ICN Official Says Records Have Been Subpoenaed

A board member of ICN Pharmaceuticals Inc. said the Justice Department issued a broad subpoena last week seeking company records that presumably pertain to a federal inquiry into alleged insider trading by ICN’s controversial chairman, Milan Panic.

Dale Hanson, the board member, said he questioned management of the drug company regarding the matter after hearing rumors from investors that the federal government had stepped up its investigation.

In four days of high-volume trading beginning last Thursday, ICN shares jumped on rumors that Panic might be forced out soon. Shares rose $2.625 a share during the period, closing Tuesday to close at $25.125. The stock slipped Wednesday, closing at $24.875.

David Watt, ICN’s general counsel, said the company today plans to release a statement and its quarterly filing with the Securities and Exchange Commission in which it will disclose information regarding the government’s inquiry. He refused to comment on whether the company had received a subpoena.

Panic couldn’t be reached for comment. A company source said Wednesday that Panic was in Yugoslavia, his native country, where he served as its prime minister during a seven-month leave from the company in 1992. The source said Panic is due back in the United States within a few days.

Hanson said he presumed company officials would meet soon with government officials to learn more about the nature of the records being sought.

The government has been investigating Panic’s sale of $1.24 million in company stock in the fall of 1994. The sale occurred after the firm learned the federal Food and Drug Administration wouldn’t approve the company’s star drug Virazole as a stand-alone treatment for the liver ailment hepatitis C.

But the company didn’t disclose the FDA’s decision to investors until February 1995. After the disclosure, ICN stock lost 42% of its value in six days of trading, falling to $13.25.

The company has said that it is cooperating in the investigation. A source said the directors serving on the company’s audit committee were expected to approve a draft of the SEC filing late Wednesday.

Asked to explain why the stock price had surged recently, Hanson observed, “Milan is at times not dearly beloved by certain shareholders.”