Positive Test News Lifts ICN Shares

Times Staff Writer

Shares of ICN Pharmaceuticals Inc. soared 32% on Thursday after the company said it would begin late-stage human tests of an experimental hepatitis C drug ahead of schedule.

The Costa Mesa-based company disclosed plans for accelerated tests of the drug, Viramidine, on the day it reported a wider third-quarter loss. ICN's shares touched a 52-week high of $25.85 before closing at $24.75, up $6.02, on the New York Stock Exchange.

Viramidine is a modified version of ICN's existing drug ribavirin, an antiviral commonly used in combination with interferon to treat hepatitis C. The standard drug cocktail is effective in about 50% of patients but can induce anemia serious enough to force patients to reduce or end drug treatments.

ICN decided to launch the late-stage clinical trial after discussing preliminary data from an early human test with the Food and Drug Administration. An earlier trial showed that Viramidine might cause fewer cases of anemia than ribavirin.

Patients treated with a cocktail of Viramidine and interferon experienced significant reductions in their virus levels and smaller drops in hemoglobin, a measure of anemia, than patients on ribavirin, ICN said. The results were measured after patients had 12 weeks of treatment.

Hepatitis C is a chronic disease that can lead to cirrhosis of the liver and liver cancer. About 3 million to 4 million Americans have the disease, which is transmitted through contact with infected blood.

ICN licenses ribavirin to Schering-Plough Corp. and receives royalties on sales of the drug. But ICN's ribavirin royalties have come under pressure lately because of competition from a similar drug marketed by Roche, the Swiss pharmaceutical company.

There are 20 to 30 drugs in various stages of testing as a possible treatment for hepatitis C, but none are as advanced as Viramidine, said hepatitis expert Dr. Karen Lindsay, an associate professor at USC's Keck School of Medicine. A treatment that did not cause anemia would be welcomed by physicians and patients, she said.

"The ability to get through treatment without reducing or stopping it is critical," Lindsay said.

ICN is in the midst of a restructuring under new management after founder Milan Panic, who built the company into a global enterprise, resigned last year. The company plans to slash its workforce by more than one-third and sell eight manufacturing plants. In June, ICN unloaded its operations in Russia, including factories and a pharmacy chain.

In the third quarter, ICN lost $82.4 million, or 99 cents a share, compared with a loss of $74.9 million, or 90 cents, in the year-ago quarter. In the recent quarter, ICN bought back the 20% publicly held stake of its Ribapharm Inc. unit. Excluding costs related to that acquisition and other expenses, ICN reported profit of 23 cents a share, beating Wall Street's estimate of 22 cents, according to Thomson First Call.

Third-quarter revenue declined slightly to $167.5 million from $171.7 million in the year-earlier quarter. Royalties on ribavirin fell 43% to $36.2 million from $62.4 million in last year's third quarter, reflecting increased competition.

On Wall Street, analysts were divided on whether the jump in ICN's share price was justified.

Robert H. Uhl of Wells Fargo Securities noted that Viramidine was three to four years from reaching market, assuming the late-stage trial is a success. "There is still a long way to go. I do think the market is overreacting," he said.

But Joseph P. Riccardo of Bear, Stearns & Co. in a research note raised his price target for ICN to $27 from $19 and added $60 million in Viramidine sales to his 2006 estimates.

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