CHIR Chiron (MM)

Chiron Corporation (NASDAQ:CHIR) today announced that it has won a $62.5 million contract to supply the U.S. government with pre-pandemic influenza vaccine for a stockpile to protect against the H5N1 avian influenza virus strain. Under the agreement with the Department of Health and Human Services (HHS), Chiron will provide a bulk stockpile of H5N1 influenza vaccine, which the company will produce at its Liverpool manufacturing facility using the U.S.-licensed commercial-scale manufacturing process. Production of the H5N1 stockpile vaccine under this agreement will not affect production of Chiron's annual FLUVIRIN(R) influenza virus vaccine. "Chiron commends the U.S. government's comprehensive approach to pandemic preparedness," said Dan Soland, president of Chiron Vaccines. "We have engaged in discussions with a number of governments around the world on a range of pandemic measures, including vaccine stockpiling and advance purchase contracts. Avian influenza knows no boundaries, and public-private partnerships are essential to address the threat it poses. As a leading influenza vaccine manufacturer, we are pleased to bring the capabilities of all of our influenza production facilities to this global effort." The stockpile vaccine, which Chiron will provide to HHS in 2006, is based on an inactivated influenza strain similar to the H5N1 avian subtype that has circulated throughout Southeast Asia and more recently in Eastern Europe. H5N1 is one of a number of avian influenza viruses that do not usually infect humans. However, if the virus acquired the ability to readily transmit from person to person, it could result in a global outbreak of influenza to which people have no natural immunity, commonly called a pandemic. With pandemic vaccine research ongoing, providing the stockpile vaccine in bulk will allow HHS to determine final dose and formulation, including potentially adding an adjuvant, based on the most current data available at the time of use. The stockpile vaccine contributes to the U.S. National Strategic Stockpile, which HHS is building to contain enough avian influenza vaccine for 20 million people and enough antiviral medication for another 20 million people. As part of its comprehensive approach to pandemic preparedness, HHS has also voiced support for improved vaccine production methods and dose-sparing vaccine approaches such as the use of adjuvants. "Chiron has invested in research and development to improve global capabilities to combat both annual and pandemic influenza," said Rino Rappuoli, chief scientific officer of Chiron and head of Research for Chiron Vaccines. "Stockpiling is an important primary step toward readiness for this potential threat. We expect that our work with adjuvants and, longer-term, flu cell culture, may also contribute to efforts to prevent a pandemic." Chiron has studied H5N1 since the avian influenza virus first emerged in Hong Kong in 1997. In addition to its stockpile contract, Chiron will provide an H5N1 avian influenza vaccine candidate for a study by the National Institute of Allergy and Infectious Diseases (NIAID), part of the National Institutes of Health (NIH) under HHS, later this year. The NIAID/NIH has also completed a study of Chiron's H9N2 avian influenza vaccine candidate, including the MF59 adjuvant, designed to enhance vaccine effectiveness, and data will be forthcoming. H9N2, like H5N1, is a potential pandemic influenza strain, which caused serious illness in three people in Hong Kong in 1999 and 2003. About Pandemic Influenza Pandemic influenza occurs when a new virus emerges that is easily transmitted among humans and causes serious illness. In this situation, the virus can result in a worldwide outbreak of disease, or pandemic. Pandemic influenza occurred three times in the last century, with the 1918 outbreak killing at least 40 million people, with a mortality rate of approximately 2.5 percent in the United States. Avian influenza, or "bird flu," does not normally infect humans, but there have been several examples in recent years of transmission to people, leading to fears of a strain with the potential to result in a pandemic. The current outbreak of H5N1 avian influenza in Southeast Asia has resulted in more than 100 human cases, in Cambodia, Indonesia, Thailand and Vietnam, with a mortality rate of approximately 50 percent. Despite the death or destruction of an estimated 150 million birds, the virus is now considered endemic in a number of regions in Southeast Asia. About Chiron Chiron delivers innovative and valuable products to protect human health by advancing pioneering science across the landscape of biotechnology. The company works to deliver on the limitless promise of science and make a positive difference in people's lives. For more information about Chiron, please visit www.chiron.com. This news release contains forward-looking statements, including statements regarding development of pandemic influenza vaccines and adjuvants, revenue from stockpiling programs, regulatory approvals, improvements to manufacturing facilities, and product marketing, which involve risks and uncertainties and are subject to change. A discussion of the company's operations and financial condition, including factors that may affect its business and future prospects that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements, is contained in documents the company has filed with the SEC, including the Form 10-K for the year ended December 31, 2004, and the Form 10-Q for the quarter ended June 30, 2005, and will be contained in all subsequent periodic filings made with the SEC. These documents identify important factors that could cause the company's actual performance to differ from current expectations, including, among others, litigation and investigations relating to influenza vaccines, the outcome of clinical trials, regulatory review and approvals, manufacturing capabilities, intellectual property protections and defenses, litigation, stock-price and interest-rate volatility, and marketing effectiveness. In particular, there can be no assurance that additional issues with respect to influenza vaccines or Chiron's manufacturing generally will not arise in the future, or that Chiron will be able to increase sales of existing products, successfully develop and receive approval to market new products (including pandemic influenza vaccine), or achieve market acceptance for such new products. The company may face additional competition in the influenza market in the future and challenges in distribution arrangements as a result of vaccine developments. In addition, the company may engage in business opportunities, the successful completion of which is subject to certain risks, including approval by Novartis AG, regulatory approvals and the integration of operations. Chiron does not undertake an obligation to update the forward-looking information the company is giving today. NOTE: FLUVIRIN is a registered trademark of Chiron.