ICN Fall Continues in Second Day After Regulatory Setback : Pharmaceuticals: Stock has lost nearly a third of value since Friday’s FDA refusal to approve Virazole as hepatitis treatment.

Shares of ICN Pharmaceuticals Inc. continued to fall Tuesday in the second day of heavy trading after the company said that federal regulators would not approve its Virazole drug as a treatment for hepatitis C.

ICN shares dropped 11.5% to close at $15.38 a share in New York Stock Exchange trading. More than 1.4 million shares traded hands--nearly seven times the company’s recent daily average of 205,600 shares.

In two days of trading, ICN’s stock has lost nearly a third of its value, plummeting $7.25 a share altogether since the company said Friday that the U.S. Food and Drug Administration didn’t think Virazole was “safe and effective” for treating hepatitis C, a highly contagious and potentially fatal liver disease that afflicts about 150,000 Americans annually.

The FDA has directed the company to discontinue additional studies of Virazole as a possible treatment for hepatitis C.

ICN, which has battled with the FDA over Virazole before, has turned to international markets to develop the drug.

ICN said Tuesday that it has approval from Mexican authorities to conduct four clinical trials there combining Virazole with interferon to try to treat hepatitis C. All the trials should be completed this year, the company said.

But it acknowledged Friday that the Food and Drug Administration has described the possible investigation of Virazole and interferon as “a relatively problematic” procedure in treating hepatitis C.

In the late 1980s, ICN waged a contentious battle with the FDA in its effort to get Virazole approved as an AIDS treatment. The FDA refused. A few foreign countries later approved its use for treating AIDS.

Separately, ICN said Tuesday that its subsidiary in Mexico has received approval to market interferon in Mexico for a range of cancerous diseases, including leukemia.