I guess when your shares have already been whacked by a third for bungling your company's introduction of its flu vaccine right at the start of the flu season, receiving a few more indignities from the FDA and British authorities shouldn't have too much of a negative impact.
Indeed, shares of Chiron (NASDAQ:CHIR) were trading up slightly following reports that the FDA issued a warning letter to the vaccine maker over its manufacturing site in the United Kingdom. And that follows on the heels of reports that the British government extended its suspension on the company's license to make the flu vaccine at its primary plant. When it rains, it pours.
Chiron had been one of two primary providers of this country's flu vaccine until British regulators discovered the 46 million doses they were preparing to ship had been contaminated. Aventis (NYSE:AVE) provided the other half of the nation's supply with about 54 million doses. Into the void created by the shortage, a number of other companies have been stepping up to relieve flu sufferers. MedImmune (NASDAQ:MEDI) and ID Biomedical (NASDAQ:IDBE) have been benefiting from Chiron's foibles.
In its letter to the company, the Food and Drug Administration is seeking additional details into deviations from its current Good Manufacturing Processes (cGMP) as well as the design and conduct of studies to aid investigations. Chiron said it has responded to many of the FDA's concerns previously in the remediation plan it submitted to the agency last month and that it has held meetings with regulators. More are planned.
The warning was subsequent to the notice Chiron received two days ago from British regulators, which said the government was extending the manufacturing ban it had previously imposed for another three months. Apparently this was to give the company more time to clean up the plant and the suspension could be lifted sooner if the government finds Chiron has met regulatory standards.
The flu vaccine contamination was not completely of the company's doing. Chiron had acquired the facility where the contamination arose when it took over the operations of PowderJect Pharmaceuticals last year. Still, the FDA had found problems there as early as June 2003. It, too, is coming under fire for its role in failing to prevent the crisis.
However, the suspension extension could create additional problems for Chiron next year. Egg-based vaccines like the ones Chiron makes take anywhere from six months to a year to produce. With production usually beginning in the early spring, the ban jeopardizes the company's ability to meet next year's demand for the vaccine. That could give companies developing cell-based vaccines, such as Crucell (NASDAQ:CRXL) and Baxter International (NYSE:BAX), an opportunity to advance their alternatives.
Whether shares of Chiron ultimately finish the day up or down, the one-two punch from American and British authorities still points to an ailing company.
Fool contributor Rich Duprey has so far avoided the flu this season. He does not own any of the stocks mentioned in this article.
