CHIRON CORP - 10-K Annual Report

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-K

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1994
COMMISSION FILE NO. 0-12798
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CHIRON CORPORATION
(Exact name of Registrant as specified in its charter)

DELAWARE 94-2754624
(State of Incorporation) (IRS Employer Identification No.)

4560 HORTON STREET
EMERYVILLE, CALIFORNIA 94608
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (510) 655-8730
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
COMMON STOCK, $.01 PAR VALUE
WARRANTS TO PURCHASE COMMON STOCK, $.01 PAR VALUE

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

Yes __X__ No ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of Registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K.____
The aggregate market value of voting stock held by nonaffiliates of the
Registrant as of March 1, 1995, was $1,058,210,000.

The number of shares outstanding of each of the Registrant's classes of common
stock as of March 1, 1995:

TITLE OF CLASS NUMBER OF SHARES
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Common Stock, $.01 par value 40,025,293

DOCUMENTS INCORPORATED BY REFERENCE

The Company's Consolidated Financial Statements for the fiscal year ended
December 31, 1994, are incorporated by reference into Parts II and IV of this
Form 10-K Report and are filed as Exhibit 13 to this Form 10-K Report.

Portions of the Proxy Statement for the Annual Meeting of Stockholders to be
held on May 18, 1995, are incorporated by reference into Part III of this
Report.

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PART I

ITEM 1. BUSINESS

Chiron Corporation ("Chiron" or "the Company") applies biotechnology and
other techniques of modern biology and chemistry to develop products intended to
improve the quality of life by diagnosing, preventing and treating human disease
with a goal of reducing overall healthcare costs. Chiron participates in the
global healthcare industry in: (i) diagnostics, including blood screening tests,
automated immunodiagnostic systems, critical blood analytes and quantitative
branched DNA ("bDNA") probe tests for human immunodeficiency virus ("HIV"),
hepatitis C virus ("HCV") and hepatitis B virus ("HBV"); (ii) therapeutics, with
an emphasis on oncology, serious infectious diseases and cardiovascular
diseases, including the products Betaseron-Registered Trademark- (interferon
beta-1b) for relapsing-remitting multiple sclerosis and
Proleukin-Registered Trademark- (aldesleukin) (or "IL-2") for metastatic kidney
cancer; (iii) novel adult and pediatric vaccines including vaccines under
development for genital herpes ("HSV-2"), HCV, HIV, cytomegalovirus ("CMV") and
a genetically engineered acellular pertussis vaccine on the market in Italy and
in clinical trials in the United States and Europe; and (iv) ophthalmic surgical
products including instruments and devices used for the surgical correction of
vision and an intraocular implant to deliver drugs into the eye. A fifth
business, Chiron Technologies, manages development of new technologies from the
Company's research including a new generation of chemical therapeutics being
developed through advanced techniques of drug design and discovery and a program
in gene therapy.

In 1994, Chiron, which has a history of entering into research,
manufacturing and marketing collaborations with universities and other companies
to commercialize technology, entered into a series of new collaborations. The
most important of these new collaborations was a new partnership with Ciba-Geigy
Limited of Basel, Switzerland ("Ciba"), under which Chiron and Ciba may agree to
discover, develop, manufacture and market biotechnology and other healthcare
products on a global scale. Chiron and Ciba will be preferred partners to
augment their respective capabilities through cooperative approaches on arms'
length terms to be agreed upon, but remain independent to pursue where
appropriate projects outside the partnership. Under the agreement, effective
January 1, 1995, Ciba acquired a 49.9 percent ownership interest in Chiron
common stock through the purchase of approximately 38 percent of Chiron's
then-outstanding common stock for $117 per share and the exchange of Ciba's Ciba
Corning Diagnostics Corp. ("CCD") business and Ciba's interests in The Biocine
Company and Biocine SpA (collectively "Biocine") for 6.6 million new shares of
Chiron common stock and cash of $24 million. Also, Chiron may issue to Ciba up
to $500 million of new equity, Ciba has agreed to guarantee $425 million of new
debt for Chiron, and Ciba has agreed to provide at least $250 million and up to
$300 million over five years in support of research at Chiron.

The partnership with Ciba should strengthen Chiron's position as a leader in
the research, development and manufacturing of biotechnology products. Chiron
and its affiliate businesses and collaborators market three therapeutic
biologicals, more than 50 immunodiagnostic and critical care diagnostics, and
both immunodiagnostic instruments and critical blood analyzers, seven vaccines,
nine generic cancer therapeutics and five ophthalmic product lines.

Chiron was incorporated in California in 1981 and reincorporated in Delaware
in 1987. Its corporate headquarters are located at 4560 Horton Street,
Emeryville, California, 94608-2916, and its telephone number at that address is
(510) 655-8730.

DIAGNOSTICS

Chiron has built a joint business with a significant worldwide presence in
the immunodiagnostic market with Ortho Diagnostic Systems, Inc. ("Ortho"), a
Johnson & Johnson company, based largely on sales of tests used to screen blood
for the potential presence of HCV, which has been identified as a major cause of
serious liver disease throughout the world. This business sells the full line of
tests required to screen blood for hepatitis viruses and retroviruses,
confirmatory tests, and microplate-

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based instrument systems to automate the performance of tests and collection of
data. Chiron and Ortho share equally in the pretax operating earnings generated
by their joint business, including royalty payments made for the sale of HCV
tests by Abbott Laboratories ("Abbott") and Pasteur Sanofi Diagnostics
("Pasteur"), which they have licensed. Chiron also has an option to share
equally in the pretax operating earnings generated by Johnson & Johnson's home
HIV test, which is in review at the United States Food and Drug Administration
("FDA").

CCD, acquired by Chiron effective January 1, 1995, is the world's largest
seller of systems to measure blood gases, blood electrolytes and metabolytes,
which are used by hospitals to diagnose and monitor patients in critical care
settings. CCD also has developed and introduced the ACS:180 and ACS:180 Plus,
which are automated random access immunodiagnostic instrument systems for use by
hospital and reference laboratories to detect and measure thyroid, anemia,
fertility, cancer and STAT cardiac indicators.

Chiron also is developing bDNA probe tests to quantify virus levels.
Clinical evidence suggests that Chiron's bDNA probes may have utility in
predicting disease progression and response to therapy. Chiron is selling bDNA
probe tests for HIV, HCV and HBV for research use only in the United States and
Europe, and plans to submit applications to market these tests for commercial
use in measuring virus. Chiron retains the rights to commercialize these tests
in the United States and Europe, but for Japan and Taiwan, has licensed
marketing rights to Daiichi Pure Chemicals Co. Ltd., which received approval in
1994 to market Chiron's Quantiplex-TM- bDNA probe test for HCV in Japan.

THERAPEUTICS

Chiron Therapeutics is Chiron's hospital and large clinic-based
direct-selling business in the United States and Europe, and markets products
for use principally by oncologists. Its leading product is
Proleukin-Registered Trademark-, the first treatment approved for metastatic
kidney cancer. In the United States, Chiron Therapeutics also markets generic
chemotherapy drugs as part of a joint venture with Ben Venue Laboratories, Inc.,
and promotes Aredia-Registered Trademark- (pamidronate disordium for injection),
a drug to treat hypercalcimia of malignancy and Paget's disease, licensed from
Ciba. In Europe, Chiron Therapeutics also markets Salagen-Registered Trademark-
for chronic dry mouth associated with radio-therapy of cancer, licensed from MGI
Pharma, and Cardioxane, a cardioprotectant used in conjunction with chemotherapy
for cancer.

Chiron manufactures Betaseron-Registered Trademark- for Berlex Laboratories,
Inc. ("Berlex"), a United States affiliate of Schering AG, Germany ("Schering
AG"), which markets the product in the United States. Berlex Canada also plans
to market in Canada product manufactured by Chiron. In Europe, Schering AG plans
to market the product under the trade name Beneseron-Registered Trademark-,
either manufactured by Boehringer Ingelheim, for which Chiron will receive a
royalty, or by Chiron. During 1994, Chiron completed and had licensed a
significant expansion of its facility in Emeryville, and has completed a new
facility in Puerto Rico.

VACCINES

The Biocine Company and Biocine SpA are Chiron's businesses to develop and
market new vaccines, and as of January 1995 are wholly owned and managed by
Chiron (Prior to January 1, 1995, Chiron and Ciba each owned 50 percent of The
Biocine Company and Biocine SpA). Biocine SpA's business is based primarily on
the sale of non-recombinant pediatric and flu vaccines in Italy and to a lesser
extent in Southern Europe, the Middle East, the Far East, Africa and South
America, and to international health services such as the World Health
Organization. Among its products is a new genetically engineered acellular
pertussis vaccine which began sales in Italy in late 1993 and is in the final
stages of clinical trials in the United States and Northern Europe.

The Biocine Company is developing a new generation of vaccines for serious
adult infections such as HSV-2, CMV and HCV. These vaccines utilize genetically
engineered antigens that are displayed in a manner that mimics the appearance of
the actual agent, combined in an optimal formulation with

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adjuvants that stimulate the immune response. Biocine is conducting a series of
Phase 3 trials of an HSV-2 vaccine to prevent or treat genital herpes. Phase 1
trials have been completed in the United States for a CMV vaccine. Biocine is in
discussions with the U.S. Department of the Army and the government of Thailand
regarding potential trials to study the effectiveness of a vaccine to prevent
and treat HIV infection. A vaccine for HCV is in preclinical studies.

In addition to and separate from its Biocine activities, Chiron has received
royalty payments since 1986 from the sales of Recombivax-Registered Trademark-
HB, a vaccine against HBV infection developed, manufactured and marketed by
Merck & Co., Inc. ("Merck"), using technology developed by Chiron.
Recombivax-Registered Trademark- HB was the first vaccine using recombinant
technology to be licensed by the FDA for human use.

OPHTHALMICS

Chiron Vision is Chiron's direct-selling business in ophthalmic surgical
products. Chiron Vision's comprehensive line of products for the surgical
correction of vision includes both hard and foldable intraocular lenses ("IOLs")
for cataract replacement surgeries, phacoemulsification instruments for
small-incision cataract surgeries, instruments for corneal and refractive
surgeries and excimer lasers. Chiron Vision markets its excimer lasers in Europe
and Canada, and in 1993 began clinical trials in the United States. Interim
results of phase 3 clinical trials of Chiron Vision's ganciclovir implant showed
a clinically important improvement over intravenously administered ganciclovir
in delaying the progression of CMV retinitis in AIDS patients. Chiron Vision is
preparing its submission to the FDA based on final results from the trials,
which were completed in late 1994. Phase 2 trials have begun for an implantable
lens to correct presbyopia, or farsightedness. Chiron Vision sells its products
in the United States and 15 other countries and in May 1994 acquired
Laboratoires Domilens S.A., a major supplier of IOLs in France.

On March 6, 1995, the Company's Chiron Vision subsidiary announced that an
agreement had been reached to purchase the ophthalmic surgical division of
IOLAB, a Johnson & Johnson company, for approximately $95 million. IOLAB is a
supplier of intraocular lenses and related products for ophthalmic surgeries.
Following the proposed acquisition, Chiron Vision will begin a global
restructuring of the combined operations to enhance manufacturing, marketing and
management efficiencies.

CHIRON TECHNOLOGIES

Chiron's drug design and discovery group combines its own proprietary
technologies in combinatorial chemistry, robotic screening and selection and
molecular biology with the knowledge and participation of a select group of
leading academic scientists in the fields of structural biology and bio-organic
chemistry, and engages in collaborations with other pharmaceutical companies
including: Syntex Laboratories, Inc., Houghten Pharmaceuticals, Inc., and, since
1994, Janssen Pharmaceutica, a Johnson & Johnson company, to create libraries of
compounds for characterization and screening.

Chiron is developing a series of growth factors to treat topical wounds in
collaboration with Johnson & Johnson. Johnson & Johnson has underway
multi-center Phase 3 clinical trials studying the use of platelet-derived growth
factor manufactured in bulk by Chiron and formulated into a gel for treatment of
diabetic skin ulcers.

In the field of gene therapy, Chiron is collaborating with Viagene, Inc.
("Viagene"), to develop gene transfer products, for the prevention and treatment
of cancer, and drug activation technology, for the prevention and treatment of a
broad range of human diseases, and with Ribozyme Pharmaceuticals Inc. to develop
ribozyme-based therapies for HIV and other infectious diseases, cardiovascular
conditions and cancer. Chiron and Viagene have begun a Phase 1 clinical trial of
Viagene's gamma interferon gene therapy product used in tandem with Chiron's
recombinant interleukin-2 for the treatment of malignant melanoma.

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In the area of cardiovascular disease, Chiron has begun a collaboration with
G.D. Searle & Co. ("Searle") to develop tissue factor pathway inhibitor
("TFPI"), a coagulation inhibitor with potential applications in thrombotic and
inflammatory diseases, trauma and critical care. Chiron and Searle have begun a
Phase 1 clinical trial to prepare for further trials studying the use of TFPI in
microvascular surgery. Other collaborations include: Cephalon, Inc. ("Cephalon")
for the research, development and marketing of products for the treatment of
neurological disorders, including insulin-like growth factor, which Cephalon has
in Phase 2/3 clinical trials for treatment of amyotrophic lateral sclerosis
("ALS" or "Lou Gehrig's Disease"); Lynx Therapeutics, Inc., in the field of
anti-sense for antiviral drugs aimed at three viral targets, HIV, HCV and HBV;
Onyx Pharmaceuticals, Inc., for the discovery and development of cancer
therapeutics and diagnostics through research into the mechanisms of molecular
oncology.

COMPETITION

Chiron competes against a large number of other biotechnology and
pharmaceutical companies in the United States and internationally, and although
no single company competes in every area of Chiron's interests, the competition
is intense and expected to increase. Biotechnology and drug discovery are
rapidly evolving fields in which new developments frequently result in product
obsolescence and price competition. To compete effectively, Chiron's direct and
joint businesses invest heavily in research, maintain multiple sales forces that
concentrate efforts on individual classes of customers, and spend significant
amounts on advertising, promotion and selling. Substantial consolidation is
underway in the global healthcare industry, and is expected to produce greater
efficiencies and even more intense competition.

In the diagnostic market, the major competitor to both the Chiron-Ortho
joint business and to CCD is Abbott. In addition, although initial patents for
the Chiron HCV invention have issued and are being upheld through litigation
that has removed certain unlicensed sellers from some markets, the joint
business faces continued competition from a number of unlicensed sellers of HCV
tests, including: Organon Teknika, N.V., a subsidiary of Akzo, N.V.; Murex
Diagnostics, Ltd., a subsidiary of International Murex Technologies Corp.; and
United Biomedical, Inc. Other companies in Japan and Europe have introduced, or
may be preparing to introduce, competing HCV tests. In addition to Abbott, CCD
faces competition in the immunoassay market from Boehringer Mannheim and Johnson
& Johnson, which purchased the diagnostic and clinical chemistry business of
Kodak. Chiron's bDNA probe tests compete with products from affiliates of F.
Hoffmann-La Roche, Ltd., ("Roche") (which is developing tests based on
polymerase chain reaction ("PCR")), Abbott and Digene and may compete with
Gene-Trak Systems and Gen-Probe Incorporated.

In the therapeutics market, Proleukin-Registered Trademark- competes with
alpha interferon sold by Schering Plough Corporation and by Roche as a treatment
for metastatic kidney cancer. Several other biotechnology companies are
developing IL-2 or other interferons as immune-system-based therapies for
cancers and infectious diseases, including Roche, Genentech, Inc. ("Genentech"),
and Amgen Inc. Approximately 30 companies compete in the United States market
for anticancer chemotherapies, including Bristol-Myers Squibb Company, which
accounts for nearly half the market. Chiron's therapeutic products in
development for cancer, infectious diseases and cardiovascular disease face
competition from companies such as Genetics Institute, Immunex Corporation,
Genentech and many other biotechnology companies.

Four large companies hold the greatest share of the worldwide vaccine
market: Merck and SmithKline Beecham ("SmithKline"), both of which market
pediatric vaccines and the only widely sold recombinant vaccines for hepatitis B
infection; Lederle Praxis Biologics ("Lederle"), a division of American Home
Products; and the combination of Connaught Laboratories, Inc., and Pasteur
Merieux Serums et Vaccins (which separately has a strategic alliance with Merck)
both of which sell

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pediatric vaccines. SmithKline and Lederle are developing vaccines for genital
herpes, and a number of other companies have HIV vaccines in clinical trials,
including Genentech and Immune Response Corp.

Chiron Vision competes against numerous healthcare, pharmaceutical and
biotechnology companies in the research, development and marketing of devices
and therapeutic products for the ophthalmic surgery market. Chiron Vision's
competition in its largest product line, intraocular lenses, includes Alcon
Laboratories, Inc., a division of Nestle SA, Allergan, Inc., IOLAB, a division
of Johnson & Johnson (See Part I, Item 1. Business -- Ophthalmics), Pharmacia
AB, Staar Surgical Co. and Storz Instrument Company, a subsidiary of American
Home Products. Gilead Sciences, Inc., a biotechnology company, has in the final
stages of clinical trials a systematically injectable pharmaceutical that may
compete against Chiron Vision's ganciclovir implant.

Betaseron-Registered Trademark-, the only product licensed in the United
States to treat relapsing-remitting multiple sclerosis, began usage by patients
in October 1993. Potential competing products to Betaseron-Registered Trademark-
in the United States and Europe include two products that have completed
clinical trials and which their manufacturers plan to make regulatory
applications to market: recombinant beta interferon from Biogen, Inc.
("Biogen"), and Copolymer 1 from Teva Pharmaceuticals. Other companies have
entered, or are preparing to enter, products into clinical trials for multiple
sclerosis. In Europe, Schering's product Beneseron-Registered Trademark- is not
yet licensed, and Ares Serono sells in Italy and Spain an extracted form of beta
interferon as a treatment for, among other indications, multiple sclerosis, and
holds licenses for other indications in several countries, including Germany.

A significant amount of research in biotechnology is performed in
universities and nonprofit research organizations. These entities are becoming
increasingly aware of the commercial value of their findings and are becoming
more active in seeking patent protection and licensing revenues. The competition
among large pharmaceutical companies and smaller biotechnology companies to
acquire technologies from these entities also is intensifying. While Chiron
actively collaborates with such entities in research and has and will continue
to license their technologies for further development, these institutions also
compete with Chiron to recruit scientific personnel and to establish proprietary
technology positions.

MANUFACTURING

Chiron currently has licensed manufacturing facilities in Emeryville,
California for the production of biologicals and Chiron Vision has manufacturing
operations in Huntington, West Virginia, Irvine, California, Rapid City, South
Dakota, Sydney, Australia, Lyon, France, Munich, Germany and Amsterdam, The
Netherlands. Chiron began a major manufacturing expansion in early 1993 designed
to meet the projected demand for Betaseron-Registered Trademark- and other
products that are in the late stage of development. Chiron spent $106 million on
capital expenditures in 1994, primarily on manufacturing expansion. In 1994, the
Company completed upgrades to the St. Louis, Missouri and Puerto Rico
facilities. The next phase will be obtaining regulatory approvals for these
facilities. In addition, the Company has a facility in Vacaville, California
currently under construction, with completion expected in 1995. Substantial
additional capital investment will be required in connection with preparation
for large scale clinical trials and commercialization of vaccine products, bDNA
probes, therapeutic products and other products as they approach commercial
introduction. Facilities for the production of these products must be approved
by the FDA as complying with GMP requirements before products produced in them
can be sold. In addition, Chiron must obtain various approvals and permits from
local regulatory authorities. Failure to obtain all necessary approvals and
permits and to complete such facilities on a timely basis would materially and
adversely affect the continued development and introduction of Chiron products.

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MAJOR CUSTOMERS

Ciba and its affiliates are related parties and collectively contributed 11
percent, 13 percent and 6 percent of total revenues in 1994, 1993, and 1992,
respectively. Johnson & Johnson and its affiliates are related parties and
collectively contributed 22 percent, 32 percent and 38 percent of total revenues
during 1994, 1993, and 1992, respectively. During 1994, sales of
Betaseron-Registered Trademark- to Chiron's marketing partner accounted for 23
percent of total revenues (4 percent in 1993).

For a discussion of revenues by geographic areas, see Note 10 to the 1994
Consolidated Financial Statements.

RESEARCH AND DEVELOPMENT

The Company's two primary sources of new product candidates are internal
research and development and collaboration and licensing with other healthcare
companies. Research and development expense, which includes payments to
collaborative partners, for the years ended December 31, 1994, 1993 and 1992 was
$166.2 million, $140.0 million and $142.3 million, respectively. Under contracts
where reimbursement is based upon work performed, the related research and
development expenses were $72.4 million, $61.5 million and $47.3 million in
1994, 1993 and 1992, respectively.

RAW MATERIALS

Raw materials and laboratory supplies utilized in the Company's research are
generally available from several commercial sources. In certain projects, sample
tissues and cell strains used for the Company's research and development may be
difficult to obtain. The Company relies upon its good relations with other
researchers and institutions to obtain the majority of such strains and samples.
Sources include blood banks, hospitals, universities and national laboratories.
Most raw materials necessary for process development, production scale-up and
commercial manufacturing are generally available from multiple commercial
sources. However, certain processes require materials from sole sources or
materials that are difficult for suppliers to produce and certify to the
Company's specifications or for which the raw materials may be in short supply.
Although Chiron maintains an awareness of the condition of these suppliers,
their ability to supply the Company's needs and the market conditions for these
materials, there is a risk that material shortages could impact production
efforts. The Company believes that its relationships with its commercial
suppliers are good.

GOVERNMENT REGULATION

Regulation by governmental agencies in the United States and other countries
is a significant and changing factor in Chiron's research and development
effort, and in the Company's plans to produce and market both approved products
and those nearing approval. Intent to market products in Europe brings an added
regulatory burden, as the role of the European Economic Community has increased
significantly in recent years.

The Company's products (both marketed and investigational) in the United
States are primarily biologicals, but also include generic anticancer drugs,
diagnostic tests and instruments and ophthalmic devices. All are regulated under
the Food, Drug, and Cosmetic Act and supporting regulations. The biological
products are additionally regulated under the Public Health Service Act and
supporting regulations. Licensing of a biological product in the United States
is accompanied by a requirement to simultaneously license the manufacturing
establishment.

Licensing of the establishment includes a requirement that all facilities
used to manufacture, fill, test and distribute the product in interstate
commerce be inspected and approved by the FDA's Center for Biologics Evaluation
and Research. The review and inspection process includes a review of all
labeling, including the vial, carton, box, and packers, as well as promotional
and advertising materials.

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Since every FDA decision requires submission of documentation (such as a Product
License Application, or Establishment License Application), the preparation of
the documentation, its submission and audit review determines the speed with
which a research program is translated into a marketed product.

European regulations are being harmonized, with a major transition in review
authority and procedures scheduled for 1995. It remains to be seen what effect,
if any, the proposed change in review process will have on the overall approval
process.

PATENTS AND PROPRIETARY RIGHTS

Intellectual property (e.g., patents, trade secrets and trademarks) is
important to the business of the Company. Chiron and its subsidiaries have a
substantial number of pending patent applications and granted patents in the
United States and in foreign countries. It is not known how many of these
pending patent applications will be granted as patents and at least some of the
pending applications will be abandoned. A number of patents and patent
applications owned by third parties have been licensed exclusively,
semiexclusively or nonexclusively to Chiron and its subsidiaries for one or more
fields of use. Chiron and its subsidiaries also own a number of trademarks in
the United States and foreign countries.

Due to unresolved issues regarding the scope of protection provided by such
patents, as well as the possibility of patents being granted to others, there
can be no assurance that the patents owned or licensed to Chiron and its
subsidiaries will provide substantial protection or commercial benefit. The
rapid rate of development and the intense research efforts throughout the world
in biotechnology, the significant time lag between the filing of a patent
application and its review by appropriate authorities and the lack of
significant legal precedent involving biotechnology inventions make it difficult
to predict accurately the breadth or degree of protection that patents will
afford Chiron's or its subsidiaries' biotechnology products or their underlying
technology. It is also difficult to predict whether valid patents will be
granted based on biotechnology patent applications or, if such patents are
granted, to predict the nature and scope of the claims of such patents or the
extent to which they may be enforceable.

Important legal questions remain to be resolved as to the extent and scope
of available patent protection in the United States and abroad. Under United
States law, although a patent has a statutory presumption of validity, the
issuance of a patent is not conclusive as to validity or as to the enforceable
scope of its claims. Accordingly, there can be no assurance that Chiron's
patents will afford legal protection against competitors with similar
inventions, nor can there be any assurance that the patents will not be
infringed or designed around by others or that others will not obtain patents
that Chiron would need to license or design around.

Trade secrets and confidential information are likely to be important to
Chiron's commercial success. Although Chiron and its subsidiaries seek to
protect trade secrets and confidential information they believe to be
significant, there can be no assurance that others will not either develop
independently the same or similar trade secrets or confidential information or
obtain access to such trade secrets or confidential information. Furthermore,
there can be no assurance others have not obtained or will not obtain patent
protection that will preclude Chiron or its subsidiaries from using their trade
secrets or confidential information.

Most countries limit the enforceability of patents against government
agencies or government contractors. Generally, the patent owner may be limited
to monetary relief and may be unable to enjoin infringement. This can be of
particular importance in countries where a major customer of Chiron or its
licensees is a governmental agency. The inability to enjoin such infringement
and the necessity of relying exclusively on monetary compensation could
materially diminish the value of a particular patent. Furthermore, many
countries (including European countries) have compulsory

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licensing laws under which third parties may compel the grant of non-exclusive
licenses under certain circumstances (for example, failure to "work" the
invention in the country, patenting of improvements by a third party or failure
to supply a product related to health and safety). The mere existence of such
limits on injunctive relief and compulsory licensing systems could force Chiron
to grant a license it would not have otherwise granted.

Chiron is aware that others, including various competitors, educational
institutions and governmental organizations have intellectual property,
particularly patents and pending patent applications, in the United States and
other countries potentially useful or necessary to Chiron's and its
subsidiaries' businesses including vaccines, diagnostics, therapeutics, oncology
and ophthalmics. Some of these patents and applications claim only specific
products or methods of making such products, while others claim more general
processes or techniques. There may be similar third-party intellectual property
important to the business of Chiron or its subsidiaries of which the Company is
not currently aware. It is likely that in the future others will obtain patents
or develop proprietary rights that might be necessary or useful for the
manufacture, use or sale of some products by Chiron or its subsidiaries. Certain
of these patents or rights may be sufficiently broad to prevent or delay Chiron
or its subsidiaries from practicing necessary technology, including the
manufacture and/or marketing of products important to Chiron's current and
future business. The scope, validity and enforceability of such patents, if
granted, the extent to which Chiron or its subsidiaries may wish or need to
obtain licenses thereunder and the cost and availability of such licenses are
not susceptible to accurate prediction. If Chiron or its subsidiaries do not
obtain such licenses, products may be withdrawn from the market, or delays could
be encountered in market introduction while an attempt is made to design around
such patents. Alternatively, Chiron or its subsidiaries could find that the
development, manufacture or sale of such products is foreclosed. Chiron or its
subsidiaries could incur substantial costs in challenging the validity or scope
of such patents.

Chiron is currently involved in legal proceedings involving patents and
expects that litigation relating to the validity and scope of certain patents
and its proprietary rights and those of third parties will continue to arise in
the future. (See Part I, Item 3. Legal Proceedings). Substantial costs could be
incurred in defending the validity or scope of patents owned by or licensed to
Chiron or its subsidiaries. If Chiron and its subsidiaries are unable to obtain
strong proprietary rights to protect a product after the expenditure of funds to
obtain regulatory approval, competitors may be able to market competing products
without being required to undertake the same lengthy and expensive development
efforts that Chiron and its subsidiaries already have completed. In these cases,
it is possible that price competition could become a principal competitive
factor in the marketing of such products. If Chiron or any of its subsidiaries
should lose litigation with respect to third party intellectual property rights,
Chiron and its subsidiaries could be precluded from manufacturing or marketing
certain products and incur substantial liability for damages and attorney fees.

EMPLOYEES

At December 31, 1994, Chiron and its subsidiaries employed 2,668 people on a
full-time and part-time basis in ten principal locations on three continents. Of
Chiron's employees, 1,729 were involved in research, development and
manufacturing efforts and 939 were involved in operations, administration, sales
and marketing and finance.

8

ITEM 2. PROPERTIES

At December 31, 1994, Chiron owned and leased approximately 1.6 million
square feet of building space on three continents. Following is a summary of the
Company's properties:

BUILDINGS (SQ. FT.)
---------------------- LAND
LEASED OWNED (ACRES)
---------- ---------- -------

Location:
Emeryville, California.......................... 811,877 45,525 7
Other United States (including Puerto Rico)..... 223,161 202,496 63
Europe.......................................... 163,369 105,448 --
Rest of world................................... 23,559 21,500 1
---------- ---------- -------
1,221,966 374,969 71
---------- ---------- -------
---------- ---------- -------

Chiron's principal facilities are located in Emeryville, California, and are
used for research and development, manufacturing and administrative activities.
Currently, several of these buildings are undergoing general construction
upgrades and expansion.

Included in the chart above is a location of 30,000 square feet on 51 acres
in Vacaville, California, which is currently under construction. This facility
will expand the Company's manufacturing capacity and is expected to become
operational within one year. During 1994, Chiron completed construction of
facilities in St. Louis, Missouri and Puerto Rico for the manufacture of
Betaseron-Registered Trademark- and other products in the late stage of
development. These facilities are currently manufacturing clinical materials or
awaiting FDA approval.

Elsewhere in the United States, the Company leases facilities in three
locations: Irvine, California, Huntington, West Virginia, and Rapid City, South
Dakota, for manufacturing, research and development, and administration. No
additional expansion of these facilities is planned in the near future.

As of December 31, 1994, Chiron had operations in eight foreign countries:
Australia, Canada, France, Germany, Italy, the Netherlands, Spain and the United
Kingdom. These facilities are primarily sales offices, with manufacturing
operations in Australia, Germany, France and The Netherlands.

Upon completion of the expansion of manufacturing capacity mentioned above,
Chiron believes that it will have sufficient manufacturing facilities to meet
its needs for the foreseeable future. Chiron is currently in the planning stage
for a large-scale expansion of its research and administration facilities in
Emeryville, California.

ITEM 3. LEGAL PROCEEDINGS

MUREX DIAGNOSTICS, LTD. On March 2, 1992, Chiron together with Ortho
Diagnostic Systems, Inc. ("Ortho") and Ortho Diagnostic Systems, Ltd., filed
suit in the High Court for England and Wales against Murex Diagnostics, Ltd.
("Murex"), alleging infringement of Chiron's U.K. Patent No. 2,212,511 ("the
'511 patent") as a result of Murex's manufacture and sale of HCV immunoassay
kits in the U.K. Murex is a subsidiary of International Murex Technologies
Corp., a Canadian company. Chiron and Ortho sought injunctive relief and
unspecified damages. While the relevant patent claims were found valid and
infringed, the court denied any damages or injunctive relief because it found
Murex had a defense under Section44 of the U.K. Patents Act. On October 28,
1993, Chiron and Ortho began new infringement proceedings against Murex
requesting unspecified damages and injunctive relief. On May 27, 1994, the court
granted judgment for Chiron and Ortho, holding the '511 patent valid and
infringed, and ordered Murex to pay damages in an amount to be determined. Murex
has appealed. Chiron's and Ortho's request for an injunction was granted on
November 29, 1994. Chiron is informed that officials within the British Ministry
of Health have in the past raised the possibility of authorizing Murex's
infringement of the '511 patent under the "Crown use" provisions of British law,

9

with respect to the sale of HCV immunoassay kits to the British National Health
Service. Further, Murex has stated that it will apply for a compulsory license
under the '511 patent. Infringement proceedings against Murex on German and
European patents corresponding to the '511 patent have also been filed by Chiron
and Ortho in Germany, Italy, The Netherlands and Belgium. On January 23, 1995,
Chiron and Ortho were granted an injunction in Germany. Murex has brought an
action in Australia seeking the revocation of the Australian counterpart of the
'511 patent. Chiron has counterclaimed for infringement.

ORGANON TEKNIKA, LTD. On May 4, 1994, Chiron instituted summary legal
proceedings against Organon Teknika, B.V., Akzo Pharma, B.V., Akzo Pharma
International, B.V., Organon Teknika, N.V (all subsidiaries of Akzo N.V.
(collectively referred to as "Organon")), and United Biomedical, Inc. ("UBI"),
the supplier of Organon's HCV antigens and kits, in the District Court of the
Hague, The Netherlands, alleging infringement of European Patent No. 318,216
("the '216 patent") as a result of the defendants' manufacture and sale of HCV
immunoassay kits. On July 22, 1994, Chiron was granted a cross-border
preliminary injunction against further infringement, including sale of the UBI
kit, by Organon in Austria, Belgium, Switzerland, Germany, Spain, France, Italy,
Liechtenstein, Luxembourg, The Netherlands and Sweden. Organon and UBI have
appealed the injunction. The '216 patent is a counterpart of the British '511
patent. Infringement proceedings brought by Chiron and Ortho are also pending
against Organon in Italy and Belgium, (based on the '216 patent), and in the
U.K., (based on the British '511 patent), in proceedings consolidated with the
actions against Murex, described above.

DANIEL W. BRADLEY. On December 20, 1994, Dr. Daniel W. Bradley, a former
scientist at the U.S. Centers for Disease Control (the "CDC") brought suit in
the United States District Court for the Northern District of California against
Chiron, Ortho, certain employees of Chiron, and the United States government.
The basis of the suit is that Bradley, who collaborated with Chiron scientists
on the research that led to the discovery of HCV, alleges he has been wrongly
excluded as an inventor of HCV. He requests various forms of relief, including
declarations that he is an inventor of Chiron's patents related to HCV and that
these patents are unenforceable as to Chiron. Bradley further seeks monetary
damages and a constructive trust on all past and future profits derived from
Chiron's HCV invention, which are estimated by Bradley to be in excess of $1
billion, as well as penalties under federal and state Racketeering and Corrupt
Organization (RICO) statutes. Chiron believes that this suit is without merit
and that substantial defenses exist. In 1990, Bradley and the CDC entered into a
settlement agreement regarding his claims of inventorship in which any rights
either Bradley or the CDC might have were assigned to Chiron. Chiron believes
that the settlement agreement is valid and bars nearly all of the claims in the
subject litigation.

SICOR. In April 1991, Alco Chemicals, Ltd. ("Alco") and Sicor, SpA
("Sicor"), Cetus Ben Venue Therapeutics' ("CBVT") former suppliers of bulk
doxorubicin, filed suit in the United States District Court for the Northern
District of California against Cetus Oncology Corporation ("Cetus"), Ben Venue
Laboratories, Inc. ("Ben Venue"), CBVT and Erbamont, Inc. ("Erbamont") and its
affiliates. Sicor had been prevented from manufacturing product for CBVT since
September 1990, when Sicor's facilities in Italy were ordered closed by the
government in connection with trade secret litigation in Italy. In March 1991,
CBVT entered into an agreement with Erbamont which provided for, among other
things, the settlement of several legal proceedings then pending relating to
Erbamont's alleged doxorubicin proprietary rights, and the exclusive supply of
doxorubicin to CBVT by Erbamont. The Sicor complaint alleges breach of the CBVT
contract to purchase bulk doxorubicin from Sicor, as well as antitrust
violations and interference with contractual relations, and seeks unspecified
damages. Cetus has denied any entitlement to recovery in this lawsuit and has
filed a counterclaim against the plaintiffs for fraud and breach of contract
based on Sicor's failure to deliver the bulk product. In an order filed on
January 11, 1993, the judge granted summary judgment motions in favor of the
Cetus parties and Erbamont with respect to the Sicor and Alco claims. Sicor has
appealed the summary

10

judgment to the Ninth Circuit Court of Appeals in a notice filed April 5, 1993.
In August 1993, Sicor dismissed its claims against Erbamont. A hearing before
the Ninth Circuit was held July 12, 1994, but no decision has yet been issued.
In the event that the summary judgment is overturned and the case is remanded
for trial, the Company believes that it has substantial defenses to the claims.
A related arbitration before the International Chamber of Commerce in Paris
brought by Sicor against Chiron, Cetus and Ben Venue has been stayed pending the
resolution of the Cetus parties' counterclaims in the above-described
litigation.

In February 1995, Sicor and Alco filed a further action in the United States
District Court for the Northern District of California against CBVT for amounts
allegedly owed by CBVT to Sicor and Alco for the supply of doxorubicin, plus
interest and attorneys' fees. Internal investigation of the claim is under way,
and there has been no action in this suit.

ADVANCED CHEMTECH. On August 11, 1994, Advanced ChemTech, Inc. brought a
lawsuit against Chiron in the United States District Court for the Western
District of Kentucky, Louisville Division, asserting that certain Chiron patents
relating to peptide mixtures are invalid and unenforceable and that Chiron had
engaged in unfair competition and unfair business practices in asserting its
patent rights. Advanced ChemTech is asking the court to find: (1) that the
patent at issue is invalid and unenforceable; (2) that Advanced ChemTech does
not infringe the patents; and (3) damages according to proof. Chiron has
answered and counterclaimed for infringement of its patents. Chiron believes
that it has substantial defenses against the claims asserted by Advanced
ChemTech.

ABBOTT LABORATORIES. On December 13, 1993, Chiron filed a patent
infringement action against Abbott Laboratories ("Abbott") in the United States
District Court for the Northern District of California. The suit, which alleges
infringement of Chiron's U.S. Patent No. 5,156,949, claiming the use of
recombinant envelope antigens in immunoassays for HIV antibodies, is based on
Abbott's sale of unlicensed HIV immunoassay tests which are believed to fall
within the scope of one or more patent claims. Abbott is defending this suit on
the basis of invalidity and non-infringement. Chiron is requesting unspecified
damages and injunctive relief. Cross motions for summary judgement on Abbott's
defenses of inequitable conduct and prior invention are currently pending.

On April 26, 1994, Abbott filed suit against Chiron in the United States
District Court for the Northern District of Illinois, Eastern Division, alleging
that the Company has, by making, using and selling nucleic acid hybridization
assays, infringed three U.S. patents owned by third parties and licensed to
Abbott. Abbott is seeking injunctive relief and damages in an unspecified
amount. The Company believes that it has substantial defenses and intends to
defend this suit vigorously.

CARNEGIE-MELLON UNIVERSITY. On August 20, 1994, Carnegie Mellon University
and Three Rivers Biologicals, Inc. brought a lawsuit in the United States
District Court for the Western District of Pennsylvania against Hoffmann-La
Roche, Inc., Roche Molecular Systems, Inc., the Perkin-Elmer Corporation, Chiron
and Cetus Oncology Corporation claiming that the defendants infringed certain
United States patents relating to plasmids for the expression of an enzyme which
may be useful in connection with polymerase chain reaction ("PCR") processes and
products. Cetus sold its PCR business to F. Hoffmann-La Roche Ltd. and
Hoffmann-LaRoche, Inc. ("Roche") in 1991. Carnegie Mellon and Three Rivers
Biologicals are seeking a finding that the defendants willfully infringed the
patents at issue, injunctive relief and damages according to proof. All
defendants have answered the complaint. Discovery has only recently begun. The
facts of the case, including any indemnification rights or obligations among the
defendants, are currently under review. However, Chiron believes that it, and
its wholly owned subsidiary, Cetus Oncology, have significant defenses.

SUMMIT. On September 29, 1994, Summit Technology Ireland B.V., a subsidiary
of Summit Technology, Inc., a manufacturer of ophthalmic excimer lasers, filed a
patent infringement action in the Regional Court of Dusseldorf, Germany, against
two German companies affiliated with Chiron Vision and their respective managing
directors. The suit alleges that the manufacture and sale in

11

Germany of Chiron Vision's ophthalmic excimer laser infringes certain European
patents held by plaintiff. The plaintiff is seeking injunctive relief and
damages which it currently estimates at DM 2 million. The Company intends to
vigorously defend this lawsuit, and believes it has substantial defenses. Chiron
Technolas continues to manufacture ophthalmic excimer lasers which are
distributed by Chiron Vision and its subsidiaries, thereby exposing the Company
to damages with respect to its continuing activities in the event plaintiff
prevails. Chiron Technolas is currently Chiron Vision's sole source of
ophthalmic excimer lasers and an injunction, if it were to issue, could preclude
the Company from serving its market for the product.

STOCKHOLDER LITIGATION. In November 1994, Chiron, its directors, and
certain of its officers were sued in three essentially identical actions filed
as class actions on behalf of Chiron stockholders, alleging that the directors
had violated their fiduciary duty by failing to maximize stockholder value in
connection with the series of transactions affected with Ciba-Geigy which were
announced on November 20, 1994, by, among other things, not taking all possible
steps to seek out and encourage the best offer for the Company once the Company
had been put in play. Two of the actions filed respectively on November 14, 1994
and November 22, 1994 (HANNA V. CHIRON CORP, ET AL., C.A. No. 13874, and DEZUBE
V. CHIRON CORPORATION ET AL., C.A. No. 13896) were filed in the Court of
Chancery of the State of Delaware in and for New Castle County. The complaints
in both cases ask for injunctive relief, rescission and attorneys' fees.
Plaintiff in the HANNA action additionally seeks damages in an unspecified
amount. Plaintiff in the DEZUBE action additionally seeks an accounting. The
complaints have been answered by all defendants, who deny the material
allegations of the complaints. The third action was filed in the Superior Court
of California, Alameda County, Northern Division on December 1, 1994 (PERERA ET
AL. V. CHIRON CORPORATION ET AL., Case Action No. 744522-2). Plaintiff seeks
injunctive and declaratory relief, an accounting, costs and disbursements,
including attorneys' and experts' fees, and other relief. The defendants intend
to defend vigorously these matters.

SCRIPPS CLINIC ET AL. V. CHIRON CORPORATION. The Company is defending a
lawsuit filed on November 8, 1983, by the Scripps Clinic and Research Foundation
and Revlon, Inc., in the United States District Court for the Northern District
of California alleging that Chiron's research program to synthesize a protein
associated with human blood clotting ("Factor VIII:C") through genetic
engineering techniques infringes plaintiff's rights under a patent for purified
Factor VIII:C. The suit seeks an injunction against further infringement, an
accounting, compensatory damages of at least $10 million and punitive damages in
the same amount. After the trial court granted summary judgment in favor of
Chiron, the plaintiffs appealed. The United States Court of Appeals for the
Federal Circuit reversed the trial court, finding that summary judgment was not
appropriate and directing that a number of issues be tried, including the issues
of inequitable conduct on the part of Scripps, patent validity and patent
infringement. No trial date has yet been set and it is unclear when a date will
be set. Chiron intends to vigorously assert its defenses at trial.

ALLERGAN MEDICAL OPTICS V. CHIRON CORPORATION. On December 8, 1992,
Allergan Medical Optics filed a lawsuit in the United States District Court for
the Central District of California against Chiron and Chiron IntraOptics (now
Chiron Vision). The complaint alleges that Chiron Vision's mechanical inserter
used to place the Chiron foldable intraocular lens in the eye during cataract
surgery infringes a patent licensed exclusively to Allergan. Allergan is seeking
an injunction against sales of the inserter, damages in an unspecified amount,
and attorneys' fees. Discovery in the case has commenced. The Company believes
that it has substantial defenses based, among other things, upon invalidity of
the patent in suit. The Company continues to distribute the allegedly infringing
inserter and therefore continues to be exposed to damages in the event that
Allergan prevails. Cross motions for summary judgments have been denied. A
bifurcated trial is expected to begin in 1995, trying first certain issues of
ownership and rights under license from Allergan to Starr Surgical Co. and
through Starr to Chiron, and then issues of infringement and invalidity. The
Company believes it has rights of indemnity from Starr with respect to certain
damages that may be awarded against it.

12

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were brought to a vote of Chiron's stockholders in the quarter
ended December 31, 1994.

EXECUTIVE OFFICERS

The executive officers of the Company, who serve at the discretion of the
Board of Directors, are as follows:

NAME AGE TITLE
- -------------------------------- --- -----------------------------------------

William J. Rutter, Ph.D. 66 Chairman of the Board
Edward E. Penhoet, Ph.D. 54 President and Chief Executive Officer

Renato Fuchs, Ph.D. 52 Senior Vice President, Manufacturing and
Development Operations
William G. Green, Esq. 50 Senior Vice President, Secretary and
General Counsel
David W. Martin, M.D. 54 Senior Vice President; President, Chiron
Therapeutics
Pablo D.T. Valenzuela, Ph.D. 53 Senior Vice President, Biologicals
Research and Development
Lewis T. Williams, M.D., Ph.D. 46 Senior Vice President, Research and
Development; President, Chiron
Technologies
Dennis L. Winger 47 Senior Vice President, Finance and
Administration and Chief Financial
Officer

Robert P. Blackburn, Esq. 38 Vice President and Chief Patent Counsel
Rajen K. Dalal 41 Vice President, Corporate Planning
Dino Dina, M.D. 48 Vice President, Virology and Vaccine
Development; President, The Biocine
Company
William G. Gerber, M.D. 48 Vice President; President, Chiron
Diagnostics
Alain Herrera, M.D. 44 Vice President; President, Chiron
Therapeutics Europe
William J. Link, Ph.D. 48 Vice President; Chief Executive Officer,
Chiron Vision
Mario Lorenzoni 53 Vice President; Chief Executive Officer,
Biocine SpA
Bernardita Mendez, Ph.D. 42 Vice President, Regulatory and Quality
Affairs
Walter H. Moos, Ph.D. 40 Vice President, Chemical Therapeutics
Research and Development
Mickey S. Urdea, Ph.D. 42 Vice President, Nucleic Acid Systems
Research and Development
C. William Zadel 51 Vice President; President, Ciba Corning
Diagnostics Corp.

13

DR. RUTTER was a co-founder of the Company and has served as its Chairman of
the Board since the Company's inception in 1981. He was Director of the Hormone
Research Institute at the University of California, San Francisco Medical
Center, from 1983 to May 1989 and has been on the faculty at the University of
California, San Francisco, since 1969, becoming Professor Emeritus in 1991.

DR. PENHOET, a co-founder of the Company, has been Chief Executive Officer
and a Director since the Company's inception in 1981, and was President from
1981 to 1989 and Vice Chairman from 1989 until 1993. Dr. Penhoet reassumed the
title of President effective April 1, 1993. He has been a faculty member at the
University of California, Berkeley, for 21 years.

DR. FUCHS joined the Company as Senior Vice President, Manufacturing and
Development Operations in 1993. From 1988 until joining Chiron, he was with
Centocor, Inc., most recently as Senior Vice President of Pharmaceutical
Development.

MR. GREEN joined the Company as Vice President and General Counsel in
October 1990, having served as Secretary or Assistant Secretary since the
Company's inception in 1981. In February 1992, he became Senior Vice President,
Secretary and General Counsel. From 1981 to 1990, he was a partner in the San
Francisco law firm of Brobeck, Phleger & Harrison.

DR. MARTIN joined the Company as Senior Vice President and President of
Chiron Therapeutics in January 1994. From 1990 to 1993, he was Executive Vice
President, Research and Development, for Dupont Merck. From 1983 to 1990, he was
with Genentech, Inc., most recently as Senior Vice President, Research and
Development.

DR. VALENZUELA, a co-founder of the Company, became Senior Vice President in
March 1989 having served as Vice President and Director of Research since the
Company's inception in 1981. He was associated with the University of
California, San Francisco, and also has held adjunct faculty positions at
Catholic University in Santiago, Chile.

DR. WILLIAMS joined the Company in August 1994 as Senior Vice President of
Research and Development and President of Chiron Technologies. From 1988 until
joining the Company, he was a professor of medicine at the University of
California, San Francisco. Prior to joining USCF, he was on the faculty of
Harvard Medical School. In addition, he was a co-founder and Director of COR
Therapeutics, Inc. from 1988 until joining the Company.

MR. WINGER joined the Company in August 1989 as Vice President, Finance and
Administration, and Chief Financial Officer. He became Senior Vice President,
Finance and Administration, and Chief Financial Officer, in February 1992. He
was Vice President and Chief Financial Officer of The Cooper Companies from 1987
to 1989.

MR. BLACKBURN joined the Company in April 1989 as Director of Intellectual
Property. He became Vice President and Chief Patent Counsel in February 1992.
Prior to joining the Company, he was a partner in the law firm of Ciotti &
Murashige, Irell & Manella.

MR. DALAL joined Chiron in December 1991 as Vice President, Corporate
Planning. From 1983 until joining Chiron, he was with the international
consulting firm of McKinsey & Company in the firm's pharmaceuticals, medical
devices and diagnostics industries practice.

DR. DINA joined the Company as Director of Virology in 1982. In November
1990, he became Vice President, Virology and Vaccine Development, and in
February 1993, Vice President, Virology and Vaccine Development and President,
The Biocine Company.

DR. GERBER joined Cetus in 1987 as Senior Director of Corporate Ventures,
becoming Vice President and General Manager, PCR Division, in 1988 and Senior
Vice President in September 1990. In December 1991, Dr. Gerber became Vice
President, and President, Chiron Diagnostics.

14

DR. HERRERA was promoted to Vice President and President of Chiron
Therapeutics Europe in 1993. From 1991 until 1993, he was Managing Director of
the Company's EuroCetus office in France. From 1987 until joining Chiron, he was
Managing Director of Pierre Fabre Oncologie Laboratories.

DR. LINK joined the Company as President of Chiron Ophthalmics, Inc. in
February 1986. In November 1990, he became Vice President and in January 1992,
also became Chief Executive Officer, Chiron Vision.

MR. LORENZONI joined the Company in January 1995 as Vice President; and
Chief Executive Officer of Biocine SpA. Prior to joining the Company, he was
Chief Executive Officer of Biocine SpA since 1994 and Managing Director of
Biocine SpA since 1992. Prior to 1992, he was Vice Director of Ciba Italy.

DR. MENDEZ joined the Company in 1984 in Scientific Affairs following
post-doctoral studies at the University of California, Berkeley. She became
Director of Regulatory and Patent Affairs in 1987, Vice President, Regulatory
Affairs, in February 1992, and in February 1993 became Vice President,
Regulatory and Quality Affairs.

DR. MOOS joined Chiron in October 1991 as a Vice President of Research and
Development and Director of Chemical Therapeutics. He became Vice President,
Chemical Therapeutics Research and Development, in February 1992. From 1982
until joining Chiron, he was with the Parke-Davis Pharmaceutical Research
Division of the Warner-Lambert Company, where he last held the position of Vice
President, Neuroscience and Biological Chemistry. Dr. Moos has been an Adjunct
Professor of Pharmaceutical Chemistry at the University of California, San
Francisco since 1992.

DR. URDEA joined the Company in 1981 after a post-doctoral fellowship at the
University of California, San Francisco, and has directed nucleic acid
diagnostic efforts at Chiron since that time. He became Vice President, Nucleic
Acid Systems Research and Development, in February 1992.

MR. ZADEL joined the Company in January 1995 as Vice President and President
of Ciba Corning Diagnostics Corp. Prior to joining the Company he was President
and Chief Executive Officer of Ciba Corning Diagnostics Corp. since 1986.

15

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS

The information under the caption "Market Price of Common Stock" on page 38
of the 1994 Consolidated Financial Statements, which is included as Exhibit 13
to this Form 10-K Report, is incorporated herein by reference.

ITEM 6. SELECTED FINANCIAL DATA

YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
1994 1993 1992 1991 1990
------------- ------------ ------------ ------------ -----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)

Consolidated Statement of Operations Data:
Total revenues............................ $ 453,979 $ 317,535 $ 246,260 $ 141,498 $ 99,087
Other income (expense), net............... (10,403) 7,949 6,973 12,997 5,305
Income (loss) before extraordinary item... 18,325 18,384 (92,595) (444,650) 4,536
Net income (loss)......................... 18,325 18,384 (99,252) (444,650) 7,911
Income (loss) per share before
extraordinary item....................... 0.53 0.55 (3.07) (22.54) .26
Net income (loss) per share............... 0.53 0.55 (3.29) (22.54) .45
Weighted average shares outstanding....... 34,293 33,681 30,200 19,724 17,675

DECEMBER 31,
--------------------------------------------------------------------
1994 1993 1992 1991 1990
------------- ------------ ------------ ------------ -----------
(IN THOUSANDS, EXCEPT EMPLOYEE DATA)

Consolidated Balance Sheet Data:
Working capital........................... $ 314,174 $ 256,419 $ 250,874 $ 486,826 $ 156,279
Total assets.............................. 1,049,742 968,597 701,115 907,162 277,535
Long-term debt, excluding current
portion.................................. 338,061 332,991 110,681 247,466 126,116
Accumulated deficit....................... (575,236) (593,561) (611,945) (511,783) (67,133)
Stockholders' equity...................... 572,631 522,289 478,681 505,617 121,186

Number of employees......................... 2,668 2,179 1,867 1,706 733

On January 8, 1992, Chiron combined with IntraOptics, Inc. in a transaction
accounted for as a pooling-of-interests. All periods have been restated for the
effects of this combination. On December 12, 1991, Chiron acquired Cetus in a
merger accounted for by the purchase method; therefore, the operating results of
Cetus are included from the date of the merger.

On May 10, 1994, Chiron acquired Laboratoires Domilens, S.A., in a
transaction accounted for by the purchase method; therefore, the operating
results of Domilens are included from the date of the transaction.

The Company has paid no cash dividends and does not expect to pay dividends
in the foreseeable future.

16

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

The information under the caption "Management's Discussion and Analysis of
Financial Condition and Results of Operations" on pages 1-11 of the 1994
Consolidated Financial Statements which is included as Exhibit 13 to this Form
10-K Report is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and supplementary data on pages 12-37 of the 1994
Consolidated Financial Statements which is included as Exhibit 13 to this Form
10-K Report are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

The Company's current reports on Form 8-K dated March 7, 1994 and March 25,
1994, are incorporated herein by reference.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information under the captions "Election of Directors" and "Compliance
with Section 16(a) of the Securities Exchange Act of 1934" in the Registrant's
Proxy Statement for the Annual Meeting of Stockholders to be held on May 18,
1995, is incorporated herein by reference.

Information as to Chiron's executive officers appears at the end of Part I
of this Report.

ITEM 11. EXECUTIVE COMPENSATION

The information under the caption "Executive Compensation" in the
Registrant's Proxy Statement for the Annual Meeting of Stockholders to be held
on May 18, 1995, is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information under the captions "Principal Stockholders" and "Security
Ownership of Management" in the Registrant's Proxy Statement for the Annual
Meeting of Stockholders to be held on May 18, 1995, is incorporated herein by
reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information under the captions "Related Transactions" and "Compensation
Committee Interlocks and Insider Participation" in the Registrant's Proxy
Statement for the Annual Meeting of Stockholders to be held on May 18, 1995, is
incorporated herein by reference.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a) 1. FINANCIAL STATEMENTS

The Consolidated Financial Statements and Notes to Consolidated Financial
Statements appearing on pages 12-37 of the 1994 Consolidated Financial
Statements, which is included as Exhibit 13 to this Form 10-K Report and the
Reports of Independent Auditors appearing on pages 26 and 27 of this Form 10-K,
are incorporated herein by reference.

17

2. FINANCIAL STATEMENT SCHEDULES

Schedule II -- Valuation and Qualifying Accounts

All other schedules are omitted, since the required information is not
present or is not present in amounts sufficient to require submission of the
schedule, or because the information required is included in the consolidated
financial statements and notes thereto.

(b) REPORTS ON FORM 8-K

Chiron filed a current report on Form 8-K dated November 10, 1994, reporting
under Item 5:

(1) the issuance of a press release announcing that the Company
confirmed that it is in discussions with another company regarding a
potential strategic alliance that would include the other company acquiring
a very substantial minority equity investment in the Company; and

(2) the issuance of a press release announcing that the Company, on
behalf of its vaccine joint businesses with Ciba, entered into a letter
agreement, subject to Federal Trade Commission approval, with American Home
Products Corporation ("AHP") to purchase AHP's tetanus and diphtheria
vaccine products.

Chiron filed a current report on Form 8-K dated November 20, 1994, reporting
under Item 5 that the Company and Ciba-Geigy Ltd. announced the signing of
definitive agreements to form a strategic biotechnology collaboration that
includes the acquisition by Ciba of a 49.9 percent interest in the Company.

(c) EXHIBITS

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

2.01 Agreement and Plan of Merger, made as of February 6, 1987, incorporated by reference to Exhibit 2.01 of
the Registrant's Form 10-Q report for the period ended September 30, 1994.
3.01 Restated Certificate of Incorporation of the Registrant, dated August 18, 1987, incorporated by
reference to Exhibit 3.01 of the Registrant's Form 10-K report for fiscal year 1991.
3.02 Certificate of Amendment of Restated Certificate of Incorporation of the Registrant, dated December 12,
1991, incorporated by reference to Exhibit 3.01 of the Registrant's Form 10-K report for fiscal year
1991.
3.03 Bylaws of the Registrant, as amended.
4.01 Indenture, dated as of May 21, 1987, between Cetus Corporation and Bankers Trust Company, Trustee,
incorporated by reference to Exhibit 4.01 of the Registrants Form 10-Q report for the period ended
September 30, 1994.
4.02 First Supplemental Indenture, dated as of December 12, 1991, by and among Registrant, Cetus Corporation,
and Bankers Trust Company, incorporated by reference to Exhibit 4.02 of the Registrant's Form 10-K
report for fiscal year 1992.
4.03 Indenture, dated as of November 15, 1993, between Registrant and The First National Bank of Boston, as
Trustee, incorporated by reference to Exhibit 4.03 of the Registrant's Form 10-K report for fiscal year
1993.
4.04 Rights Agreement, dated as of August 25, 1994, between the Company and Continental Stock Transfer &
Trust Company, which includes the Certificate of Designations for the Series A Junior Participating
Preferred Stock as Exhibit A, the form of Right Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Shares as Exhibit C, incorporated by reference to Exhibit 4.04 of Registrant's
report on Form 8-K dated August 25, 1994.

18

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

4.05 Amendment No. 1 to Rights Agreement dated as of November 20, 1994, between Chiron Corporation and
Continental Stock Transfer & Trust Company, incorporated by reference to Exhibit 4.05 of Registrant's
report on Form 8-K, dated November 20, 1994.
10.01 Lease between Registrant and BGR Associates, a California limited partnership, dated May 26, 1989,
incorporated by reference to Exhibit 10.01 of the Registrant's Form 10-Q report for the period ended
September 30, 1994.
10.02 Lease between Registrant and BGR Associates II, a California limited partnership, dated May 26, 1989,
incorporated by reference to Exhibit 10.02 of the Registrant's Form 10-Q report for the period ended
September 30, 1994.
10.03 Office Sublease between Sybase, Inc., a California corporation, and Registrant, dated July 18, 1991,
incorporated by reference to Exhibit 10.03 of the Registrant's Form 10-K report for fiscal year 1992.
10.04 Lease between Registrant and Bay Center Associates, a California limited partnership, dated as of June
5, 1987, incorporated by reference to Exhibit 10.33 of Registrant's Form 10-K report for fiscal year
1987.
10.05 Amendment to lease between Registrant and Bay Center Associates, a California limited partnership, dated
February 4, 1988, incorporated by reference to Exhibit 10.05 of the Registrant's Form 10-Q report for
the period ended September 30, 1994.
10.06 Amendment to lease between Registrant and J S Bay Center Associates, a California limited partnership,
dated December 1, 1994.
10.07 Lease between Acorn Development, Inc., a West Virginia corporation, and IntraOptics, Inc., a Delaware
corporation, dated September 12, 1991, incorporated by reference to Exhibit 10.06 of the Registrant's
Form 10-K report for fiscal year 1992.
10.08 License Agreement between the Registrant and the Board of Trustees of the Leland Stanford Junior
University, dated December 15, 1981, incorporated by reference to Exhibit 10.07 of the Registrant's
Form 10-Q report for the period ended September 30, 1994.
10.09 Joint Venture Agreement by and between Chiron Biocine Corporation, a California corporation, and
CIBA-GEIGY Biocine Corporation, a Delaware corporation, dated April 15, 1987 (with certain confidential
information deleted), incorporated by reference to Exhibit 10.23 of the Registrant's Form 8 filed with
the Commission on February 14, 1992.
10.10 Amendment to Biocine Joint Venture Agreement by and between Chiron Biocine Corporation, a California
corporation, and CIBA-GEIGY Biocine Corporation, a Delaware corporation, effective as of January 1,
1992, incorporated by reference to Exhibit 10.63 to Registrant's Form 10-Q report for the period ended
June 30, 1992.
10.11 Research and License Agreement by and between Registrant and The Biocine Company, a Delaware
partnership, dated April 15, 1987 (with certain confidential information deleted), incorporated by
reference to Exhibit 10.24 of the Registrant's Form 8 filed with the Commission on February 14, 1992.
10.12 License Agreement by and between CIBA-GEIGY Biocine Corporation, a Delaware corporation, and The Biocine
Company, a Delaware partnership, dated April 15, 1987 (with certain confidential information deleted),
incorporated by reference to Exhibit 10.25 of the Registrant's Form 8 filed with the Commission on
February 14, 1992.

19

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

10.13 License Agreement by and between Chiron Biocine Corporation, a California corporation, and The Biocine
Company, a Delaware partnership, dated April 15, 1987 (with certain confidential information deleted),
incorporated by reference to Exhibit 10.26 of the Registrant's Form 8 filed with the Commission on
February 14, 1992.
10.14 Letter Agreement signed by CIBA-GEIGY Corporation, dated April 15, 1987, incorporated by reference to
Exhibit 10.13 of the Registrant's Form 10-Q report for the period ended September 30, 1994.
10.15 Agreement between the Registrant and Ortho Diagnostic Systems, Inc., a New Jersey corporation, dated
August 17, 1989, and Amendment to Collaboration Agreement between Ortho Diagnostic Systems, Inc. and
Registrant, dated December 22, 1989 (with certain confidential information deleted), incorporated by
reference to Exhibit 10.14 of the Registrant's Form 10-Q report for the period ended September 30,
1994.
10.16 License and Supply Agreement between Ortho Diagnostic Systems, Inc., a New Jersey corporation, the
Registrant and Abbott Laboratories, an Illinois corporation, dated August 17, 1989 (with certain
confidential information deleted), incorporated by reference to Exhibit 10.15 of the Registrant's Form
10-Q report for the quarter ended June 30, 1994.
10.17 Chiron 1991 Stock Option Plan, as amended.*
10.18 Forms of Option Agreements, Chiron 1991 Stock Option Plan, as amended, incorporated by reference to
Exhibit 10.17 of the Registrant's Form 10-K report for fiscal year 1993.*
10.19 Forms of Option Agreements, Cetus Corporation Amended and Restated Common Stock Option Plan,
incorporated by reference to Exhibit 10.33 of Registrant's Form 10-K report for fiscal year 1991.*
10.20 Forms of Supplemental Letter concerning the assumption of Cetus Corporation options by Chiron,
incorporated by reference to Exhibit 10.34 of Registrant's Form 10-K report for fiscal year 1991.*
10.21 Agreement and Plan of Reorganization dated as of October 11, 1991 by and among the Registrant, Chiron
Ophthalmics, Inc., COI Acquisition Corp., IntraOptics, Inc. and James R. Cook, M.D., incorporated by
reference to Exhibit 28.2 of Registrant's report on Form 8-K dated October 14, 1991.
10.22 Indemnification Agreement between the Registrant and Dr. William J. Rutter, dated as of February 12,
1987 (which form of agreement is used for each member of Registrant's Board of Directors), incorporated
by reference to Exhibit 10.21 of the Registrant's Form 10-Q report for the period ended September 30,
1994.
10.23 Stock Purchase Agreement by and between the Registrant and Johnson & Johnson Development Corporation, a
corporation organized and existing under the laws of the State of New Jersey, dated as of October 3,
1986, incorporated by reference to Exhibit 10.22 of the Registrant's Form 10-Q report for the period
ended September 30, 1994.
10.24 Stock Purchase Agreement between the Registrant and CIBA-GEIGY, Limited, a corporation organized and
existing under the laws of Switzerland, dated November 14, 1988, incorporated by reference to Exhibit
10.23 of the Registrant's Form 10-Q report for the period ended September 30, 1994.
10.25 Form of Debenture Purchase Agreement between the Registrant and CIBA-GEIGY, Limited, a corporation
organized and existing under the laws of Switzerland, dated June 22, 1990.
10.26 Chiron Corporation 1.90% Convertible Subordinated Note due 2000, Series B, incorporated by reference to
Exhibit 10.25 of the Registrant's Form 10-K report for fiscal year 1993.

20

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

10.27 Shareholders Agreement, dated as of February 28, 1992, by and among Chiron Corporation, CIBA-GEIGY
Limited and JV VAX B.V., incorporated by reference to Exhibit 10.40 of Registrant's Form 10-K report
for fiscal year 1991.
10.28 Investment Agreement dated as of November 20, 1994 among Ciba-Geigy Limited, Ciba-Geigy Corporation,
Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by reference to Exhibit 10.54 of
the Registrant's current report on Form 8-K dated November 20, 1994.
10.29 Governance Agreement dated as of November 20, 1994 among Ciba-Geigy Limited, Ciba-Geigy Corporation and
Chiron Corporation, incorporated by reference to Exhibit 10.55 of the Registrant's current report on
Form 8-K dated November 20, 1994.
10.30 Subscription Agreement dated as of November 20, 1994 among Ciba-Geigy Limited, Ciba-Geigy Corporation,
Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by reference to Exhibit 10.56 of
the Registrant's current report on Form 8-K dated November 20, 1994.
10.31 Cooperation and Collaboration Agreement dated as of November 20, 1994, between Ciba-Geigy Limited and
Chiron Corporation, incorporated by reference to Exhibit 10.57 of the Registrant's current report on
Form 8-K dated November 20, 1994.
10.32 Registration Rights Agreement dated as of November 20, 1994 between Ciba Biotech Partnership, Inc. and
Chiron Corporation, incorporated by reference to Exhibit 10.58 of the Registrant's current report on
Form 8-K dated November 20, 1994.
10.33 Market Price Option Agreement dated as of November 20, 1994 among Ciba-Geigy Limited, Ciba-Geigy
Corporation, Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by reference to
Exhibit 10.59 of the Registrant's current report on Form 8-K dated November 20, 1994.
10.34 Amendment dated as of January 3, 1995 among Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech
Partnership, Inc. and Chiron Corporation, incorporated by reference to Exhibit 10.60 of the
Registrant's current report on Form 8-K dated January 4, 1995.
10.35 Supplemental Agreement dated as of January 3, 1995 among Ciba-Geigy Limited, Ciba-Geigy Corporation,
Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by reference to Exhibit 10.61 of
the Registrant's current report on Form 8-K dated January 4, 1995.
10.36 Amendment with Respect to Employee Stock Option Arrangements dated as of January 3, 1995 among
Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech Partnership, Inc. and Chiron Corporation,
incorporated by reference to Exhibit 10.62 of the Registrant's current report on Form 8-K dated January
4, 1995.*
10.37 Supplemental Benefits Agreement, dated July 21, 1989, between the Registrant and Dr. William J. Rutter,
incorporated by reference to Exhibit 10.27 of the Registrant's Form 10-Q report for the period ended
September 30, 1994.*
10.38 Lease dated as of July 1, 1983 between Cetus Corporation and H.B. Chapman, Jr., incorporated by
reference to Exhibit 10.28 of the Registrant's Form 10-Q report for the period ended September 30,
1994.
10.39 Amendment to Lease, dated as of March 20, 1990, amending Lease dated as of July 1, 1983, incorporated by
reference to Exhibit 10(b) of Cetus Corporation's Form 10-K report for its fiscal year 1990.

21

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

10.40 Lease commencing March 1, 1987, between EuroCetus B.V. and the Municipal Land Company of the City of
Amsterdam (Translation), incorporated by reference to Exhibit 10(k) of Cetus Corporation's Form 10-K
report for its fiscal year 1987 (Commission File No. 0-10003).
10.41 Agreement commencing January 1, 1991, between Euro Cetus B.V. and the Municipal Development Corporation
(Translation).
10.42 Form of Option Agreement (with Purchase Agreements attached thereto) between Cetus Corporation and each
former limited partner of Cetus Healthcare Limited Partnership, a California limited partnership,
incorporated by reference to Exhibit 10.31 of the Registrant's Form 10-Q report for the period ended
September 30, 1994.
10.43 Form of Option Agreement (with forms of Purchase Agreements attached thereto), dated December 30, 1986,
between Cetus Corporation and each former limited partner of Cetus Healthcare Limited Partnership II, a
California limited partnership, incorporated by reference to Exhibit 10.32 of the Registrant's Form
10-Q report for the period ended September 30, 1994.
10.44 Big-O Property Purchase and Leaseback Agreement, dated as of October 31, 1988, between Cetus Corporation
and Richard K. Robbins, incorporated by reference to Exhibit 10.33 of the Registrant's Form 10-Q report
for the period ended September 30, 1994.
10.45 Triple Net Lease dated as of January 20, 1989, between Cetus Corporation and BGR Associates III, a
California limited partnership, and Marin County Exchange Corporation, incorporated by reference to
Exhibit 10.34 of the Registrant's Form 10-Q report for the period ended September 30, 1994.
10.46 Lease entered into as of November 15, 1993 between Hollis R&D Associates, a California General
Partnership, and Registrant, incorporated by reference to Exhibit 10.35 of the Registrant's Form 10-K
report for fiscal year 1993.
10.47 Stock Purchase and Warrant Agreement dated May 9, 1989, between Cetus Corporation and Hoffmann-La Roche
Inc., incorporated by reference to Exhibit 10.36 of the Registrant's Form 10-Q report for the period
ended September 30, 1994.
10.48 Letter Agreement, dated as of December 12, 1991, relating to Stock Purchase and Warrant Agreement
between Registrant and Hoffmann-La Roche Inc., incorporated by reference to Exhibit 10.59 of
Registrant's Form 10-K report for fiscal year 1991.
10.49 Agreement and Plan of Merger dated as of July 21, 1991, by and among Registrant, Chiron Acquisition
Subsidiary, Inc. and Cetus Corporation, incorporated by reference to Exhibit 28.2 of Registrant's Form
8-K report dated July 22, 1991.
10.50 Letter Agreement dated September 26, 1990 between the Registrant and William G. Green, incorporated by
reference to Exhibit 10.41 of the Registrant's Form 10-K report for fiscal year 1992.*
10.51 Letter Agreement dated December 18, 1991 between Registrant and Jack Schuler, incorporated by reference
to Exhibit 10.42 of the Registrant's Form 10-K report for fiscal year 1992.*
10.52 Letter Agreement dated May 7, 1992 between Registrant and Donald A. Glaser, incorporated by reference to
Exhibit 10.43 of the Registrant's Form 10-K report for fiscal year 1992.*
10.53 Letter Agreement dated March 12, 1993 between the Registrant and William G. Gerber, incorporated by
reference to Exhibit 10.46 of the Registrant's Form 10-K report for fiscal year 1992.*

22

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

10.54 Letter Agreement dated September 9, 1991 between the Registrant and Walter Moos, incorporated by
reference to Exhibit 10.47 of the Registrant's Form 10-K report for fiscal year 1992.*
10.55 Letter Agreement between the Registrant and Walter Moos, dated February 1, 1993, incorporated by
reference to Exhibit 10.48 of the Registrant's Form 10-K report for fiscal year 1992.*
10.56 Letter Agreement between Registrant and Renato Fuchs, dated May 13, 1993, incorporated by reference to
Exhibit 10.47 of the Registrant's Form 10-K report for fiscal year 1993.*
10.57 Letter Agreement between Registrant and David Martin, dated December 2, 1993, incorporated by reference
to Exhibit 10.48 of the Registrant's Form 10-K report for fiscal year 1993.*
10.58 Description of Executive Variable Compensation Program.*
10.59 Chiron Corporation Executive Bonus Plan.*
10.60 Regulatory Filing, Development and Supply Agreement between the Registrant, Cetus Oncology Corporation,
a wholly owned subsidiary of the Registrant, and Schering AG, a German company, dated as of May 10,
1993 (with certain confidential information deleted), incorporated by reference to Exhibit 10.50 of the
Registrant's Form 8-K report dated February 9, 1994.
10.61 Letter Agreement dated December 30, 1993 by and between Registrant and Schering AG, a German company
(with certain confidential information deleted), incorporated by reference to Exhibit 10.51 of the
Registrant's Form 10-K report for fiscal year 1993.
10.62 Guaranty, dated as of September 29, 1994, made by Registrant, in favor of Bankers Trust Company, as
trustee, incorporated by reference to Exhibit 10.52 of the Registrant's Form 10-Q report for the period
ended September 30, 1994.
10.63 Guaranty, dated as of September 29, 1994, made by Cetus Corporation, in favor of The First National Bank
of Boston, as trustee, incorporated by reference to Exhibit 10.53 of the Registrant's Form 10-Q report
for the period ended September 30, 1994.
10.64 Letter Agreements dated September 11, 1992, July 15, 1994 and September 14, 1994 between the Registrant
and Lewis T. Williams, incorporated by reference to Exhibit 10.54 of the Registrant's Form 10-Q report
for the period ended September 30, 1994.*
10.65 Letter dated January 4, 1995 to C. William Zadel.*
10.66 Letter to Dino Dina dated April 24, 1984.*
11 Statement of Computation of Earnings per Share.
13 Consolidated Financial Statements.
21 List of Subsidiaries of the Registrant.
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors. Reference is made to page 28 of this Form 10-K
report.
23.2 Consent of Ernst & Young LLP, Independent Auditors. Reference is made to page 29 of this Form 10-K
report.
24 Power of Attorney. Reference is made to pages 24-25 of this Form 10-K report.

- ------------------------
* Management contract, compensatory plan or arrangement.

23

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed on
its behalf by the undersigned, thereunto duly authorized.

Date: March 17, 1995

CHIRON CORPORATION

By /s/ EDWARD E. PENHOET

-----------------------------------
Edward E. Penhoet, Ph.D.
PRESIDENT AND CHIEF EXECUTIVE
OFFICER

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS:

That the undersigned officers and directors of Chiron Corporation do hereby
constitute and appoint Edward E. Penhoet, Ph.D., and William J. Rutter, Ph.D.,
and each of them, the lawful attorney and agent or attorneys and agents with
power and authority to do any and all acts and things and to execute any and all
instruments which said attorneys and agents, or either of them, determine may be
necessary or advisable or required to enable Chiron Corporation to comply with
the Securities Exchange Act of 1934, as amended, and any rules or regulations or
requirements of the Securities and Exchange Commission in connection with this
Form 10-K Report. Without limiting the generality of the foregoing power and
authority, the powers granted include the power and authority to sign the names
of the undersigned officers and directors in the capacities indicated below to
this Form 10-K report or amendments or supplements thereto, and each of the
undersigned hereby ratifies and confirms all that said attorneys and agents or
either of them, shall do or cause to be done by virtue hereof. This Power of
Attorney may be signed in several counterparts.

24

IN WITNESS WHEREOF, each of the undersigned has executed this Power of
Attorney as of the date indicated opposite his name.

Pursuant to the requirements of the Securities Exchange Act of 1934, the
Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.

SIGNATURE TITLE DATE
- ----------------------------------- ------------------------- ----------------

/s/ EDWARD E. PENHOET
- ----------------------------------- President and Chief March 17, 1995
Edward E. Penhoet, Ph.D. Executive Officer

Senior Vice President,
Finance and
/s/ DENNIS L. WINGER Administration, Chief
- ----------------------------------- Financial Officer, and March 17, 1995
Dennis L. Winger Principal Accounting
Officer

/s/ WILLIAM J. RUTTER
- ----------------------------------- Chairman of the Board of March 17, 1995
William J. Rutter, Ph.D. Directors

/s/ GILBERT AMELIO
- ----------------------------------- Director March 17, 1995
Gilbert Amelio, Ph.D.

/s/ LEWIS W. COLEMAN
- ----------------------------------- Director March 17, 1995
Lewis W. Coleman

/s/ PIERRE DOUAZE
- ----------------------------------- Director March 17, 1995
Pierre Douaze

/s/ DONALD A. GLASER
- ----------------------------------- Director March 17, 1995
Donald A. Glaser, Ph.D.

/s/ ALEX KRAUER
- ----------------------------------- Director March 17, 1995
Alex Krauer, Ph.D.

/s/ FRANCOIS L'EPLATTENIER
- ----------------------------------- Director March 17, 1995
Francois L'Eplattenier, Ph.D.

/s/ HENRI SCHRAMEK
- ----------------------------------- Director March 17, 1995
Henri Schramek, Ph.D.

/s/ JACK W. SCHULER
- ----------------------------------- Director March 17, 1995
Jack W. Schuler

/s/ PIETER J. STRIJKERT
- ----------------------------------- Director March 17, 1995
Pieter J. Strijkert, Ph.D.

25

REPORT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Chiron Corporation:

We have audited the accompanying consolidated balance sheet of Chiron
Corporation and subsidiaries as of December 31, 1994 and the related
consolidated statements of operations, stockholders' equity and cash flows for
the year then ended. In connection with our audit of the consolidated financial
statements, we also have audited the financial statement schedule as listed in
the accompanying index. These consolidated financial statements and the
financial statement schedule are the responsibility of the Company's management.
Our responsibility is to express an opinion on these consolidated financial
statements and the financial statement schedule based on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Chiron
Corporation and subsidiaries as of December 31, 1994, and the results of their
operations and their cash flows for the year then ended, in conformity with
generally accepted accounting principles. Also in our opinion, the related
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.

KPMG Peat Marwick LLP

San Francisco, California
February 17, 1995

26

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Chiron Corporation:

We have audited the consolidated balance sheet of Chiron Corporation as of
December 31, 1993, and the related consolidated statements of operations,
stockholders' equity and cash flows for the years ended December 31, 1993 and
1992, included in the 1994 Consolidated Financial Statements of Chiron
Corporation included as Exhibit 13. Our audits also included the financial
statement schedule of Chiron Corporation for the years ended December 31, 1993
and 1992, listed in the Index at Item 14(a). These financial statements and
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these financial statements and schedule based on our
audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position of
Chiron Corporation at December 31, 1993, and the consolidated results of its
operations and its cash flows for the years ended December 31, 1993 and 1992, in
conformity with generally accepted accounting principles. Also, in our opinion,
the related financial statement schedule, when considered in relation to the
basic consolidated financial statements taken as a whole, presents fairly in all
material respects the information set forth therein.

ERNST & YOUNG LLP

San Francisco, California
February 25, 1994

27

CONSENT OF KPMG PEAT MARWICK LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements
(File Numbers 33-20181, 33-35182, 2-90595, 33-44477, 33-65024, 33-23899, and
33-45822 on Form S-8 and File Number 33-43574 on Form S-3) of Chiron and in the
related prospectuses of our report dated February 17, 1995, relating to the
consolidated balance sheet of Chiron Corporation and subsidiaries as of December
31, 1994, and the related consolidated statements of operations, stockholders'
equity, and cash flows for the year then ended and the related schedule, which
report appears in the December 31, 1994 annual report on Form 10-K of Chiron
Corporation.

KPMG Peat Marwick LLP

San Francisco, California
March 14, 1995

28

CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

We consent to the incorporation by reference in the Registration Statements
(Forms S-8, File Numbers 33-20181, 33-35182, 2-90595, 33-44477, 33-23899,
33-65024, 33-45822 and Form S-3 File Number 33-43574) pertaining to the Chiron
Corporation 1991 Stock Option Plan, the 1988 Employee Stock Purchase Plan, The
IntraOptics, Inc. 1986 Incentive Stock Option Plan, as amended, the 1982 Stock
Option Plan and the shares issuable to certain warrant holders and in the
related prospectuses of our report dated February 25, 1994, with respect to the
1993 and 1992 consolidated financial statements and schedule of Chiron
Corporation included and incorporated herein by reference in this Annual Report
(Form 10-K) of Chiron Corporation for the year ended December 31, 1994.

ERNST & YOUNG LLP

San Francisco, California
March 13, 1995

29

CHIRON CORPORATION
INDEX TO FINANCIAL STATEMENTS AND
FINANCIAL STATEMENT SCHEDULES

PAGES OF 1994
CONSOLIDATED
FINANCIAL
STATEMENTS
INCORPORATED FORM 10-K
BY REFERENCE PAGE
------------- -----------

Financial Statements and Notes............................................. 1-37 --
Report of KPMG Peat Marwick LLP............................................ -- 26
Report of Ernst & Young LLP................................................ -- 27
Schedule II -- Valuation and Qualifying Accounts........................... -- 31

30

CHIRON CORPORATION
SCHEDULE II VALUATION AND
QUALIFYING ACCOUNTS
YEARS ENDED DECEMBER 31, 1994, 1993 AND 1992
(IN THOUSANDS)

ADDITIONS
-------------------------
BALANCE AT CHARGED TO BALANCE AT
BEGINNING COSTS AND END OF
DESCRIPTION OF YEAR EXPENSES OTHER DEDUCTIONS RECLASSIFICATIONS YEAR
- --------------------------------- ----------- ----------- ------------ ---------- --------------- ----------

1994:
Accounts receivable............ $ 5,194 $ 5,880 $ 2,424(1) $ (4,880 ) $ (1,408)(2) $ 7,210
1993:
Accounts receivable............ 2,525 4,012 -- (1,343 ) -- 5,194
1992:
Accounts receivable............ 1,602 2,296 -- (1,373 ) -- 2,525

- ------------------------
(1) Represents accounts receivable allowances as of the acquisition date
related to an acquired business.

(2) Represents amounts reclassified to other current liabilities.

31

EXHIBIT INDEX

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

2.01 Agreement and Plan of Merger, made as of February 6, 1987, incorporated by reference to Exhibit 2.01 of
the Registrant's Form 10-Q report for the period ended September 30, 1994
3.01 Restated Certificate of Incorporation of the Registrant, dated August 18, 1987, incorporated by
reference to Exhibit 3.01 of the Registrant's Form 10-K report for fiscal year 1991
3.02 Certificate of Amendment of Restated Certificate of Incorporation of the Registrant, dated December 12,
1991, incorporated by reference to Exhibit 3.01 of the Registrant's Form 10-K report for fiscal year
1991
3.03 Bylaws of the Registrant, as amended
4.01 Indenture, dated as of May 21, 1987, between Cetus Corporation and Bankers Trust Company, Trustee,
incorporated by reference to Exhibit 4.01 of the Registrants Form 10-Q report for the period ended
September 30, 1994
4.02 First Supplemental Indenture, dated as of December 12, 1991, by and among Registrant, Cetus Corporation,
and Bankers Trust Company, incorporated by reference to Exhibit 4.02 of the Registrant's Form 10-K
report for fiscal year 1992
4.03 Indenture, dated as of November 15, 1993, between Registrant and The First National Bank of Boston, as
Trustee, incorporated by reference to Exhibit 4.03 of the Registrant's Form 10-K report for fiscal year
1993
4.04 Rights Agreement, dated as of August 25, 1994, between the Company and Continental Stock Transfer &
Trust Company, which includes the Certificate of Designations for the Series A Junior Participating
Preferred Stock as Exhibit A, the form of Right Certificate as Exhibit B and the Summary of Rights to
Purchase Preferred Shares as Exhibit C, incorporated by reference to Exhibit 4.04 of Registrant's
report on Form 8-K dated August 25, 1994
4.05 Amendment No. 1 to Rights Agreement dated as of November 20, 1994, between Chiron Corporation and
Continental Stock Transfer & Trust Company, incorporated by reference to Exhibit 4.05 of Registrant's
report on Form 8-K, dated November 20, 1994
10.01 Lease between Registrant and BGR Associates, a California limited partnership, dated May 26, 1989,
incorporated by reference to Exhibit 10.01 of the Registrant's Form 10-Q report for the period ended
September 30, 1994
10.02 Lease between Registrant and BGR Associates II, a California limited partnership, dated May 26, 1989,
incorporated by reference to Exhibit 10.02 of the Registrant's Form 10-Q report for the period ended
September 30, 1994
10.03 Office Sublease between Sybase, Inc., a California corporation, and Registrant, dated July 18, 1991,
incorporated by reference to Exhibit 10.03 of the Registrant's Form 10-K report for fiscal year 1992
10.04 Lease between Registrant and Bay Center Associates, a California limited partnership, dated as of June
5, 1987, incorporated by reference to Exhibit 10.33 of Registrant's Form 10-K report for fiscal year
1987
10.05 Amendment to lease between Registrant and Bay Center Associates, a California limited partnership, dated
February 4, 1988, incorporated by reference to Exhibit 10.05 of the Registrant's Form 10-Q report for
the period ended September 30, 1994
10.06 Amendment to lease between Registrant and J S Bay Center Associates, a California limited partnership,
dated December 1, 1994

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

10.07 Lease between Acorn Development, Inc., a West Virginia corporation, and IntraOptics, Inc., a Delaware
corporation, dated September 12, 1991, incorporated by reference to Exhibit 10.06 of the Registrant's
Form 10-K report for fiscal year 1992
10.08 License Agreement between the Registrant and the Board of Trustees of the Leland Stanford Junior
University, dated December 15, 1981, incorporated by reference to Exhibit 10.07 of the Registrant's
Form 10-Q report for the period ended September 30, 1994
10.09 Joint Venture Agreement by and between Chiron Biocine Corporation, a California corporation, and
CIBA-GEIGY Biocine Corporation, a Delaware corporation, dated April 15, 1987 (with certain confidential
information deleted), incorporated by reference to Exhibit 10.23 of the Registrant's Form 8 filed with
the Commission on February 14, 1992
10.10 Amendment to Biocine Joint Venture Agreement by and between Chiron Biocine Corporation, a California
corporation, and CIBA-GEIGY Biocine Corporation, a Delaware corporation, effective as of January 1,
1992, incorporated by reference to Exhibit 10.63 to Registrant's Form 10-Q report for the period ended
June 30, 1992
10.11 Research and License Agreement by and between Registrant and The Biocine Company, a Delaware
partnership, dated April 15, 1987 (with certain confidential information deleted), incorporated by
reference to Exhibit 10.24 of the Registrant's Form 8 filed with the Commission on February 14,
1992
10.12 License Agreement by and between CIBA-GEIGY Biocine Corporation, a Delaware corporation, and The Biocine
Company, a Delaware partnership, dated April 15, 1987 (with certain confidential information deleted),
incorporated by reference to Exhibit 10.25 of the Registrant's Form 8 filed with the Commission on
February 14, 1992
10.13 License Agreement by and between Chiron Biocine Corporation, a California corporation, and The Biocine
Company, a Delaware partnership, dated April 15, 1987 (with certain confidential information deleted),
incorporated by reference to Exhibit 10.26 of the Registrant's Form 8 filed with the Commission on
February 14, 1992
10.14 Letter Agreement signed by CIBA-GEIGY Corporation, dated April 15, 1987, incorporated by reference to
Exhibit 10.13 of the Registrant's Form 10-Q report for the period ended September 30, 1994
10.15 Agreement between the Registrant and Ortho Diagnostic Systems, Inc., a New Jersey corporation, dated
August 17, 1989, and Amendment to Collaboration Agreement between Ortho Diagnostic Systems, Inc. and
Registrant, dated December 22, 1989 (with certain confidential information deleted), incorporated by
reference to Exhibit 10.14 of the Registrant's Form 10-Q report for the period ended September 30, 1994
10.16 License and Supply Agreement between Ortho Diagnostic Systems, Inc., a New Jersey corporation, the
Registrant and Abbott Laboratories, an Illinois corporation, dated August 17, 1989 (with certain
confidential information deleted), incorporated by reference to Exhibit 10.15 of the Registrant's Form
10-Q report for the quarter ended June 30, 1994
10.17 Chiron 1991 Stock Option Plan, as amended*
10.18 Forms of Option Agreements, Chiron 1991 Stock Option Plan, as amended, incorporated by reference to
Exhibit 10.17 of the Registrant's Form 10-K report for fiscal year 1993*

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

10.19 Forms of Option Agreements, Cetus Corporation Amended and Restated Common Stock Option Plan,
incorporated by reference to Exhibit 10.33 of Registrant's Form 10-K report for fiscal year 1991*
10.20 Forms of Supplemental Letter concerning the assumption of Cetus Corporation options by Chiron,
incorporated by reference to Exhibit 10.34 of Registrant's Form 10-K report for fiscal year 1991*
10.21 Agreement and Plan of Reorganization dated as of October 11, 1991 by and among the Registrant, Chiron
Ophthalmics, Inc., COI Acquisition Corp., IntraOptics, Inc. and James R. Cook, M.D., incorporated by
reference to Exhibit 28.2 of Registrant's report on Form 8-K dated October 14, 1991
10.22 Indemnification Agreement between the Registrant and Dr. William J. Rutter, dated as of February 12,
1987 (which form of agreement is used for each member of Registrant's Board of Directors), incorporated
by reference to Exhibit 10.21 of the Registrant's Form 10-Q report for the period ended September 30,
1994
10.23 Stock Purchase Agreement by and between the Registrant and Johnson & Johnson Development Corporation, a
corporation organized and existing under the laws of the State of New Jersey, dated as of October 3,
1986, incorporated by reference to Exhibit 10.22 of the Registrant's Form 10-Q report for the period
ended September 30, 1994
10.24 Stock Purchase Agreement between the Registrant and CIBA-GEIGY, Limited, a corporation organized and
existing under the laws of Switzerland, dated November 14, 1988, incorporated by reference to Exhibit
10.23 of the Registrant's Form 10-Q report for the period ended September 30, 1994
10.25 Form of Debenture Purchase Agreement between the Registrant and CIBA-GEIGY, Limited, a corporation
organized and existing under the laws of Switzerland, dated June 22, 1990
10.26 Chiron Corporation 1.90% Convertible Subordinated Note due 2000, Series B, incorporated by reference to
Exhibit 10.25 of the Registrant's Form 10-K report for fiscal year 1993
10.27 Shareholders Agreement, dated as of February 28, 1992, by and among Chiron Corporation, CIBA-GEIGY
Limited and JV VAX B.V., incorporated by reference to Exhibit 10.40 of Registrant's Form 10-K report
for fiscal year 1991
10.28 Investment Agreement dated as of November 20, 1994 among Ciba-Geigy Limited, Ciba-Geigy Corporation,
Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by reference to Exhibit 10.54 of
the Registrant's current report on Form 8-K dated November 20, 1994
10.29 Governance Agreement dated as of November 20, 1994 among Ciba-Geigy Limited, Ciba-Geigy Corporation and
Chiron Corporation, incorporated by reference to Exhibit 10.55 of the Registrant's current report on
Form 8-K dated November 20, 1994
10.30 Subscription Agreement dated as of November 20, 1994 among Ciba-Geigy Limited, Ciba-Geigy Corporation,
Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by reference to Exhibit 10.56 of
the Registrant's current report on Form 8-K dated November 20, 1994
10.31 Cooperation and Collaboration Agreement dated as of November 20, 1994, between Ciba-Geigy Limited and
Chiron Corporation, incorporated by reference to Exhibit 10.57 of the Registrant's current report on
Form 8-K dated November 20, 1994

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

10.32 Registration Rights Agreement dated as of November 20, 1994 between Ciba Biotech Partnership, Inc. and
Chiron Corporation, incorporated by reference to Exhibit 10.58 of the Registrant's current report on
Form 8-K dated November 20, 1994
10.33 Market Price Option Agreement dated as of November 20, 1994 among Ciba-Geigy Limited, Ciba-Geigy
Corporation, Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by reference to
Exhibit 10.59 of the Registrant's current report on Form 8-K dated November 20, 1994
10.34 Amendment dated as of January 3, 1995 among Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech
Partnership, Inc. and Chiron Corporation, incorporated by reference to Exhibit 10.60 of the
Registrant's current report on Form 8-K dated January 4, 1995
10.35 Supplemental Agreement dated as of January 3, 1995 among Ciba-Geigy Limited, Ciba-Geigy Corporation,
Ciba Biotech Partnership, Inc. and Chiron Corporation, incorporated by reference to Exhibit 10.61 of
the Registrant's current report on Form 8-K dated January 4, 1995
10.36 Amendment with Respect to Employee Stock Option Arrangements dated as of January 3, 1995 among
Ciba-Geigy Limited, Ciba-Geigy Corporation, Ciba Biotech Partnership, Inc. and Chiron Corporation,
incorporated by reference to Exhibit 10.62 of the Registrant's current report on Form 8-K dated January
4, 1995*
10.37 Supplemental Benefits Agreement, dated July 21, 1989, between the Registrant and Dr. William J. Rutter,
incorporated by reference to Exhibit 10.27 of the Registrant's Form 10-Q report for the period ended
September 30, 1994*
10.38 Lease dated as of July 1, 1983 between Cetus Corporation and H.B. Chapman, Jr., incorporated by
reference to Exhibit 10.28 of the Registrant's Form 10-Q report for the period ended September 30, 1994
10.39 Amendment to Lease, dated as of March 20, 1990, amending Lease dated as of July 1, 1983, incorporated by
reference to Exhibit 10(b) of Cetus Corporation's Form 10-K report for its fiscal year 1990
10.40 Lease commencing March 1, 1987, between EuroCetus B.V. and the Municipal Land Company of the City of
Amsterdam (Translation), incorporated by reference to Exhibit 10(k) of Cetus Corporation's Form 10-K
report for its fiscal year 1987 (Commission File No. 0-10003)
10.41 Agreement commencing January 1, 1991, between Euro Cetus B.V. and the Municipal Development Corporation
(Translation)
10.42 Form of Option Agreement (with Purchase Agreements attached thereto) between Cetus Corporation and each
former limited partner of Cetus Healthcare Limited Partnership, a California limited partnership,
incorporated by reference to Exhibit 10.31 of the Registrant's Form 10-Q report for the period ended
September 30, 1994
10.43 Form of Option Agreement (with forms of Purchase Agreements attached thereto), dated December 30, 1986,
between Cetus Corporation and each former limited partner of Cetus Healthcare Limited Partnership II, a
California limited partnership, incorporated by reference to Exhibit 10.32 of the Registrant's Form
10-Q report for the period ended September 30,
1994
10.44 Big-O Property Purchase and Leaseback Agreement, dated as of October 31, 1988, between Cetus Corporation
and Richard K. Robbins, incorporated by reference to Exhibit 10.33 of the Registrant's Form 10-Q report
for the period ended September 30, 1994

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

10.45 Triple Net Lease dated as of January 20, 1989, between Cetus Corporation and BGR Associates III, a
California limited partnership, and Marin County Exchange Corporation, incorporated by reference to
Exhibit 10.34 of the Registrant's Form 10-Q report for the period ended September 30, 1994
10.46 Lease entered into as of November 15, 1993 between Hollis R&D Associates, a California General
Partnership, and Registrant, incorporated by reference to Exhibit 10.35 of the Registrant's Form 10-K
report for fiscal year 1993
10.47 Stock Purchase and Warrant Agreement dated May 9, 1989, between Cetus Corporation and Hoffmann-La Roche
Inc., incorporated by reference to Exhibit 10.36 of the Registrant's Form 10-Q report for the period
ended September 30, 1994
10.48 Letter Agreement, dated as of December 12, 1991, relating to Stock Purchase and Warrant Agreement
between Registrant and Hoffmann-La Roche Inc., incorporated by reference to Exhibit 10.59 of
Registrant's Form 10-K report for fiscal year 1991
10.49 Agreement and Plan of Merger dated as of July 21, 1991, by and among Registrant, Chiron Acquisition
Subsidiary, Inc. and Cetus Corporation, incorporated by reference to Exhibit 28.2 of Registrant's Form
8-K report dated July 22, 1991
10.50 Letter Agreement dated September 26, 1990 between the Registrant and William G. Green, incorporated by
reference to Exhibit 10.41 of the Registrant's Form 10-K report for fiscal year 1992*
10.51 Letter Agreement dated December 18, 1991 between Registrant and Jack Schuler, incorporated by reference
to Exhibit 10.42 of the Registrant's Form 10-K report for fiscal year 1992*
10.52 Letter Agreement dated May 7, 1992 between Registrant and Donald A. Glaser, incorporated by reference to
Exhibit 10.43 of the Registrant's Form 10-K report for fiscal year 1992*
10.53 Letter Agreement dated March 12, 1993 between the Registrant and William G. Gerber, incorporated by
reference to Exhibit 10.46 of the Registrant's Form 10-K report for fiscal year 1992*
10.54 Letter Agreement dated September 9, 1991 between the Registrant and Walter Moos, incorporated by
reference to Exhibit 10.47 of the Registrant's Form 10-K report for fiscal year 1992*
10.55 Letter Agreement between the Registrant and Walter Moos, dated February 1, 1993, incorporated by
reference to Exhibit 10.48 of the Registrant's Form 10-K report for fiscal year 1992*
10.56 Letter Agreement between Registrant and Renato Fuchs, dated May 13, 1993, incorporated by reference to
Exhibit 10.47 of the Registrant's Form 10-K report for fiscal year 1993*
10.57 Letter Agreement between Registrant and David Martin, dated December 2, 1993, incorporated by reference
to Exhibit 10.48 of the Registrant's Form 10-K report for fiscal year 1993*
10.58 Description of Executive Variable Compensation Program*
10.59 Chiron Corporation Executive Bonus Plan*
10.60 Regulatory Filing, Development and Supply Agreement between the Registrant, Cetus Oncology Corporation,
a wholly owned subsidiary of the Registrant, and Schering AG, a German company, dated as of May 10,
1993 (with certain confidential information deleted), incorporated by reference to Exhibit 10.50 of the
Registrant's Form 8-K report dated February 9, 1994

EXHIBIT
NUMBER EXHIBIT
- ---------- --------------------------------------------------------------------------------------------------------

10.61 Letter Agreement dated December 30, 1993 by and between Registrant and Schering AG, a German company
(with certain confidential information deleted), incorporated by reference to Exhibit 10.51 of the
Registrant's Form 10-K report for fiscal year 1993
10.62 Guaranty, dated as of September 29, 1994, made by Registrant, in favor of Bankers Trust Company, as
trustee, incorporated by reference to Exhibit 10.52 of the Registrant's Form 10-Q report for the period
ended September 30, 1994
10.63 Guaranty, dated as of September 29, 1994, made by Cetus Corporation, in favor of The First National Bank
of Boston, as trustee, incorporated by reference to Exhibit 10.53 of the Registrant's Form 10-Q report
for the period ended September 30, 1994
10.64 Letter Agreements dated September 11, 1992, July 15, 1994 and September 14, 1994 between the Registrant
and Lewis T. Williams, incorporated by reference to Exhibit 10.54 of the Registrant's Form 10-Q report
for the period ended September 30, 1994*
10.65 Letter dated January 4, 1995 to C. William Zadel*
10.66 Letter to Dino Dina dated April 24, 1984*
11 Statement of Computation of Earnings per Share
13 Consolidated Financial Statements
21 List of Subsidiaries of the Registrant
23.1 Consent of KPMG Peat Marwick LLP, Independent Auditors. Reference is made to page 28 of this Form 10-K
report
23.2 Consent of Ernst & Young LLP, Independent Auditors. Reference is made to page 29 of this Form 10-K
report
24 Power of Attorney. Reference is made to pages 24-25 of this Form 10-K report

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* Management contract, compensatory plan or arrangement.