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SCHEDULE 14A INFORMATION
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for the Securities Exchange Act of 1934
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Check the appropriate box:
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ICN PHARMACEUTICALS, INC.
(Name of Registrant as Specified in its Charter)
ICN PHARMACEUTICALS, INC.
(Name of Person(s) Filing Proxy Statement)
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* Set forth the amount on which the filing fee is calculated and state how it
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/ / 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
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[ICN PHARMACEUTICALS, INC. LETTERHEAD]
January 13, 1994
Dear ICN Stockholder:
1993 was a challenging and noteworthy year for ICN Pharmaceuticals. We made
great strides in our goal of creating a world-class enterprise on the cutting
edge of drug development and global distribution. We expanded and strengthened
our already top-notch team of managers and scientists. We added a Nobel
Prize-winning scientist to our Board. And we moved ahead prudently in the
approval process for promising new applications of our antiviral Virazole
(ribavirin). We enter 1994 well positioned for sustained growth in an
increasingly competitive global marketplace.
We are proud of these accomplishments. But the hard work is only just
beginning. Now is the time to put the distractions of a long proxy contest
behind us and to invest all our energies into realizing ICN's true potential.
Delivering shareholder value over the long term is our highest priority, and we
believe we have the vision, the resources, and the leadership to succeed.
Over the past few months we have spoken to many of you in person and by
telephone. We have welcomed the chance to hear your interests and concerns,
and consider both the communications process and the substance of these
discussions to have been invaluable. We would like to take this opportunity to
address some of your questions.
How did ICN's stock perform this year?
ICN's common stock performed exceedingly well in 1993, but still does not yet
reflect the Company's true value or long-term growth potential. We pledge to
continue our efforts to create a better understanding among the investment
community of our Company's significant prospects and progress.
Against the backdrop of our desire to enhance shareholder value even further,
we are delighted that the stock outperformed four major stock market indices in
1993, including the Dow Jones pharmaceutical industry group and the New York
Stock Exchange index. In addition, the common stocks of the companies in which
ICN holds significant equity positions--SPI Pharmaceuticals, Viratek, and ICN
Biomedicals--also beat the Dow Jones pharmaceutical industry group index as
well as the American Stock Exchange and Standcard & Poor's 500 averages.
What is the status of ICN's efforts to make ribavirin available for treatment
of hepatitis C?
Ribavirin is making positive and steady progress through the testing and
regulatory approval process. Virazole (ribavirin) is a product of ICN's
pioneering work with nucleic acide research. It is authorized in over 40
countries for at least one of eight indications. Three years ago we initiated
development of Virazole for hepatitis C, just as
<PAGE> 3
the virus was being clearly identified. After tests in small pilot experiments
and independent Phase II studies, the drug is now undergoing intensive Phase
III clinical trials. These trials are nearing completion, and we plan to
submit a New Drug Application in the early part of 1994 to the U.S. Food and
Drug Administration, and in major pharmaceutical markets elsewhere in the
world.
Our regulatory staff has been working diligently to manage the approval
process with care. We are encouraged by the sound clinical results to date.
The market for hepatitis C medication is potentially quite large, and there are
still only a handful of antivirals available today. With ICN's increasingly
global and sophisticated distribution network, we believe our prospects for
expanding ribavirin to new applications and new markets are excellent.
Why is ICN investing so much of the Company's resources in Eastern Europe?
We believe Eastern Europe offers outstanding potential for growth. It is a
large, under-developed market eager for new capital and strong partners, and
our early activity and hands-on experience give us an important leadership
position. Over the past few years, we have been aggressively expanding our
manufacturing and distribution channels around the world, and Eastern Europe is
one of the most important pharmaceutical markets we have targeted for growth.
Our success to date in Eastern Europe is notable. ICN Galenika, our Yugoslav
venture, has made a model transition from socialist to capitalist management
despite the turmoil of civil war, and has performed remarkably well under the
most adverse of circumstances, including economic sanctions. It has also begun
a substantial building and modernization program using local currency which
will enable it to expand operations quickly once the sanctions are lifted.
Our pioneering venture with one of Russia's largest pharmaceutical companies,
Oktyabr, is nearing start-up--the first privatization of a major pharmaceutical
company in Russia. We are modernizing the company, which manufactures 225
pharmaceutical products, and building a new manufacturing facility in St.
Petersburg.
In early January we announced an agreement with the government of Hungary to
acquire a 30 percent ownership in Alkaloida, a major Hungarian pharmaceutical
manufacturer with annual sales of about $90 million. Alkaloida is one of only
five facilities worldwide for the production of medicinal morphine. We intend
to increase our percentage ownership in Alkaloida to a controlling interest of
over 50 percent.
Is ICN pursuing other drug research and development?
We have begun an ambitious program in antisense technology, capitalizing on
ICN's long-standing strength in nucleotide chemistry. This is a multimillion
dollar effort to develop therapies tailored to block production of genetic
materials in cancer, viral infections, and psoriasis. We believe this can lead
to the in-house development of important new antiviral, anticancer, and
dermatological drugs.
Are you planning on strengthening your Board of Directors?
Yes. In fact, ICN has already enhanced the Board with the election of Nobel
Laureate Dr. Roger Guillemin last October. We will continue the process and we
are committed to maintaining a truly independent Board of Directors, drawn
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from the disciplines of business, science, finance, and government. The Board
formally adopted a set of corporate governance principles in December which it
intends to use as a guide in being more responsive to shareholders. The Board
is currently reviewing its composition, with a goal of adding at least two
additional independent directors over the next six months.
Do you intend to link executive compensation practices with company
performance?
YES. IN ORDER TO EMPHASIZE THE IMPORTANCE WE PLACE ON THIS ISSUE, WE
HAVE RECONSTITUTED OUR COMPENSATION COMMITTEE SO THAT IT WILL BE COMPLETELY
COMPRISED OF INDEPENDENT DIRECTORS WHO WILL SET MANAGEMENT PAY USING
WELL-DEFINED OBJECTIVE STANDARDS. These standards now include the market
performance of ICN stock as well as more traditional measures of operating
earnings growth and earnings per share growth. Incentives will be pegged to
meaningful goals and are designed to benefit all shareholders by creating a
more valuable enterprise.
What are ICN's priorities for 1994?
THE NUTS AND BOLTS OF GOOD MANAGEMENT: CAPITALIZING ON NEW OPPORTUNITIES WHILE
CONTROLLING COSTS, IMPROVING MARGINS, AND REDUCING DEBT. We believe ICN is
well positioned to benefit from the tremendous changes taking place in the
pharmaceutical industry today. Our global presence, new drug opportunities,
and strong management team provide a strong foundation for future growth.
What do others recommend?
WE ARE PLEASED TO INFORM YOU THAT INSTITUTIONAL SHAREHOLDER SERVICES, INC., THE
LARGEST PROXY ADVISORY FIRM IN THE U.S., RECOMMENDS A VOTE FOR THE INCUMBENT
SLATE OF DIRECTORS. TO PROTECT AND ENHANCE THE VALUE OF YOUR INVESTMENT, VOTE
FOR A PROVEN TEAM. SIGN AND RETURN THE BLUE PROXY CARD IMMEDIATELY. DO NOT
SIGN ANY OTHER PROXY FORM. IF YOU HAVE ANY QUESTIONS ABOUT THE SOLICITATION
PROCESS OR NEED FURTHER ASSISTANCE, PLEASE CALL OUR PROXY SOLICITOR, GEORGESON
& COMPANY INC., TOLL-FREE AT 1-800-223-2064.
Sincerely,
THE BOARD OF DIRECTORS OF
ICN PHARMACEUTICALS, INC.
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IMPORTANT MESSAGE TO ALL ICN STOCKHOLDERS:
OUR ANNUAL MEETING IS FEBRUARY 1, JUST A FEW DAYS AWAY. PLEASE SIGN, DATE, AND
RETURN THE BLUE PROXY CARD AS SOON AS POSSIBLE SO YOUR VOTE CAN BE COUNTED.
EVEN IF YOU HAVE ALREADY RETURNED A BLUE CARD, REMEMBER, ONLY THE LATEST DATED
PROXY COUNTS.
This package contains a number of documents designed to bring you up to date on
ICN and its recent activities. You will find:
1. A letter from the Board which answers critical questions about the Company
and discusses our progress and prospects. Here are a few highlights.
* Stock price performance in 1993.
* Encouraging prospects for use of ribavirin in hepatitis C treatments.
* Pioneering investments in the under-developed markets of Eastern Europe.
* Actions to strengthen our Board of Directors.
* Renewed commitment to link executive compensation with Company
performance.
* Priorities for 1994: Continuing to build a world-class pharmaceutical
enterprise.
* Institutional Shareholder Services, the largest proxy advisory firm in
the U.S., recommends a vote FOR management's slate.
2. A chart comparing the stock performance of SPI Pharmaceuticals with other
major pharmaceutical manufacturers.
3. A chart comparing the stock performance of ICN with several major market
indices.
4. A press release announcing a license agreement between SPI Pharmaceuticals
and Schering-Plough.
Please take a few minutes to learn why our future is so exciting.
THE BOARD OF DIRECTORS OF
ICN PHARMACEUTICALS
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[ICN PHARMACEUTICALS, INC. LETTERHEAD]
Contact Paul Knopick
FOR IMMEDIATE RELEASE 714/546-0100 ext. 2465
SCHERING-PLOUGH LICENSES ORAL ANDROGEN TO
SPI PHARMACEUTICALS
COSTA MESA, Calif. Jan. 10 - SPI Pharmaceuticals, Inc. (AMEX: SPI) and
Schering-Plough Corporation (NYSE: SGP) have announced an agreement in which SPI
will be the exclusive licensee in the U.S. and Puerto Rico of the Oreton Methyl
line (brand of methyltestosterone tablets, USP), a prescription oral androgen
to be manufactured by Schering-Plough.
The product will be marketed by SPI Pharmaceuticals under the ICN
Pharmaceuticals label as Oreton Methyl 10 (10mg), under the agreement which
became effective Jan. 1, 1994. The product is professionally marketed to
physicians.
Oral androgens are intended for use by males as a replacement therapy in
conditions associated with a deficiency or absence of testosterone
(hypogonadism). They also are a second line therapy for advanced, inoperable
metastatic (skeletal) breast cancer for women who are one to five years
post-menopausal.
SPI Pharmaceuticals, headquartered in Costa Mesa, manufactures, markets
and distributes more than 600 prescription and nonprescription pharmaceuticals
in over 60 countries, including North and Latin America, Western and Eastern
Europe and the Far East. Schering-Plough Corporation, based in Madison, N.J., is
a research-based company engaged in the discovery, development, manufacturing
and marketing of pharmaceutical and health care products worldwide.
The product will be sold in bottles of 100 tablets. Oreton Methyl
tablets are classified as controlled substances under the Anabolic Steroid
Control Act of 1990 and have been assigned to Schedule III. Terms of the
transaction were not disclosed.
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[ICN Pharmaceuticals, Inc,. Letterhead]
SPI PHARMACEUTICALS RANKS WITH TOP
INTERNATIONAL PHARMACEUTICAL COMPANIES
The January 3, 1994 issue of Forbes ranked
SPI Pharmaceuticals as one of the top 24
international pharmaceutical companies in several categories.
<TABLE>
<Caption
5 YEAR SALES GROWTH 5 YEAR EARNINGS PER SHARE
---------------------------------- ---------------------------------
COMPANY % COMPANY %
------- ------ ------- ------
<S> <C> <C> <C> <C> <C>
1) IVAX 68.90% 1) PERRIGO 80.40%
2) SPI PHARMACEUTICALS 48.20% 2) BINDLEY WESTERN INDS 54.10%
3) RHONE-POULENC RORER 41.80% 3) SPI PHARMACEUTICALS 90.60%
4) MARION MERRELL DOW 39.30% 4) RHONE-POULENC RORER 30.40%
5) CARDINAL DISTRIBUTION 31.10% 5) MARION MERRELL DOW 24.00%
</TABLE>
<TABLE>
<CAPTION>
5 YEAR AVERAGE RETURN ON EQUITY 5 YEAR DEBT/CAPITAL
---------------------------------- ---------------------------------
COMPANY % COMPANY %
------- ------ ------- ------
<S> <C> <C> <C> <C> <C>
1) AMERICAN HOME PRODS 55.40% 1) CARDINAL DISTRIBUTION 41.70%
2) MERCK 52.60% 2) BERGEN BRUNSWIG 41.50%
3) PERRIGO 42.70% 3) NATIONAL INTERGROUP 37.00%
4) SYNTEX 41.60% 4) SYNTEX 33.00%
5) MARION MERRELL DOW 39.30% 5) IMCERA GROUP 31.40%
6) SCHERING-PLOUGH 37.90% 6) BINDLEY WESTERN INDS 28.90%
7) WARNER-LAMBERT 37.70% 7) IVAX 26.20%
8) ABBOTT LABORATORIES 37.60% 8) WARNER-LAMBERT 24.40%
9) BRISTOL-MYERS SQUIBB 33.60% 9) RHONE-POULENO RORER 23.30%
10) GLAXO HOLDINGS 30.90% 10) PERRIGO 22.30%
11) RHONE-POULENO RORER 28.80% 11) AMERICAN HOME PRODS 18.50%
12) SPI PHARMACEUTICALS 26.90% 12) AMERICAN CYANAMID 18.30%
13) ELI LILLY 25.00% 13) UPJOHN 18.10%
14) UPJOHN 22.40% 14) SPI PHARMACEUTICALS 14.80%
15) PFIZER 17.70% 15) MCKESSON 12.30%
</TABLE>
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[ICN Pharmaceuticals, Inc. Letterhead]
ICN FAMILY OF COMPANIES BEATS DOW JONES, S&P, NYSE,
AMEX INDICES & DOW JONES PHARMACEUTICAL INDUSTRY GROUP
% INCR. NYSE DJIA S&P 500 DJ PHARM
'93/'92 CO. CO. CO. AMEX GROUP
ICN 36.50%
SPI 38.10%
7.86% 13.72% 7.06% 19.52% -10.58%
VRA 56.40%
BIM 21.40%
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VALUTRAC
a division of Audio Alert, Inc. 10616 Beaver Dam Road, Hunt Valley, MD 21030
Long-Term Opportunities for the Intelligent Investor
No. 9310
October 22, 1993
IT'S TIME TO BEGIN PLANNING FOR '94
Deja Vu All Over Again?
PHOTO 1 PHOTO 2
Joe Bradley Jim Powell
ICN PHARMACEUTICALS [Joseph Morgan]
Has A Promising New Anti-viral Drug
Plus an Excellent Stake in Eastern Europe
ICN PHARMACEUTICALS, INC. (ICN-NYSE)
JOSEPH J. MORGAN
Editor
Dr. Morgan's Medical Stock Commentary PHOTO 3
1431 Lexington Drive
Maple Glen, PA 19002
BACKGROUND ON ICN PHARMACEUTICALS
1. ICN is basically a holding company with interests in three other publicly
traded companies: SPI Pharmaceuticals, an Eastern European pharmaceutical
company which distributes worldwide; ICN Biomedicals, a supply company for
medical labs; and Viratek, an R&D facility (viral disease and cancer).
2. ICN Pharmaceuticals also manufactures and markets its own products
(distributed by ICN Biomedicals to 43 countries); ICN Biomedicals' product
catalog (over 70,000 items) is distributed to 96% of United Nations
countries.
3. ICN Pharmaceuticals may be the largest pharmaceutical company in Eastern
Europe following its recent acquisition of a formerly Yugoslavian
pharmaceutical company, which is now called ICN Galenika.
4. A joint-venture with the Russian government called ICN Oktyabr, still in the
planning stages, should be selling products before the end of this year.
5. ICN Galenika is currently crippled by the civil war in former Yugoslavia,
but is expected to recapture its large market share after the war is over.
MARKET REACTION
1. The stock is affected by the risk of owning stock in a country at war and
by the UN economic sanctions -- ICN Galenika is prohibited from trading
outside of Yugoslavia.
2. Additionally, Yugoslavia suffers from unstable currency, hyperinflation and
supply shortages of imported raw materials.
3. Even so, SPI (owns the majority of ICN Galenika) has reported an operating
profit of $1.5 million in Q2 93; peace will put them in even better
position.
4. Purchase of the stock at this time does represent a speculation, but the
current price reflects continued outlook for war.
5. The potential of the company cannot be quantified by looking at a
spreadsheet; conceptually, the company is attempting to introduce
capitalism and modern pharmaceuticals to the formerly communist world.
POTENTIAL FOR SUCCESS
1. The involvement in ICN of a former US ambassador to Yugoslavia and other
European business leaders as well as its founder who emigrated from
Yugoslavia gives ICN an advantage in Eastern European markets.
2. Another positive factor is the company's primary product, ribavirin, an
antiviral drug with blockbuster potential that has been ignored by Wall
Street.
3. From August 1989 to July 1993, ICN stock has gone up 71%, and SPI stock has
gone up 121%, compared to 28% for the S&P.
4. ICN Biomedicals is currently profitable and has a market value of $125-$175
million; yet, the market capitalization of the parent company ICN
Pharmaceuticals is only about $200 million -- a bargain basement price that
discounts the downside.
5. Realistically, the situation in Russia and Eastern Europe should stabilize;
if that happens, ICN should be the premier company in that market for the
foreseeable future.
THE CURRENCY FACTOR
1. SPI is carried at a long-term investment, so short-term losses do not
radically affect ICN Pharmaceuticals' bottom line.
2. Currency risk is being managed, but this risk within Yugoslavia is a plus
for purchasing materials within that state.
THE CORE PRODUCT: RIBAVIRIN
1. In contrast to the present main drug for treating hepatitis-C virus
(inuron-A, an interferon drug which is effective only 20%-30% of the cases
and must be injected), ribavirin is a tablet which can be easily taken by
the patient.
2. Year-long field tests for ribavirin in treating hepatitis-C have been
conducted at NTII, in Sweden and elsewhere -- results are about to be
presented; shorter preliminary field tests showed good results and little
toxicity.
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[CHART]
Recent Price: $10.75 Market Value (Mil. $): 218.8
Latest Yr. Earnings: $5.56 Latest Yr. Dividend: NA
Latest Yr. Book Value: $0.31 P/E Ratio: NA
% Yield: NA Common Shares (the): 20451
3. If the year-long results turn out as well, Wall Street should begin to see
ribavirin as a challenger for intron-A's billion-dollar market.
4. Ribavirin, around for about 20 years, has been the object of hundreds of
studies; in tablet form, it is already available over-the-counter in many
countries and is taken for viral infections such as measles, flu and hepatitis.
5. Ribavirin is already a $27 million drug worldwide of which $19 million is
sold in the United States.
EXPECTATIONS
1. The stock price of ICN, currently in the 10-11 range (11 1/8 close on
10/15), can be 20-30 within a couple of months of good hepatitis-C results; an
end to the war in Yugoslavia could mean an additional 10-20 point increase.
2. If war continues or the hepatitis-C results are not good, the maximum
downside should be 5 points.
3. The upside for the company is unlimited because ribavirin is approved for
HIV/AIDS patient use in several countries and has been shown to be safe and
effective compared to other drugs available.
4. If the tablet form becomes available in the US for use in hepatitis-C,
physicians are likely to begin prescribing it also for HIV/AIDS as well as
other viral infections.
5. NTH is currently testing ribavirin in combination with an approved drug
called DDI for HIV use; if results of this trial are good (in a year or so),
rapid approval of ribavirin for HIV can be expected -- another boost for the
stock price.
ANNOUNCEMENT EXPECTED
1. The results of the year-long trials for hepatitis-C use are expected to be
announced at the annual meeting of the American Association for the Study of
Liver Diseases on 11/4/93; if results are good, ICN stock could run up several
points in a matter of days.
2. Once approved for use with hepatitis-C (probably by Q3 95), physicians will
be able to prescribe ribavirin as their medical judgment dictates (e.g., for
AIDS); the stock price could rise as high as 60 or 70 within a couple of years.
VARIOUS WAYS TO PLAY
1. ICN is an ideal speculation -- but not a sure thing; investors who are
interested after further research and who understand options may wish to buy
the stock and, as a hedge against its decline, buy puts (as far out as
possible).
2. Another way to play is to use risk capital to buy calls (for those who
expect good news); or an investor can short the stock and buy calls.
3. The stock is likely to move quickly: with good news on hepatitis-C, a
double or triple within 12 months; with added good news of an end to the civil
war in Bosnia, considerably higher; plan to be out of the stock by 1997 or
1998.
4. The purchase-with-puts strategy limits risk to 10%-15%, but allows the
potential to double or triple the initial investment within 2 years.
Company info: ICN Pharmaceuticals, Inc., 3300 Hyland Ave., Costa Mesa, CA
92626; 714/545-0100.
For information on Dr. Morgan's Medical Stock Commentary, write to the address
given above or call 215/641-9006.
Reprinted with permission from ValueTrac.
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APPENDIX
Photo 1 - Joe Bradley
Photo 2 - Jim Powell
Photo 3 - Joseph J. Morgan
