Ribapharm Inc. reported Thursday a 30% drop in its first-quarter profit because its hepatitis C drug faced increased competition .
The Costa Mesa-based biotech company posted a $21-million profit, or 14 cents a share, in the quarter, compared with $30 million, or 20 cents, in the same period a year earlier.
ICN Pharmaceuticals Inc. of Costa Mesa owns 80% of Ribapharm and both companies rely heavily on royalties from the sale of Ribavirin, an antiviral drug that treats hepatitis C and is sold by Schering-Plough Corp.
Schering markets Ribavirin to be used in combination with a Schering interferon drug to treat the often deadly liver disease.
But in December, Swiss health-care company Roche Holding launched a rival hepatitis C drug at a lower cost than Ribavirin, ending Schering’s hold on this market.
As a result, Ribapharm’s royalties fell 15% to $48.6 million in the first quarter, down from $57 million a year earlier.
Ribapharm also suffered a setback when Schering agreed to a court settlement in February to license its Ribavirin patents to a generic competitor, Three Rivers Pharmaceuticals. Three Rivers in turn is battling Ribapharm in a patent dispute involving the lucrative drug.
Herman Saftlas, an analyst at Standard & Poor’s who covers ICN Pharmaceuticals, said Ribapharm is concentrating on bringing advanced versions of Ribavirin to market.
“There is some promise there,” Saftlas said. “These smaller biotechs are highly speculative stocks investors purchase hoping for the success of the products in development. Historically, only a small number pan out.”
Ribavirin also has been used by doctors in Canada and China to help treat severe acute respiratory syndrome, or SARS.
But spokesmen for the World Health Organization in Geneva and the federal Centers for Disease Control and Prevention said Thursday that the drug has not been effective in combating SARS.
Ribapharm’s earnings were released after the close of trading Thursday. Ribapharm’s shares rose 10 cents to $4.40 on the New York Stock Exchange. In after-hours trading, the stock fell to $4.