Chiron reported a 9.5% decline in revenues in the third quarter of 2005 to $530 million dollars, held back by ongoing problems affecting its influenza vaccine business.
The US company managed to nearly double its net earnings to $51 million from $27 million a year ago, although the prior period had included a $91 million charge relating to the suspension in manufacturing of the flu vaccine Fluvirin after contamination problems were uncovered at the UK plant manufacturing the product [[14/10/05c]]. Chiron said that excluding various special charges, the company would have earned $73 million in the last quarter. Earnings for full-year 2005 will now fall short of its previous estimate of between $1.20-$1.45 per share.
Revenues were also affected by manufacturing problems at another plant in Germany making Chiron’s Begrivac flu vaccine for the UK, Germany and other European markets. This shaved $41 million off Chiron’s third-quarter revenues, said the company in a statement, and it does not expect to resume production this year. However, manufacturing should be back on track before next year’s flu season, it said.
Despite the grim figures, the last quarter was a turning point for the company as it managed to resume production of Fluvirin, delivering the first 1.5 million batches of the vaccine from the UK plant [[18/10/05e]]. Chiron will have shipped 5 million doses by the end of the week, according to chief executive Howard Pien, but the firm is still declining to speculate on exactly how much Fluvirin it will be able to deliver in time for the forthcoming flu season, having already reined back production targets below its earlier forecasts of 18 to 30 million doses.
There was also some encouraging news for Chiron’s activities outside the flu vaccine arena. Meningococcal and travel vaccines both put in 30%-plus sales growth in the quarter, bringing in revenues of $12 million and $35 million, respectively, which helped offset the 35% decline in flu vaccine revenues to $60 million. The company’s biopharmaceuticals business, which includes inhaled antibiotic TOBI (tobramycin) and Proleukin (aldesleukin) for kidney cancer, also managed a 4% rise in revenues to $137 million.
In September, Swiss drugmaker Novartis, which holds an approximately 42% stake in Chiron, bid $40 a share for the company’s outstanding shares, in a deal valued at about $4.5 billion. Chiron has rejected the offer, and there were no updates on this in the third quarter statement [[26/09/05b]] [[07/09/05e]].
Meanwhile, Chiron has begun Phase I/II testing in the USA of an experimental flu vaccine that could be manufactured more quickly than current products as it does not need to be produced in embryonated eggs. The technology, based on cell culture, could make it possible to respond much more quickly to an emerging, pandemic strain of the flu virus.
The cell culture-made vaccine has already completed one Phase III trial and entered another in Europe, said Chiron. Meanwhile, the company said it recently started clinical trials of a pandemic flu vaccine based on the H5N1 strain of the virus, a form of avian flu that is tipped to be a strain likely to cause an upcoming pandemic.
