from Corange that they believe the companies' collaboration to develop a bone marrow purification device violates European antitrust laws.

But the deal's demise would mean the loss of CellPro's biggest investor, and there is a hint that the change of heart may be connected to a change of management that resulted from a high stakes and dramatic power struggle played out in Bermuda last year.

After the battle for control over Corange, that included precedent-setting litigation in the Bermuda Supreme Court, the board of directors and their management team were ousted in favour of personnel backed by the principals of the family-owned business.

According to CellPro, the new Corange team has said that the deal between the two firms is unenforceable. CellPro has threatened to take legal steps to ensure it is consummated.

CellPro Inc. is a biotechnology company specialising in the development, manufacturing and marketing of proprietary, continuous-flow cell-selection systems for the use in a variety of therapeutic, diagnostic and research applications.

Their main product is Ceprate, which purifies bone marrow cells before transplants to cancer patients. The product is sold in 14 European countries and Israel.

Corange is a multi-billion dollar pharmaceutical and health care concern, the parent company of Boehringer Mannheim and DuPuy Orthopedics.

CellPro has said that Corange had told them that the diagnostics agreement is unenforceable and that the therapeutics collaboration violates applicable European antitrust laws, unless amended in accordance with the terms of the agreement.

Corange is said to have stated that because the diagnostics collaboration is unenforceable, CellPro would be unable to satisfy the conditions for closing the $60 million investment scheduled for this month under the equity agreement between the two parties.

CellPro disputes the Corange position and said that it will vigorously pursue the matter and call upon Corange to perform all of its obligations, including its second equity investment.

CellPro spokesman Mr. Lee Parker said from Seattle: "We believe Corange's new management (which took over eight months ago) doesn't have the same vision as the old one. We believe Corange is using antitrust issues as a way to back down.'' Corange officials in Bermuda and Germany were unavailable for comment.

The two companies entered into an agreement that saw Corange commit to invest a total of $110 million in CellPro through the purchase of the firm's common stock.

Under separate collaboration agreements, Corange also committed to make payments to CellPro that could total $55 million in research and development funding and a further $45 million in milestone payments, in exchange for certain rights to therapeutic and diagnostic products being developed by CellPro.

CellPro also received $10 million after signing the agreements.

A year ago January, Corange made its initial equity investment of $50 million in CellPro under the equity agreement by purchasing 1,160,362 newly issue shares of CellPro's common stock at $43.09 per share.

Under the equity agreement, Corange was supposed to this month make a second equity investment of $60 million by purchasing newly issued shares of CellPro common stock at a price that was expected to be $47.40 per share.

According to Bloomberg: "Since entering into this strategic alliance with CellPro, Corange has made significant changes in its management, apparently resulting in a reassessment of this strategic alliance.'' President and CEO of CellPro, Mr. Richard D. Murdock stated: "There apparently has been a great deal of speculation in the financial community with respect to our relationship with Corange.

"Although as a matter of policy, we do not address speculation and rumours, we thought it prudent to inform our stockholders of this development. We intend to pursue as required the remedies available to us under the agreements for Corange's failure to honour its promises in respect to research and development funding and milestone payments.

"In addition, should Corange dishonour its undertaking in respect of further equity investment when that performance is due, we intend to seek all remedies available under the law.'' CellPro had a major setback in December when the US Food and Drug Administration (FDA) denied a CellPro request to approve Ceprate SC as a purifier of bone marrow transplanted into women with advanced breast cancer.

Regulators asked CellPro to provide additional information.

Then last month, the company's executive vice president, chief medical and scientific officer, the main link to the FDA, quit.

The firm has been unprofitable for some years, according to its spokesman.

Third quarter figures show a $4.8 million loss ($0.37 per share) on revenue of $1.2 million.