Chiron Net Income Beats Estimates
Chiron Corp., the world’s second-largest biotechnology company, said Tuesday that strong cancer drug sales helped lift its second-quarter profit nearly 40% above Wall Street estimates.
But industry analysts attributed the robust sales to impending price increases and said the outlook for the rest of the year remains unchanged.
For the quarter ended June 30, the Emeryville-based company said it earned $34 million, or 18 cents a share, from continuing operations, compared with $12 million, or 7 cents, for the same 1998 period. Revenue for the quarter rose 16%, to $189 million from $163 million a year earlier, including $13 million of research and development funding from Novartis, the Swiss company that owns nearly half of Chiron.
Shares of Chiron, which reported earnings after the markets closed, gained 25 cents to close at $25.94 on Nasdaq.
Analysts surveyed by First Call had expected the company to earn 13 cents a share for the latest quarter.
Including a one-time gain, Chiron posted net income of $37 million, or 20 cents a share, for the latest quarter. That compares with $25.4 million, or 14 cents, a year earlier.
The better-than-expected growth was driven by a 5% increase in net product revenue, royalty revenues generated from Chiron’s hepatitis C virus and HIV technologies, and milestone revenue earned in April when cancer drug DepoCyt was approved for sale in the U.S, the company said.
Analysts noted that Chiron did not alter its indication for full-year earnings. Estimates are for the company to earn 33 cents a share in the second half, according to First Call.
“Chiron has been able to improve its margins with efficiencies, but you don’t get anywhere in this business without new products,” said Charles Engelberg, an analyst at AmeriCal Securities.
He said sales of multiple sclerosis treatment Betaseron appeared to be “dead in the water” and that the outlook for 1999 sales of cancer drug Proleukin and for Regranex, a treatment for diabetic foot ulcers, is flat.
