Biogen Inc., which posted a net loss for the second quarter of 1996,and Chiron Corp., which reported a profit, saw their stocks reactdramatically, the former surging ahead and the latter dropping.
Chiron, of Emeryville, Calif., reported net income of $15.4 million,or 35 cents per share, on revenues of $315 million for the quarter.For the first six months profits reached $28 million, or 63 cents pershare, on revenues of $621.5 million.
Despite the earnings gain, Chiron's stock (NASDAQ:CHIR) was off12 percent Thursday to $77.25. The quarterly figures were releasedWednesday after the market closed.
Biogen, on the other hand, saw its stock (NASDAQ:BGEN) jump 4percent to $61.12 on Wednesday following release the day before ofits second-quarter fiscal report. Shares Thursday gained another 62cents.
Investors reacted positively to the company's quarterly net loss of$9.1 million, or 25 cents per share, based on encouraging sales ofBiogen's multiple sclerosis treatment, Avonex. The drug wasapproved in May 1996 by the FDA and in six weeks topped $6million in sales. Total revenues for the quarter reached $45.4 million.
Chiron's gains were significantly better than a year ago. In the firsthalf of 1995, the company posted a net loss of $385 million, or $9.60per share, on revenues of $500 million. For the second quarter lastyear Chiron reported net income of $830,000, or 2 cents per share, onrevenues of $282 million.
The six-month 1995 loss, however, reflected charges associated withseveral transactions, primarily Chiron's alliance with Ciba-GeigyLtd., of Basel, Switzerland, which owns 49.9 percent of Chiron. Cibais merging with fellow Basel drug maker Sandoz Ltd. to form a newcompany called Novartis.
Chiron's stock decline was spurred by what analysts called a lack of"quality" in the earnings report.
Subtract $12.1 million for the sale of its generic chemotherapeuticsbusiness and $15 million in research funds from Ciba, analystsobserved, and Chiron's net income for the quarter turns into anoperating loss.
Biogen Expects 3rd Quarter 1996 Profit
Biogen's second-quarter performance combined with a $3.7 millionnet loss in the first quarter this year resulted in a six-month loss of$12.7 million, or 36 cents per share on revenues of $84.2 million.
The company ended 1995 with a profit of $5.7 million, or 16 centsper share. For the first six months last year, Biogen reported netincome of $3.5 million, or 10 cents per share, on $73 million inrevenues. In the second quarter of 1995, earnings were 2 cents pershare with profits of $714,000, on revenues of $37 million.
Analysts said the 1996 quarterly losses were expected as Biogenprepared for the launch of Avonex, which is the first productmarketed by Biogen and one of two drugs for multiple sclerosis. Theother, Betaseron, is made by Chiron and marketed by BerlexLaboratories Inc., of Wayne, N.J., a subsidiary of Berlin-basedSchering AG.
Biogen officials said they expect to return to profitability in the thirdquarter of 1996. Prior to approval of Avonex, the company's incomewas based on product royalty revenues, primarily from alphainterferon and hepatitis B vaccines.
Peter Drake, analyst with Vector Securities International Inc. inDeerfield, Ill., said Biogen has had a "very effective launch" forAvonex.
"They enrolled more patients than (Wall Street) expected," he said,"and they are projecting 30,000 patients a year from now. That's$250 million. That would be more patients than Berlex had lastyear."
Drake said Biogen is emerging as the new leader amongbiotechnology's top tier, which includes Chiron, Amgen Inc., ofThousand Oaks, Calif., Genentech Inc., of South San Francisco, andGenzyme Corp., of Cambridge, Mass.
Chiron's Negatives Cited
As for Chiron, Sharon Seiler, analyst for Oppenheimer & Co. in NewYork, said the company's earnings report contained too manynegatives.
"If you take out the $12.1 million [for sale of Chiron's half of thegeneric chemotherapeutics business to joint venture partner BenVenue Laboratories Inc., of Bedford, Ohio] you get 16 cents pershare net income," she said. "Or take out the $15 million [from Ciba]and you get 11 cents per share. Take them both out and you get a netloss of 7 cents."
Other negatives included slow Betaseron sales and vaccine productsales. "Everything was flat except for Chiron Vision," Seiler said.Ophthalmic product sales jumped to $59.5 million in the secondquarter of 1996 from $52.4 million based in part on the first full-quarter sales of Vitrasert, approved in March 1996 by the FDA forcytomegalovirus retinitis.
Chiron's revenues from Betaseron declined to $13.9 million in thesecond quarter this year compared with $22.4 million a year ago. Thecompany's Betaseron revenues are generated by shipments of thedrug to Berlex and by royalty payments. No revenues were receivedfor manufacturing in the second quarter of 1996 and the companytold analysts it did not expect to ship any drug to Berlex during thethird quarter this year.
Chiron's product development also has suffered some setbacks,analysts noted. The company and its partner, Cephalon Inc., of WestChester, Pa., were delayed earlier this year in filing a new drugapplication (NDA) for Myotrophin for amyotrophic lateral sclerosis,or Lou Gehrig's disease. The companies were expected to submit anNDA this summer.
Chiron also told analysts it was postponing release of data from oneof two Phase III herpes vaccine trials. Results were expected at theend of this year, but Chiron has delayed release until mid-1997 whenboth studies are complete.
Meirov Chovav, analyst for Salomon Brothers Inc. in New York, saidconcerns about Chiron are not new.
"Chiron's great with science and management," she said, "but theyhave not demonstrated a commitment to the bottom line."
Chiron said its per-share calculations for the quarterly earnings reportdid not include the 4-for-1 stock split that takes effect today. n
-- Charles Craig
(c) 1997 American Health Consultants. All rights reserved.