Chiron Corp. chief executive officer Edward Penhoet toldattendees at a Merrill Lynch seminar in New York on Thursdaythat the company will report "substantial" losses for 1992, butshould return to profitability in 1993. Penhoet attributed theselosses--as well as those the Emeryville, Calif. firm incurred in1991--to "acquisitions and restructuring." Chiron acquiredCetus Corp. in July of 1991, in a transaction that is usuallyvalued at $660 million. Its subsidiary, Chiron Ophthalmics,acquired IntraOptics in Jan. of 1992 for $39 million, and Biocine[Chiron's joint venture with Ciba-Geigy] bought the vaccinebusiness of the Italian firm, Sclavo SpA, for $128.8 million, inthe same month.
"We've had substantial losses throughout the first threequarters of 1992," said Larry Kurtz, Chiron's vice president ofcorporate communications. And the fourth quarter was noexception. According to Kurtz, these included: the formationand funding of Lynx Therapeutics; the redemption of Chiron'sconvertible subordinated debentures; the licensing of drugdelivery implants from Control Data Systems; the licensing ofexcimer lasers from the German firm Technolas; the funding forOnyx Pharmaceuticals; foreign exchange losses; therestructuring of some of the Eurocetus sales offices; therestructuring of IntraOptics' European operations; andinventory write-offs.
Cowen & Co. analyst David Stone, whose biotechnology universeincludes Chiron, says that, from the operating point of view, thefirm had "close brushes with break-even in 1992" but thecompany's message has consistently been that it would achieveprofitability in 1993. "We feel 1992 is water-over-the-dam atthis point."
Chiron's Penhoet also told the Merrill Lynch attendees that hewas "very encouraged by discussions with FDA about thepending approval for beta-interferon (Betaseron)," and in factChiron will be expanding its manufacturing capabilities to"meet the projected demand" for Betaseron, which will be usedto treat patients with multiple sclerosis. Penhoet also said thefirm expects to begin Phase III trials of its HIV and herpesvaccines this year.
Cowen & Co.'s Stone predicts that the FDA might convene anadvisory committee to decide Betaseron's fate by the middle of1993, and approval could come three to six months after that.As for the vaccines, Stone told BioWorld that "the first vaccinethey'll see sales from is the herpes vaccine, which should enterthe market in 1996." The time frame for FDA approval of theAIDS vaccine, however, is "difficult to predict," he said,[because there are so many unknowns concerning thisapproach to treating or preventing AIDS], but it's lengthy. "Welaud Chiron's work in HIV, but it's not a major part of ourinvestment thesis."
Chiron's stock (NASDAQ:CHIR) closed Thursday at $53.75, up 75cents a share.
-- Jennifer Van Brunt Senior Editor
(c) 1997 American Health Consultants. All rights reserved.