Controversy Around ICN Chief Hits New Intensity : Profile: Panic appears to relish a good fight and has had many, mostly with success. He may now be in for his toughest.


Controversy hasn't dogged Milan Panic throughout his life as much as he seems to court it.

Reared during guerrilla warfare against the Nazis in his native Yugoslavia, Panic--who later served his war-torn country as premier--is known as an intense, flamboyant, hot-tempered executive who doesn't back away from a good fight, and he has had quite a few.

None, however, has threatened the professional standing of the ICN Pharmaceuticals chairman as much as the latest imbroglio.

Panic sold $1.24 million worth of his ICN stock more than two months before disclosing publicly that federal regulators weren't going to approve the company's anti-viral drug, Virazole, for treating the contagious liver disease hepatitis C.

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

This time, Panic has angered some directors as well as shareholders. One major shareholder in New York is calling for his resignation, and investors say that three of the company's 15 outside directors have already resigned.

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

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

If Panic reacts 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.

As an alternate on Yugoslavia's Olympic cycling team, Panic defected during a team outing in 1955 and brought his family to the United States the following year. He worked as a research assistant in the chemistry department at USC before starting ICN in 1960 with $200.

Panic soon became adept at making connections in the political and the medical arenas for himself and his company. He built an arsenal of influential friends, including former Sen. Birch Bayh (D-Ind.), former California Gov. Edmund G. (Jerry) Brown Jr., former Democratic National Committee Chairman Charles T. Manatt and onetime Health, Education and Welfare Secretary Robert H. Finch.

Brown once served as an ICN director; the other three still do. Leading business executives, professors and lawyers also are or have been directors.

"Mr. Panic has had some run-ins with the federal bureaucracy, all of which he has basically won. He is a buccaneer, a two-fisted guy," Brown said in an interview three years ago.

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 use 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 for 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 in future. The criminal investigation was dropped in exchange for a $600,000 civil settlement, again without any admission of wrongdoing.

Panic was soon involved in other battles. When the Iron Curtain crumbled, ethnic fighting broke out in Yugoslavia, and the native son of Belgrade returned in July, 1992, to serve as premier. His intent, he said then, was to "stop the fighting." A Justice Department official, calling him "very strong, very manipulative," said Panic "may be just what Yugoslavia needs."

ICN critics cheered the news, hoping the company would bring in better management. But by the end of that year, Panic was ousted in an overwhelming vote of no confidence, and he was soon back at the company's helm.

Shareholders, however, were emboldened. Investor Rafi M. Khan, once one of ICN's ardent followers, launched a proxy fight in 1993 to oust Panic. But after a bitterly fought battle that spilled into the courts, Khan lost.

At headquarters, though, Panic was having other problems. He was sued by former ICN employee Colleen James in 1992 over alleged sexual harassment. James claimed Panic verbally abused her by repeatedly propositioning her and then fired her. The case was settled a year later.

But only last month, another former employee, Debra Levy, accused Panic in a lawsuit of demanding sex from her and fathering her child before forcing her from her job last October. Panic "emphatically" denied the paternity and harassment charges, an ICN spokesman said. The case is pending.

The latest flap over Virazole, though, may undo him. "He probably thought that he got away relatively scot-free in the past," McCamant said, "so he felt he could do it again."

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