For Chiron Corp., it was supposed to be the launchpad for a bold expansion in the risky vaccine business.
The purchase of PowderJect Pharmaceuticals and its factory in Liverpool, England, would give Chiron a strong position in the flu shot market and a platform for rolling out vaccines it was developing for meningitis and other diseases.
"This is an important day in Chiron's history," Chief Executive Howard Pien said when the $878-million acquisition was announced in May 2003.
Seventeen months later, at 3 a.m. on Oct. 5, he heard it all come undone.
As Pien listened from his apartment in San Francisco, and Chiron's in-house lawyers and managers gathered in a conference room at company headquarters in Emeryville across the bay, John Lambert, the British-based head of Chiron's vaccine business, gave them the news: British health regulators had suspended the license for the Liverpool plant, taking half the U.S. supply of flu vaccine off the market and knocking Chiron out of the business until next year.
Today, Pien is scheduled to appear before the House Government Reform Committee, where he is likely to face questions about what Chiron knew or should have known -- and when -- about bacterial contamination at the factory.
The day after the plant was effectively closed, Pien said Chiron's own tests had showed that the vaccine was safe to use and called the British action "completely unexpected." But nearly two weeks later, the U.S. Food and Drug Administration confirmed the British decision after it conducted its own inspection and found evidence of bacteria in the vaccine.
The company has refused to release any documents about its vaccine or conditions at the Liverpool plant. The FDA's inspection records dating to 2003 are expected to be made public by the congressional committees investigating the matter.
The committee probes are just one of several fronts in Chiron's legal troubles. Civil lawsuits filed on behalf of shareholders accuse the company of misleading investors about its ability to produce vaccine. The Justice Department has launched a criminal investigation, and the Securities and Exchange Commission has asked Chiron for documents about its vaccine as part of an informal inquiry.
Chiron's own lawyers have been investigating to figure out what went wrong. Pien himself is leading an effort to fix the manufacturing problems, while Jack Goldstein, head of Chiron's blood-testing business, has temporarily assumed the post of chief operating officer to oversee day-to-day operations.
