Executives of Chiron Corp. and Cetus Corp., meeting withanalysts on Friday, reported that the merger of the twocompanies will result in charges of some $350 million in1992, according to analysts in attendance.
Chiron on Friday also reported a solid performance for thequarter ended June 30 on strong product sales.
Analyst Denise Gilbert of Smith, Barney, who said she likes theproposed merger of the Emeryville, Calif., companiesannounced July 22, pointed to several positive announcementsat the meeting:
-- The data for Cetus' interleukin-2 (IL-2) includes a newmulticenter trial that confirms data from the National CancerInstitute trial. Some analysts had been concerned that theNCI's results couldn't be duplicated independently.
-- Macrophage colony stimulating factor (M-CSF) will enterPhase II clinicals by the end of 1991 as an anti-fungal agent inpre- and post-bone marrow transplant patients and to treatcancer. "The Street has undervalued Cetus' M-CSF," Gilbertsaid. The drug is equivalent to Genetics Institute Inc.'s productand is at about the same stage of development, she added.
-- Cetus' septic shock antibody, which is in Phase III trials,could be a real player if marketing approval is delayed forrival products of Centocor Inc. and Xoma Corp., which arescheduled for Sept. 4 review by a Food and Drug Administrationadvisory committee.
Gilbert said Chiron also hopes to trade Cetus products thatdon't fit into its plans with Japanese companies for otherproducts.
Excluding the $350 million in charges and expenses related tothe merger, Gilbert said, Chiron expects a slight loss in 1992.Chiron expects to return to profitability in 1993.
For the second quarter ended June 30, Chiron had net income of$5.2 million, or 26 cents a share, on revenues of $28.7 million.For the comparable 1990 period, the company had net incomeof $3.4 million, or 20 cents a share, on revenues of $17.8million.
The higher revenues reflected increased earnings from Chiron'sjoint blood screening business with Ortho Diagnostic SystemsInc. For the quarter, Chiron's share of the profit was $10.5million, compared with $7.9 million for the 1990 quarter.
Product sales at Chiron Ophthalmics were $4.2 million for thequarter compared with $1.6 million for the 1990 quarter,principally due to sales of the company's Adatomed GmbHEuropean subsidiary, the results of which were consolidatedfor the first time in the second quarter.
Chiron stock (NASDAQ:CHIR) lost 88 cents on Friday, closing at$55.88 and Cetus stock (NASDAQ:CTUS) closed down 13 centsat $16.
-- Karen Bernstein BioWorld Staff
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