ICN Chief in Hot Water Over Stock Trading : Pharmaceuticals: Milan Panic’s actions shake up the company’s board and anger its stockholders.

Disclosures about stock trading by ICN Pharmaceuticals Chairman Milan Panic are shaking the flamboyant, hot-tempered executive’s hold on the company he founded.

Panic sold $1.24 million worth of his ICN stock more than two months before disclosing publicly that federal regulators were not going to approve the company’s antiviral drug, Virazole, for treating the contagious liver disease hepatitis C.

Reared amid guerrilla warfare against the Nazis in his native Yugoslavia, Panic--who later served his war-torn country as premier--doesn’t back away from a good fight. None, however, has threatened his professional standing as much as the latest imbroglio.

“This is going to be more serious,” said Jim McCamant, editor of the Medical Technology Stock Letter in Berkeley. “Here’s a guy who clearly has a different way of looking at the world.”

One major shareholder in New York is calling for his resignation, and investors say that three of the company’s 15 outside directors already have resigned.

Since the company released news of the FDA decision Feb. 17, shareholders have filed five lawsuits and ICN’s stock has plummeted 42% to close Monday at $13.25 on the New York Stock Exchange.

The 65-year-old Panic (pronounced PAN-eesh) would not comment on the latest controversy. ICN refused to say anything except to repeat its announcement, made Friday, that Panic has asked the company board to immediately set up a committee to investigate the latest developments.

If Panic responds as he has in the past, a long, tenacious fight is assured. What isn’t as clear is the fate of Virazole, which ICN once championed as an AIDS treatment.

Virazole found success in treating a rare respiratory condition that affects children--a rare success in the world of pharmaceuticals, where there are few drugs that work even slightly in treating viral diseases, according to McCamant.

Panic has promoted the drug, the generic name of which is ribavirin, as a treatment for a wide variety of viral ailments, including chicken pox, measles, herpes, influenza and a few tropical diseases. But it was his effort to promote the drug as a treatment for AIDS symptoms that brought on his first major confrontation with federal regulators.

ICN began touting the results of clinical trials and even put together a video presentation for investors in 1987. “When I saw the video, before I knew of any problems, it showed how great the drug was for treating AIDS symptoms,” McCamant said.

But it turned out that the claims were premature. Later results did not support the glowing report the company was giving. And regulators jumped in.

A federal grand jury began investigating allegations that ICN illegally offered to sell ribavirin as an AIDS treatment without government approval. Then the Securities and Exchange Commission sued Panic, accusing him of securities fraud, claiming he knowingly misled the public about ribavirin.

Panic didn’t help his cause much by referring to the head of the FDA as “the jerk commissioner” and accusing the federal government of persecuting him.

Panic and ICN settled in 1991--without admitting or denying wrongdoing--by signing a consent decree in which they agreed not to violate securities laws. The criminal investigation was dropped in exchange for a $600,000 civil settlement, again with no admission of wrongdoing.