8-KOther Events

JOHNSON & JOHNSON 8-K Report, Corporate Update (Feb 2, 2022)

Filed February 2, 2022For Securities:JNJ

Summary

Johnson & Johnson (JNJ) has announced its determination to record a significant non-cash intangible asset impairment charge of approximately $610 million pre-tax. This charge is related to the termination of its investigational drug, bermekimab, for the treatment of Atopic Dermatitis (AD). The company acquired the rights to bermekimab in fiscal year 2020, but recent clinical trial efficacy information for the AD indication led to the decision to cease development in this area. This impairment charge will be recognized in the company's first fiscal quarter of 2022 and is expected to be excluded from adjusted earnings, meaning it will not impact the company's operational performance metrics used for adjusted financial reporting. While development for AD is halted, bermekimab will retain a carrying value of approximately $150 million for its remaining indication in Hidradenitis Suppurativa (HS). Investors should note this charge is a non-cash item and impacts reported earnings but not cash flow from operations.

Key Highlights

  • 1Johnson & Johnson (JNJ) will record a $610 million pre-tax intangible asset impairment charge.
  • 2The impairment relates to the investigational drug bermekimab for Atopic Dermatitis (AD).
  • 3Development of bermekimab for AD is being terminated due to clinical trial efficacy data.
  • 4The charge will impact Q1 2022 financial results and is a non-cash expense.
  • 5The impairment charge will be excluded from adjusted earnings, preserving operational performance metrics.
  • 6Bermekimab will retain a $150 million carrying value for its Hidradenitis Suppurativa (HS) indication.

Frequently Asked Questions

Johnson & Johnson will record a non-cash, pre-tax intangible asset impairment charge of approximately $610 million in its first fiscal quarter of 2022. This charge relates to the decision to discontinue development of the investigational drug bermekimab for Atopic Dermatitis.

No, the company has stated that this $610 million impairment charge will be excluded for purposes of calculating adjusted earnings. This means that the reported adjusted earnings should not be directly impacted by this specific charge.

Development of bermekimab for Atopic Dermatitis (AD) is being terminated due to clinical trial efficacy information. However, the drug will continue to be developed for the Hidradenitis Suppurativa (HS) indication, with a remaining carrying value of approximately $150 million allocated to this indication.

The decision to terminate development for Atopic Dermatitis was based on additional information regarding efficacy that became available through ongoing clinical trials for this specific indication.