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Panic Backs Away From ICN Drug Unit

Biotech: Parent's CEO is no longer listed as chairman of Ribapharm as subsidiary prepares to go public.

August 24, 2000|From Bloomberg News

ICN Pharmaceuticals Inc.'s embattled chairman and chief executive Milan Panic has left the chairman's post at the drug maker's Ribapharm Inc. subsidiary as the hepatitis-drug unit prepares to go public.

Panic, listed as chairman in an earlier Ribapharm filing for its initial public offering, no longer holds a title or position at the unit, according to an updated Securities and Exchange Commission filing.

The unit conducts ICN's biotechnology business and receives royalties for its blockbuster Hepatitis C drug Ribavirin. Both companies are based in Costa Mesa.

ICN plans to divide into three companies, and Panic's departure from Ribapharm could remove a point of contention with some ICN shareholders, who criticized the 70-year-old CEO for remaining chairman of all three. The company's largest shareholder, Heartland Advisors Inc., has sought Panic's ouster as head of ICN, contending he isn't leading the company properly.

An ICN executive said Panic was sharpening Ribapharm's focus on research and development, not placating dissident investors.

"He felt that he wanted to develop a truly independent R&D company," said David Watt, executive vice president and general counsel at ICN. "A lot of the feedback we heard [from investors] was the management should be more focused on biotech."

Panic could not be reached Wednesday.

Watt said Panic--who left ICN for a time in 1992 to serve as prime minister of his native Yugoslavia--intends to remain chairman of ICN's remaining North American operations as well as its Eastern European business, which is planning an IPO of its own in Europe.

Michael Smith, a biotech research scientist and ICN board member since 1994, will assume the chairman's post at Ribapharm, according to the SEC filing. He was already on the unit's board.

Watt said Panic, who has focused on managing ICN rather than conducting research himself, sought to put in charge a chairman more familiar with the latest biotech advances.

Ribapharm's updated IPO filing also revealed that ICN expects to garner between $234 million and $270 million, before expenses, from the IPO. ICN plans to sell 18 million Class A common shares of Ribapharm for $13 to $15 each.

The dollar amount of the offering is little changed from the unit's earlier estimate of $250 million. However, ICN's move to sell all the stock itself and capture the proceeds directly is a change from the original plan in which the unit would sell the shares and use the money to pay a dividend to ICN.

ICN plans to use the proceeds from the IPO to repay debt, Watt said.

The parent company is focused for now on taking the European business public and hasn't made any specific plans for its remaining stake in the biotech unit, Watt said.

Ribapharm also reported in the filing that net income rose 73% to $45.2 million in the first half of this year from $26.1 million in the first half of 1999. Its revenue, consisting of royalties from Ribavirin, meanwhile rose 67% in the first half of this year to $76.6 million from $45.9 million a year ago.

ICN shares fell 69 cents Wednesday to $27.63. The shares have gained 9.1% this year.

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