COSTA MESA — ICN Pharmaceuticals said Wednesday that it has ceased efforts to obtain approval to market ribavirin in the United States as a remedy against the AIDS virus and took a $71-million writedown in the fourth quarter, largely as a result of that decision.
The Costa Mesa-based drug company reported a loss of $82 million for fiscal 1989 ended Nov. 30 on sales of $185.5 million, contrasted with earnings of $17.8 million on sales of $166.3 million in fiscal 1988.
In the fourth quarter ended Nov. 30, the company posted a loss of $85.7 million on sales of $55.88 million, contrasted with earnings of $554,000 on sales of $49 million for the same period in 1988.
The quarterly loss included a $56.6-million write-off related to the company's 74% ownership interest in Viratek Inc., its research affiliate involved in developing ribavirin. ICN also took an additional one-time charge of $14.4 million related to Canadian tests of ribavirin, litigation and restructuring costs.
"Given the complexity of the U.S. regulatory process and the time and considerable cost of doing additional trial work, it is difficult to predict when, if at all, an approved use of ribavirin against HIV (the virus causing acquired immune deficiency syndrome) could be achieved in the United States," said ICN spokesman Jack Sholl, in explaining the company's actions.
But he said the decision not to go forward with studies did not mean that the company has lost confidence in the drug's potential in thwarting AIDS.
Less than four years ago, there was widespread speculation that ribavirin--marketed under the trade name Virazole--had potential for fighting AIDS in its early stages. That belief fired up Wall Street, causing the price of ICN's stock in 1986 to soar from $10 a share to $34 a share and the per-share price of its Viratek subsidiary to zoom from $10 to $98.
Subsequent events, however, have sobered the market, so that at the close of the stock market Wednesday, ICN stock was selling at $4.75 a share. The latest financial figures were released after the market closed.
"I don't think the market anticipated this, but I think the market has given up caring," said Craig Dickson, a health care analyst with Rauscher Pierce Refsnes in Dallas. "I think the sizzle is already out of it."
ICN drew criticism from the FDA for making false claims about the drug.
In 1987, the company was scolded before a House subcommittee for providing allegedly misleading information to federal officials about ribavirin's effectiveness as an AIDS treatment.
To date, ICN has encountered difficulty proving to the FDA that ribavirin is effective in combatting the AIDS virus. The FDA has denied two applications by the company for approval to market its drug for use in life-threatening cases, based on data from clinical trials that the company has sponsored on pre-AIDS patients. A third application was voluntarily withdrawn by the company in December.
Also, in late 1989, Viratek halted a trial of ribavirin on the AIDS virus as a result of the Canadian government's decision to make AZT, the only FDA-approved anti-AIDS drug, available to the study's patient population.
"At the present time, there is no new clinical trial work on ribavirin sponsored by the company ongoing in the United States," Sholl said.
He noted that ribavirin has FDA approval and continues to be marketed in the United States in aerosol form as a treatment for children with respiratory syncytial virus, the most prevalent cause of lung infection in infants.
Sholl said ICN has spent $150 million on the development of ribavirin, of which $20 million was related to its use against AIDS.
Viratek said Wednesday that it planned to significantly curtail research and development spending in 1990 to bring research costs more in line with revenues. The company reported a loss of $17.1 million in fiscal 1989 on revenues of $2.6 million, in contrast with a loss of $6.3 million the previous year on revenues of $2.3 million.
ICN PHARMACEUTICALS' PERFORMANCE
Year ends Nov. 30
(in millions) 1989 1988 1987 1986 Revenue $185.5 $166.3 $121.0 $102.8 Net income (loss) $(82.0) $17.8 ($16.6) $13.4
Assets: $436.4 million
Number of employees: 3,000
Chief executive: Milan Panic
Shares outstanding: 14.6 million
52-week price range: 4 5/8 to 6 3/4
Wednesday's close (NYSE): $4.75