ICN to Pay $15 Million to Settle Virazole Suit

ICN Pharmaceuticals Inc. on Thursday said it has agreed to pay $15 million to settle a lawsuit that accused its chairman of insider trading and the company of misleading investors about its prize drug, Virazole.

The Costa Mesa drug maker and its chairman, Milan Panic, will pay about $12 million to end the 2-year-old lawsuit, and the company’s insurer will pay the rest, according to two individuals familiar with the terms.

“Early settlement, which was recommended by our investment bankers, will avoid further litigation costs,” Panic said in prepared remarks.

Panic and other corporate executives were unavailable for further comment.

The settlement is the second major payoff in a class-action suit against ICN in the last 12 months.

In October, the company also paid $14.5 million in cash and stock to settle a 9-year-old shareholder lawsuit that had accused it of overly hyping Virazole, which federal officials at that time had rejected as a treatment for AIDS.

After failing in its efforts to get its antiviral drug approved for AIDS treatment, ICN began working to obtain Federal Drug Administration approval for using Virazole as a treatment for the contagious liver disease hepatitis C.

In late November 1994, Panic sold $1.24 million worth of his ICN stock more than two months before the company disclosed publicly that federal regulators were going to reject ICN’s application for Virazole as a treatment for hepatitis C.

ICN’s stock gained $2 a share to close at $33.31 on the New York Stock Exchange.

In a report filed Thursday with the Securities and Exchange Commission, ICN said the company and Panic remain targets of a federal criminal investigation and an SEC probe.