Maybe it did. Maybe it didn't. Depends upon who's asking.
Beleaguered pharmaceutical company Chiron (NASDAQ:CHIR) said in a regulatory filing that Congress had subpoenaed records regarding the debacle surrounding its flu vaccine. When the committee investigating the company's handling of the vaccine disaster said it did not subpoena any records, Chiron then said it had received only a "request."
The House of Representatives Committee on Energy and Commerce sent the company a letter in mid-November requesting any documents about its Liverpool, England, manufacturing plant where contamination was found that eventually scuttled half this country's flu vaccine supply. The committee wanted the documents by Dec. 1, and Chiron says it's cooperating. Apparently the company took the request as a demand and, in a filing regarding the private placement of convertible debentures, enumerated the legal weight hanging over it: a subpoena from the U.S. Attorney's Office for the Southern District of New York, the Securities and Exchange Commission's informal investigation, and the congressional "subpoena."
A spokesman for the committee denied a subpoena was issued, and Chiron subsequently clarified the statement.
The risks facing Chiron are indeed steep regardless of the form of the request for information. In addition to any government action facing it, the company also faces lawsuits from those to whom it was to supply the vaccine. The Centers for Disease Control, for example, has asked Chiron to show why it should not be held in default of its contractual obligations, and some distributors as well are asking why they, too, should not be compensated for the company's failures.
Moreover, Chiron's competitors have been stepping in to fill the void. Aventis (NYSE:AVE) is the supplier of the country's other, larger half of the flu vaccine; MedImmune (NASDAQ:MEDI) was making available an additional 1 million doses of its FluMist nasal vaccine; and companies such as Baxter International (NYSE:BAX), Crucell (NASDAQ:CRXL), and ID Biomedical (NASDAQ:IDBE) are investigating alternative methods of creating the vaccine.
English authorities had suspended Chiron's license to manufacture the vaccine at the plant for three months and extended the suspension for an additional three. While the company notes the suspension could be lifted at any time should it meet the requirements imposed sooner, the authorities could also extend the suspension further or make it permanent. Chiron needs to get its act together by early spring 2005 to be able to make next year's supply in time. It's a dicey proposition for the company, one that could have wide-ranging implications for investors, whether for equity or debt.
Perhaps when you're under the gun and people are demanding reams of paperwork from you, a letter from Congress also requesting documents by a specific date could seem like a demand, even a subpoena. Had the company simply issued a press release with the incorrect information, it might be understandable, but investors might feel more at ease if it had gotten it right when it filed documents with the SEC.
For related Fool Takes, see:
- Chiron Sneezes, Investors Catch Cold
- It's Half-Time at MedImmune
- Chiron Crisis Creates Investor Opportunity
- ID Biomedical's Shot in the Arm
- Regulators Quarantine Chiron
- Flu Shots for the Elite
Fool contributor Rich Duprey is under the gun with his Christmas shopping. He does not own any of the stocks mentioned in this article.
