In a surprise announcement Tuesday, Eastman Kodak Co. said that it will sell its 2.3% stake in ICN Pharmaceuticals Inc. and a "significant portion" of its 9% share of ICN's Viratek Inc. subsidiary.
The announcement came just one day after ICN's directors approved a plan to repurchase about 15.1% of the Costa Mesa-based pharmaceuticals company's shares and 6.3% of Viratek's outstanding stock.
Rochester, N.Y.-based Kodak, which has sought to become a player in the pharmaceuticals and biotechnology industries, bought into ICN in mid-1984. A year later, it agreed to help build the Nucleic Acid Research Institute to research drugs that might be useful against viral diseases, cancer and aging.
Kodak said that its investments in ICN and Viratek were to help "lay the groundwork" for the development of the research institute, an equal joint venture of Kodak and ICN.
Because the institute is a reality, Kodak has no "strategic reason" for continuing to hold its stake in ICN or for maintaining as large a position in Viratek, said Henry Kaska, a Kodak spokesman. He added that the company remains "happy" with its joint venture and has no plans to end the agreement.
Potential AIDS Medication
However, Kodak will no longer finance trials of Virazole, an ICN-developed drug that is considered a potential medication for acquired immune deficiency syndrome, Kaska said. Kodak co-sponsored recently completed clinical trials of Virazole among about 350 patients who harbor the AIDS virus but do not have all the symptoms of the disease. The trials were not entirely conclusive, however.
Under an agreement with ICN, Kodak would either receive a royalty from ICN for Virazole's use, or would have the right to market the drug should ICN choose not to do so itself, Kaska said. Because it appears unlikely that Kodak will get to market Virazole, Kaska said, "it just doesn't make sense for us to fund trials."
Although the news follows an announcement by ICN that it will buy substantial quantities of its own and Viratek stock, Kaska said Kodak's decision was not influenced by the buy-back program and the shares will be sold on the open market. "Basically, the two are not to be tied together," he said. "The decision to get out was made some time ago."
Targets of Inquiries
However, Dubrazka Pineda, an ICN spokeswoman, said that the company "is considering making a bid for the stock." Analysts said the Kodak decision may affect ICN's credibility to some degree, though the stock sale does not mean that the giant chemicals firm is attempting to distance itself from ICN; the company, its drug Virazole and trading of ICN and Viratek securities reportedly are all the subjects of federal investigations.
"I would not view this as (Kodak's) saying that there is anything wrong with ICN," said Craig Dickson, an analyst with Interstate Securities Corp. of Charlotte, N.C. "But there will be those investors who view this as a negative."
Because the news was not released until after the close of the markets, it came too late to have any effect on ICN's and Viratek's stock prices.