Viratek Stock Scores Big Gain in Heavy Trading

The stock of Viratek Inc., battered recently by a dismal earnings report, climbed 71.4% Wednesday, making it the largest percentage gainer in the over-the-counter market.

Viratek stock gained $1.875 to close at $4.50 on the national market. It was the second consecutive day for the company’s stock to see heavy trading and be among those with the largest percentage gains.

Company spokesman Jack Sholl was at a loss Wednesday to explain the day’s stock-price rise.

Securities analysts who follow the company were also uncertain of the reason behind the short-term price increase and the unusually high trading volume. During the day, 87,200 shares of Viratek were traded; the daily average for the stock is 26,500 shares.

Some analysts speculated that Wednesday’s action could reflect action by investors to “cover their short positions.” When investors take short positions, they borrow the stock and sell it at a high price, betting that the stock will fall and they will be able to buy it back for less.

The volatility comes a week after Viratek’s parent company, ICN Pharmaceuticals of Costa Mesa reported that it had ceased trying to win federal approval to market ribavirin for the treatment of early complications associated with Acquired Immune Deficiency Syndrome.

A reflection of the import of its decision to give up the battle for a share of the potentially lucrative U.S. market for AIDS drugs is the fact that ICN took a $71-million writedown on its fourth quarter earnings. Most of that amount was related to ribavirin research and development.

Another unfavorable signal to investors was Viratek’s report last week that it lost $17.1 million on revenue of $2.6 million for 1989, contrasted with a loss of $6.3 million on revenue of $2.3 million for 1988.

In the past year, Viratek’s stock peaked at $15, far from the $98 high of 1986, when speculation over ribavirin’s potential as an AIDS treatment was running at a fever pitch.