11:43 AM
Jan 06, 2019
 |  BC Extra  |  Company News

AbbVie records $4B impairment on Stemcentrx deal

As multiple companies were announcing new deals on the eve of J.P. Morgan Healthcare Conference, AbbVie Inc. (NYSE:ABBV) found itself acknowledging one of its biggest deals was a flop. The company said Friday it will record a $4 billion impairment charge on its 2016 acquisition of Stemcentrx Inc.

AbbVie paid $5.8 billion up front for Stemcentrx and its cancer compound Rova-T rovalpituzumab tesirine.

The impairment is related to AbbVie's decision last month to halt enrollment in the Phase III TAHOE trial of Rova-T as second-line treatment of advanced or metastatic small cell lung cancer (SCLC) after the product led to a lower improvement on the primary endpoint of overall survival (OS) vs. topotecan (see "AbbVie's Rova-T Suffers Another Setback in SCLC").

The December news marked AbbVie's second setback for Rova-T. On March 22, AbbVie said it would not seek accelerated approval of Rova-T as third-line treatment of relapsed or refractory SCLC.

The company has since dropped $19.94 (18%) to $89.07 from March 21 to Jan. 4, shedding almost $30 billion in market cap.

AbbVie had called Rova-T an “anchor asset” for its solid tumor portfolio and anticipated peak revenues nearing $5 billion. Buysiders who spoke to BioCentury in March said the Rova-T setback raises questions about AbbVie’s ability to grow its pipeline (see "Rova-T Roadblock").

Rova-T is an antibody-drug conjugate (ADC) composed of a humanized mAb against δ like canonical Notch ligand 3 (DLL3) and a pyrrolobenzodiazepine (PBD) dimer toxin.

The 2016 deal also stipulated up to $4 billion in milestone payments from AbbVie to Stemcentrx shareholders.

AbbVie said Friday it will monitor the remaining $1 billion of Stemcentrx assets for further impairment.

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