Washington Editor

Chiron Corp. received clearance to begin producing its flu vaccine again.

The Emeryville, Calif.-based company, which last year lost its license to manufacture Fluvirin, received word that the UK's Medicines and Healthcare products Regulatory Agency (MHRA) lifted its suspension of a manufacturing facility in Liverpool, where the vaccine is produced. The news boosted Chiron's stock (NASDAQ:CHIR) by 6.4 percent Wednesday, as the shares gained $2.27 to close at $37.69.

Alison Marquiss, a spokeswoman at the company, declined to comment on the news, deferring to prepared remarks from CEO Howard Pien.

"We are grateful for the guidance and effort from the regulatory agencies as we have navigated a path toward remediation," he said in a press release. "Our employees have worked tirelessly, and we are extremely proud of this result. This is a significant accomplishment."

Marquiss said Pien is expected to hold a press conference today after traveling from the UK Wednesday.

Chiron expects the FDA to soon conduct a full inspection of its Good Manufacturing Practices (GMP) to resolve a warning letter the agency issued late last year, though Marquiss declined to speculate on such a timeframe.

The MHRA's notice follows inspections of the Liverpool facility and concluded that Chiron now is in a position to conduct its operations in accordance with GMP principles and guidelines. The company has yet to publicly specify issues that caused contamination at the manufacturing site, but its remediation activities have focused on production, quality systems and governance, Marquiss said.

She added that the company has yet to define a specific number of doses it could produce for the 2005-06 flu season. Marquiss declined to say whether Chiron's production schedule is beginning later than usual because of the now-lifted suspension.

An industry analyst, Jennifer Chao, of Deutsche Bank in New York, issued a report stating that Chiron could manufacture 35 million to 55 million doses for the coming flu season after receiving "full clearance for initiating full-throttle manufacturing of Fluvirin." Should the company hit the 35 million-dose projection, Chao said $217 million in Fluvirin sales would be generated and translate into $1.62 in earnings per share, bettering the current consensus estimate of $1.42. If the company produces 50 million doses, it would translate to about $310 million in sales and an earning-per-share range of $1.72 to $1.78.

Chiron, which also said it expects to be in a position to deliver Fluvirin for the upcoming flu season, continues to work to complete its remediation plan and ongoing improvements. The company said it would provide the MHRA with weekly updates to ensure that progress on its various projects proceeds satisfactorily, but acknowledged that the British health authorities might conduct further inspections.

Last fall, the MHRA suspended Chiron from manufacturing the drug for three months at the Liverpool site, a suspension that prevented the company from sending its expected shipment of 46 million to 48 million flu shots to the U.S. for the past flu season. That news dropped the company's stock by 16.4 percent in a single day. (See BioWorld Today, Oct. 6, 2004.)

There were earlier indications that trouble was brewing for Chiron.

Problems first surfaced less than two months earlier, when the company said it had experienced sterility issues with a small number of Fluvirin lots manufactured at the Liverpool facility. And in the end, those issues weren't rectified in time to release drugs for the past flu season, causing the U.S. shortfall. (See BioWorld Today, Aug. 30, 2004.)