National Editor

There was good news from overseas and somewhat less-encouraging news stateside from a pair of first-quarter reports.

Chiron Corp.'s earnings numbers dipped 36 percent, compared to those in the same period last year. That was partly due to how money from its flu vaccine is recorded and partly due to less royalty income from Betaseron, the interferon beta-1b drug for multiple sclerosis, which is sold by Montville, N.J.-based Berlex Laboratories Inc.

On the other hand, Geneva-based Serono SA reported revenues jumped more than 25 percent, thanks largely to market leader Rebif - an interferon beta-1a that also targets multiple sclerosis, in that vigorously competitive market.

Chiron's stock (NASDAQ:CHIR) closed Thursday at $45.78, up $1.67. Serono's shares (NYSE:SRA) ended the day at $15.22, down 7 cents.

Specifically, Chiron reported pro-forma income from continuing operations of $43 million, or 22 cents per share, for the first quarter of 2004, compared to $56 million, or 30 cents per share, during the same period last year.

"While we do not give quarterly guidance, we're cognizant that this quarter's earnings are below the consensus number," Howard Pien, Chiron's president and CEO, told investors during a conference call.

But he added, "When we look at the growth of our businesses for the entire year, we are confident in our ability to deliver solid financial results completely consistent with our previously stated guidance." Pien repeated earlier full-year, pro-forma guidance of $1.80 to $1.90 per share for 2004.

Chiron acquired PowderJect Pharmaceuticals plc, of Oxford, UK, in March 2002 for $880 million.

The impact of PowderJect and Betaseron amounted to a decrease of about 10 cents in pro-forma and GAAP earnings per share. Chiron gets revenue from the acquired Fluvirin influenza vaccine mainly in the second half of the year, when people come down with the disease - but operating costs, of course, run all year long.

In the operating-expenses column, Chiron's cost of sales totaled $126.7 million in 2004 as compared with $85.6 million the same period a year ago. Selling, general and administrative expenses added up to $104.7 million, compared with $73 million last year.

On a GAAP basis, Chiron reported income from continuing operations of $27 million, or 14 cents per share, for the first quarter of 2004, compared to $61 million, or 32 cents per share, for the first quarter of last year.

Total revenues were $380 million for the first quarter, compared to $307 million last year, with foreign exchange rates resulting in a 5 percent increase. Net product sales were $281 million, compared to $219 million for the first quarter of 2003. Analyst forecasts had guessed earnings at about 27 cents per share, with revenues of about $378 million.

Chiron comprises three business areas, and all three "performed in line with our expectations this quarter," Pien said.

The blood-testing arm did especially well, with revenues rising to $117 million, up from $93 million a year ago. Revenues from vaccines hit $86 million, compared to $68 million in 2003's first quarter. Biopharmaceuticals pulled in $140 million, compared to $116 million for the period last year.

Serono, for its part, saw net income soar 76 percent, thanks mostly to the mighty Rebif. Net income rose to $106.1 million, or $6.73 a share, from $60.2 million, or $3.80 a share, last year. Analysts had predicted several million dollars less.

Sales of Rebif in the U.S. were up 55.7 percent to $62.7 million in the first quarter, making it the fastest-growing MS therapy in the nation. The drug had reached 15.6 percent of total prescriptions at the end of the first quarter, compared with 13.4 percent at the end of 2003.

Outside the U.S., Rebif also is marching onward. Sales rose by 45.9 percent to $196.9 million, or 28.3 percent, in local currencies. Another cash helper in the Serono lineup is Novantrone for MS, total sales of which rose 19 percent to $15.3 million.

In the first quarter, reproductive health sales grew 5.9 percent to $170.2 million, with sales of Gonal-F increasing by 12.6 percent (3.8 percent in local currencies to $137.4 million). The product is indicated for induction of ovulation and pregnancy as part of hormonal treatment for infertility.