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Chiron Corporation is emerging as a repeat incompetent in the production of "normal" flu vaccine, but nevertheless recently landed a $62.5 million contract from the Bush Administration to protect people from the possible, and possibly much more virulent, avian influenza, while it was itself being purchased outright, at a significant premium, by Swiss pharmaceutical giant Novartis.

The 2004-5 flu season, though in the end, fortunately, a relatively mild one, was thrown into disarray when Chiron's Liverpool, UK, vaccine production facility was declared "contaminated" by the British equivalent of the FDA and its inventory of flu vaccine was destroyed.

Not withstanding that aggravating foul-up, the U.S. Government contracted with Chiron in late May, 2004, to develop prototype vaccine against the impending threat of the possibly even more dangerous avian influenza virus, H5N1. You can read the press release announcing this deal by clicking here.

Towards the end of October, 2005, the Bush Administration agreed to pay Chiron $62.5 million to manufacture vaccine designed to confer immunity against the currently-circulating strain of H5N1 virus that has sickened and killed patients in Southeast Asia, but is distinctly NOT the variant of this microbe (not yet observed anywhere) capable of generating a global bird flu pandemic.

Whether the vaccine Chiron has been hired to make will work against the not-yet-evolved "super-bug" is anybody's guess.

While the public had been repeatedly reassured that this year's production of "normal" flu vaccine would be quite sufficient to meet all needs, it emerged Thursday that, once again, Chiron was not going to be able to meet its commitments in this area, with the predictable result of massive personal inconvenience and the overall disruption of vaccination programs.

You can read the details of this year's emerging foul-up in "Clinics Delay Flu Shots as Deliveries Lag--Federal Health Officials Offer Reassurances, but Some Patients See Echo of Last Winter's Shortages," by staff writers Susan Levine and Carol Morello in the November 3, 2005, edition of the Washington Post.

You can read about Novartis' purchase of Chiron, based in part on expectations that doing so will let it partake in vastly increased revenues from the production of vaccines against avian influenza, by clicking on the title of the October 31, 2005, Red Herring article entitled "Novartis Buys Chiron."

The repeated difficulties Chiron has had in delivering promised doses of "normal" flu vaccines on time do not seem to have adversely affected its financial value. According to the Red Herring article referenced above:

"Swiss pharmaceutical company Novartis announced Monday that Chiron’s independent directors had unanimously accepted an offer of $45 per share for the remaining 58 percent of the vaccine company that Novartis does not own.

"The $5.1-billion price tag adds $600 million to Novartis’ original offer in early September and represents a 23 percent premium over Chiron’s stock price before negotiations began."

"The increased bid for Chiron’s remaining 113 million shares raises Novartis’ valuation of the Emeryville, California, company by about $1 billion to $8.77 billion

You can read Chiron co-founder and ICOC Vice-Chair Dr. Ed Penhoet's comments on this sale, including his acknowledgement that "we got a fair price," in an article entitled "Chiron to be bought by Swiss drug giant," which appeared in the November 1, 2005, edition of the San Jose Mercury News.

You can read a copy of Dr. Penhoet's testimony, the same Halloween Day of the Novartis-Chiron announcement, before a "Joint Information Committee" of the California Legislature hearing from industry spokespeople about how paying back California voter-taxpayers (lured into voting for Proposition 71 with assurances from a Stanford professor of medical economics that they could expect over a billion dollars in revenue from their investment) would so severely de-motivate the bio-tech companies that they'd refuse to participate in the life-saving and life-extending stem cell research being financed by tax-exempt general obligation bonds that, according to existing IRS rules, can't be used to finance research that would return revenue to the State of California in any event, by clicking here.

Echoing the promises made in the September 14, 2004, "Economic Impact Analysis--Proposition 71: California Research and Cures Initiative" paid for by the supporters of Proposition 71, Dr. Penhoet, on October 31, 2005, testifies to the California legislative joint committee:

"I believe that the State of California may achieve economic benefits from CIRM-funded research in a number of different ways including:

* Providing cures as opposed to lifelong therapies for patients
* Increased economic activity resulting from growth of an industry based on stem cell science: jobs, taxes, and economic development
* Direct remuneration to the state from arrangements with industry which provide royalties or other forms of revenue-sharing
* Attracting substantial increases in research and development funding to California by non-Californian entities

See, in regard to the question of "direct remuneration to the state from arrangements with industry which provide royalties or other forms of revenue-sharing," the September 19, 2005, entitled "California taxpayers unlikely to see any cash return on their $6 billion investment in stem cell research under Proposition 71."

For a discussion of a long-forgotten statement from Berkeley-based public interest attorney Charles Halpern that Edward Penhoet, Vice-Chair of the ICOC, "is deep into the conflict-of-interest problem and would need either to give up his bio-medical financial investments and other involvements, or resign his position on the ICOC," click on the title of this February 23, 2005, California Politics Today article entitled "Public interest lawyer asks for public hearing to discuss proposed reforms for ICOC."