Tip of New Products on the Way Boosts ICN Shares 7.5%

Shares of ICN Pharmaceuticals Inc. rose 7.5% Wednesday after an industry analyst suggested that the Costa Mesa drug maker has shown that it has more viable products in its pipeline than its hepatitis C drug, ribavirin.

The stock rose $2.44 to close at $34.94 a share on the New York Stock Exchange.

Sutro & Co. analyst D. Larry Smith said an agreement announced Tuesday between ICN and Schering-Plough Corp. is important because “most people have been concerned that ICN has no pipeline other than ribavirin.”

“What this does is give ICN credibility for its pipeline,” Smith said. It also gives ICN a “natural marketing partner,” he said.

ICN said Tuesday that it would license as many as three hepatitis-fighting compounds to Schering-Plough Corp. to settle a research dispute. Under a partnership for the past five years, Schering-Plough sells ribavirin in the U.S. and Europe in combination with its own interferon drug, Intron A.

The agreement gives Schering-Plough the right to license levovirin, the next-generation version of ribavirin, and viramidine, another antiviral drug. ICN also will give Schering-Plough rights to license other compounds related to infectious and other diseases. Schering-Plough agreed to fund development costs for any compounds it licenses.

“Levovirin is an isomer of ribavirin. The hope is that it won’t have some of the same side effects as ribavirin [such as birth defects],” Smith said. “From Schering-Plough’s standpoint, levovirin is the logical successor to ribavirin. This could extend their franchise in hepatitis C and keeps their archrival Roche from going in and grabbing levovirin.”

Smith also said the new partnership could give Schering-Plough an added incentive to consider an acquisition of ICN’s Ribapharm Inc., the unit that holds rights to ribavirin and contains ICN’s pipeline of drugs. ICN has announced plans to sell part of Ribapharm to the public before spinning it off into an independent company.

Schering-Plough’s stock fell 6 cents to close at $51.94 a share.

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Bloomberg News was used in compiling this story.