<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ X ]
Check the appropriate box:
[ ]Preliminary Proxy Statement
[ ]Definitive Proxy Statement
[ X ]Definitive Additional Materials
[ ]Soliciting Material Pursuant to SECTION 240.14a-11(c) or SECTION 240.14a-12
ICN PHARMACEUTICALS, INC.
(Name of Registrant as Specified In Its Charter)
RAFI M. KHAN
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box):
[ ]$125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2).
[ ]$500 per each party to the controversy pursuant to Exchange Act
Rule 14a-6(i)(3).
[ ]Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (1)
4) Proposed maximum aggregate value of transaction:
(1) Set forth the amount on which the filing fee is calculated and state how
it was determined.
[ ]Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously. Identify the
previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 The Times Mirror Company
Los Angeles Times
November 1, 1993, Monday, Southland Edition
SECTION: Business; Part D; Page 1; Column 6; Financial Desk
LENGTH: 1184 words
HEADLINE: HARSH BATTLE RAGES OVER DRUG FIRM;
MEDICINE: ICN STOCKHOLDERS TO CHOOSE WHICH OF TWO WEALTHY
IMMIGRANTS WILL GUIDE
FIRM.
BYLINE: By JAMES M. GOMEZ and MICHAEL FLAGG, TIMES STAFF WRITERS
DATELINE: COSTA MESA
BODY:
Rafi M. Khan and Milan Panic have much in common: Both are
immigrants who
found wealth in the United States and both are colorful executives
who stand out
in the often bland, button-down milieu of business. And each man's
business
dealings are wreathed in controversy.
Once allies in the promotion of Costa Mesa-based ICN
Pharmaceuticals Inc.,
Khan and Panic (pronounced PAHN-ish) now find themselves in a
spectacularly
nasty squabble, each lining up allies and deploying squads of
lawyers in a
battle for control of the company.
The fight heated up last week after a federal court on Oct. 19
allowed Khan
to go ahead with his long-threatened proxy solicitation designed to
oust Panic
from the chairmanship of ICN, and throw out the company's other
directors as
well.
Panic, who had a tormented and brief stint last year as prime
minister of his
native Yugoslavia, founded and presides over a company that makes
drugs for
treating everything from cancer to arthritis.
Khan, a high-profile, former Beverly Hills stockbroker, once
promoted ICN
when other brokers and analysts were shying away from it.
Khan now claims that Panic is an overpaid autocrat who manages
the company
poorly at the expense of shareholders. In documents filed with the
SEC, Khan
maintains that Panic has received extravagant compensation -- more
than $6
million in 1991 -- and made corporate decisions that have caused
ICN to lose
about $150 million over the past five years and $65 million last
year alone.
<PAGE>
Meanwhile, ICN suggests that Khan is an opportunist who is using
insider
information as he tries to take control of the company.
Regardless of who wins when shareholders vote Dec. 15, both will
emerge
flecked with mud.
Neither Khan nor Panic would comment for this article.
<PAGE>
PAGE 2
Los Angeles Times, November 1, 1993
"In the mutual fund business, you will run into a lot of very
strange
situations," said Bob Lange of Linder Management Corp. in St.
Louis. "But I
don't recall anything else quite like this before."
Khan is a dapper, balding man of 43 whom some clients regard as
a wizard at
picking small, undervalued stocks poised for big profits.
But he generates lawsuits like Johnny Appleseed generated apple
trees. In
addition to several suits filed by ICN in the months of legal
wrangling over
whether the proxy solicitation should proceed, Khan is the subject
of lawsuits
in relation to other stocks he represented, including Future
Communications
Inc., a Dallas-based cable TV programmer, and Spectrum Information
Technologies
Corp., a New York telecommunications firm.
Khan was recently hired as a broker with Phoenix-based Desert
Mountain
Securities -- his third job this year. He was hired there after
quitting his
positions as director and broker three weeks ago at RKS Financial
Group Inc. and
its brokerage unit, Reynolds Kendrick & Stratton in Beverly Hills.
Before that, Khan worked as a broker for H.J. Meyers & Sons of
Beverly Hills,
where he sold ICN stock as an underwriter in 1992. A federal judge
ruled in May
that Khan was using insider information to solicit shareholder
support while at
H.J. Meyers and lied under oath.
Some observers said they believe Khan's earlier troubles with
securities
regulators are likely to hurt his chances for success in the proxy
fight, which
comes at a time when investors in medical companies are wary of
needless change
and would probably support the current board.
The judge's declaration that Khan "committed willful perjury" is
one of the
nicer things that has been said about the Pakistani immigrant since
he first
appealed to shareholders last spring to oust the ICN management.
ICN took out a full-page, $114,000, ad in the Wall Street
Journal last week
headlined "Don't Be Conned by Khan." "Do You Want a Speculative
Trader to Run
Your Company?" it asked shareholders.
That hard-nosed response is typical of the 63-year-old Panic. He
is a tough
boss who has been known to yell at employees.
Among the things the ICN chairman includes in the biographical
<PAGE>
sketch the
company hands out is his account of how he fought Nazis as a
teen-ager in
Yugoslavia and how he defected from the communist country in 1955
as a member of
the Olympic bicycling team.
Panic founded ICN in 1960 with $200 and a washing machine. Now
the $5 million
worth of ICN stock he holds makes him a wealthy man; he has
cultivated a taste
for expensive, conservative suits and wears his graying hair swept
straight back
from a high forehead.
Criticism of Khan notwithstanding, ICN's own history isn't
exactly
unblemished.
When the Food and Drug Administration took issue with its claim
that its
ribavirin drug was an effective treatment for AIDS, Panic called
the head of
<PAGE>
PAGE 3
Los Angeles Times, November 1, 1993
the FDA "the jerk commissioner."
Then there was the lawsuit by the Securities and Exchange
Commission in 1991
that said ICN misled investors about ribavirin. The company settled
that suit
without admitting wrongdoing. A criminal probe was dropped after
ICN paid a
$600,000 settlement.
Investors and analysts generally agree that change is needed at
Panic's
four-company drug empire: ICN, SPI Pharmaceuticals Inc., ICN
Biomedicals Inc.
and Viratek Inc.
But some say they do not believe Khan is the cure. ICN, whose
stock was
trading at about $23 a share early last year, closed Friday at
$11.125 on the
New York Stock Exchange.
Khan is an ebullient man, and his reports shout big, bold-type
headlines at
clients. Take, for instance, the one last year on insurance company
Kentucky
Central Life: "Kentucky -- Finger Lickin' Good!!?"
His detractors point out that a year after the Kentucky Central
report, the
company's stock was taken off the Nasdaq market for failing to make
the required
public filings. Then the state insurance commissioner barred it
from writing new
policies.
In criticizing ICN's management, stock analyst Eugene
Melnitchenko of Legg
Mason Wood Walker said, "I think (Rafi) is taking it a bit too far
. . . at
stockholders' expense" as ICN deploys squads of expensive lawyers
in the battle.
Profile: Milan Panic
Age: 63
Position: Founder and chairman, ICN Pharmaceuticals, Costa Mesa
Background: Born in Belgrade, Yugoslavia, and immigrated to the
United States
in 1956. Founded ICN in 1960 and built it into a $1-billion empire.
Took a leave
of absence in July, 1992, to serve as prime minister of Yugoslavia,
but returned
in March, 1993, after losing an election to Serbian President
Slobodan
Milosevic.
Compensation: In 1991, he received $6.1 million: Orange County's
highest-compensated exec that year.
Source: Times reports, Bloomberg Business News
Profile: Rafi M. Khan
<PAGE>
Age: 43
Position: Stockbroker at Desert Mountain Securities, Phoenix.
Background: Former broker at Beverly Hills firm Reynolds
Kendrick Stratton.
Waging a proxy battle to remove Milan Panic as chairman of ICN
Pharmaceuticals
Inc., and replace its current board of directors.
<PAGE>
PAGE 4
Los Angeles Times, November 1, 1993
Lawsuit: In April, ICN filed suit against Kahn, accusing him of
insider
trading, racketeering and violating his fiduciary responsibilities
when he was
an institutional underwriter for the company.
Source: Times reports
Los Angeles Times
GRAPHIC: Chart, Profile: Milan Panic, Los Angeles Times ; Chart,
Profile: Rafi
M. Khan, Los Angeles Times
LANGUAGE: ENGLISH
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 The Times Mirror Company
Los Angeles Times
November 17, 1993, Wednesday, Orange County Edition
SECTION: Business; Part D; Page 6; Column 5; Financial Desk
LENGTH: 776 words
HEADLINE: ICN PINS $2.34-MILLION LOSS ON FOREIGN MONEY;
FINANCE: THE PHARMACEUTICAL FIRM, LOCKED IN A PROXY FIGHT OVER POOR
EARNINGS,
NOTES SUBSIDIARIES WERE PROFITABLE FOR THE QUARTER.
BYLINE: By JAMES M. GOMEZ, TIMES STAFF WRITER
DATELINE: COSTA MESA
BODY:
ICN Pharmaceuticals Inc., under siege by a dissident shareholder
who wants to
oust current management, on Tuesday reported a third-quarter loss
but said its
three subsidiaries were profitable for the period.
ICN attributed its $2.34-million loss to international currency
fluctuations.
The company, which is locked in a proxy fight with stockbroker
Rafi M. Khan,
has come under fire, in part, because of recent quarterly losses.
Some health care analysts watching Khan's effort to unseat ICN
Chairman Milan
Panic and the rest of the nine-member board of directors have also
criticized
the company's ongoing financial condition.
But ICN spokesman Jack Sholl said that the loss on the latest
financial
statement was a so-called paper loss reflecting differences between
the changing
value of the dollar and the values of bonds that were priced in
Swiss francs and
Dutch guilders.
ICN's loss, equal to 11 cents a share, compared to a loss of
$9.65 million,
or 69 cents a share, for the same period a year ago.
The 1992 third-quarter loss was attributed to the impact on the
company's
venture in Yugoslavia of hyper inflation and currency devaluation
in that
country. ICN Galenika, a drug
<PAGE>
manufacturer based in Belgrade, is
operating at a
break-even level despite the impact of the Balkan civil war.
ICN Pharmaceuticals posted third-quarter revenue of $15.8
million, an 86%
drop from $113 million for 1992's third quarter. ICN owns
substantial stakes in
SPI Pharmaceuticals Inc., ICN Biomedicals Inc. and Viratek Inc.,
all based in
Costa Mesa.
The steep drop, Sholl said, was due to an accounting change
earlier this year
that removed SPI revenue from ICN's net sales. Without the
accounting change,
ICN would have reported $85 million in revenue for a 25% decline,
he said.
For the first nine months, ICN lost $4.2 million, or 22 cents a
share,
compared to earnings of $144,000 for the first nine months of 1992.
<PAGE>
PAGE 2
Los Angeles Times, November 17, 1993
Wall Street had a lackluster reaction to the announcement. ICN
stock closed
Tuesday at $10.125 a share on the New York Stock Exchange, down
12.5 cents a
share from Monday.
Reporting on its subsidiaries, the company said that ICN
Biomedicals is
completing a turnaround after a recent restructuring. The smaller
company posted
modest earnings for the third straight quarter despite a
$73-million charge for
its 1989 soured acquisition of Flow Laboratories. ICN Biomedicals
now is
concentrating on reducing liabilities and has paid off $3 million
of its
$18-million debt load since December.
A second company, Viratek, is awaiting word on whether its key
drug will
receive U.S. Food and Drug Administration approval for marketing as
a treatment
of debilitating hepatitis C virus, which attacks the liver and
eventually leads
to death. The drug, Virazole, is nearly through the necessary
clinical trials
and Viratek said it could submit its application to the FDA early
next year.
SPI Pharmaceuticals continues to be profitable, ICN said,
despite a
significant drop in revenue from ICN Galenika. The company has made
up for the
Yugoslav subsidiary's sagging sales in other areas of the world,
including Latin
America, Mexico and Western Europe.
Losses and Profits
ICN Pharmaceuticals posted a third-quarter loss despite
profitable quarters
in each of its three publicly traded subsidiaries. Dollar amounts
in millions,
except per share data:
PARENT COMPANY
<TABLE>
<CAPTION>
ICN Pharmaceuticals Third quarter Three quarters
1992 1993 1992 1993
<S> <C> <C> <C> <C>
Revenue $113.0 $16.0 $425.5 $48.1
Net income (loss) (9.7) (2.3) 0.1 (4.2)*
Per share (loss) ($0.7) ($0.1) ($0.03) ($0.2)*
</TABLE>
* Includes extraordinary income of $627,000, or $0.03 per share.
*
SUBSIDIARIES
<TABLE>
<CAPTION>
ICN Biomedicals Third quarter Three quarters
1992 1993 1992 1993
<S> <C> <C> <C> <C>
Revenue $18.4 $14.6 $58.8 $45.8
Net income (loss) (7.6) 0.9 (9.0) 5.3*
Per share (loss) ($0.4) $0.05 ($0.5) $0.3*
</TABLE>
* Includes extraordinary income of $627,000, or $0.03 per share.
*
<TABLE>
<CAPTION>
Viratek Third quarter Three quarters
1992 1993 1992 1993
<S> <C> <C> <C> <C>
Revenue $1.9 $2.0 $4.2 $4.0
Net income (loss) 0.7 0.3 2.2 (0.6)
Per share (loss) $0.05 $0.02 $0.15 ($0.04)
</TABLE>
*
<TABLE>
<CAPTION>
SPI Pharmaceuticals** Third quarter Three quarters
1992 1993 1992 1993
<S> <C> <C> <C> <C>
Revenue $94.6 $70.2 366.6 256.3
Net income (loss) 9.7 6.9 25.6 13.7
Per share (loss) 0.5 0.4 1.4 0.7
</TABLE>
<PAGE>
PAGE 3
Los Angeles Times, November 17, 1993
** Carried as equity investment and therefore not part of ICN
overall earnings.
Source: ICN Pharmaceuticals Inc.; Researched by JANICE L. JONES /
Los Angeles
Times
GRAPHIC: Table, Losses and Profits: ICN Pharmaceuticals / Los
Angeles Times
LANGUAGE: ENGLISH
LOAD-DATE-MDC: November 18, 1993
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 The Times Mirror Company
Los Angeles Times
November 19, 1993, Friday, Orange County Edition
SECTION: Business; Part D; Page 3; Column 5; Financial Desk
LENGTH: 344 words
HEADLINE: ICN DISCLOSES SETTLEMENT OF SEX HARASSMENT LAWSUIT
BYLINE: By JAMES M. GOMEZ, TIMES STAFF WRITER
DATELINE: COSTA MESA
BODY:
A former ICN Pharmaceuticals Inc. employee has reached an
out-of-court
settlement in a sexual harassment lawsuit against the company's
chairman, Milan
Panic, the company said Thursday.
Panic attorney Bernard Segal confirmed that Colleen James, a
former
trade-show manager for the Costa Mesa-based drug company, settled
her case
against Panic and ICN. James had sued Panic in May, alleging that
she was fired
after rebuffing Panic's sexual advances.
Segal said that, under the agreement made between James and his
client, terms
of the settlement were not disclosed.
James could not be reached for comment. Her Los Angeles
attorney, Shelly
Mandell, did not return phone calls.
The company did not publicly announce the status of the lawsuit,
which was
settled three months ago, until Rafi M. Khan, a disgruntled ICN
shareholder,
sent a letter to other shareholders condemning the settlement.
Khan is asking shareholders to elect him and his six-member
slate of
candidates to the ICN board as part of his plan to unseat Panic,
who founded the
company in 1960, and the eight other directors.
In a letter mailed Tuesday, Khan challenged shareholders to ask
the company
who paid the settlement and if there are other sexual harassment
charges leveled
at Panic, a onetime premier of Yugoslavia. He also asked them to
sign proxy
cards giving him the authority to challenge Panic during ICN's
annual meeting,
set for Dec. 15.
Recently portrayed by ICN attorneys as a fugitive from
<PAGE>
Scotland
Yard, Khan
used the sexual harassment case to raise questions about Panic's
character.
"Since the company is so anxious to tell you about me, I think
it is
appropriate for you to learn more about the man who is running the
company,"
Khan said in his letter to shareholders.
Attorney Segal emphasized, however, that James' allegations
against Panic
were never tested in court, whereas those against Khan were aired
in a hearing
last week in U.S. District Court in New York and will be ruled on
by federal
<PAGE>
PAGE 2
Los Angeles Times, November 19, 1993
judge.
"We can't lose sight of that distinction," Segal said.
LANGUAGE: ENGLISH
LOAD-DATE-MDC: November 20, 1993
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 PR Newswire Association, Inc.
PR Newswire
September 3, 1993, Friday
SECTION: Financial News
DISTRIBUTION: TO BUSINESS EDITOR
LENGTH: 314 words
HEADLINE: FORMER ICN EMPLOYEE DISCREDITS ICN'S CLAIMS AGAINST
RAFI KAHN
DATELINE: LOS ANGELES, Sept. 3
BODY:
C. Robert Sala, who served as vice president of marketing and
sales of SPI
Pharmaceuticals, Inc. (AMEX: SPI), owned 43 percent by ICN
Pharmaceuticals
(NYSE: ICN), from April 1989 to May 1993, has filed an Affidavit
stating
that "no person at the ICN group of Companies, including ICN and
Viratek, had
any material knowledge whatsoever as to the possible timing of FDA
approval
other than a general time period in which approval could occur
subject to
satisfactory conclusion of the still ongoing Phase III trials which
we freely
shared with members of the investing public during our Viratek road
show."
In Mr. Sala's capacity at SPI Pharmaceuticals, he was in charge
of the key
personnel responsible for liaison with the FDA and NIH, who
reported directly to
him concerning all matters relating to the FDA and NIH.
Mr. Sala's Affidavit goes on to state, "Under such circumstances
I do not
believe that anyone could have been given material non public
information by ICN
as to the possible timing of FDA approval other than the general
range of
possible approval times subject to satisfactory conclusion of the
ongoing Phase
III trials which were given to all people attending the Viratek
road show."
The Affidavit filed by Mr. Sala refutes the charges made by
ICN Pharmaceuticals that Rafi Khan could possibly have had any
inside information other than as reported in the Interim Financial
Report issued
for Viratek, Inc. for the three month period ending March 31, 1992,
which
stated, "Both trials are scheduled to conclude in late 1993, and if
successful,
an NDA would be filed with the Food and Drug Administration in
early 1994."
<PAGE>
In a statement by Rafi Khan, he stated, "I consider Mr. Sala's
Affidavit to
constitute another victory and a complete repudiation of the
baseless charges
made by ICN." CONTACT: Fran Daniels, 310-278-4413
LANGUAGE: ENGLISH
LOAD-DATE-MDC: September 4, 1993
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 The Washington Post
The Washington Post
August 21, 1993, Saturday, Final Edition
SECTION: FINANCIAL; PAGE B6
LENGTH: 462 words
HEADLINE: Former Leader Of Yugoslavia To Pay RTC
SERIES: Occasional
BYLINE: Jerry Knight, Washington Post Staff Writer
BODY:
Milan Panic, the multimillionaire California businessman who
served briefly
as prime minister of his native Yugoslavia, has agreed to pay $ 5
million to $ 7
million to settle a $ 9.3 million lawsuit filed against him by the
Resolution
Trust Corp., the government's savings and loan cleanup agency.
The settlement calls for the RTC to forgive part of Panic's debt
and to drop
efforts to foreclose on a San Diego motel he owns. An independent
arbitrator
will decide exactly how much Panic must pay.
Panic (pronounced Pan-ish) is the chairman of ICN
Pharmaceuticals, a
California drug company. He came to the United States as a
penniless immigrant
from Yugoslavia in the 1950s and became wealthy through ICN and
several other
companies.
Last year, Panic returned to his homeland as a would-be
peacemaker. But after
five months as prime minister, he was ousted by President Slobodan
Milosevic,
the Serbian hardliner blamed by the West for today's brutal ethnic
warfare in
Bosnia.
In 1985, Panic bought a 233-unit Budget Motel in San Diego,
taking over an $
8.2 million mortgage that had been issued by Progressive Savings
Bank, of
Alhambra, Calif. Progressive failed in 1991 and was taken over by
the RTC.
By that time, Panic had stopped making payments on the loan,
claiming he was
cheated by the developer who sold him the motel. The developer
later was
convicted of bankruptcy fraud and sentenced to prison.
The government sued to foreclose on the San Diego motel, which
was disclosed
by the Los Angeles Times the day before Panic was sworn in as prime
minister of
Yugoslavia.
<PAGE>
The lawsuit languished during Panic's foray into Yugoslavian
politics, and
settlement talks resumed last year.
Calling his client "a victim," Panic's attorney, Bernard I.
Segal, said
executives of Progressive Savings encouraged him to assume an $ 8
million
mortgage on the motel so the S&L would not have to repossess the
property from
the original borrower.
<PAGE>
PAGE 2
The Washington Post, August 21, 1993
Under terms of the settlement, Panic and the RTC agreed to
reduce the total
debt on the property to $ 7 million from $ 9.3 million. Panic is to
pay the RTC
$ 5 million and then an independent arbitrator will decide whether
he must pay
the additional $ 2 million.
RTC spokesman Steve Katsanos said the RTC agreed to accept the
reduced
payment from Panic because "it appears there may be some merit to
his point that
he was misled and taken to the cleaners on the initial deal.
Panic's return to his homeland was encouraged by State
Department officials
in the Bush administration, who regarded him as a much-needed
moderate voice in
the chaotic region.
Any suggestion that Panic's political connections had anything
to do with the
government's decision to settle the lawsuit is "an absolute lie,"
his lawyer
said.
LANGUAGE: ENGLISH
LOAD-DATE-MDC: October 14, 1993
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 The Times Mirror Company
Los Angeles Times
August 26, 1993, Thursday, Orange County Edition
SECTION: Business; Part D; Page 5; Column 5; Financial Desk
LENGTH: 533 words
HEADLINE: RULING OF APPEALS COURT A BLOW TO ICN PRESIDENT;
DISSIDENT: THE ACTION LEAVES FOE FREE TO PUSH FOR OUSTER OF MILAN
PANIC, THE
FIRM'S COLORFUL FOUNDER.
BYLINE: By JAMES M. GOMEZ, TIMES STAFF WRITER
DATELINE: COSTA MESA
BODY:
A federal appeals court dealt a blow to ICN Pharmaceuticals Inc.
on
Wednesday, overturning a lower court ruling that had barred a
dissident
shareholder from trying to overthrow the company's colorful
chairman.
Beverly Hills stockbroker Rafi Khan, who once sold ICN shares
but has since
become one of the company's chief detractors, is now free to press
on with his
proxy battle to oust ICN's directors, including Chairman Milan
Panic, who
founded the company in 1960.
Panic, who returned to ICN in February after serving for nine
months as
premier of Yugoslavia, is known in financial circles as a
flamboyant
businessman. According to company lore, he came to the United
States from
Yugoslavia in 1956 and reportedly started ICN with $200. Since then
he has
earned praise for his financial acumen and criticism for his blunt
manner.
Khan accuses Panic of living a lavish lifestyle at ICN's
expense. The
chairman accepted executive compensation of about $6 million two
years ago and
continued to draw his annual salary of $500,000 while in
Yugoslavia.
The company has staunchly denied Khan's accusations, maintaining
that Panic
deserved what he was paid for guiding the company to financial
success.
Khan, nevertheless, remains determined to push Panic out.
"I have every intention of proceeding," said Khan, who owns
120,000 shares of
ICN stock. "This is a landmark decision."
<PAGE>
The ruling by the U.S. Court of Appeals for the 2nd Circuit in
New York,
announced late Wednesday, also opens the door for ICN's
long-awaited annual
meeting. ICN attorneys succeeded in postponing the meeting, which
had been
scheduled for May.
They argued that holding it then would not be appropriate
because the appeals
court was still considering whether to set aside the May 13 ruling
barring Khan
from proceeding with his proxy fight.
<PAGE>
PAGE 2
Los Angeles Times, August 26, 1993
Putting off the meeting also kept critics of Panic from staging
a public
coup.
ICN spokesman Paul Knopick said that the company could not
comment on
Wednesday's ruling because it had not yet seen the court's opinion.
A statement
may be released today, he said.
Khan, a stockbroker for Reynolds Kendrick & Stratton, said that,
though he
has not yet seen the ruling, he feels vindicated.
A strong booster of ICN when he worked at Beverly Hills
brokerage H.J. Meyers
& Co., Khan began his battle against the pharmaceuticals company in
April.
Khan's efforts landed him in court when the company filed a suit
against him,
alleging that he violated securities laws and breached his
fiduciary
responsibility as a broker when he set out to topple Panic.
In issuing the lower court ruling on May 13, U.S. District Judge
John Sprizzo
had said that Khan was guilty of lying to court and had used inside
information
in his fight against Panic.
Jack Sholl, senior vice president at ICN, said late Wednesday
that, though he
had not yet seen the latest ruling, "it is our understanding that
the company's
suit . . . against Khan was not affected."
If Khan persists with his proxy fight, Sholl said, ICN will
continue with its
legal action against him.
In Wednesday's trading on the New York Stock Exchange, ICN fell
slightly to
close at $9.75 a share, down 37.5 cents.
LANGUAGE: ENGLISH
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 The Times Mirror Company
Los Angeles Times
July 7, 1993, Wednesday, Orange County Edition
SECTION: Metro; Part B; Page 1; Column 5; Metro Desk
LENGTH: 900 words
HEADLINE: ICN'S PANIC ACCUSED OF SEX HARASSMENT;
LAWSUIT: FIRED EX-AIDE ALLEGES THAT THE HIGH-PROFILE BUSINESSMAN
CONSTANTLY MADE
SEXUAL REFERENCES AND ONCE ATTACKED HER.
BYLINE: By ERIC LICHTBLAU, TIMES STAFF WRITER
DATELINE: SANTA ANA
BODY:
A former aide to Milan Panic has brought a sexual harassment
lawsuit against
the Orange County businessman and one-time Yugoslav leader,
claiming that Panic
propositioned her repeatedly at their Costa Mesa office and
ultimately fired her
earlier this year after she threatened to make trouble over his
unwanted
advances.
Colleen James, 39, alleges in a lawsuit filed in Orange County
Superior Court
in Santa Ana on May 25 that the largely verbal harassment escalated
to a
physical attack in her office last year, when Panic grabbed her
from behind and
thrust himself against her in a sexual manner. James said in an
interview that
she screamed and managed to break free from her boss.
Panic, the chairman of ICN Pharmaceuticals Inc. in Costa Mesa,
did not return
calls seeking comment on the case Tuesday, and a spokesman said he
would not
discuss the lawsuit. But Panic's attorney, Bernard I. Segal of Los
Angeles, said
the businessman had never harassed James during her years at his
company, and
that she was let go in February solely because of cost cutbacks.
"You have here a disgruntled employee who knows that she's
dealing with a
prominent figure and is trying to make the most of it through some
gambit to
coerce money out of the company," Segal said. "But the company is
not about to
be browbeaten."
Panic has been a force in Southland business circles for years,
building the
company he founded in 1960 into an industry giant and generating
controversy
over his marketing of a treatment for the AIDS virus.
But he burst onto a far larger international stage last summer
<PAGE>
when he was
named prime minister of his war-ravaged homeland of Yugoslavia. The
appointment
was seen by many in the Belgrade power structure as an attempt to
provide a
much-needed link with the West as the two-republic federation sank
deeper into
economic and political chaos.
Nine months later, however, Panic returned to Orange County and
his
pharmaceutical business after receiving a vote of no-confidence as
prime
minister, and then failing to unseat rival Slobodan Milosevic in a
race for the
presidency of Serbia, one of the states that, with Montenegro,
makes up the
<PAGE>
PAGE 2
Los Angeles Times, July 7, 1993
Yugoslav federation.
James, who worked as a $51,000-a-year trade show manager at SPI
Pharmaceuticals in Costa Mesa, an ICN subsidiary that is also
headed by Panic,
alleges in her lawsuit that Panic attacked her in her office just
six weeks
before he was named prime minister of Yugoslavia.
"Without consent," the lawsuit says, Panic grabbed James from
behind, pulled
her into his pelvic area and "began to grind against her." James
said she later
complained to several supervisors but was told that there was
little they could
do.
That incident, James alleges in her lawsuit, came after a
lengthy string of
other propositions from the ICN founder, who commented on her legs,
invited her
to have sex with him, and made other often blatant overtures.
One one occasion, for instance, Panic told James: "You have the
perfect body
for making love," the lawsuit alleges. In another instance, he
allegedly told
James that he was personally responsible for her bonus and linked
the reward to
her "beautiful legs."
"He seemed to enjoy it if you were shocked or disgusted," James
said in an
interview. "You feel totally helpless. But if I can help other
women (by
bringing her lawsuit), this will all be worth it. I want it to stop
- -- maybe
this is how we do it."
During her time at the company from 1979 until early this year,
James said
she avoided getting into an elevator alone with her boss or meeting
him in the
hallway. She worried about what clothes she could wear to work.
And, James said,
she grew increasingly concerned about her reputation among her
colleagues as
rumors spread that she had risen from the ranks of secretaries by
having an
affair with Panic, who is married.
"My worth there was in my sexuality. That's what was important
to (Panic),
and that hurts," she said.
But Segal, the attorney for Panic, questioned why James never
filed a formal
complaint under the company's sexual harassment policy and raised
the issue only
after she was let go.
"It makes you wonder," he said.
Segal also suggested that Shelly Mandell, who is James' attorney
and a past
president of the Los Angeles chapter of the
<PAGE>
National Organization
for Women,
"has her own interest in advancing this case."
NOW's potential involvement in the case "is as much a part of
this as
anything else," he said. "Mr. Panic becomes a very easy target for
people with
an agenda who want publicity."
Mandell acknowledged that sexual harassment has become one of
NOW's top
priorities in the wake of the Anita Hill-Clarence Thomas
controversy, but she
said the group has played no part in the James case. The main force
in the case,
she said, has been Panic himself.
<PAGE>
PAGE 3
Los Angeles Times, July 7, 1993
"It is not about sex. It is about power, and this guy is
quintessential in
the profile of a power abuser," Mandell said.
The lawsuit does not specify damages sought by James, but
Mandell said: "We
want $6 million. A woman's dignity to me is worth a lot more than
$6 million,
but you've got to put a number on it somehow."
Mandell said she arrived at the figure by following the lead of
a jury that
awarded a sexual harassment victim $1 million because that was the
amount her
boss had received as a bonus. Panic reportedly made $6 million in
salary and
compensation for 1991.
GRAPHIC: Photo, COLOR, Colleen James had worked at ICN since 1979.
Her lawyer
will seek $6 million in damages. ; Photo, A distraught Colleen
James alleges
pattern of sex harassment. MARK BOSTER / Los Angeles Times
LANGUAGE: ENGLISH
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 Agence France Presse
Agence France Presse
July 8, 1993
SECTION: News
LENGTH: 254 words
HEADLINE: Panic sued for six million dollars in sexual harassment
case
DATELINE: SANTA ANA
BODY:
SANTA ANA, California, July 8 (AFP) - A California woman is
suing former
Yugoslav prime minister Milan Panic for sexually harassing her and
then sacking
her when she complained.
Colleen James filed the six-million-dollar suit May 25 charging
that Panic
grabbed her last year at their Costa Mesa, California, office where
Panic was
head of ICN Pharmacueuticals Inc.
The alleged incident took place six months before Panic became
prime
minister of Yugoslavia.
James, a trade show manager for ICN who was laid off in
February, said she
broke free and complained of the incident to several supervisors
who refused to
take action.
James, 39, also said Panic made remarks about her legs, asked
her for sex
and made overt advances. Her attorney said she would ask for six
million dollars
in damages, Panic's reported income for 1991.
An attorney for Panic said the businessman never harassed James
and that she
was fired because of the company's cost cutting plan.
Panic became Yugoslav prime minister in July 1992 but returned
nine months
later after a no-confidence vote and a defeat in the presidential
race for
Serbia.
LANGUAGE: ENGLISH
LOAD-DATE-MDC: July 8, 1993
<PAGE>
PAGE 1
LEVEL 1 - 2 OF 2 STORIES
The Associated Press
The materials in the AP file were compiled by The Associated Press.
These
materials may not be republished without the express written
consent of The
Associated Press.
July 8, 1993, Thursday, PM cycle
SECTION: Domestic News
LENGTH: 248 words
HEADLINE: Former Yugoslav Prime Minister Target of Sex Harassment
Suit
DATELINE: SANTA ANA, Calif.
BODY:
A woman filed a sexual harassment suit against former Yugoslav
Prime
Minister Milan Panic, alleging he propositioned her repeatedly
and fired her
after she complained.
Colleen James claimed in the lawsuit that Panic, who heads ICN
Pharmaceuticals Inc. in Costa Mesa, grabbed her in her office last
year. Janes
said she broke free and later complained to several supervisors,
but was told
there was little they could do.
That incident allegedly occurred in spring 1992, about six weeks
before Panic
was named to lead what was left of his native Yugoslavia.
The suit, filed May 25 in Orange County Superior Court, doesn't
request
specific damages. Shelly Mandell, James' attorney, said she would
ask for $ 6
million, Panic's reported compensation for 1991.
Bernard I. Segal, an attorney for Panic, said the businessman
never harassed
James and that she was laid off in February because of cost
cutbacks.
James, 39, who earned $ 51,000 a year as a trade show manager
for an ICN
subsidiary, said Panic would comment on her legs, invite her to
have sex and
made blatant overtures.
Panic, who emigrated to the United States in 1956 and became a
U.S. citizen
seven years later, became Yugoslav prime minister in July 1992. He
vowed to try
to bring peace to the embattled region. But he returned to the
United States
nine months later after a no-confidence vote and defeat in an
election for the
presidency of Serbia, the more powerful of the country's two
<PAGE>
remaining
republics.
LANGUAGE: ENGLISH
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 The Times Mirror Company
Los Angeles Times
June 20, 1993, Sunday, Home Edition
SECTION: Magazine; Page 14; Magazine Desk
LENGTH: 5713 words
HEADLINE: TOXIC HOPE;
WIDELY EMBRACED, THE AIDS DRUG IS NOW UNDER HEAVY FIRE.;
THE AZT STORY
BYLINE: By Linda Marsa
BODY:
It was such a shocking incident that it seemed to unfold in slow
motion.
Researcher Peter Mansell, normally cerebral and brooding, was
almost jovial as
he reeled off figures from a nationwide test of ribavirin, a drug
to combat
AIDS. A ripple of excitement swept through the capacity crowd
gathered in an
unremarkable meeting room in the Washington Hilton hotel for the
third
International Conference on AIDS in June, 1987.
Mansell's presentation of dull scientific data didn't obscure
his underlying
message: ribavirin worked. HIV patients who took the drug were less
likely to
develop AIDS than those who didn't. "Dr. Mansell, a man shouted
from the back of
the room. "Do you or any of the other researchers have a financial
interest in
the approval of this drug of the company that makes it?
The audience erupted. Mansell, a veteran cancer researcher at
M.D. Anderson
Hospital in Houston, had a spotless reputation. The implication
that he, or any
of the scientists conducting the study, had acted unethically was
outrageous.
Suddenly, another man jumped up on the podium and grabbed the
microphone, a
larger-than-life blur in the blinding dress whites of the U.S.
Public Health
Service. "Frank Young, FDA, he said, identifying himself as the
commissioner of
the Food and Drug Administration. Young told the stunned crowd that
the FDA
thought the ribavirin study was biased, perhaps even fraudulent,
and that the
Securities and Exchange Commission suspected ICN Pharmaceuticals,
the Costa
Mesa, Calif., company that made the drug, had used bogus test
results to
artificially inflate the price of its stock.
"It was like God coming down, recalls Peter Heseltine, who
tested ribavirin
at USC. He could not remember ever witnessing a government official
publicly
humiliating a respected researcher.
<PAGE>
Subsequently, the FDA and the SEC launched separate
investigations, raiding
researchers' offices and confiscating file cabinets full of
documents. Months
later, they issued similar verdicts. Everyone was exonerated: The
test data was
deemed accurate, and no stock manipulation had occurred.
The affair still pains Heseltine, now director of the HIV clinic
at Los
Angeles County-USC Medical Center, where one-third of the county's
AIDS patients
are treated. "The humiliation fades, he says. "But the guys who
literally gave
their lives to do these studies and test ribavirin, the fact that
their
<PAGE>
PAGE 2
Los Angeles Times, June 20, 1993
sacrifice was wasted, that's sticks with me. This was a potentially
useful drug,
but it was never given a chance.
A scant six months before the conference, scientists at the
National
Institutes of Health and officials at the FDA had lined up behind
another drug,
zidovudine, nicknamed AZT for its chemical components. AZT was a
chemotherapy
that had been sitting in an NIH shelf for 20 years because it was
expensive and
toxic to produce and didn't do much against cancer. But it had a
rich producer
with influential friends -- Burroughs Wellcome, one of the
pharmaceutical giants
- -- and the enthusiastic backing of Dr. Samuel Broder, then
associate director of
the National Cancer Institute, one the behemoth research facilities
that compose
the NIH.
As with any war on disease, there is only so much money, only so
many
scientists. But in the mid-80's, AIDS activists were bringing
intense pressure
against the political and medical establishment, including
candlelight vigils on
the White House lawn and sit-down strikes at NIH headquarters. The
medical
community, desperate for something that would alleviate patients'
suffering,
began to focus almost all its resources on AZT. Nothing else, aside
from two
similarly designed chemotherapies, ddI and ddC, has been approved
for use in
combatting HIV since AZT was sanctioned by the FDA in 1987. Only
today, six
years later, is ribavirin -- along with a few other AIDS drugs --
finally being
tested on humans.
Until 1991, of the more than $420 million that has poured into
the NIH's AIDS
Clinical Trials Group, which conducts tests of experimental AIDS
drugs in
humans, 80% went toward studies on AZT. "We've lost many valuable
years because
of the sole preoccupation with AZT and its close relatives, ddC and
ddI, says
Michael Lange, an FDA adviser and assistant chief of infectious
diseases at St.
Luke's-Roosevelt Hospital in New York.
Now a new European study, the Concorde, casts doubts about
whether AZT, which
is used by 180,000 people worldwide and whose sales topped $385
million in 1992,
should be taken by HIV-positive people who aren't yet ill. Some
critics contend
the drug may actually hasten the deterioration of the immune system
associated
with AIDS. In the post-mortems on AZT, some AIDS activists now
admit that in
their haste to get the drug approved, caution was swept aside.
The stark reality is that 12 years and 10 billion taxpayer
dollars into this
epidemic, there's no cure in sight. The story of how AZT was
transformed from an
unused chemotherapy into the most widely prescribed AIDS drug,
despite
accusations of sloppy research and political manipulation, is a
cautionary tale
of
<PAGE>
hasty decisions and inexact science.
*
Big science costs big money. In 1990 dollars, the price of
developing a drug,
any drug, from scratch and shepherding it through the federal
approval process
is estimated at $194 million. Consequently, the quest for a cure
for an illness,
whether heart disease, cancer or AIDS, requires a massive infusion
of money and
a firm commitment on the par of the federal government scientists
at major
universities, and the pharmaceutical industry. In a perfect world,
academic
scientists would only do basic research, deciphering the root
causes of a
disease in unfettered isolation -- information that drug makers
would use to
formulate new treatments. Unfortunately, "federal funding has dried
up, so
<PAGE>
PAGE 3
Los Angeles Times, June 20, 1993
academics are doing more and more applied research, says Joseph
DiMasi, senior
research fellow at the Center for the Study of Drug Development at
Tufts
University in Boston. "Simultaneously, pharmaceutical firms these
days are
taking a hard look at their R & D programs and trying to wring out
whatever
inefficiencies they can. Consequently, only the most promising
avenues are
explored, often sending researchers stampeding down one path.
With AIDS, an epidemic that blindsided the biomedical
establishment, all
these endemic problems were magnified. Scientists, desperate to
conquer the
disease that was sucking the life out of so many, jumped on the
hypothesis that
HIV was the lone AIDS assassin; they embraced AZT because it seemed
to work by
destroying some HIV when nothing else even came close. And because
this disease
hit a vocal and extraordinarily well-organized population, the
scrutiny and
political pressures have been intense.
But science is not always predictable. Scientific knowledge
moves forward
incrementally, with each new discovery built upon the bricks of the
last. Many
of the greatest breakthroughs -- such as Alexander Fleming
discovering the
bacteria-fighting ability of penicillin after he saw mold forming
in a petri
dish in 1928 -- have been serendipitous. The likelihood of these
fortuitous
accidents increases if research is proceeding down many paths
rather than
intractably sticking to one road -- which could be a dead end.
"I think we made a terrible mistake when we narrowed our focus,
says Joseph
Sonnabend, head of the Community Research Initiative on AIDS in New
York, which
conducts community-based tests of AIDS drugs. "Because if the role
(of other
factors besides HIV) had been worked out, then we might have come
up with (other
treatment) that could have helped people.
Many dedicated AIDS researchers, however, have wearied of all
this criticism
from the sidelines. "There's a fascinating phenomenon here --
there's a couple
hundred people who are doing the studies and generating data, and
a few thousand
commentators, says Douglas Richman, a top AIDS researcher and a
professor of
pathology and medicine at UC San Diego. "These 'experts' all say
the same thing
- -- AZT was done too quickly, and drug development is going too
slowly. We can't
win. Still, progress has been incredibly fast. This virus was
discovered less
than 10 years ago, and we have three drugs approved and a whole
bunch more that
look promising.
"We're very proud of the speed with which we developed AZT, says
Burroughs
Wellcome spokesperson Kathy S. Bartlett. "Since 1985, we've
supported more than
30 million clinical trials with
<PAGE>
AZT involving more than 20,000
patients. It's
the most thoroughly studied antiretroviral medication there is.
People need to
remember a little bit what it was like back in 1985 and '86 -- how
hard people
worked to find a treatment for this disease. AZT certainly has its
limitations,
but it has made a big difference in people's lives.
Nonetheless, there is a consensus that politics shackled AIDS
drug
development. In the competitive world of AIDS research, dissent has
often been
stifled, and scientists who have challenged the twin pillars of
AIDS research --
that HIV is the sole cause of AIDS and that AZT is its only
effective combatant
- -- find it difficult to get grants. "It's a bit like the war on
cancer in
Nixon's time, observes Gunther Stend, former chairman of the
molecular and cell
biology department at UC Berkeley. "In some instances, people who
couldn't hack
it in other fields moved to AIDS, where they could get funding, and
forced out
<PAGE>
PAGE 4
Los Angeles Times, June 20, 1993
the good scientists.
It all comes down to money and who has it: The group that
controls the purse
strings controls the direction of research. But "the larger issue
is the drug
industry's influence on the scientific process, says Peter Arno, a
health
economist at the Albert Einstein College of Medicine in New York
and co-author
of "Against the Odds: The Story of AIDS Drug Development, Politics
and Profits.
"And it's a very corrupting influence.
"Academics receive industry funding all the time, and it doesn't
necessarily
bias their results, counters Kenneth Kaitin, assistant director of
the Center
for the Study of Drug Development at Tufts.
One of the richest and most influential drug companies is
Burroughs Wellcome,
an American subsidiary of a British pharmaceutical, headquartered
in North
Carolina. It is an oddity in the rarefied world of billion-dollar
multinational
companies: a medical philanthropy with a corporate arm. In 1936,
after its
founder, Henry S. Wellcome, died, all of the company's stock was
deposited into
a charitable trust, which is now the second-largest source of funds
for
biomedical research in Great Britain (the largest being the
government.) In
1955, the Burroughs Wellcome Fund, similar in structure to its
London-based
parent, was set up in the United States.
Most of the company's profits -- from dozens of drugs, including
Actifed and
Sudafed cold remedies and the antidepressant Wellbutrin -- finance
biomedical
research and drug development. Burroughs Wellcome endows chairs at
Johns Hopkins
and other medical schools, funds scholarships and awards, and
provides grant to
hundreds of scientists. Both here and in Great Britain, the
Wellcome Trust has
become a quiet but potent force in biomedical science.
In the early '80's, Burroughs Wellcome resynthesized AZT from a
public-domain
formula, saw that it prevented HIV from making an enzyme critical
to its
reproduction, and decided to throw its weight behind the drug. It
was perhaps
inevitable that AZT would become a pharmaceutical front-runner, but
no one
expected it to go unchallenged for so long. Some observers claim
that most of
the major pharmaceutical companies weren't initially interested in
AIDS because
the patient populations were too small to justify the research
expense. Plus,
viruses are wily foes -- witness science's inability to conquer the
common cold.
"AZT was seen as a temporary stopgap, says John James, editor of
AIDS
Treatment News. "Ideally, we should have gone on to fundamentally
better drugs
- -- which we have not done.
<PAGE>
*
IN 1985, AFTER AZT SHOWED THAT IT was able to thwart HIV in test
tubes,
Burroughs Wellcome, with the blessing of the FDA, moved quickly to
test the drug
in people with AIDS. From the start, the tests were problematic.
Patients were
already desperately ill, and the drug seemed to make them even
sicker. To be
admitted to the tests, they had to have had pneumocystic carinii
pneumonia, the
No. 1 killer of people with AIDS, and their T-cell counts -- the
number of
immune cells -- had to have dropped below 200.
The study began in early 1986 with 282 patients at 12 medical
sites around
the country. The first step in this process was to hire principal
<PAGE>
PAGE 5
Los Angeles Times, June 20, 1993
investigators, or PI's -- researchers at leading medical schools
and hospitals
who designed the AZT trial as a double-blind, placebo-controlled
trial: Give
half the patients the drug, the other half a placebo, and see which
group fares
best. Not even the doctors know who gets the real thing.
But the AZT trials in which 145 people with AIDS were on AZT and
137 on a
placebo, were unblinded almost immediately. Patients knew right
away who was
getting what. The AZT pills tasted bitter, and the side effects
tore up the
gastrointestinal tract, causing nausea, vomiting and a loss of
appetite; a
severe atrophy made their muscles feel like wet spaghetti. Not to
mention acne,
pounding migraines, impotence and high fevers.
The People With AIDS Coalition in New York set up a hotline to
analyze
patients' pills. If patients weren't receiving AZT, they often
bought the drug
on the black market. According to Michael Callen, one of the
founders of the
PWA, some patients shared their pills with those on placebos out of
a sense of
solidarity.
Within a month, doctors also knew who was on what. According to
FDA reports,
nearly half the people taking AZT developed such severe anemia that
they needed
blood transfusions, so patient care was hardly identical. The AZT
was devouring
their bone marrow, which produces the immune-system cells that HIV
attacks, so
it was accelerating the very process it was supposed to stop. Some
patients were
so weak they couldn't get out of bed. Twenty-seven were taken off
the drug
temporarily, another 21 altogether.
Every week, researchers at the 12 centers around the country
waited for word
to halt the painful tests. They heard nothing. However, after the
initial
reaction to the drug, some patients seemed to get better -- they
put on weight,
and symptoms such as night sweats, fatigue and neurological
problems eased or
disappeared. "It became apparent some people were doing better,
recalls Paul A.
Volberding, a professor of medicine at the UC San Francisco Medical
Center who
was the PI for the test at San Francisco General Hospital.
Suddenly, the trials were halted after only 16 weeks, two months
earlier than
planned, because officials felt that it was unethical to withhold
a potentially
lifesaving drug. Although patients using AZT had suffered horribly
at first,
their survival rate was astonishing. Nineteen people in the placebo
group had
died versus one in the group receiving AZT. An NIH press release
proclaimed that
AZT "showed great promise in prolonging life in AIDS patients.
The FDA jumped on the available data, because, an agency
<PAGE>
official says, "it
suggested that AZT was the best hope at the time. Still pressured
by activists'
demands for action, the agency moved at warp speed to approve it.
But in the meantime, there were reports of problems at one of
the test sites.
The understaffed FDA relies primarily on the honor system when
testing new
drugs, but the agency does do audits when there are complaints. In
this
instance, it dispatched an investigator, Patricia Spitzig, to
Massachusetts
General Hospital.
Spitzig discovered "serious violations of the protocols. People
received the
wrong medications. One patients who died was listed as part of the
placebo
group, but he may have been getting AZT. At least 84 vials of
medication had
disappeared. But after the FDA analyzed her report, officials
decided that,
<PAGE>
PAGE 6
Los Angeles Times, June 20, 1993
despite the violations, the Mass General data was strong enough to
include in
the final test results.
On the morning of Jan. 16, 1987, an FDA panel convened in the
agency's
Rockville, Md., headquarters to decide whether to approve the
commercial sale of
AZT for treating AIDS. The group included a panel of advisers; the
approval
panel; a contingent from Burroughs Wellcome led by David Barry, the
company's
vice president in charge of research; half a dozen of the AZT
trial's principal
investigators and several government officials led by Samuel
Broder, who had
come to be known around the NIH as "Mr. AZT because of his
promotion of the
drug.
Everyone expected to rubber-stamp this. After all, this was
Burroughs
Wellcome. Their drug applications were always clean and thorough --
no
discrepancies or anomalies. By the time a drug had overcome all the
regulatory
hurdles to reach this stage of the approval process -- and only 20%
do -- it was
usually ready to be marketed. Itzak Brook, who chaired the FDA
panel, had even
alerted the agency's public-affairs officer to prepare a press
release.
Brook, a spare man with delicate features, is a professor of
pediatrics and
surgery at the Uniformed Services University of the Health Sciences
in nearby
Bethesda. He had chaired the FDA's Anti-Infective Drug Advisory
Committee for
two years. But he had never seen anything quite like this. There
wasn't an empty
seat in the large room. AIDS activists were patrolling the grounds
and
buttonholing panelists whey they went to the bathroom, pressuring
them to
approve the drug. Brook and the 10 other members of the approval
panel felt a
tremendous burden of responsibility to do the right thing.
But as the morning wore on, Brook became increasingly uneasy.
According to
the testimony given that day, more patients in the AZT group had
died since the
study was halted. And the many blood transfusions given to patients
on AZT could
have accounted for the difference in survival rates.
The FDA's anti-viral chief, Ellen Cooper, a cool professional,
was sharply
critical of the study during her testimony. She had little more
than a month to
review the data -- normally FDA medical officers have several
months to digest
this information and do a meaningful analysis -- but what she found
was
troubling. The study had been unblinded, leaving open the
possibility of biases
in patient management. It alarmed her that long-term toxicity
studies on animals
weren't completed, so there was no telling what the consequences of
AZT would be
in humans over time. "Will efficacy last? Will toxicity accumulate
to
intolerable levels with longer exposure? Prolonged
<PAGE>
administration
of an
anti-retroviral agent, such as AZT, may be of more harm than
benefit, she
concluded. To approve this drug would represent a "significant and
potentially
dangerous departure from our normal toxicology requirements.
Perhaps the initial results were a statistical fluke, Brook
thought. Perhaps
the study was stopped prematurely. At the lunch break, he
discovered other
panelists shared his misgivings, agreeing that they needed more
data. After
lunch, Brook recalls, the FDA brought in the heavy artillery.
In an unusual move, Paul Parkman, the FDA's acting director of
the Center for
Drugs and Biologics, came to plead AZT's case and assured everyone
that the
government would work out a post-approval monitoring system with
Burroughs
Wellcome. It became clear to everyone, says Brook, that the FDA
wanted this
<PAGE>
PAGE 7
Los Angeles Times, June 20, 1993
drug approved.
"The real issue for the FDA, recalls one knowledgeable source
close to the
process, "was whether the government had the right to prevent
patients from
taking a drug when they are desperately ill and dying.
"I speak for myself, but I think others as well, said PI Dr.
Paul Volberding
at the hearing. "We would like this drug to be available to people
with AIDS. I
have become convinced, using the drug and seeing the data, that it
does have a
clinical benefit in this patient population.
But Brook remained unswayed. "My gut feeling was the drug
company was pushing
very hard for approval even though they knew the drug wasn't ready,
Brook
recalls. "Something just didn't click. I think someone behind the
scenes was
pulling strings to get the drug approved.
Others discount political pressures, pointing out that there
simply were no
other drugs. "The expeditious action was warranted, says the
source, "by the
national concern for any type of medication to treat people who are
desperately
ill and afflicted with AIDS.
It was a Friday afternoon, everyone was weary, and people had
planes to
catch, so they took a vote at 4:05. Brook was shocked at the
outcome: 10-1 for
approval. He was the lone dissenter. "Once a drug is approved, it
is impossible
to control how it is used, he warned them, in a parting shot. "We
may release a
genie out of the bottle, and it may be something that we may
regret.
Once AZT was approved -- just as Brook feared -- there was a
runaway effect.
Because it was the only drug available for AIDS patients, many
doctors
prescribed it for all of their HIV-infected patients, including
those who were
otherwise healthy.
The wholesale price that Burroughs Wellcome initially set for
AZT was
staggering: $188 for a bottle of 100 capsules, which, at the
then-recommended
dosage -- 12 capsules a day -- translated into a retail price of
about $10,000 a
year per patient, making it one of the most expensive drugs in
history. "The
price was based on the usual factors, says Kathy Bartlett. "Cost of
research and
development, production, marketing, the need to maintain an ongoing
R&D program,
the uncertain market for the drug and the possibility of other new
therapies.
When the price was announced, AIDS activists charged Burroughs
Wellcome with
price gouging and profiteering on a drug originally invented by
government
researchers at taxpayer expense. The price
<PAGE>
of AZT dropped twice,
first because
of manufacturing improvements, and again in 1989 when it became
clear the drug
would be used in the early stage of the disease, making a
substantially larger
patient base. AZT now costs $2,200 a year because of the reductions
and because
dosage has been cut in half.
With the approval of AZT, federal money gushed into the testing
of AIDS drugs
- -- except there really weren't many drugs ready for testing in
humans. So
scientists tested AZT on infants and children with AIDS, on
pregnant women and
on HIV-positive people with no symptoms. The PI's on the original
AZT trial
dominated the trials group and served on the core committees where
key decisions
about spending and resource allocation were made. Burroughs
Wellcome officials
had access to these committee meetings. "This is unusual for a drug
company,
<PAGE>
PAGE 8
Los Angeles Times, June 20, 1993
particularly when other companies weren't given the same
opportunity, says Karl
Johnson, director of the operations office of the trials group
before he retired
in 1992. "It is a matter of public record that David Barry was
always at the
table -- and I don't mean just in the room -- whenever the original
AIDS
clinical gang were getting together. He was a member of Tony
Fauci's advisory
group. Fauci, the director of the national Institute for Allergies
and
Infectious Diseases and the official who spearheads the was on
AIDS, was
unavailable for comment.
But, according to Bartlett, "there's nothing unusual about
representatives of
pharmaceuticals attending these meetings.
"The idea that the ACTG was dominated by Burroughs Wellcome PIs,
that PIs are
contaminated by an association with a company, is simplistic
thinking that is
dangerous for society, says Stanford's Tom Merigan, a member of the
trials
group. "The fact is, there's only a certain number of people who
have experience
doing these types of studies. If you cut experience out of the
loop, you lose a
lot.
What is not disputed, though, is that the few drugs then ready
for
pre-approval testing on humans were tested only in combination with
AZT, making
it virtually impossible to determine if their success or failure
was due to
their essential effectiveness or their interaction with AZT. In any
case, they
were not subsequently approved.
"Granted, AZT was studied a lot because it was the first drug
that showed
some efficacy -- it's like the advantage of incumbency, says health
economist
Peter Arno. "But a big part of the reason why the overwhelming
number of drug
trials (80%) were on AZT is because of Burroughs Wellcome's
influence. And it is
often very subtle. It has to do with support scientific conferences
and of
research, with publications in special issues of journals the drug
companies
support -- all of which are helpful in promoting one's own career.
You can't go
to a conference, a symposium, anything remotely related to the
pharmaceutical
industry without seeing sponsorship by Burroughs Wellcome -- and a
few other
companies.
Since 1986, the value of Burroughs Wellcome stock has jumped
from $1.4
billion to $10 billion, augmented by sales of AZT, which total 12%
of Burroughs
Wellcome 1992 revenues, as well as two other drugs used to control
AIDS-related
infections: Septra, a sulfa drug that prevents pneumocystic carinii
pneumonia,
and Zovirax, an antiviral also used to combat herpes.
Burroughs Wellcome is not the only manufacturer of AZT. The NIH
recently
signed a non-exclusive licensing agreement with Barr
<PAGE>
Laboratories
to market AZT
in competition with Burroughs Wellcome. The NIH contends that its
scientists not
only first synthesized AZT but also were instrumental in
discovering its
anti-HIV properties, so the agency should receive some royalties
from the drug's
sale. Burroughs Wellcome has filed suit -- scheduled for trial this
month -- to
block Barr Laboratories' production. If Burroughs Wellcome loses,
the government
could lose millions in royalties.
While profits were soaring, Wellcome's philanthropic arm was
also swinging
into action. In August, 1989, the NIH announced AZT significantly
slowed the
progression to AIDS in HIV-positive people with T-cell counts below
500 but who
had not yet developed AIDS. Suddenly, the market for AZT expanded
<PAGE>
PAGE 9
Los Angeles Times, June 20, 1993
exponentially, from the 40,000 people with AIDS to the 650,000 who
were
HIV-positive.
Burroughs Wellcome says it gave more than $7 million to hundreds
of AIDS
groups ranging from guerrilla clinics to research centers and
hospices. When
Burroughs Wellcome approached AIDS Project Los Angeles, it
triggered a heated
debate. "We wondered: It this smart? Are we taking guilt money
here? recalls
Stephen Bennett, APLA's chief executive officer at the time. "But
the next thing
we knew, they were giving money to all the small organizations who
were
desperate for money, desperate.
When the tiny, cash-starved agencies accepted Burroughs
Wellcome's largess,
the bigger, more visible groups soon followed. Among the more
notable recipients
are Project Inform, a San Francisco-based education and lobbying
group, which
got $149,000; AIDS Project Los Angeles, $55,000, and $1 million to
the American
Foundation for AIDS research to support community-based research.
As part of Burroughs Wellcome's campaign, posters jointly
sponsored by the
company and various AIDS group appeared on billboards and buses,
urging people
to get tested for HIV because "new treatments could "put time on
your side.
For desperately ill people who have nothing else, the brief
reprieve offered
by AZT -- the "AZT honeymoon -- is worth any price. It gives them
renewed mental
clarity and a few more month to settle their affairs and say goodby
to loved
ones. "We've had staff members (at San Francisco General) who got
so sick they
couldn't work, says Paul Volberding. "Then they started on AZT, and
now they're
back at work.
But opinion is sharply divided over using AZT before symptoms
appear. Even
among people who take AZT, there doesn't seem to be any consensus.
Some, like
Nicholas (a pseudonym), 42, an unemployed Las Vegas hotel worker
who's used AZT
for more than five years, experience few or no side effects. "I've
been HIV
positive for eight years without any side effects whatsoever, he
says. "I don't
know if that's because of AZT or the fact I've always been in great
health. But
I'm not willing to take a chance and stop taking the drug.
Others, though, like patient Robert Bowers in Los Angeles, who
tested
positive for HIV about nine years ago, have been debilitated by
AZT. Bowers was
put on an AZT regimen about 4+ years ago when his T-cell counts
dropped below
400. "The pain was excruciating, Bowers recalls. Afterward, he was
chronically
with low-grade fevers, aching muscles, lightheadedness, nausea,
piercing
headaches and an overwhelming fatigue that made it
<PAGE>
almost
impossible to do the
simplest chores. A year and a half ago, after experimenting with
different
dosages, he went off AZT -- and his symptoms vanished. "I had
forgotten what it
was like to feel good, says Bowers.
"Taking AZT, says Michael Callen, author of "Surviving AIDS and
a long-term
AIDS patient who refuses to take AZT, "is like aiming a
thermonuclear warhead at
a mosquito.
These concerns crystallized by 1990, when evidence began to
trickle out that
AZT wasn't so terrific, that only half the people with AIDS could
tolerate the
drug, that it caused vaginal cancer in laboratory animals. One
study, conducted
by Samuel Broder at the National Cancer Institute, revealed that
people who took
AZT for two to three years had a 49% incidence of lymphoma, a
cancer of the
<PAGE>
PAGE 10
Los Angeles Times, June 20, 1993
lymph glands, compared to about 2% of AIDS patients who didn't take
AZT.
Another study, conducted by researchers at the Veterans
Administration on
asymptomatic patients, was even more alarming. "Our study showed
AZT didn't make
you live longer, says John D. Hamilton, of the VA Medical Center in
Durham,
N.C., and principal investigator or the study. "It delayed the
symptoms due to
AIDS. But it carried with it adverse side effects. Our thinking was
that if you
don't get any survival benefit, what it boils down to is deciding
whether you
want to have symptoms of HIV or symptoms of AZT.
It's also interesting to take a closer look at 1989 studies
that, according
to Volberding, "show an absolutely monotonously consistent halving
of the
progression rate. So progression rates go from 7.6% (for those on
placebo) to
3.6% (for those taking AZT), or in that range. "That means that 7.6
HIV patients
out of every 100 progress to AIDS if they don't take AZT; 3.6
patients progress
to AIDS if they do take it. So doctors are administering a toxic
chemotherapy to
100 people in hopes that four of them will progress more slowly to
AIDS.
What's more, after several years of treatment, HIV becomes
resistant to AZT.
Richard Beltz is a professor of biochemistry at Loma Linda
University. In
1961, working on a grant from the National Cancer Institute, he
synthesized the
compound that came to be known as AZT.
Beltz never published his results, so bragging rights for
discovering AZT
belong to Jerome Horowitz, another cancer researcher who formulated
the compound
independently in 1964 but did not patent it. But Beltz never forgot
about his
creation. "I thought about patenting it, he said. "But I finally
decided against
it because resistance developed so fast. Anybody who works with AZT
for even a
short time can see that.
At the FDA hearings in January, 1987, when AZT was approved,
panel members
did voice concerns about the possibility of resistance. But
Burroughs Wellcome's
scientists stoutly denied seeing any evidence of it. Studies had
been done in
the early 1980's in Burroughs Wellcome's labs on AZT, in hopes of
finding a use
for it as an antibacterial drug. "You don't find resistance in
toxicology
studies, says Bartlett. "The first reports of viral resistance were
in 1988.
"I don't see how anyone who works with AZT as an antibacterial
drug could not
know that resistance develops to this drug within a few days in
certain
bacteria, says Beltz. "Cripes, I found it within
<PAGE>
a year (working
with bacteria).
So why wouldn't they find it with greater resources?
FDA adviser Michael Lange agrees. "If the 1986 study at the 12
medical
centers had been permitted to go on as planned, the fact that AZT
benefits were
exceedingly transient would have shown up, he says.
Counters Bartlett: "There is resistance with a lot of
medications. It's one
of the limitations of the drug, but there's nothing unusual about
it. Resistance
is less of a problem when the medication is used early in the
disease.
The debate on how soon to start taking AZT may ultimately be
settled by the
Concorde study, which has been going on for the past three years in
France and
Great Britain. When the preliminary results were released in April,
it sent
shock waves through the AIDS establishment. "There was a very
small, early
<PAGE>
PAGE 11
Los Angeles Times, June 20, 1993
benefit (from taking AZT), but that effect was not maintained, says
Ian Weller,
who was the PI for the Concorde in the United Kingdom. "After three
years, we
detected no difference between those on placebo and those taking
AZT in terms of
final outcome. The concorde study, however, may have skewed
results, since 32%
of the placebo group received AZT.
Today, things are changing in AIDS research. Fifteen of the
world's top drug
companies announced a groundbreaking collaborative agreement in
April. They
agreed to pool information and share experimental compounds to
speed up the
search for a cure. A number of promising drugs, such as protease
inhibitors,
which stop the HIV virus from producing an enzyme key to its
replication, are
being developed. Ribavirin and Peptide T are now being tested in
humans.
But for people like Michael Callen, it is too little, too late.
A struggling
musician found to have AIDS in 1982, he has nimbly defied death,
one of the
longest of the long-term survivors. But time is running out. His
right leg is
swollen to several times its normal size by Kaposi's lesions. He
has lesions all
over his lungs, as well, and the pain is unremitting.
"I have managed to survive for 11 years with AIDS, and we're
still nowhere,
says Callen. "While they were frittering away billions of dollars,
while they
were dallying with AZT, they were not pursuing treatments that
could have saved
my life. And I will pay for their stupidity with my life.
GRAPHIC: Photo, William Duke
LANGUAGE: ENGLISH
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 The Times Mirror Company
Los Angeles Times
May 11, 1993, Tuesday, Orange County Edition
SECTION: Business; Part D; Page 7; Column 4; Financial Desk
LENGTH: 411 words
HEADLINE: ICN PHARMACEUTICALS CONFIRMS RESIGNATION OF NEWEST
DIRECTOR;
MANAGEMENT: CHARLES D. MILLER SAYS HE QUIT THE BOARD BECAUSE OF
'TIME
CONSTRAINTS.'
BYLINE: By JAMES M. GOMEZ, TIMES STAFF WRITER
DATELINE: COSTA MESA
BODY:
ICN Pharmaceuticals Inc. on Monday confirmed a persistent rumor
that its
newest director quit within days of his election.
Charles D. Miller, chairman of Avery Dennison Corp. in Pasadena,
said in a
prepared statement Monday that he changed his mind about serving on
the board
because of "my time constraints."
Miller's statement was intended to stave off speculation by
disgruntled
shareholders that he stepped down because of ICN's ongoing
troubles. A group of
investors led by Beverly Hills stockbroker Rafi Khan has threatened
a proxy
fight to unseat ICN Chairman Milan Panic, who founded the company
and its three
subsidiaries.
ICN has indefinitely postponed its annual meeting, initially
scheduled for
Wednesday, in part because of the impending struggle for control of
the firm.
"My action does not reflect any negative feeling about ICN or
its business
possibilities," Miller said in the statement. He was not available
to comment
directly.
ICN defended its weeklong secrecy about Miller's resignation,
saying that the
company had no official notification of it.
ICN spokesman Jack Sholl said the company received formal word
Monday that
Miller had resigned on April 29, three days after he was elected to
the
nine-member board. He admitted that ICN withheld the announcement
until Panic
was able to speak with Miller.
Sholl said that Panic had been traveling in New York last week
<PAGE>
and could not
reach Miller, who was also traveling on the East Coast. Miller's
office last
week referred inquiries from The Times to ICN.
"Mr. Panic wanted to speak with Mr. Miller directly," Sholl
said, "to
actually verify the information that we had heard."
Sholl said that the company is seeking a replacement but that he
does not
know when one will be nominated. "We just don't want to feel
constrained by
<PAGE>
PAGE 2
Los Angeles Times, May 11, 1993
time pressures. We want to find the best-qualified candidate," he
said.
The other ICN board members are Panic, who recently returned
from his stint
as premier of Yugoslavia; Adam Jerney, who took over Panic's duties
while he was
gone; Norman Barker Jr., former chief executive of First Interstate
Bank;
Richard W. Starr, also formerly of First Interstate Bank; Birch
Bayh, a former
U.S. senator from Indiana; Weldon B. Jolley, a former professor of
surgery at
Loma Linda University's School of Medicine; Robert H. Finch, former
U.S. health,
education and welfare secretary; and Roberts Smith, a former UCLA
chemist who
founded ICN with Panic in 1960.
LANGUAGE: ENGLISH
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Orange County Business Journal
Copyright Scott Publications Inc 1993;
Business Dateline; Copyright 1993 UMI/Data Courier
May 17, 1993
SECTION: Vol 16; No 20; Sec 1; pg 1
LENGTH: 2001 words
HEADLINE: CEO's style key issue in proxy battle
BYLINE: Scott Woolley
DATELINE: Costa Mesa; CA; US
BODY:
There's Milan Panic the world citizen and statesmen, coolly
fielding
questions about Bosnia on a recent "Larry King Live" telecast, and
there is
Panic the entrepreneurial visionary, pushing into uncharted markets
in Russia
and elsewhere.
Then there's Panic the capricious and volatile martinet, as
described by
former employees and a number of Wall Street investors calling for
his head.
The latest chapter in the turbulent tenure of the 63-year-old
founder,
chairman and CEO of ICN Pharmaceuticals Inc. is the most serious
challenge yet
to his corporate empire, despite the reprieve Panic appeared to
have won late
last week against those mounting a proxy challenge (see Executive
Summary, page
6). Panic's enemies claim his spotty record and freewheeling style
are grounds
for his ouster.
Untangling the history of Panic's personality and business
decisions--the two
are intertwined--isn't easy.
It is certainly confusing for shareholders, many of whom will
head to ICN's
Costa Mesa headquarters for the annual meeting, postponed once but
expected to
be held later this month. While some investors want to oust him,
others would be
satisfied with a few new board members, and many more don't know
what to think.
Panic has always been one of Orange County's most colorful and
inscrutable
personalities. Beverly Hills stockbroker Rafi Khan, who started the
bid to
remove Panic, calls him "obnoxious in his greed." Friends call him
a "genius"
and "invaluable to ICN."
Panic's attitude toward his accusers is derisive and angry. He
has repeatedly
referred to the Khan challenge as "Mickey Mouse.
<PAGE>
"During a recent
interview
Panic leaned forward at the mention of the takeover attempt and his
speech
quickened. "This is an embarrassment. That's its only effect," he
declared.
"This is a battle between stupidity and intelligence."
Meanwhile Panic is actively recruiting other outside directors
to join the
company's board in what, despite Panic's denial, is widely seen as
a move to
mollify shareholders. Despite a recent setback--Charles Miller of
Avery Dennison
in Pasadena quit the ICN board three days after joining it--many
foresee new
PAGE 2
Orange County Business Journal, May 17, 1993
outside directors as the ultimate outcome of the battle, satisfying
many
shareholders and leaving Panic in power.
The ICN chairman also appears to be trying, in his own way, to
soften his
image. For example, he has taken pains to frequently describe
himself as a
"conservative businessman."
"We are considered promoters, and I don't want that," he said.
Panic still complains about the way federal regulators cracked
down on him
for promoting the benefits of ICN's drug ribavirin as an AIDS
treatment in 1987.
The bitter battle that ensued concluded with the ICN board, in a
rare override
of Panic, agreeing to pay the government $ 600,000.
But Panic says he has no desire for a rematch, saying the AIDS
flap wiped out
a $ 100 million investment ICN had in the drug. With the company
awaiting
approval for the same drug as a treatment of hepatitis C, a
potential bonanza
for the company, Panic is being much lower-key this time around.
"Premature
promotion of the drug is unnecessary," he said.
An examination of Panic's record provides plenty of fodder for
both backers
and detractors.
On one end there's the heroic image, enshrined in an inch-thick
folder
distributed by ICN, emblazoned with Panic's name and an American
flag.
It chronicles Panic's legendary early life: a young partisan
fighting the
Nazis with Marshall Tito; a Yugoslav bicycle star defecting to the
west
mid-race; a young dreamer emigrating to the U.S. to found the
International
Chemical and Nuclear Corp. (now just ICN) with $ 20 and a washing
machine for a
centrifuge.
On the other end there are the tales of current and former
employees who
describe Panic's autocratic side.
Stan Yakatan, former ICN executive and now CEO of Irvine-based
Unisyn
Technology, said Panic often used management meetings, held in
ICN's giant
boardroom, "as public displays of humiliation."
"Some executives referred to the meetings as stamp-collecting,"
said Yakatan.
Panic's verbal admonishments were the "stamps."
"His favorite tactic at the meetings was to ask you, 'How many
orders did you
ship yesterday?'" says another former executive. "He'd memorized
the figure, and
you had better know it, too."
<PAGE>
Yakatan says some demoralized
managers simply give
up preparing for the meetings at all.
Alternately, Yakatan said, Panic would sometimes use the
meetings to reward
good work by announcing promotions and bonuses--$ 50,000 in one
case. Whether
rewarding or criticizing, Panic was always in charge.
One current executive, who asked for anonymity, said managers'
meetings "are
like that Whack-A-Mole game in arcades, where moles pop up out of
different
holes, and you hit them on the head with a mallet."
<PAGE>
PAGE 3
Orange County Business Journal, May 17, 1993
"Milan starts down the line and whacks everyone on the head,"
said the
executive.
Panic also runs a tight ship, stressing formality and
discouraging
individuality, several former ICN workers said.
Top executives address Panic as "Mr. Panic" or "sir." When
employees leave
for the evening their desks must be clear, several employees said,
per a Panic
edict. There is a de facto dress code of conservative blue suits
and ties.
Yakatan said Panic objected when he brought a modern painting
into his
office. "There was a way to do things, and if you weren't going to
do things
that way you weren't going to be there," he said.
Asked for a response to these criticisms, ICN spokesman Paul
Knopick issued
this statement:
"The decorum of the ICN workplace is modeled after IBM and its
system of
office arrangement. This system was adopted in the early days of
the company and
has been followed since.
"Mr. Panic is the classic, quintessential, Southern California
entrepreneur
who built a business from literally scratch into the 48th largest
pharmaceutical
company in the world and a company on the verge of the Fortune 500.
"As with other entrepreneurs, he has a very strong work ethic.
He shares with
entrepreneurs certain basic work principle. Among others, they are
doing
everything with a sense of urgency; hard work; determination; never
giving up;
always seeing solutions, not problems.
"These principles have served him well. As a strong leader, Mr.
Panic has
recruited a strong group of professional managers who have been
with him for a
number of years to implement his vision for the company. Those who
know him
well, and who work well with him, know that the way he says
something is not
important but the meaning is."
Admirers say Panic is an altruist, speaking with genuine pride
and emotion
about his company's drugs' saving and improving the lives of
infants and others
every year. ICN executive Adam Jerney describes Panic as a
peacemaker so
dedicated to ending blood-shed in his native Yugoslavia that he
took the
corporate leave of absence that now has become an issue among some
critics. (A
few cynics suggest his overseas mission was really to protect ICN's
huge
investment ICN Galenika of Yugoslavia, but that assertion undercuts
the
criticism he doesn't look out for his company.)
<PAGE>
And Yakatan, while criticizing Panic's management style, said he
was
impressed by Panic's financial acumen.
"To spend an hour with Milan was the equivalent of six months in
school,"
said Yakatan.
Panic has, in some ways, run ICN more like an M&A firm than a
typical
pharmaceutical company. The only major drug ICN has developed on
its own is
ribavirin. Otherwise, Panic has pursued a strategy of acquiring
other drug
companies with both debt and equity, and making the deals pay off
by trying to
<PAGE>
PAGE 4
Orange County Business Journal, May 17, 1993
manage them better. The strategy to date has worked splendidly in
the case of
Balenika, which has accounted for most of ICN's revenue and
operating profits in
the last two years. The big question now is what affect the Balkans
fighting
will have on the company longer-term. Panic already has cautioned
that
Galenika's performance will be hurt this year by the war.
An acquisition that failed miserably was that of medical device
maker Flow
Laboratories, purchased for $ 37.7 million in 1989. ICN subsidiary
ICN
Biomedicals took a $ 63 million writeoff in the fourth quarter in
consolidating
what remained of Flow.
Panic conceded Flow was a bad investment, but said ICN's
acquisition strategy
is sound: "Your risks are prudent because you have more successes
than
failures."
Even some of his critics have difficulty envisioning ICN without
Panic, given
how dependent the company seems to be on both his personality and
his overseas
connections.
Concludes Yakatan, "It would be an absolute disaster if Panic
was forced
out."
WHO OWNS HOW MUCH AT ICN
Milan Panic is the unquestioned boss of ICN Pharmaceuticals. But
the
unquestioned owner he is not.
Panic and the other company insiders controlled through stock
and options 1.2
million shares as of ICN's last proxy, about 5% of the company.
Panic has sold
off most of his stock in recent years.
Most of ICN's shares are scattered among institutional
investors, brokerage
firms holding the stock for clients and individual investors. At
last count,
there were 5,662 ICN shareholders of record : no single entity
controlled more
than 8.2%.
That means if the challenge by Beverly Hills stockbroker Rafi
Khan goes
forward, Panic will have to rely on other investors to come to his
side. Khan,
who controls less than 1%, will have to do the same. While Khan
faces a
formidable challenge in trying to unseat Panic, he has won the
support of most
shareholders who have taken a public position on the fight.
But no one knows exactly where the support of most major
shareholders lies; a
federal judge has issued a temporary restraining order barring Khan
from going
forward with his ouster bid.
<PAGE>
ICN's own suit against Khan, which prompted the restraining
order, alleges
that Khan has had considerable success in converting major
shareholders to his
cause.
The suit alleges that the Khan formed a "conspiracy" to gain
control of the
company. The alleged conspiracy would violate securities law if it
amassed
control of more than 5% of ICN stock without officially notifying
the Securities
and Exchange Commission.
<PAGE>
PAGE 5
Orange County Business Journal, May 17, 1993
ICN's suits identifies major institutional investors including
Glickenhaus &
Co., Putnam Management Company Inc. and Invesco Funds Group as
members of the
"Khan group." The three are ICN's biggest investors, with about 10%
of the
outstanding stock combined, according to recent SEC filings.
That may be the tip of the iceberg. ICN's suit loosely estimates
the total
number of shares in the group is somewhere in excess of 10% of
outstanding
stock. But it also sites Khan and Eugene Melnichenko a broker at
Legg, Wood, and
Mason as allegedly having said the group controls more than 50%.
Melnitchenko has previously said his clients alone own close to
2 million, or
about 10%, of ICN stock and would likely support an ouster of
Panic. He could
not be reached for comment to respond to the suit's allegations.
Counting only those publicly voicing support, Khan has about 10%
committed to
his slate.
Khan's challenge is a "consent solicitation," meaning he must
have investors
controlling over 50% of the shares mail him their votes in favor of
his new
board. The vote is a straight choice between the current board and
Khan's.
Abstentions are effectively "no" votes, benefiting the current
board.
There is one important caveat to the above ownership scenario:
The big unknown is the shares that ICN has recently issued in
quiet offerings
in the U.S. and abroad. The company's stock has been diluted by
more than 6
million additional shares since the beginning of the year. There
are more than
20 million shares now outstanding.
Where those shares--30% of the total --ended up hasn't yet been
disclosed.
ICN proxy filings have been delayed along with the company's annual
meeting.
Whether those shares have ended up in the hands of friends or foes
of Panic
could decide the ICN battle's final outcome.
GRAPHIC: Graph; Photo
SUBJECT: Pharmaceutical industry; Chief executive officers;
Management styles;
Proxy solicitation; Pacific
NAME: Milan Panic
GEOGRAPHIC: Pacific Region; Newport Beach; CA; US
COMPANY: ICN Pharmaceuticals Inc; DUNS: 04-223-0623; SIC:
<PAGE>
2834;2819; TICKER: ICN
CO: ICN PHARMACEUTICALS INC;
TS: ICN (NYSE);
IND: 151 DRUG MANUFACTURERS;
LOAD-DATE-MDC: June 18, 1993
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Orange County Business Journal
Copyright Scott Publications Inc 1993;
Business Dateline; Copyright 1993 UMI/Data Courier
April 5, 1993
SECTION: Vol 16; No 14; Sec 1; pg 1
LENGTH: 973 words
HEADLINE: Drug patent at center of ICN board challenge
BYLINE: Scott Wooley
DATELINE: Costa Mesa; CA; US
BODY:
The bid to oust ICN Pharmaceutical chairman and founder Milan
Panic goes
beyond complaints about his management style and executive perks.
At the center of the just-launched shareholder battle is Costa
Mesa-based
ICN's would-be wonder drug, ribavirin.
The filing last week of a full slate of candidates to replace
Panic and the
other current directors of ICN comes on the heels of new scientific
discoveries
that have enhanced the potential of ribavirin, an antiviral drug to
which ICN
holds the patent. The drug must still successfully pass final
clinical trials
before it could be accepted as a treatment for hepatitis C,
currently seen as
its most promising use.
"This has the potential to be one of the biggest-selling drugs
ever,"
declared Rafi Khan, leader of the shareholder rebellion and a
broker with the
Beverly Hills firm of Reynolds Kendrick Stratton Inc.
Despite the recent poor financial performance of ICN --the
company last week
reported a loss of $ 65 million for the fourth quarter and for the
year, even as
annual revenue hit a record $ 550 million--Wall Street has been
bidding up the
stock; ICN was the second biggest percentage gainer on the New York
Stock
Exchange in the first quarter of this year, almost doubling in
price to 12-3/4.
Several investors have said the price spike is largely due to
ribavirin.
On paper, at least, Panic could be in for a tough battle.
According to
year-old proxy data, he and other company insiders control about 5%
of the
company, but most of that is in options; it is uncertain whether
those options
have been, or could be,
<PAGE>
exercised in time to vote against Khan's
slate. The 10
biggest institutional investors, two of whom have publicly
criticized Panic but
the rest of whom have not yet taken a position, held about 17% of
the shares at
the end of 1992.
However, Khan also faces a tough task. A mailing to ICN
shareholders from
Khan, which includes a ballot for his slate of directors, indicates
that under
company bylaws he needs a majority of the outstanding shares voted
in his
slate's favor in order to remove the current board, not just a
majority of those
votes cast. There is no cumulative voting--each share counts as one
vote for or
against the slate. ICN's annual meeting is set for May 14, but
Khan's
<PAGE>
PAGE 2
Orange County Business Journal, April 5, 1993
challenge, filed as a consent solicitation, is not bound by that
deadline.
The rebelling shareholders have complained Panic has not
adequately exploited
ribavirin's potential.
"If ribavirin had been in the hands of Merck & Co., it would be
a household
word," said Seth Glickenhaus, who manages ICN shares for his New
York investment
firm, Glickenhaus & Co. "The hepatitis C potential alone boggles
the mind. We
don't know whether it is $ 2 billion or $ 8 billion in sales."
A report released this month by Baltimore-based Legg Mason,
which says it has
several large ICN shareholders as clients, said: "Although
ribavirin's approval
for hepatitis C should have a major favorable effect on the
company's sales and
profits, ICN has been a poorly managed company, and caution should
be exercised
in buying its stock."
Panic (pronounced PAHN-ish) has staunchly defended his tenure
and ICN's
long-term performance. In a prepared statement, ICN accused
Khan--who had until
recently worked at H.J. Meyers & Co. of Beverly Hills, an
investment firm that
underwrote a securities offering for ICN subsidiary Viratek--of
financial
misdealing. "Khan has acted irresponsibly for someone in a
fiduciary capacity.
We intend to prove this in court and to demand an immediate
Securities and
Exchange Commission investigation into his activities." Khan said
he doesn't
believe he has violated any laws.
Last month Panic angrily branded his shareholder critics as "war
profiteers"
who tried to undermine him while he was serving as prime minister
of Yugoslavia.
Panic lost his bid for the Serbian presidency and subsequently
returned to the
helm of ICN.
Some of these shareholders have been buying more shares even as
they step up
their complaints about Panic. Invesco Funds Group Inc., which two
weeks ago said
it would field two candidates of its own to challenge Panic's
directors,
increased its ownership from 300,000 shares as of Dec. 31 to 1.3
million as of
March, according to SEC filings. Glickenhaus & Co.'s recent holding
of 500,000
shares is up almost 50% since the end of last year.
Here is the preliminary arithmetic for the board battle
(Percentages are
based on the fourth quarter count of 16.1 million shares
outstanding):
* ICN' s officers and directors hold 873,833 shares and options,
or 5.4%.
Panic now controls about 500,000 shares, almost all of it in
options, based on
proxy data.
<PAGE>
* Challenger Khanhas 120,000 shares, .7%. Khan supporter
Glickenhaus said he
holds just over 500,000 shares, or about 3%.
* Panic critic Invesco, which has not yet taken a position on
the Khan slate,
has 1.325 million shares, or 8.2%.
* Eugene Melnitchenko, a broker at Legg Mason, said he will be
voting his
small amount of stock for Khan. He said he thinks investors who
bought about 2
million shares (about 12%) through his Baltimore firm will do the
same.
<PAGE>
PAGE 3
Orange County Business Journal, April 5, 1993
In his letter, Khan said the replacement slate, if elected,
would terminate
Panic as ICN's chairman, president and CEO. The new slate proposes
to replace
the current eight directors with seven new ones, including Khan
and:
* Peter Caserta, president and CEO of Spectrum Information
Technologies.
* Howard Cooper, chairman, president and CEO of Irvine-based
Cardiac Science
Inc.
* Andrew Furtak, vice-president of Minneapolis-based investment
bank R.W.
Baird.
* Charles Mehlhouse, managing director of Texas Commerce
Investment Co.,
Chemical Banking Corp. of Houston.
* David Musket, principal of DBM Corporate Consulting Group.
* Dana Verrill, chairman of Spectrum Information Technologies.
GRAPHIC: Photo
SUBJECT: Pharmaceutical industry; Patents; Shareholder relations;
Boards of
directors; Stock prices; Pacific
NAME: Milan Panic; Rafi Khan
GEOGRAPHIC: Pacific Region; Newport Beach; CA; US
COMPANY: ICN Pharmaceuticals Inc; DUNS: 04-223-0623; SIC:
2834;2819; TICKER: ICN
CO: ICN PHARMACEUTICALS INC;
TS: ICN (NYSE);
IND: 151 DRUG MANUFACTURERS;
LOAD-DATE-MDC: May 13, 1993
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 Predicasts, a Division of Ziff
Communications Co.
Food and Drug Administration
FDA Enforcement Report
March 3, 1993
LENGTH: 158 words
HEADLINE: Class III Recalls and Field Corrections -- DEVICES --
Manufacturer:
ICN Biomedicals, Inc., Costa Mesa, California
BODY:
PRODUCT: Testosterone Test Standard, a component of the RSL 1251
Testosterone
Test Kit, which detects the total unconjugated form of this
steroid, for
in-vitro diagnostic use only. Recall #Z-326-3.
CODE: Catalog #07189130, lot #RTS9203, EXP 10/1/93.
MANUFACTURER: ICN Biomedicals, Inc., Costa Mesa, California.
RECALLED BY: Manufacturer, by letter October 12, 1992.
Firm-initiated recall
complete.
DISTRIBUTION: California, Illinois, Indiana, New Jersey,
Pennsylvania, Texas,
Washington state, Wisconsin.
QUANTITY: 228 sets were distributed.
REASON: Lack of product stability when stored above the
recommended - 15C.
Class III-A situation in which the use of, or exposure to, a
violative product
is not likely to cause adverse health consequences. (Class III
recalls are
listed when received by the Press Office. Media reporters should
contact the
companies involved to obtain the most information of the progress
of recalls.)
LANGUAGE: ENGLISH
PTS-ACC-NO: 1871560
PTS-LOAD-DATE: 1993 Week 21
LOAD-DATE-MDC: May 24, 1993
<PAGE>
PAGE 1
LEVEL 1 - 1 OF 1 STORY
Copyright 1993 McGraw-Hill, Inc.
Business Week
March 22, 1993
SECTION: TOP OF THE NEWS; Number 3310; Pg. 31
LENGTH: 703 words
HEADLINE: THERE MAY NOT BE MUCH CONFETTI AT MILAN PANIC'S
HOMECOMING
BYLINE: Larry Armstrong in Los Angeles
HIGHLIGHT:
ICN Pharmaceuticals has been doing just fine without its founder
BODY:
As a rookie diplomat, Milan Panic was a bust. Just six months
after taking
a sabbatical from ICN Pharmaceuticals Inc., the Costa Mesa (Calif.)
drug company
that he founded in 1960, Panic was ousted as Prime Minister of
Yugoslavia. Civil
war continues to rage in his native country, undeterred by his
efforts to
galvanize the Serbian opposition and move the country to a market
economy.
Panic returns to ICN this month, but this homecoming may not be
any more
fruitful. Despite a sales decline of 9% in the third quarter, ICN's
stock price
has soared 83% since January, to $ 11. Prospects are good -- so
good, in fact,
that some investors would just as soon see the 63-year-old Panic
(pronounced
PAHN-ish) stay in Yugoslavia.
A BRAWL? Indeed, shareholders are leaving open the possibility of
a proxy fight
for control of ICN's board. ''Most professional investors would
like to see a
change in management, and we'd support anyone who would propose a
more
independent slate'' of directors, says John Kaweske, a portfolio
manager at
Invesco Trust Co., whose funds own an estimated 6% of ICN. Adds
Seth
Glickenhaus, a New York money manager and ICN investor: ''There's
been a welling
disaffection with Panic, and I would guess that there's going to be
some sort of
struggle over his return.''
Panic's tenure at ICN has been long on controversy. Over the
years, the
drugmaker has had numerous spats with shareholders, the Securities
& Exchange
Commission, and the Food & Drug Administration. Two years ago, it
paid a $
600,000 fine to the FDA and signed its second SEC consent decree --
both without
admitting fault -- over the promotion of its flagship drug, the
antiviral
Virazole, an AIDS treatment.
<PAGE>
These days, investors are upset that Panic would abandon the
company for a
fling in international politics, however well-intentioned. They're
also upset
that ICN's board continued to pay his $ 620,000 annual salary while
he was on
leave. That perk reawakened feelings among investors that Panic has
long run ICN
and its subsidiaries as a private fiefdom. Panic, traveling in
Europe, was not
available to be interviewed.
''Institutions are fed up that the board continually
replenishes Panic's
pocket with options year after year,'' says Steven B. Reid,
health-care analyst
at H. J. Meyers & Co. The Beverly Hills brokerage in February
managed a stock
<PAGE>
PAGE 2
Business Week, March 22, 1993
offering that netted $ 9 million for Viratek Inc., ICN's 78%-owned
research
subsidiary. ''And they're very unhappy that he continually sells
stock on the
open market to support his lavish lifestyle,'' he adds. Most
recently, Panic in
January cashed in $ 2.9 million worth of ICN options, then sold the
shares.
But investors are bullish on ICN. One big reason: the company's
push into
Eastern Europe. ''ICN is leading the charge of Western companies by
providing
quasi-commodity pharmaceuticals'' to the region, says veteran drug
analyst
Samuel D. Isaly of New York's Mehta & Isaly.
In May, 1991, SPI Pharmaceuticals Inc., ICN's half-owned
drugmaking and
marketing subsidiary, bought 75% of Yugoslavia's biggest drug
company, Galenika
- -- and rewarded Panic with $ 5.4 million in SPI stock. Galenika
soared in its
first year under SPI, then lost 56% of its sales to the war and the
onset of U.
N. sanctions. Now, SPI is within weeks of formalizing a similar
deal in Russia.
It has signed a letter of intent with a Polish drug concern and has
had
discussions with Hungarian companies.
ALLURING VOWS. Investors are betting even more on renewed interest
in ICN's
proprietary ribavirin. One of the few broad-spectrum antiviral
agents, ribavirin
- -- ICN's Virazole -- seems well on the way to FDA approval for the
treatment of
hepatitis C. Analysts say that ICN could apply for FDA approval as
early as
yearend. Approval could add $ 500 million to ICN's annual sales.
Wall Street, of course, has heard such alluring promises
before. The
difference? This time, they're coming from scientific meetings and
professional
journals, instead of from the hastily called press conferences
often favored by
Panic. Suddenly, Virazole's prospects looks a whole lot more
promising. Indeed,
at ICN these days, it's Panic's future that's up in the air.
GRAPHIC: Photograph, Panic served for six months as Yugoslavia's
Prime Minister
but continued to receive his $ 620,000 annual salary from ICN
BRADNER/REA/SABA
LANGUAGE: ENGLISH
<PAGE>
