Buoyed by $238.3 million in product sales and $31.4 million incollaborative agreement revenues, Chiron Corp. reported a netincome of $12.7 million or 29 cents per share on revenues of $305.8million for the quarter ended March 31, 1996.

First quarter product sales, which represent a 30 percent increasefrom the first quarter of 1995, were attributed to increased ocularproduct sales from last year's IOLAB acquisition and increased salesof Betaseron by Chiron to its partner, Berlex Laboratories, the U.S.affiliate of Schering AG, of Germany.

In the fourth quarter of 1995, Chiron posted a profit of $17.6 million,or 40 cents per share, on revenues of $326 million. Because Chiron'score businesses are seasonal (i.e., linked to the budgetary cycles ofmajor purchasers), first quarter results are routinely weaker thanfourth quarter results and many analysts have built the expectedvariation into their earnings models.

Emeryville, Calif.-based Chiron received $16 million in researchfunding during the first quarter from its strategic partnership with theSwiss pharmaceutical giant Ciba-Geigy Ltd. (Ciba-Geigy acquired 50percent of Chiron in late 1994). In addition, Chiron collected a $7.5million initial payment from Tokyo-based Japan Tobacco Inc. as partof a deal struck in March that gives the Japanese firm access to itscombinatorial chemistry technology.

Although sales of Chiron diagnostics and therapeutics were strong inthe first quarter, vaccine product sales were somewhat anemic andChiron Vision, the company's ophthalmic products division,performed poorly in the eyes of some analysts. Diagnostic productsales increased to $134.3 million in the first quarter of 1996 ascompared to $127.4 million in the first quarter of 1995 and ChironTherapeutics' sales of oncology products in the U.S. and Europeincreased to $16.1 million in the first quarter of 1996 versus $12.8million for the same period in 1995.

Betaseron sales increased to $20.9 million in the first quarter of 1996up from $1.8 million in the first quarter of 1995 (a quarter in whichChiron made minimal shipments to Berlex). Betaseron (interferonbeta-1-b), a drug to treat multiple sclerosis (MS), could face its firstreal competition later this year if and when Biogen Inc.'s MS drug,Avonex (interferon beta 1-a), wins FDA approval. Berlex lost thefirst round of its fight to keep Avonex off the market on Mondaywhen a U.S. District Court judge rejected a motion to seek atemporary restraining order barring the FDA from approving thecompeting product (See BioWorld Today, May 1, 1996, p. 1.)

According to analyst Joyce Lonergan of Boston-based Cowen & Co.,the outcome of the Betaseron-Avonex battle will have no significantimpact on Chiron's bottom line. "We estimate Chiron will haverevenues of $1.2 billion in 1996 _ of which Betaseron makes upabout $80 million _ so it's just a fraction of the company'sbusiness," she told BioWorld Today. "Betaseron is not burning upthe track as a drug and most analysts have already accounted forthat."

Vaccine product sales were $20.8 million for the first quarter of 1996compared to $15.8 million for the first quarter of 1995 while sales byChiron Vision increased to $44.9 million for the first quarter of 1996from $24.3 million the previous year. Sales of Chiron's recentlyapproved Vitrasert implant for cytomegalovirus retinitis totaled only$1 million following its launch in early March. That figure fell belowsome analysts expectations, including Lonergan's, which projectedabout $6 million in sales. "[Chiron] Vision has still not reachedprofitability and is a vulnerable spot in Chiron's profit and lossstatement," Lonergan wrote in a research report on Wednesday.

Nonetheless, Lonergan reiterated her firm's "strong buy" rating onChiron on Wednesday, characterizing Chiron's first quarter 1996operating results as "mixed but overall solid." She said thecompany's appeal to investors lies primarily in its earnings growthpotential, its rich pipeline of products and its comfortable cashposition ($219.3 million in cash, cash equivalents and investments inmarketable debt securities on March 31, 1996).

In a conference call with analysts earlier this week, Chiron executivesindicated that the company will release clinical trial data on thecancer drug Aredia (pamidronate disodium) at the American Societyfor Clinical Oncology meeting later this week and that it willcomplete five FDA filings by the end of 1996, including a marketingapplication for the amyotrophic lateral sclerosis drug, Myotrophin.

Chiron's stock (NASDAQ:CHIR) finished the day up $2.13 per shareon Wednesday to close at $98.50. n

-- Lisa Piercey Special To BioWorld Today

(c) 1997 American Health Consultants. All rights reserved.