Chiron gets subpoena over vaccine debacle

A federal grand jury is investigating Chiron Corp.'s failure to deliver flu vaccine for the coming flu season, the company disclosed on Tuesday.

Chiron, which had been expected to supply half the nation's vaccine supply, said it had received a grand jury subpoena seeking documents about the vaccine. Sterility problems were found at the British plant where the vaccine is made.

The subpoena was issued on Monday by the U.S. Attorney's Office for the Southern District of New York, Chiron said in a regulatory filing with the Securities and Exchange Commission. The company said it will cooperate with the investigation.

"I don't exactly know what they are looking for, but I assume it relates to Chiron's disclosure practices, and I'm sure we'll see other investigations and maybe some shareholder litigation," said Eric Schmidt, an analyst at SG Cowen. "But I think Chiron now is a cheap stock."

British regulators stopped Chiron from releasing 48 million doses of its flu vaccine after they found what one U.S. regulator described as "systemic deficiencies within the firm related to sterility issues as well as a finding of contamination in some of the lots." Most of Chiron's vaccine is made at a plant in Liverpool, England.

Chiron shares fell 53 cents, or 1.55 percent, to $33.72 in early trading on the Nasdaq stock market.

Chiron officials were not immediately available for further comment. Megan Gaffney, a spokeswoman for the U.S. Attorney's office, said no further details were being given out at present.