Firm Profited From Sale of Hoffmann-LaRoche Stake : Stock Market Investments Boost ICN Earnings

Benefiting from its stock market investments, including the sale of its sizable stake in the giant Swiss pharmaceutical company Hoffmann-LaRoche, ICN Pharmaceuticals reported earnings of $5.6 million in the second quarter ended May 31.

The quarter’s earnings reflect an $8.2-million pretax gain from securities transactions. The company said that in addition to attaining profits from other investments, it profited from the sale of its 8.6% stake in Hoffmann-LaRoche. By contrast, the Costa Mesa-based pharmaceuticals company reported a $1.7-million loss in the second quarter of fiscal 1987.

ICN has declined to say how much it made on the March sale of 1,308 shares of Hoffmann-LaRoche, said to be one of the most expensive stocks in the world. But market analysts estimated that the company realized a profit of $25 million to $30 million.

ICN controller Steve Jenkins said, however, that part of the gain that ICN made from the Hoffmann-LaRoche stock sale was recorded as profit in the company’s first quarter.

In addition, Jenkins said ICN’s second-quarter earnings for fiscal 1988 include an extraordinary gain of $4 million from a buyback of long-term debt.

Jenkins said these positive influences on the company’s earnings offset higher costs of net interest expense, an expanded sales force and increased investments in research and development.

He noted that in the second quarter ICN paid $5.9 million in interest expense on the money it had borrowed to buy securities.

ICN’s sales for the 1988 second fiscal quarter were $41 million, up about 40% from $29 million for the same quarter a year ago.

For the first six months of fiscal 1988, the company posted net income of $10.2 million, up 168% from $3.8 million for the first six months of the previous fiscal year. Sales for the first half of fiscal 1988 were $75.6 million, up 46% from $51.7 million during the same period the year before.

Viratek Inc., ICN’s pharmaceutical development company, reported a loss of $3.1 million in the second quarter. That loss was attributed to increased investments in research and development, including expanded clinical trials for the antiviral drug ribavirin. ICN is trying to get governmental approval to market the drug as a treatment for pre-AIDS conditions.