J&J takes a $630M asset hit on the books, shuttering PhIIb trials as its $1.75B RSV drug teeters on the brink

Almost exactly 4 years after J&J paid $1.75 billion for a little biotech called Alios, one of the central drugs featured in the deal appears to be in deep trouble. Researchers at the company voluntarily suspended advanced trials on the drug months ago and now the pharma giant is taking a heavy hit on the books as it reassesses the drug’s fast-dwindling asset value.

The pharma giant revealed in an SEC filing that it is taking an after-tax impairment charge of about $630 million on AL-8176 — lumicitabine — an anti-RSV drug designed to prevent a common respiratory infection in children. And it adds that it will keep an eye out on the rest of the $900 million still on the books, suggesting they may have a complete write-off on their hands.

The move was briefly noted in J&J’s 10Q filed last August. That filing noted:

Late in the fiscal second quarter of 2018, information became available which led the Company to suspend on-going Phase 2B trials until an analysis of this information is completed. The Company will reassess the carrying value of the in-process research and development asset upon completion of the analysis. If the development timeline is significantly delayed or development is abandoned the Company may incur an impairment charge.

In an update, a J&J spokesperson tells me that the Phase IIb trials have now been scrapped as they return to a preclinical stage of development.

This decision was made due to the ongoing analysis of new preclinical data and the need to perform further pre-clinical studies. Generation and analysis of these data is anticipated to require additional time.

A decision on further clinical trials for lumicitabine will be made once the evaluation of the data has been completed.

J&J bought out the biotech after taking a close look at its Phase II data.

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Sr. Manager, Regulatory Affairs, CMC
CytomX Therapeutics San Francisco, CA
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