West Coast Editor
Like a persistent bug, Chiron Corp.'s problems related to the influenza vaccine remain with the company, although Wall Street seems to be taking the latest unfavorable news in stride.
Chiron said no Begrivac flu vaccine, which the company has been making for the German and UK markets, will be available this year. Earlier, Chiron had said production for the 2005-2006 flu season would drop from about 12 million doses to about 4 million because of manufacturing problems. (See BioWorld Today, July 18, 2005.)
The company's stock (NASDAQ:CHIR) closed Wednesday at $35.89, unchanged, though analyst Jennifer Chao of Deutsche Bank wrote in a research note that the "constellation of negative announcements surrounding [Chiron's] flu vaccines business calls into question management credibility."
Alex Hittle, analyst with A.G. Edwards in St. Louis, called the situation "déj vu all over again," but pointed out that "on Wall Street we're having an extremely strong day in biotech, with Amgen leading the parade." Amgen Inc., of Thousand Oaks, Calif., reported strong second-quarter earnings and "single-handedly made everything worth more," Hittle said.
Emeryville, Calif.-based Chiron, while not providing a reason for the latest word on Begrivac, said it is "working to cover [the] shortfall with other non-U.S. influenza vaccines."
In the middle of the month, Chiron said a "small number of lots" of the Begrivac vaccine, made at the company's facility in Marburg, Germany, did not meet product sterility specifications - a glitch that analyst Thomas Shrader, with New York-based Harris Nesbitt Corp., also called "unsettlingly familiar."
The phrase used in reporting the Begrivac problem - "small number of lots" - is identical to the language first used when Chiron reported problems at the Fluvirin facility. As few investors have forgotten, Chiron failed, after predicting 46 million to 48 million doses, to supply any flu vaccine last year to the U.S. market, after European authorities found contamination and suspended the company's license to manufacture Fluvirin in the Liverpool, UK, plant, which was the only maker authorized to supply the vaccine to the U.S. (See BioWorld Today, Oct. 6, 2004.)
Hittle told BioWorld Today he is convinced the situation in Germany is not serious.
"Chiron makes the argument fairly persuasively that it's a one-off event," he said. "The hit is somewhere between 2 and 4 cents" in terms of earnings per share, he added.
"We'd been hearing that the PowderJect plant was not up to snuff," Hittle said, referring to the Fluvirin plant acquired in Chiron's 2003 buyout of Oxford, UK-based PowderJect Pharmaceuticals plc, but "what we've picked up from people in the industry is that their facilities in Germany and Italy are pretty well run."
He predicted Chiron would "not have to re-tool procedures" to get the German plant operational again.
As for the Liverpool facility, Chao wrote in a research not that her firm "continue[s] to expect a positive FDA regulatory review" of the plant in the third quarter of this year, and expects "more granularity" on Chiron's second-quarter earnings during a conference call July 27. Chiron forecasts earnings per share of $1.20 to $1.45, as compared to the consensus of $1.26.
In happier news, also recent, the FDA has deemed Chiron's Pulminiq approvable, though the agency asked for another study to confirm efficacy. The inhaled cyclosporine is intended to increase survival and prevent chronic rejection in combination with standard immunosuppressive therapy, for patients getting allogeneic lung transplants. Chiron's application was based on data from one Phase II trial.