ICN Consulting Investment Banker to Boost Its Value
Drug maker ICN Pharmaceuticals Inc., badgered by big shareholders upset with a 18% slide in the stock price this year, said Thursday that it has hired an investment banker to help it find ways to boost the value--including the sale of some units.
The Costa Mesa company said it will consider “all options” for its Eastern European drug unit and its biomedicals group, which sells radiation badges, diagnostic products and chemicals.
The company’s Wall Street woes come at a time when its key drug, the anti-viral ribavirin, finally is being used, with another company’s product, to help treat a major ailment, the highly contagious and potentially fatal liver disease hepatitis C.
The price of ICN shares has seesawed the past 52 weeks on the New York Stock Exchange. It hit a high of $35 in May, dropped to a low of $16.75 in October, rose again to nearly $30 last month and ended Thursday at $21 a share, up 6 cents from Wednesday’s close.
Shareholders have called on Milan Panic, the company’s controversial chairman, to resolve problems with its business in Eastern Europe, where economic and political turmoil have hurt profits during the past few years.
“The company needs to address the causes of the undervaluation in the marketplace,” said board member David Batchelder, whose Relational Investors LLC last year bought 1.6 million ICN shares. “Relational does believe that the Eastern European operations are one of those causes. So we look forward to the company addressing that.”
The company named Batchelder to the ICN board in August, and Relational signed an agreement not to increase its 2% stake in the company to more than 10%. Relational is an activist investment company that buys stakes in companies it believes are undervalued and then works to help management boost the stock price.
Panic said in an interview that ICN will examine all possibilities for the two units, including their sale. He declined to say how long it will take for the investment banker, Warburg Dillon Read, to conduct its review.
Schering-Plough Corp. sells ribavirin along with its own Intron A drug in a combination known as Rebetron. ICN receives royalties on Rebetron sales.
In Eastern Europe, ICN has taken hundreds of millions of dollars in charges to account for setbacks, including the seizure of a plant in Belgrade, Yugoslavia, and economic problems in other parts of the region.
The company said last month it will refrain from investing further in Eastern Europe this year until it sees more political stability and economic growth.
ICN bought plants in Eastern Europe, including Russia, after the fall of the Soviet Union. The company has been hurt by a decline in purchasing power among Russians after the ruble began weakening in late 1998 and the economy went into recession, contributing to slower growth in other countries in the region.
Its foreign troubles come at a time when ribavirin finally is bringing in revenue. For most of three decades, ribavirin was a drug in search of an illness to treat.
Panic previously has promoted ribavirin, then referred to by its brand name, Virazole, as a drug that can fight many viruses. Despite its toxicity, it has fewer and less harsh side effects than other antiviral drugs. It once was sold in four dozen countries to treat up to 10 illnesses, from flu to the AIDS virus.
Yet for a long time, Panic and ICN were left to ponder whether there was much of a future for Virazole in the United States.
In the late 1980s, the company lost a long, bitter battle with the U.S. Food and Drug Administration to get the drug approved to treat the AIDS virus. In late 1994, the agency directed the company to halt Virazole testing on hepatitis C.
But even after spending $200 million on developing, testing and putting the drug through clinical trials, Panic and his directors have maintained that ribavirin would someday be ICN’s home-run drug.
Until it hooked up with Schering-Plough, ICN had U.S. approval to use ribavirin only for a severe respiratory ailment that afflicts some children.
