HEM Research Inc. has an experimental AIDS drug in its Rockville laboratory that company officials believe deserves a second chance.

And last week, after tiny HEM scored a legal victory over giant Du Pont Co., it looks like that is precisely what the drug Ampligen is likely to get.

Since Philadelphia-based HEM triumphantly announced results of preliminary Ampligen trials in 1987, it has ridden a roller coaster of success and defeats, albeit one of mostly defeats. It entered a joint venture agreement with Du Pont, only to see large-scale trials of the drug fail, its joint agreement with Du Pont terminated, its chief scientist fired and development of the drug stymied under a barrage of lawsuits and counter-suits. The company nearly went bankrupt in the process.

In many ways, HEM's downhill slide mirrors the experiences of other small companies racing to bring AIDS drugs to the market. Many new drugs heralded as the latest cure for AIDS don't live up to expectations after strenuous testing.

Last week, HEM, which stands for Human Ethical Medicine, announced that it had reached a legal settlement with Du Pont, which agreed to pay HEM $2.75 million, sell its HEM stock back to the company and give up royalty and marketing rights to Ampligen.

"We both had claims that we thought were valid and decided to drop suits and come to a settlement," said Roger Morris, a spokesman for Du Pont.

However, HEM officers believe the settlement exonerated their drug. "The company is moving forward aggressively," said HEM's chairman and chief executive, E. Paul Charlap. "We expect to have an answer {to Ampligen's effectiveness} less than a year from now."

Charlap and scientists who work with the company contend that a multimillion-dollar, 300-patient test of Ampligen in 1988 failed because the drug was administered in plastic IV bags instead of the glass bottles used in initial, small trials. They say company tests show chemicals from the plastic bags, supplied by Du Pont, caused the drug to become inactive.

"The explanation {for the trial's failure} is very convincing," Dr. Mathilde Krim, founding co-chairman of the American Foundation for AIDS Research in New York. "I believe that the material shows great promise but has to be studied again."

Other doctors share Krim's optimism. "Anytime you see a clinical trial that fails, it's very seldom that you see a drug get a second chance. This one will," said Dr. William M. Mitchell, professor of pathology at Vanderbilt University and a consultant to HEM.

Doctors who have worked with Ampligen administered in glass bottles say the drug merits more testing. According to doctors monitoring one small trial at Hahnemann University in Philadelphia, about 15 patients with AIDS-related diseases who have been on the drug for nearly four years have seen positive results.

"We have not had a death of a patient while he has been receiving Ampligen," said Dr. Isodore Brodsky, chairman of Hahnemman University's Department of Neoplastics, which supervises the Ampligen trial.

In addition, doctors say Ampligen has none of the debilitating side effects of AZT, one of the few AIDS drugs to win approval from the Food and Drug Administration.

One Washington resident with AIDS, who has been on Ampligen for three years, said that he has almost no symptoms of his disease. "I don't feel the drug is a cure for AIDS, but I feel that it's like what insulin is to a diabetic. It's keeping me alive with a quality of life that is as good as anyone else's," he said.

HEM, which is a privately held company, has applied to the FDA for permission to conduct another full-scale trial of Ampligen in patients who test positive for AIDS. Company officials are confident that the FDA will grant the request within the next few months.

However, some AIDS activists are not so willing to grant the drug another try. For AIDS patients trying to gain access to experimental drug trials, time is too short and experimental drugs pose too many risks to spend time on a drug that failed.

"Ampligen's been vastly mismanaged. Any confidence we've had in the drug has been wiped away," said Kevin Armington, coordinator of medical information for Gay Men's Health Crisis in New York.

Armington and others said they need to see more clinical data before reaching a judgment about Ampligen's potential. With many AIDS drugs, toxic side effects become apparent only after long-term trials involving large numbers of patients.

Officials at HEM's Philadelphia headquarters concede the company has a credibility problem, but say the settlement with Du Pont should help restore confidence.

Du Pont entered a multimillion-dollar joint venture with HEM after a British medical journal, the Lancet, published an article detailing promising results from a trial of Ampligen in 10 AIDS patients. As Ampligen's popularity soared, HEM and Du Pont in 1988 rushed the drug into large, multi-center trials approved by the FDA.

Just as quickly, though, HEM's fortunes reversed. As the lackluster results of the trial became apparent, Du Pont announced it was pulling out of the joint venture, leaving HEM without enough funds to go forward. HEM ended the trial, stating that results showed no difference between Ampligen and a placebo.

"One in three drugs you bring into the clinic are going to fail. We knew it was a gamble and we took the gamble," said Morris of Du Pont.

Immediately after the test results were announced, HEM's board of directors fired Dr. William Carter, HEM's chief executive officer and chief scientist. Carter filed suit against HEM for wrongful dismissal and was reinstated as chief scientist a year later.

Compounding the company's problems, Du Pont, in April 1989, filed a $30 million lawsuit against HEM alleging that the company misrepresented data in its original study of Ampligen. HEM filed a counter-suit, claiming Du Pont owed the company more than $7 million for breach of contract and other damages.

For most of 1989, HEM "was dead in the water. It was in a dire, dire condition," said company counsel Michael A. Walsh, with the law firm Choate, Hall & Stewart in Boston. HEM's board of directors considered liquidating the company, Walsh said.

Then, at the lowest point in HEM's history, the unlikely occurred. A new group of investors who believed in Ampligen -- headed by Charlap -- pledged more than $1 million to the company.

"It wasn't an easy decision to walk into a company that's been damned in every way," said Charlap, former chairman of Savin Corp., an office copier company. "We didn't come in for the money. What we came in for is to make the drug available to the people who need it."

HEM officials believe that settling the Du Pont lawsuit will allow it to move forward. Charlap said that major companies have already approached HEM about the possibility of joint venture agreements. The company, which has no income from operations, is developing other products, mostly diagnostics tests and other drugs. But the majority of its efforts remain focused on Ampligen.