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.