Chiron Corp. reported Tuesday that it had achievedsecond quarter net income of $830,000 or 2 centsper share in large part due to higher-than-anticipated revenues from its diagnostics divisionand lower research and development costs.

Analysts told BioWorld Today that Chiron's higherearnings signaled the infusion of more investmentin biotech stocks.

Chiron's stock (NASDAQ:CHIR) topped $90 onWednesday and closed the day at $88.25, anincrease of $10.63, a 52-week high. Other biotechstocks also surged on the Chiron news.

"The whole biotech sector is white hot," said RachelLeheny, an analyst for Hambrecht & Quist, New York.

Chiron said its second quarter revenues were $281.8million on revenues of just over $100 millioncompared to a net income of $5.1 million or 15 centsper share for the second quarter in 1994.

For the six months ending June 30, 1995, Chiron hada net loss of $384.9 million or $9.60 per share onrevenues of about $500 million vs. net income of$9.9 million or 29 cents per share on revenues of$191.5 million for the same period a year earlier.

Biotech stock analysts said the earnings representeda stronger-than-anticipated showing for Chiron."The Wall Street composite projected a 26 cent pershare loss. If you adjust the 2 cent gain for one timecharges for restructuring and their recent purchaseagreements which were equivalent to 10 cents, thentheir real earnings would have amounted to 8 centsper share, a huge showing," said Leheny.

"The recent earnings show that Chiron, which beganrebuilding nine months ago, has turned the cornerearlier than expected," said Peter Ginsberg, ananalyst with Vector Securities, Deerfield, Ill. "Withthe addition of its recent acquisitions, Chiron hasrapidly grown into a highly diversifiedbiopharmaceutical company."

"Chiron's stock showing is emblematic of thecurrent interest in biotech stocks," said MatthewGeller, an analyst with Oppenheimer & Co., Inc, NewYork. "There's a lot of technology money out therelooking for a home. Investors realize they can't getearnings in technology stocks so they are turning tobiotech stocks for liquidity. Chiron provides thattype of liquidity," Geller said in an interview withBioWorld Today.

Chiron wrote off charges in the second quartertotaling $3.2 million for in-process technology andrestructuring costs. Without these charges, Chironsaid its operating income would have been $9.5million for the second quarter of 1995 compared to$7.1 million for the second quarter of 1994.

In the first quarter of 1995, Chiron took charges of$349 million to write off the costs of restructuring,the Ciba partnership, research funding paymentsand investment in existing and new collaborativepartnerships.

Chiron's stronger revenues were due to theperformance of the acquired business not fromsales of Betaseron, an interferon beta-1b product.

"The most recent earnings show that Chiron canmake it without Betaseron," said Geller. Both Gellerand Leheny agreed that Betaseron has not been wellreceived by clinicians.

The Emeryville, Calif.-based company's revenueswere up substantially over the same quarter a yearago and over 1994 in part because of strongshowings by Ciba Corning Diagnostics Corp. andThe Biocine Company and Biocine S.p.A. Chironcompleted its partnership deal with Ciba GeigyLimited on Jan. 4, 1995.

Ciba Corning Diagnostics revenues, which were notincluded in the 1994 earnings, were $129.2 million inthe second quarter, an increase of 22 percentcompared to the prior year and $249.3 million forthe six month period, an increase of 21 percent over1994.

"An increase of $8 million is very significant,"Leheny said. "This 6.6 percent increase is significantgrowth in a company that had experienced nogrowth."

Biocine S.p.A. vaccine sales, also not included in the1994 results, were $19.6 million in the secondquarter of 1995, an increase of approximately $6.1million in sales receipts compared to the secondquarter of 1994 and $35.4 million for the first sixmonths of 1995, a increase of approximately $10.8million compared to the first six months of 1994. n

-- Michele L. Robinson Washington Editor

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

No Comments