Summary
Johnson & Johnson (JNJ) announced on March 21, 2019, that it will record a significant non-cash intangible asset impairment charge related to its investigational drug AL-8176. This drug, aimed at treating Respiratory Syncytial Virus (RSV) and human metapneumovirus (hMPV), had a carrying value of approximately $900 million following its acquisition in 2014. The decision to abandon development stems from new information that renders the drug's progression unviable. This new impairment charge, estimated at approximately $700 million after tax, represents the remaining value of the intangible asset. This charge will impact the company's first quarter 2019 financial results but will be excluded from adjusted earnings, allowing investors to focus on ongoing operational performance. It's important to note that this is a follow-on impairment, as JNJ had already recorded a partial charge of approximately $630 million after tax in the third quarter of 2018 for the same asset.
Key Highlights
- 1Johnson & Johnson (JNJ) will record an intangible asset impairment charge of approximately $700 million (after tax).
- 2The charge relates to the abandonment of the investigational drug AL-8176, developed for Respiratory Syncytial Virus (RSV) and human metapneumovirus (hMPV).
- 3AL-8176 was acquired as part of the Alios Biopharma Inc. acquisition in 2014 with an initial carrying value of approximately $900 million.
- 4This is a subsequent impairment, following a prior charge of approximately $630 million (after tax) in Q3 2018 for the same asset.
- 5The impairment charge will be recognized in the fiscal first quarter of 2019.
- 6The charge will be excluded from the calculation of adjusted earnings, providing a clearer view of core operational performance.
- 7The decision to abandon AL-8176 was driven by newly available information.