SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 16383 / December 9, 1999
SECURITIES AND EXCHANGE COMMISSION v. ICN PHARMACEUTICALS, INC., MILAN PANIC, NILS O. JOHANNESSON AND DAVID C. WATT, Civil Action No. SACV99-1016DOC(ANX) (C.D. Cal.)
Court Refuses to Dismiss SEC's Fraud Suit Against ICN Pharmaceuticals, Milan Panic and Nils Johannesson
The Securities and Exchange Commission ("Commission") announced today that, on December 8, 1999, the United States District Court for the Central District of California denied motions made by ICN Pharmaceuticals, Inc. ("ICN"), ICN's chief executive officer, Milan Panic ("Panic"), and ICN's former vice president of research and development, Nils O. Johannesson ("Johannesson"), asking the court to dismiss the Commission's complaint against them, filed August 11, 1999. The Commission's complaint charges that the defendants failed to publicly disclose that, in November 1994, the FDA rejected ICN's application for approval of ribavirin, a new drug to treat hepatitis C, and that they made fraudulent and misleading public statements about that new drug application.
In denying the defendants' motions, the court found the allegations in the complaint sufficient and noted that both Panic and Johannesson allegedly sold shares of ICN stock while aware that the FDA had rejected the new drug application, but prior to full public disclosure of that information. The court also let stand the Commission's request for an order barring Panic from acting as an officer or director of any public company. At the same time, the court granted the motion of another ICN official, David C. Watt ("Watt"), to dismiss the allegations against him, but permitted the Commission 20 days in which to amend its complaint to supplement the allegations against Watt.
The Commission's complaint alleges that ICN received a letter from the FDA on November 28, 1994 informing the company that its drug application was "not approvable" because the data in the application failed to show that ribavirin was safe and effective in the treatment of hepatitis C. The complaint further alleges that on December 22, 1994 the FDA sent ICN another letter which restated the FDA's earlier rejection of its drug application, and urged the company to withdraw its application. The Commission alleges that the defendants failed to publicly disclose the FDA's November 28, 1994 rejection of the drug application until ICN issued a press release on February 17, 1995. Prior to the issuance of that press release, ICN allegedly made numerous public statements which misled the public about the status of its ribavirin application.http://www.sec.gov/litigation/litreleases/lr16383.htm