Acquisition Leads to 4th-Quarter Loss at Chiron

Chiron Corp., one of the largest U.S. biotechnology companies, said Tuesday that it had a fourth-quarter loss because of costs associated with its acquisition of PathoGenesis Corp.

Emeryville-based Chiron lost $134.4 million, or 74 cents a share, contrasted with net income of $31.8 million, or 17 cents, a year earlier. Revenue rose 52% to $293.5 million as Chiron sold more of its Proleukin cancer and Betaseron multiple sclerosis drugs.

Proleukin, a treatment for kidney and skin cancer, generated sales of $36 million in the quarter, after third-quarter sales were hurt by fluctuations in orders from wholesalers. Chiron’s $700-million acquisition of PathoGenesis in September added Tobi, an inhaled antibiotic for cystic fibrosis. The drug contributed $28 million in fourth-quarter sales, but at least one investor said he wasn’t impressed with the results.

“It looks as though they had to struggle to get to” these results, said Stephen Flaks, manager of the Flaks Partners fund. “They were pretty much in line with what everyone was predicting for Tobi and Proleukin, but they seemed to have slowed at these levels.”

Flaks sold the fund’s holdings in Chiron at the end of last year because of his disappointment with the company’s products in development and with Chiron’s management.

Excluding a write-off of research costs and amortization expenses related to the PathoGenesis acquisition, Chiron would have reported profit from operations of $30 million, or 15 cents a share. That’s up from $25.9 million, or 14 cents, a year earlier.

Chiron was expected to earn 14 cents a share, the average estimate of analysts polled by First Call/Thomson Financial.

Chiron shares fell $2.50 to close at $43.69 on Nasdaq. It released results after markets closed.