Some Good News--for a Change--About ICN

COSTA MESA —  Shareholders of ICN Pharmaceuticals Inc. got good news for a change Monday as the drug company announced record quarterly earnings and a licensing deal with industry giant Schering-Plough Corp. that could put its prized drug ribavirin into wider use worldwide.

Under the agreement, Schering-Plough will direct clinical efforts to prove that ICN’s main drug, which goes by the brand name of Virazole, works with its own interferon drug to treat the highly contagious liver ailment hepatitis C. Schering also will seek regulatory approval for the combination treatment.

ICN, based in Costa Mesa, has failed to prove the efficacy of ribavirin as a sole treatment for hepatitis C, and the company has repeatedly had problems moving through regulatory channels. The U.S. Food and Drug Administration halted the company’s pursuing combination testing.

Schering, based in Madison, N.J., will pay ICN a $23-million licensing fee and royalties. In addition, it will purchase up to $42 million worth of ICN stock if ribavirin obtains approval from U.S. regulators and those elsewhere.

Separately, ICN reported that its second-quarter earnings more than doubled to $13.9 million, or 45 cents a share, from $5.2 million, or 24 cents a share, for the year-earlier period. Sales for the quarter jumped 63% to $129 million from $79 million in last year’s quarter.

ICN shareholders greeted the announcements with relief.

“Obviously, we are delighted,” said Sharon Weeks, a spokeswoman for Heartland Value Fund, a Milwaukee investment fund that owns 4.8% of ICN.

Seth Glickenhaus, a partner at Glickenhaus & Co. in New York, which holds a 1.6% stake, said he was “elated with the news.”

Shares of ICN common stock shot up 16% Monday on the two announcements. The price rose $2.75 a share to close at $19.625; Schering-Plough climbed 37.5 cents to close at $46.50. Both issues are traded on the New York Stock Exchange.

Analysts saw the licensing deal as a feather in ICN’s cap. Jim McCamant, editor of Medical Technology Stock Letter, said ICN is “a company which some people are skeptical about because of its history, and a relationship with a respected company like Schering is clearly positive.”

ICN’s brightening prospects come on the heels of months of bad news. Last November, its controversial chairman, Milan Panic, sold 55,000 shares in the company for about $1.24 million after the company had received a letter from the FDA indicating that ribavirin would not be approved as a sole treatment for hepatitis C.

The company did not make the FDA’s decision public until mid-February. Once it did, the stock lost 42% of its value in six days of trading, falling to $13.25 a share.

Subsequently, the Securities and Exchange Commission and the FBI opened investigations into the company’s actions. In addition, shareholders have filed a number lawsuits alleging insider trading. Panic has denied any wrongdoing, and a committee of ICN directors decided to take no action against him.