Despite higher revenue, Chiron's ( CHIR) first-quarter earnings slipped from a year ago as an acquisition swelled expenses.

Chiron earned $39.8 million, or 21 cents a share, in the latest quarter, compared with earnings of $62.5 million, or 33 cents a share. The latest quarter's income from continuing operations was $26.9 million, or 14 cents a share. Chiron's revenue totaled $379.7 million in the latest quarter, up from $321.0 million last year.

Chiron's bottom line was depressed by higher expenses in the most recent quarter relative to last year: cost of sales of $126.7 million in 2004 vs. $85.6 million a year ago; and selling, general and administrative expenses of $104.7 million in the latest quarter compared with $73.0 million last year.

The biotech company noted its cost side was disproportionately swollen in the most recent quarter by its acquisition of PowderJect Pharmaceuticals. While revenue from its Fluvirin influenza vaccine are recognized mainly in the year's second half, costs associated with the unit occur throughout the year.

It also cited a lower royalty rate for its Betaseron product.

Among its segments, blood-testing revenue rose to $117 million from $93 million a year ago; vaccine revenue rose to $86 million from $68 million; and biopharmaceuticals revenue, including Betaferon interferon beta-1b royalties, rose to $140 million from $116 million for the first quarter of 2003. The gross profit margin on biopharmaceutical products was 76% for the first quarter of 2004, compared to 79% for the first quarter of 2003.

On a pro forma basis that primarily excludes amortization costs, income from continuing operations was $43 million, or 22 cents a share, in the latest quarter, compared with $56 million, or 30 cents a share, last year.

Analysts had been forecasting earnings on that basis of 27 cents a share on revenue of $378.9.

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