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By Mike Oboh

KANO, Nigeria, Oct 27 (Reuters) - Pfizer Inc <PFE.N> said on Monday it hoped to reach an out-of-court settlement with Nigeria over a 1996 drug trial that the government says caused the death of 11 children and left dozens disabled.

Nigeria's federal government and its northern state of Kano sued Pfizer last year for a total of $8.5 billion in damages over the testing of the antibiotic Trovan in Kano during a 1996 meningitis epidemic that killed 12,000 children.

The New York-based drugmaker denies all charges and argues that meningitis, not Trovan, killed the children or damaged their health. It says Trovan saved lives and was as effective as a more established drug used for comparison in the study.

The civil and criminal cases launched by authorities more than a year ago have grown into a tangle of unresolved petitions and side issues, dragging from one adjournment to the next. No witness has been heard and no substantive issue tackled.

Talks between the Nigerian authorities and Pfizer on a possible settlement have been slowed by disagreements over liabilities and compensation.

"The reason for the lack of progress in these settlement talks is the excessive and unsubstantiated claims put forth by the private lawyers hired by the governments," Pfizer said in a statement.

Prosecution lawyers have failed to provide evidence to support their "excessive monetary claims" despite repeated demands by Pfizer, it said.

"Nevertheless, Pfizer continues to be interested in an amicable resolution of these cases. The company is prepared to stay at the settlement table to reach an agreement," the firm said.

Pfizer said it has proposed to set up a fund for participants in the study, underwrite projects to improve and expand healthcare in Nigeria, and provide assistance to cover legitimate legal expenses incurred by the government.

Court sources said in March Pfizer had proposed to pay $10 million in compensation, rehabilitate the hospital where the Trovan study took place, and upgrade Kano's state-owned drug manufacturing company.

But Kano state's lead attorney Aliyu Umar said in April the government wanted "a better package for the victims".

A Kano state High Court hearing the lawsuits adjourned the civil case on Monday to Nov. 27 and the criminal one to Nov. 28.

Speaking to reporters after Monday's court sitting, Pfizer's lead counsel Anthony Idigbe said the adjournment provided the disputing parties an opportunity to close ranks and reach an amicable agreement.

(For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/ )

(Writing by Tume Ahemba; Editing by Randy Fabi and Sue Thomas)

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