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A federal grand jury is investigating Chiron Corp.’s failure to supply the nation with half the needed flu vaccine this year, the company said Tuesday in a regulatory filing. The Emeryville, Calif.-based company said it received a subpoena from the U.S. Attorney in New York, the same office that recently prosecuted Martha Stewart and former star investment banker Frank Quattrone in unrelated financial scandals. The subpoena demanded documents and other information related to British regulators prohibiting Chiron from shipping about 48 million Fluvirin vaccine shots from its Liverpool plant because of contamination concerns, the company said in a Securities and Exchange Commission filing. Officials with Chiron and the U.S. Attorney’s office declined comment. In its filing, the company said it would cooperate with the investigation. Also Tuesday, Chiron said it was reducing its expected 2004 earnings from $1.50 to $1.60 a share to between 35 cents and 45 cents a share because of the flu fiasco. Analysts had expected the downward revision, estimating that the missed flu season would cost Chiron about $300 million in sales. Several investment firms had previously downgraded Chiron’s stock and questions remain about whether the company will be able to fix its production problems and restore its credibility in time for next year’s flu season. On Tuesday, Chiron’s share price fell 51 cents to close at $33.74 on the Nasdaq Stock Market. Chiron’s stock has plunged more than 25 percent since Oct. 5, when British regulators took their actions. Chiron chief executive Howard Pien and U.S. Food and Drug Administration officials have said the British regulators actions were unexpected, even though the Liverpool factory has had a history of production problems. In 2000, the company that owned the factory at the time, Powderject Pharmaceuticals PLC, recalled polio vaccines made there because of contamination issues. As recently as August, Chiron had announced four million Fluvirin shots had been found to be contaminated with bacteria — but had said the company would still ship most of its vaccine in time for the flu season. “Chiron did not at any time mislead public health stakeholders or the public,” Pien said in a written testimony submitted Friday to a congressional committee looking into the matter. “The results of Chiron’s internal investigations confirmed our belief that our product was safe.” A congressional hearing on the vaccine shortage was held Friday. Chiron purchased the Liverpool vaccine factory when it acquired U.K.-based Powderject Pharmaceuticals for $878 million in May 2003, two months after Chiron appointed Pien chief executive. Copyright 2004 Associated Press. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.

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