Two More Suits Filed Against ICN by Shareholders

ICN Pharmaceuticals Inc. was hit with two shareholder class-action lawsuits Wednesday that echo the accusations made in a similar suit filed last week that the Costa Mesa drug maker illegally inflated its stock price.

The three lawsuits follow the opening of an equal number of federal inquiries into the company, including an investigation by the House Energy and Commerce Committee.

In Wednesday’s suits, two ICN shareholders accuse the company, its chairman, Milan Panic, director Roberts A. Smith and ICN’s Viratek Inc. subsidiary of “fraudulently” misrepresenting the potential of Virazole, a drug jointly developed by ICN and Viratek.

Richard Keatinge Sr., an attorney for ICN, declined to comment Wednesday, saying that the company had not yet seen the two new suits. However, Keatinge said ICN considers Friday’s suit to be “totally without merit.” The company “will take steps to meet the charges,” Keatinge said.

Because Virazole has been touted as a potential AIDS medication, ICN and Viratek have been the subject of wide speculative interest on Wall Street during the last year, often causing the two stocks to swing wildly on company news releases and bearish rumors.

Although ICN has traded for as high as $34 a share and Viratek for as high as $98.50 a share during the last 12 months, the stock’s prices have eroded sharply recently.

Traded on the New York Stock Exchange, ICN closed Wednesday at $18 a share, down 25 cents for the day. Viratek, which is traded over the counter, closed at $41.50 a share, up 50 cents for the day.

Adding to the downward pressure on the stocks has been news of federal investigations of the company.

Two of those investigations, one by the congressional committee and one by the Food and Drug Administration, were spurred by recent allegations that Virazole causes severe side effects in infants. Last year, the drug was approved for treating severe cases of flu-like disease in children.

Late last year, the New York investment firm of PaineWebber Inc. became the target of an ICN shareholder lawsuit stemming from a bullish research report and “buy” recommendation issued on ICN by a PaineWebber analyst.

In the week that followed that report, ICN jumped 67% to a new 12-month high of $34 a share. It quickly plunged to $20 a share on medical skepticism and several articles questioning Virazole’s potential in treating AIDS and influenza.

In a lawsuit filed last year in federal district court in New York, an ICN investor, who bought 2,000 shares of the company at $31.50 and $29 each based on PaineWebber’s recommendation, accuses the firm of “inflating” ICN’s share price through a “false and fraudulent” research report.