Chiron Corp. received news early Tuesday that, when boiled down, meant it would not be a player in the 2004-2005 influenza market. That news not only dropped the company's stock by nearly 17 percent, it sent a shudder through a U.S. population already skittish about the flu.
Chiron's news "couldn't have come at a worse time," said a participant in the company's conference call.
Howard Pien, Chiron's CEO and president, said the Emeryville, Calif.-based company received at around 3 a.m. PST, "a notification from the Medicines and Healthcare Products Regulatory Agency [MHRA] that it has temporarily suspended Chiron's license to manufacture Fluvirin in our Liverpool facility, which is the sole Chiron facility that is authorized to supply flu vaccine to the U.S. That action will prevent Chiron from releasing any product for the 2004 and 2005 influenza season."
Chiron's stock (NASDAQ:CHIR) sank $7.44 Tuesday, or 16.4 percent, to close at $37.98. The company scuttled its previous pro-forma guidance of $1.80 to $1.90 for 2004, lowering it to 70 cents to 80 cents per share. Certainly bad news for Chiron, but the suspension had far-reaching impact on the U.S., which was expecting to get from Chiron about half of the estimated 100 million flu vaccines it wanted for the flu season just about to start.
Trouble first surfaced for Chiron in late August, when the company said it had experienced sterility issues with a "small number" of Fluvirin lots manufactured in Liverpool, UK. The company set about rectifying the issues through a "comprehensive and rigorous" testing effort, Pien said, but apparently the MHRA didn't like what it saw. (See BioWorld Today, Aug. 30, 2004.)
"We believed that our confirmatory testing indicated that the problem was confined to a limited number of lots, as we had outlined in August," Pien said. "As we said last week, we expected to be on track to begin delivering Fluvirin in early October.
"Therefore, today's action by the MHRA is unexpected and disappointing, but we respect the regulatory authority's judgment, because we believe it is fundamentally based on concerns for safety."
The MHRA said Chiron's manufacturing process does not comply with UK Good Manufacturing Practices regulations and suspended the license for three months. Chiron said it has begun discussions with the agency to decide what's best to do next. The company also supplies Fluvirin to the UK market, where it has about a 20 percent share, but it said it expected to make up for the loss there by using other manufacturing facilities that are approved for use in the UK. That does not help the U.S. market, though, as the Liverpool facility was the only site approved to manufacture product for sale into the States.
Chiron had been anticipating supplying between 46 million and 48 million doses to the U.S. Last year's aggressive flu strain hit the U.S. population early and hard, causing the Centers for Disease Control and Prevention in Atlanta to recommend this season that healthy children aged 6 months to 23 months, and close contacts of children aged up to to 23 months, be vaccinated. Couple that with the threat of severe acute respiratory syndrome resurfacing with any intensity and the possibility of the avian flu making a jump to humans, and the flu vaccine season was shaping up to be brisk.
That would have served Chiron well, the No. 2 vaccine supplier in the world. Instead, it's an opportunity for Aventis SA, which is under contract to supply about 54 million flu vaccines to the U.S. Industry observers speculated throughout Tuesday whether Aventis might be able to fill the gap left by Chiron - most felt it already was producing at near-capacity and could not.
The Department of Health and Human Services weighed in, saying, "Clearly the loss of the Chiron flu vaccine poses a serious challenge to our vaccine supply for the upcoming flu season." The government, HHS said, "has begun pursuing contingencies for this loss of supply."
HHS still expects those 54 million doses from Aventis, as well as 2 million doses of the nasal flu vaccine FluMist, made by MedImmune Inc., of Gaithersburg, Md. Last year it had a demand of about 87 million vaccines.
HHS said it is working with Aventis to see about more product, and, together with the CDC, the National Institutes of Health and the FDA, is working with the British government, as well as Chiron, regarding the suspension.
So while Chiron reaffirmed its "long-term commitment to the flu vaccine market" and said it would have an adequate supply for the 2005-2006 season, the news leaves the country's health officials with unanswered questions.
When posed theoretical questions about what might be done in a "catastrophic flu season," Pien indulged callers. Yes, there could be talks between the U.S. and British officials, perhaps about using the doses anyway if deemed necessary, but any hypothetical discussions such as that "we are not party to," Pien said.
"You should assume that the entirety of the 2004-2005 flu season is gone," he said. "We will have no basis to disagree with a regulatory agency's finding that the products are unfit for release."