Viratek Switches to Conservative Earnings Reporting

Drug manufacturer Viratek Inc. said Monday that it will restate last year’s earnings report after deciding to charge research costs for a hepatitis drug against profits now rather than defer them.

The more conservative approach was approved by the company’s outside auditors and resulted in third-quarter profits of $679,000, or 5 cents a share. That was down from profits of $1.5 million, or 10 cents a share, that the company had previously reported.

For the first nine months of 1992, profits were $2.2 million, or 15 cents a share. The company previously reported profits of $3 million, 21 cents a share.

Viratek said the research money was spent last year on clinical trials of its drug Virazole; the company is trying to get it approved in the United States for treatment of hepatitis C. Virazole is already used in 21 countries for treating hepatitis.

“We believe this is a prudent move that will enhance shareholder value in the future by not having the burden of past costs,” Viratek CEO Adam Jerney said in a statement.

Viratek is a subsidiary of Costa Mesa’s ICN Pharmaceuticals Inc., which owns nearly 80% of Viratek. Because of the changes in Viratek’s earnings, ICN restated its results, too.

ICN said it lost $9.7 million, or 69 cents a share, in the third quarter. The company had earlier reported a loss of $9 million, or 64 cents a share.

For the first three quarters, ICN said it earned $144,000 and lost 3 cents a share when all warrants and stock options are considered. Previously it reported a profit of $768,000, equal to 2 cents a share.

ICN owns a drug company in the former Yugoslavia, ICN Galenika, where business has been disrupted by the fighting there.