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To: Johnny Canuck who wrote (35359)	12/3/2001 2:12:01 AM
From: Johnny Canuck	Read Replies (1) \| Respond to of 69027

CHIR: possible bounce at support. stockcharts.com Chiron Blood Test Faces Delay, Industry Exec Says By Adam Feuerstein Staff Reporter 11/30/2001 12:04 PM EST Chiron (CHIR:Nasdaq - news - commentary - research - analysis) expects one big present under its Christmas tree this year -- regulatory approval of its potentially lucrative blood testing system. But a top U.S. blood-banking official sees the very heft of the application putting coal in Chiron's stocking. Celso Bianco, executive vice president of America's Blood Centers, whose 75 members collect half of the U.S. blood supply, tells TheStreet.com that paperwork for Chiron's NAT blood test will keep U.S. drug regulators busy well into 2002. That will come as a sharp disappointment to Wall Street, which expects the company to reap windfall profits from the test beginning next year. Related Stories Chiron's Shares Too Expensive to Take Drug Failure The Rumors Were True: Chiron Says Sepsis Drug Doesn't Work Trumping a Rival, Lilly Says Its Sepsis Drug Has FDA Approval "Approval for NAT is definitely going to extend into next year," Bianco says. The application "is just too big -- it requires a lot of time to review." During its third-quarter conference call, Chiron executives insisted that approval of the super-sensitive blood test for HIV and hepatitis C -- formally known as the Procleix HIV-1/HCV Assay -- would come by the end of the year. But late Thursday, a Chiron spokesman seemed to soften that stance. "We are still hopeful for year-end approval," he says, refusing to comment directly about Bianco's statement. Chiron rose 34 cents Friday to $44.35. Wound-Licking If Bianco's prediction is correct, it will be very unwelcome news for Chiron investors, who are still licking their wounds after the company's experimental sepsis drug, TFPI, was deemed a failure last week. Chiron shares have fallen more than 16% since the middle of November, when rumors started swirling about TFPI's problems. With the sepsis drug now off the table, the blood test represents the biggest potential growth-driver at Chiron. A delay in the test's approval into next year could force Chiron to take down revenue and earnings guidance for 2002, depending on the length of the delay. Because the safety of the country's blood supply is crucial, the FDA already allows blood banks to use the NAT test to screen donated blood. The test uses a form of DNA testing -- NAT stands for nucleic acid testing -- to detect HIV and hepatitis C antigens well before anything currently used by blood banks. But because the test is not officially approved, Chiron can sell it only at cost. Once FDA approval is granted, Chiron will be able to sell the test at premium prices, although the company hasn't disclosed how much it plans to charge. Chiron is expected to bring in between $40 million and $50 million in NAT blood testing revenue this year. Wall Street estimates for next year's NAT revenue -- which factor in various levels of pricing and assume approval by the end of this year -- range between $90 million and $125 million. Chiron reported sales of $1.12 billion over the last 12 months, according to Yahoo! Finance. But since Chiron is already accounting for the costs of the NAT tests, the incremental revenue represents pure profit, and as such will have an outsize impact on the company's bottom line. Chiron's third-quarter pro forma earnings were $58 million, or 30 cents a share. Banking On It Before investors jump to the conclusion that Bianco is some big Chiron bear, guess again. He has no position in the stock. And while he's not directly involved in the approval process for NAT -- that's under the purview of FDA regulators -- he is a top executive in the nation's blood-banking business and has been actively involved in the testing and lobbying on behalf of the blood tests. In fact, last March, he addressed an FDA advisory committee on blood products, extolling the value of the new tests and urging regulators to approve them quickly. "I think Chiron is optimistic about [getting year-end approval] because the FDA clearly wants to license these tests, but you have to consider the complexity of analyzing all the data," Bianco says. Bianco believes the FDA won't issue a ruling on the NAT test until it receives guidance from an FDA advisory committee on blood products. The committee meets in December, but Chiron is not on the agenda. The next meeting won't be held until March. Another hint that FDA approval won't come until midyear 2002: Last October, Chiron reportedly filed a supplement to its approval application for the NAT blood test. If this is true -- the company has neither confirmed nor denied it -- it would allow FDA regulators to extend its deadline by six months. That would push the timeline for FDA approval into April. One hedge fund manager who's short the stock figures that Chiron would have to shave off between 17 cents per share and 21 cents per share from its 2002 earnings if the FDA doesn't approve the NAT blood test until the second half of next year. Chiron expects to report 2002 earnings of between $1.10 per share and $1.20 per share, in line with Wall Street consensus estimates of $1.16 per share, according to Thomson Financial/First Call.