By Debbie Strickland

Chiron Corp. will take an approximately $25 million third-quarter charge against earnings for the loss in value of a now-idle factory in Puerto Rico, which was equipped to make Betaseron.

Betaseron is an injectable multiple sclerosis drug developed by Chiron and marketed by Berlex Laboratories Inc., a Wayne, N.J.-based subsidiary of Schering A.G., of Berlin.

The charge reflects the difference between Chiron's investment in the facility and its current fair-market value. Chiron's report for the quarter, which ended Sept. 28, is slated for release the week of Oct. 20.

"Manufacturing process improvements and the introduction of a competing product have eliminated the need for this facility to support Betaseron (interferon beta-1b) needs," the Emeryville, Calif., company said in a prepared statement.

The plant has been idle since 1995 "due to lower than expected domestic commercial demand" for Betaseron, according to Chiron's 1996 10-K report, filed with the Securities and Exchange Commission.

Chiron, which continues to make Betaseron, may eventually sell the Puerto Rico facility.

Betaseron sales have been gradually declining since the drug's launch in 1994. The drug requires multiple shots per week, while Cambridge, Mass.-based Biogen Inc.'s competing drug, Avonex (interferon beta-1a) requires only one per week.

Chiron's move was "not surprising," said analyst David Crossen, of Montgomery Securities, in San Francisco.

Avonex, approved by the FDA in May 1996, has "definitively won" the war for market share, he said.

"We will end up the year with about 30,000 patients on Avonex, vs. 15,000 on Betaseron. Before Avonex launched, Betaseron had 30,000."

Teva Pharmaceuticals Industries Ltd., of Jerusalem, also markets a multiple sclerosis drug, Copaxone, a synthetic polypetide made of four amino acids.

And last week, a new contender, Ares Serono S.A., of Basel, Switzerland, reported strong Phase III results for Rebif, a different formulation of interferon beta-1a.

Betaseron beat them all to the market, winning FDA approval in October 1993 for the treatment of relapsing-remitting multiple sclerosis. In 1994, Chiron's sales to marketing partner Berlex totaled $100.1 million, in part due to an initial inventory buildup, but since then Chiron's revenues from the drug have declined to $67.7 million in 1995 and $67.2 million in 1996. In 1995-96, the drug accounted for about 10 percent of the company's revenues.

Chiron's Betaseron revenues in the first half of 1997 slipped again, to $28.1 million, from $33.1 million during the same period in 1996 — a 15 percent drop.

Biogen meanwhile recorded sales revenues of $109 million for the first half of 1997 for Avonex.

Chiron's shares (NASDAQ:CHIR) closed Friday at $22.313, up $0.25. *

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