By Frances Bishopp

Staff Writer

Buoyed up by a 25-percent increase in operations income attributed to its blood-screening business, increased royalties and sales of its bone cancer drug, Aredia, Chiron Corp.'s net income, for first quarter 1997, rose 20 percent from 1996.

For first quarter ending March 31, 1997, the Emeryville, Calif., company had net income of $15.3 million, or 9 cents per share, on revenues of $330.3 million vs. net income of $12.7 million, or 7 cents per share, on revenues of $305.8 million for first quarter 1996, an increase of 8 percent.

Chiron's expenses were up 6.5 percent in first quarter 1997 to $299 million from $281.4 million for the same time period 1996. Research and development expenses were up 8 percent from last year at $91.7 million compared to $84 million for the same time period in 1996.

Aredia's first quarter 1997 sales were $28 million vs. $10.9 million in the first quarter a year ago. Chiron's sales fee income from U.S. sales of Aredia on behalf of Novartis AG, of Basel, Switzerland, jumped to $12.8 million in the first quarter 1997 from $3.6 million a year ago.

Betaseron (for multiple sclerosis) product sales revenues from Berlex Laboratories, of Wayne, N.J., together with royalty income from Schering AG, of Berlin, for products sold in Europe decreased 14 percent to $18 million in first quarter 1997 from $20.9 million in first quarter 1996.

The company attributed the decrease to a decline in volume of shipment to Berlex and the fact that Chiron received no royalty income from Schering in first quarter 1996. Some analysts believe the decrease was due to competition from Avonex (for multiple sclerosis), owned by Biogen Inc., of Cambridge, Mass.

Chiron's blood screening business (Chiron has a 50- percent share of the pretax profit with Ortho Diagnostic Systems Inc., of Raritan, N.J.) earnings increased to $25.1 million in first quarter 1997 from $22.5 million in first quarter 1996. During the first quarter 1997, Chiron and Ortho were awarded a contract to provide 100 percent of the reagents, systems and support required by the American Red Cross for viral disease blood screening.

Product sales from its business units were up 5 percent to $251.1 million in 1997. Revenues were negatively affected, the company said, by unfavorable foreign exchanges.

Chiron Diagnostics product sales increased 10 percent to $149 million in the first quarter 1997 from $135.9 million in the first quarter 1996, including an increase in sales of quantitative bDNA probe tests to $13.2 million in the first quarter 1997 from $5.8 million in the first quarter a year ago.

Contributing to the quarterly increase in Chiron diagnostic product sales was increased immunodiagnostic product sales resulting from greater assay volume compared to a year ago.

Vision product sales increased to $50.3 million in first quarter 1997 from $44.9 million in first quarter 1996. Increased sales of excimer lasers, refractive surgical instruments and the Vitrasert Implant (for cytomegalovirus retinitis) were offset by a decline in cataract surgery product sales.

Chiron's Therapeutics' U.S. and European sales of oncology products increased 15 percent to $18.7 million in the first quarter 1997 from $16.2 million in the first quarter 1996. Unit sales of Proleukin (for metastatic kidney cancer) increased by 17 percent during the quarter. On April 11, Chiron submitted a supplemental biological license application to the FDA seeking clearance to market Proleukin for metastatic melanoma.

Chiron's Vaccines' product sales fell 11 percent to $18.5 million in first quarter 1997 compared to $20.8 million for first quarter 1996, a decrease the company attributed to lower sales of acellular pertussis vaccine in Italy.

Collaborative research agreement revenues decreased to $26.8 million in the first quarter 1997 from $31.4 million in first quarter 1996.

On March 31, 1997, Chiron's cash, cash equivalents and investment in debt securities totaled $141.3 million, an increase of $12.4 million since Dec. 31, 1996.

While Chiron has a number of products in the pipeline, some analysts believe the company needs a blockbuster to reignite investor interest and at this point, it is unclear what that product would be.

Chiron' stock (NASDAQ:CHIR) Thursday afternoon was at $17.750, down $0.125. *