Chiron delays Fluvirin influenza virus vaccine shipments

Chiron has announced that, in conducting final internal release procedures for its Fluvirin(R) influenza virus vaccine, the company's quality systems have identified a small number of lots that do not meet product sterility specifications.

While ongoing internal investigations into the root cause of the variance indicate no widespread issues with the manufacturing process, Chiron has delayed releasing any Fluvirin doses until it has completed additional release tests. Chiron currently expects that the additional tests will delay product release until early October. Because of the delay in shipment, Chiron does not expect to record any sales of Fluvirin in the third quarter of 2004. Assuming timely release of Fluvirin in October, Chiron expects to be within the range of its previous full-year 2004 pro-forma earnings guidance of $1.80-$1.90 per share but at the low end of this range (a range of $1.50-$1.60 per share on a GAAP basis). A reconciliation is provided below.

"Chiron is committed to protecting people. These extra checks will ensure that the quality, safety and effectiveness of our product meet our rigorous standards," said John Lambert, president of Chiron Vaccines. "In our role as a key supplier of an important public health product, we are working with the FDA, the U.S. Department of Health and Human Services, and the CDC to meet the projected demand for the upcoming influenza season. We currently expect Fluvirin doses to be available in early October, in time to meet public health needs for this influenza season, and we expect to provide even more Fluvirin doses this season than last season."

In July, Chiron announced that it was on track to deliver an estimated total of 50 million doses of Fluvirin to the U.S. market this season, an increase from earlier projections, and that it had delivered its first 1 million doses to U.S. distributors. Assuming satisfactory results from ongoing release testing, Chiron now expects to deliver between 46 million and 48 million Fluvirin doses to the U.S. market beginning in October. The vaccine doses held at distributors are subject to the same internal release criteria as those held at Chiron's FDA-licensed Liverpool manufacturing facility, with release anticipated in October. The planned late-season delivery of 2 million Fluvirin doses for a national stockpile held by the U.S. Centers for Disease Control and Prevention (CDC), not included in the totals above, remains on schedule.

Chiron's full-year 2004 pro-forma earnings per share guidance of $1.80-$1.90 per share excludes amortization expense on acquired intangible assets related to the acquisitions of PathoGenesis, Chiron Behring, Pulmopharm and PowderJect of approximately $0.30 per share. Chiron management uses pro- forma financial statements to gain an understanding of the company's operating performance on a comparative basis. Pro-forma amounts exclude special items relating to certain acquisitions, which may not be indicative of the company's trends or potential future performance. All references to per-share amounts are per diluted share.