Embattled ICN Is Sued by Investor Over Stock Price

In the latest in a two-week string of misfortunes, ICN Pharmaceuticals Inc. has become the target of a class-action lawsuit that accuses it of fraudulently inflating its stock price.

The lawsuit, filed Friday in federal court in Los Angeles by a New Jersey investor, comes on the heels of disclosures that ICN, a Costa Mesa drug maker, is the subject of three federal inquiries, including an investigation by the House Energy and Commerce Committee.

Friday’s suit was filed against ICN and its Viratek Inc. subsidiary. In addition, it names ICN Chairman Milan Panic, Viratek Chairman Robert H. Finch and Viratek President Bryant W. Rossiter.

An attorney for ICN declined to comment Friday.

ICN and Viratek, whose jointly developed drug Virazole has been touted as a potential AIDS medication, have been the subject of speculation on the stock market during the last year.

The suit says that investor Joy Convertini purchased 1,000 shares of ICN common stock on Jan. 9, the day ICN held a press conference in Washington to announce results of clinical trials of Virazole among patients infected with the AIDS virus.

Although the stock climbed in anticipation of the news, reaching $30 a share in the day’s early trading on the New York Stock Exchange, results of the trials were not as promising as investors had expected. As a result, ICN’s shares fell in heavy trading to close at $21.25 a share. The stock subsequently has dropped to $18.75 per share.

Viratek, which topped out at $87 a share in over-the-counter trading on that day, plunged after the news conference to a closing price of $71 a share. It closed Friday at $40 per share.

Convertini alleges that the price of the two stocks had been “artificially inflated and maintained by the defendant’s wrongful conduct.”