Chiron to Supply United States with Pandemic Influenza Vaccine for Stockpile; Contract with U.S. Department of Health & Human Services for H5N1 Stockpile

Chiron Corporation (NASDAQ:CHIR) today announced that ithas won a $62.5 million contract to supply the U.S. government withpre-pandemic influenza vaccine for a stockpile to protect against theH5N1 avian influenza virus strain. Under the agreement with theDepartment of Health and Human Services (HHS), Chiron will provide abulk stockpile of H5N1 influenza vaccine, which the company willproduce at its Liverpool manufacturing facility using theU.S.-licensed commercial-scale manufacturing process. Production ofthe H5N1 stockpile vaccine under this agreement will not affectproduction of Chiron's annual FLUVIRIN(R) influenza virus vaccine.

"Chiron commends the U.S. government's comprehensive approach topandemic preparedness," said Dan Soland, president of Chiron Vaccines."We have engaged in discussions with a number of governments aroundthe world on a range of pandemic measures, including vaccinestockpiling and advance purchase contracts. Avian influenza knows noboundaries, and public-private partnerships are essential to addressthe threat it poses. As a leading influenza vaccine manufacturer, weare pleased to bring the capabilities of all of our influenzaproduction facilities to this global effort."

The stockpile vaccine, which Chiron will provide to HHS in 2006,is based on an inactivated influenza strain similar to the H5N1 aviansubtype that has circulated throughout Southeast Asia and morerecently in Eastern Europe. H5N1 is one of a number of avian influenzaviruses that do not usually infect humans. However, if the virusacquired the ability to readily transmit from person to person, itcould result in a global outbreak of influenza to which people have nonatural immunity, commonly called a pandemic.

With pandemic vaccine research ongoing, providing the stockpilevaccine in bulk will allow HHS to determine final dose andformulation, including potentially adding an adjuvant, based on themost current data available at the time of use. The stockpile vaccinecontributes to the U.S. National Strategic Stockpile, which HHS isbuilding to contain enough avian influenza vaccine for 20 millionpeople and enough antiviral medication for another 20 million people.As part of its comprehensive approach to pandemic preparedness, HHShas also voiced support for improved vaccine production methods anddose-sparing vaccine approaches such as the use of adjuvants.

"Chiron has invested in research and development to improve globalcapabilities to combat both annual and pandemic influenza," said RinoRappuoli, chief scientific officer of Chiron and head of Research forChiron Vaccines. "Stockpiling is an important primary step towardreadiness for this potential threat. We expect that our work withadjuvants and, longer-term, flu cell culture, may also contribute toefforts to prevent a pandemic."

Chiron has studied H5N1 since the avian influenza virus firstemerged in Hong Kong in 1997. In addition to its stockpile contract,Chiron will provide an H5N1 avian influenza vaccine candidate for astudy by the National Institute of Allergy and Infectious Diseases(NIAID), part of the National Institutes of Health (NIH) under HHS,later this year. The NIAID/NIH has also completed a study of Chiron'sH9N2 avian influenza vaccine candidate, including the MF59 adjuvant,designed to enhance vaccine effectiveness, and data will beforthcoming. H9N2, like H5N1, is a potential pandemic influenzastrain, which caused serious illness in three people in Hong Kong in1999 and 2003.

About Pandemic Influenza

Pandemic influenza occurs when a new virus emerges that is easilytransmitted among humans and causes serious illness. In thissituation, the virus can result in a worldwide outbreak of disease, orpandemic. Pandemic influenza occurred three times in the last century,with the 1918 outbreak killing at least 40 million people, with amortality rate of approximately 2.5 percent in the United States.

Avian influenza, or "bird flu," does not normally infect humans,but there have been several examples in recent years of transmissionto people, leading to fears of a strain with the potential to resultin a pandemic. The current outbreak of H5N1 avian influenza inSoutheast Asia has resulted in more than 100 human cases, in Cambodia,Indonesia, Thailand and Vietnam, with a mortality rate ofapproximately 50 percent. Despite the death or destruction of anestimated 150 million birds, the virus is now considered endemic in anumber of regions in Southeast Asia.

About Chiron

Chiron delivers innovative and valuable products to protect humanhealth by advancing pioneering science across the landscape ofbiotechnology. The company works to deliver on the limitless promiseof science and make a positive difference in people's lives. For moreinformation about Chiron, please visit www.chiron.com.

This news release contains forward-looking statements, includingstatements regarding development of pandemic influenza vaccines andadjuvants, revenue from stockpiling programs, regulatory approvals,improvements to manufacturing facilities, and product marketing, whichinvolve risks and uncertainties and are subject to change. Adiscussion of the company's operations and financial condition,including factors that may affect its business and future prospectsthat could cause actual results and developments to differ materiallyfrom those expressed or implied by these forward-looking statements,is contained in documents the company has filed with the SEC,including the Form 10-K for the year ended December 31, 2004, and theForm 10-Q for the quarter ended June 30, 2005, and will be containedin all subsequent periodic filings made with the SEC. These documentsidentify important factors that could cause the company's actualperformance to differ from current expectations, including, amongothers, litigation and investigations relating to influenza vaccines,the outcome of clinical trials, regulatory review and approvals,manufacturing capabilities, intellectual property protections anddefenses, litigation, stock-price and interest-rate volatility, andmarketing effectiveness. In particular, there can be no assurance thatadditional issues with respect to influenza vaccines or Chiron'smanufacturing generally will not arise in the future, or that Chironwill be able to increase sales of existing products, successfullydevelop and receive approval to market new products (includingpandemic influenza vaccine), or achieve market acceptance for such newproducts. The company may face additional competition in the influenzamarket in the future and challenges in distribution arrangements as aresult of vaccine developments. In addition, the company may engage inbusiness opportunities, the successful completion of which is subjectto certain risks, including approval by Novartis AG, regulatoryapprovals and the integration of operations.

Chiron does not undertake an obligation to update theforward-looking information the company is giving today.

NOTE: FLUVIRIN is a registered trademark of Chiron.