SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): JULY 16, 1998
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ICN Pharmaceuticals, Inc.
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(Exact Name of Registrant as Specified in its Charter)
DELAWARE 001-11397 33-0628076
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
3300 Hyland Avenue
Costa Mesa, California 92626
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(Address of Principal Executive Offices) (Zip
Code)
Registrant's telephone number, including area code: (714) 545-0100
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N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events
1. Due to a worsening liquidity problem in Yugoslavia, an agency of
the Yugoslavian government defaulted on notes receivable due the Registrant
and, as a result, the Registrant will provide a reserve for the amounts
owed while it works with the government agency to renegotiate credit terms.
2. The Registrant sold its rights to Schering-Plough Corporation to
co-market oral ribavirin for the treatment of hepatitis C (HCV) in the
European Union.
The preceding is qualified in its entirety by reference to the press
releases, issued by the Registrant on July 16, 1998, which are attached
hereto as Exhibit 99.1 and 99.2, respectively, and incorporated herein by
reference.
Item 7. Exhibits
99.1 Text of Press Release issued by the Registrant on July 16, 1998
regarding notes receivable due the Registrant from an agency of the
Yugoslavian government.
99.2 Text of Press Release issued by the Registrant on July 16, 1998
regarding the sale of its rights to Schering-Plough Corporation to
co-market oral ribavirin for the treatment of hepatitis C (HCV) in the
European Union.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
ICN Pharmaceuticals, Inc.
By: /s/ David C. Watt
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David C. Watt
Executive Vice President,
General Counsel and Secretary
Date: July 16, 1998
EXHIBIT INDEX
Exhibit Number Description
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99.1 Text of Press Release issued by the Registrant on July
15, 1998 regarding notes receivable due the Registrant
from an agency of the Yugoslavian government.
99.2 Text of Press Release issued by the Registrant on July
16, 1998 regarding the sale of its rights to
Schering-Plough Corporation to co-market oral ribavirin
for the treatment of hepatitis C (HCV) in the European
Union.
EXHIBIT 99.1
FOR IMMEDIATE RELEASE
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CONTACTS: Media: Kathryn Corbett Investors: Mariann Ohanesian
Edelman Financial ICN Pharmaceuticals
(212) 704-8292 (714) 545-0100
ICN PHARMACEUTICALS TO PROVIDE RESERVE FOR NOTES
RECEIVABLE DUE FROM YUGOSLAV GOVERNMENT AGENCY
NEW YORK, NY, July 15, 1998 -- ICN Pharmaceuticals, Inc. (NYSE: ICN)
said today a worsening liquidity problem in Yugoslavia has caused an agency
of the government to default on notes receivable due ICN, and, as a result,
ICN will provide a reserve for the amounts owed while it works with the
government agency to renegotiate credit terms.
Exclusive of the non-cash charge, the company expects to meet current
second quarter analyst estimates. ICN does not believe the charge will
affect its business outside Yugoslavia.
Because of the provision, ICN said it expects to record a non-cash
charge of approximately $172 million ($129 million after minority interest
or $1.65 per diluted share) in the company's second quarter ending June 30,
1998. The charge against earnings will cover ICN Yugoslavia's anticipated
losses on certain notes receivable, accounts receivable from government
sponsored agencies and impairment of certain of its investments.
As of June 30, 1998, ICN has notes receivable, including accrued
interest of approximately $176 million due from the Yugoslavian government.
The Yugoslav government agency has defaulted on approximately $39 million
of its notes payable to ICN and notified ICN that it can no longer honor
the terms of all the credit agreements.
The Yugoslav government is seeking concessions from ICN, and ICN is
currently working to renegotiate the credit terms. Pending resolution of
these negotiations, ICN Yugoslavia has suspended all direct credit sales to
the Yugoslav government.
The Yugoslav government has been adversely affected by, among other
factors, the recent economic sanctions imposed on Yugoslavia, continuing
political instability, the problems in Kosovo, and the April 1998
devaluation of the Yugoslav currency.
ICN manufactures and markets a broad range of prescription and
non-prescription pharmaceuticals and biotechnology research products in
over 90 countries and employs over 17,000 people worldwide. ICN has
operations in Western, Central and Eastern Europe, North and Latin America,
and the Pacific Rim. Additional information is available on the corporate
website at http://www.icnpharm.com.
THE SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. This press release contains forward-looking statements
that involve risks and uncertainties, including but not limited to,
projections of quarterly earnings, and other risks detailed from time to
time in the Company's Securities and Exchange Commission filings.
# # #
EXHIBIT 99.2
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FOR IMMEDIATE RELEASE
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CONTACTS: Media: Kathryn Corbett Investors: Mariann Ohanesian
Edelman Financial ICN Pharmaceuticals
(212) 704-8292 (714) 545-0100
ICN SELLS ITS EUROPEAN RIGHTS FOR RIBAVIRIN FOR
HEPATITIS C THERAPY TO SCHERING-PLOUGH FOR INCREASED
WORLDWIDE ROYALTIES AND $16.5 MILLION
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NEW YORK, N.Y., July 16, 1998 - - ICN Pharmaceuticals, Inc. (NYSE:
ICN) today announced that it sold its rights to Schering-Plough Corporation
(NYSE: SGP) to co-market oral ribavirin for the treatment of hepatitis C
(HCV) in the European Union (EU). As part of the original 1995 licensing
agreement with Schering-Plough, ICN had retained the right to co-market
ribavirin capsules in the EU under its own trademark, VIRAZOLE(R), as
combination therapy with interferon alfa-2b, recombinant (injection). The
new agreement with Schering-Plough covers only oral ribavirin for HCV. ICN
continues to retain rights for all other forms and indications for
ribavirin (VIRAZOLE). As part of the agreement, ICN will receive increased
royalty rates not only in the EU but worldwide, while Schering-Plough will
extend its exclusive rights to market ribavirin in combination with
interferon alfa-2b, recombinant (injection), which Schering-Plough markets
as INTRON(R) A. The per-capsule minimum royalty established in the original
license has also been increased. In addition, ICN said it will receive a
one-time compensation of $16.5 million as part of the new agreement, which
includes the reimbursement of certain expenses incurred by ICN in
preparation for the launch of VIRAZOLE(R) Capsules (ribavirin) in the EU.
The total potential incremental value of the new agreement is estimated to
exceed the income potential available through the Company's own
co-marketing efforts.
Schering-Plough has submitted a Marketing Authorization Application to
the European Agency of Medicinal Products seeking to market REBETRON(TM)
Combination Therapy containing ribavirin capsules and interferon alfa-2b,
recombinant injection for the treatment of chronic hepatitis C in patients
with compensated liver disease who have relapsed following alpha interferon
therapy.
"We are very pleased by this new arrangement which solidifies our
partnership with Schering-Plough and enables them to focus their
competitive efforts on maximizing the ribavirin sales opportunity in the
treatment of HCV," said Milan Panic, Chairman and Chief Executive Officer
of ICN. "Our new agreement reduces the risks and costs associated with a
separate launch and is financially more beneficial for us."
Ribavirin is a synthetic nucleoside analog with broad-spectrum
antiviral activity. ICN, which discovered ribavirin, currently markets the
drug as VIRAZOLE in a variety of dosage forms for at least one of 10
indications in 44 countries. VIRAZOLE is sold in the U.S. and the EU only
for aerosol use for the treatment of hospitalized infants and young
children with lower respiratory infection due to respiratory syncytial
virus.
Interferon alfa-2b is a recombinant version of naturally occurring
alpha interferon, which has been shown to exert both antiviral and
immunomodulatory effects. Schering-Plough markets interferon alfa-2b as
INTRON A, the world's largest-selling alpha interferon, for 16 major
antiviral and anticancer indications worldwide.
Some four million Americans are chronically infected with HCV,
according to the Centers for Disease Control and Prevention (CDCP). The
CDCP has estimated that 20-50 percent of chronically infected hepatitis C
patients will develop liver cirrhosis, and 20-30 percent of those will go
on to develop liver cancer or liver failure requiring liver transplant.
Hepatitis C infection contributes to the deaths of 8,000 to 10,000
Americans each year. In the absence of active intervention, this toll is
expected to triple by the year 2010 and exceed the number of annual deaths
due to AIDS, according to the CDCP.
Similarly, in most European countries, one to two percent of the
general population are chronically infected with HCV. According to a study
conducted by the World Health Organization (WHO), which recently issued a
world alert about the spread of hepatitis C, as many as five million
Europeans have been chronically infected with HCV.
ICN manufactures and markets a broad range of prescription and
non-prescription pharmaceuticals and biotechnology research products in
over 90 countries and employs some 17,000 people worldwide. ICN has
operations in Western, Central and Eastern Europe, North and Latin America,
and the Pacific Rim. Additional information is available on the corporate
website at http://www.icnpharm.com.
THE SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995. This press release contains forward-looking statements
that involve risks and uncertainties, including but not limited to,
projections of future sales, operating income, returns on invested assets,
regulatory approval processes, and other risks detailed from time to time
in the Company's Securities and Exchange Commission filings.
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