ICN’s New High Turns Into High-Volume Loss

Shares of ICN Pharmaceuticals Inc. enjoyed a brief ride to a record high Friday on news that it was added to Standard & Poor’s MidCap 400 Index, but the rally ended quickly and the stock lost 56 cents a share for the day.

The stock closed at $48.63 a share in trading that was three times the average number of ICN shares traded daily. About 1.26 million shares changed hands on the New York Stock Exchange, where prices reached a record $51.63 before falling. Still, the stock gained 12% for the week.

The rally fizzled as J.W. Charles Securities analyst Allan Roness cut his recommendation on the stock to “hold” from “buy,” saying the stock is fairly priced, given the company’s earnings potential.

The addition of the Costa Mesa drug maker’s stock to the index is likely to increase the stock’s appeal to institutional investors. The company’s shares have more than tripled over the past year amid expectations that its Rebetol will win U.S. approval for treatment of hepatitis C, a highly contagious and potentially fatal liver disease.

In early May, a Federal Drug Administration panel will review ICN’s request to approve the drug for use with Schering-Plough Corp.’s Intron A. Data from two trials show that patients treated with both drugs fared better than those who only received Intron A, currently one of the leading treatments for hepatitis.

Analysts also like the company’s progress in building its East European operations, which helped to boost the company net income 31% last year to a record $114 million, or $1.69 a share, from $87 million, or $1.51, a year earlier.

Roness said that approval of Rebetol could boost ICN’s earnings by $1 to $2 a share.