By Randall Osborne

Aiming to cash in on Australia-based Amrad Corp. Ltd.'s vigorous research and development efforts, Chiron Corp. has clinched a partnership against the hepatitis C virus that means the firm could pay out as much as $50 million.

The two-year collaboration involves no cash up front, but offers milestone payments, said Jim Knighton, Chiron's vice president of investor relations. The milestones, however, "are not big ticket and, given that the deal is only a couple years long, hitting milestones is quite difficult." He declined to give more details.

Chiron, of Emeryville, Calif., made history in the late 1980s, when its scientists were able to identify the hepatitis C virus. Now the company will try to use Amrad's drug discovery technologies to find a treatment for the potentially fatal liver inflammation.

Alpha interferon is marketed for the disease, but works for only about one-fourth of patients.

Amrad, of Victoria, Australia, was established in 1987 by the Victorian government to commercialize biomedical discoveries in Australia. The company, which uses a screening process on natural products to discover the lead molecules in diseases, went public in late 1996.

During the 12 months that ended with the second quarter of this year, Amrad spent A$18.5 million on research and development, a jump of 38 percent. The company's revenues increased to A$136.6 million during the period, increasing 25 percent, with A$112.2 million in sales. Amrad lost A$4.2 million (after tax and outside equity interest), compared with A$2.2 million the year before.

The company's biotechnology division, formed after the acquisition in 1993 of Uppsala, Sweden-based Pharmacia Biotech A.B.'s business units in Australia and New Zealand, recorded sales in the 12-month period of $16.3 million, with earnings before interest and tax of $1.6 million.

Chiron's sales increased less than 1 percent in the second quarter of 1997, when it recorded $256.37 million in sales and total revenues of $333.76 million. Most of Chiron's product sales are in diagnostics. The company has three new drug applications at the FDA.

The company's stock (NASDAQ:CHIR) closed Friday at $24.250, down $0.062. *