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Chiron Cuts Flu Shot Estimates

The company cites production delays at its British factory for the reduction.

October 18, 2005|Denise Gellene | Times Staff Writer

Chiron Corp. on Monday once again lowered flu-vaccine delivery estimates because of production delays at its troubled factory in Britain.

Chiron's announcement came as the biotechnology company shipped 1.5 million doses from its factory in Liverpool -- the first since the plant was shut by regulators last year.

Chiron was forced to scrap its entire production of 52 million doses a year ago after bacteria were found in some batches of vaccine. The company, based in Emeryville, Calif., said during a conference call with investors Monday that it had spent $27 million through June revamping its equipment and manufacturing process in order to provide vaccine this flu season.

In June, Chiron cut its forecast for flu vaccine shipments this season from at least 25 million doses to at least 18 million. On Monday, the company said it would deliver fewer than 18 million doses.

Chiron also said the company's sales and earnings forecast would be lower, but did not immediately offer details. On July 27 the company had projected operating income for the year would be between $1.20 and $1.45 a share.

Before the announcement, the company's stock closed down 5 cents at $43.30. It dropped below $43 in after-hours trading.

Chief Executive Howard Pien said the company could not yet predict the amount of vaccine that would reach the U.S. for the current flu season. He said the company continued to suffer delays and that some vaccine had to be discarded because it did not meet "all compliance requirements."

When asked whether fresh contamination problems forced the company to reduce its production forecast, Pien said: "We don't have any quality issue that leads to our current projection."

Whatever amount the company is able to ship this flu season, "the important thing is that we have achieved remediation and overcome all the regulatory hurdles at this point," Pien said.

The company expects to deliver vaccine through December. Several analysts have said that Chiron may have trouble selling its shots that late in the season because demand falls after Thanksgiving. Vaccine purchasers typically can cancel contracts for vaccine not delivered by then.

Two competing suppliers, Sanofi Aventis and GlaxoSmithKline, are expected to supply a total of 68 million shots. In addition, MedImmune Inc. will supply 3 million doses of inhaled flu vaccine.

Demand for vaccine has never exceeded 80 million doses in a given year. During last year's mild flu season, 57 million of 61 million available doses were used.

Pien said that Chiron would have capacity to produce 40 million doses for the 2006-07 flu season and has sales contracts with distributors for much of it.

However, Chiron would face stiff competition in a market that could be saturated with vaccine. One analyst on the call said Sanofi, Glaxo and I.D. Biomedical Corp., a Canadian company eyeing the U.S. market, could together deliver 100 million doses of vaccine.

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