Biopharmaceutical company Bristol-Myers Squibb Co. (BMY) will take a charge of $1.8 billion in the third quarter related to the voluntarily discontinued development of an experimental hepatitis C drug. The New York-based drugmaker also "does not expect that the impairment charge will result in future cash expenditures."
The move comes just eight months after Bristol-Myers acquired the BMS-986094 drug through February's $2.5 billion all-cash acquisition of hepatitis C drug developer Inhibitex Inc. The deal was struck at a whopping 163 percent premium.
The deal was expected to help Bristol-Myers to partially overcome the anticipated drop in revenues after its block-buster blood thinner Plavix's patent exclusivity was over in May 2012. Plavix had about $7 billion in annual sales.
The company dropped the study on the compound in the best interest of patient safety as an initial case of heart failure was reported that resulted in the death of one patient. Another nine patients were hospitalized, with two of them still in hospital. The U.S. Food and Drug Administration (FDA) has also subsequently placed the compound on clinical hold.
Additionally, the company confirmed that it will share data related to the study on the compound with other companies developing similar hepatitis C drugs to inform patient safety measures.
The company will also closely monitor and follow-up on patients who have received BMS-986094 across all studies.
BMS-986094 was an investigational nucleotide polymerase (NS5B) inhibitor that was in Phase II or mid-stage development, for the treatment of hepatitis C. The company had on August 1 suspended the study drug administration in the ongoing mid-stage study.
According to the US National Institutes of Health, hepatitis C virus that can cause liver damage affects about 180 million people worldwide and about 1.5 percent of the U.S. population, killing at least 10,000 Americans each year. Currently, there is no vaccine for hepatitis C available, with the current treatment drugs being given through injection.
Following the suspension of study by Bristol-Myers earlier in the month, the FDA also gave verbal notice to Idenix Pharmaceuticals Inc. (IDIX), placing a partial clinical hold on its similar nucleotide polymerase inhibitor IDX184 for the treatment of hepatitis C virus for reviewing the patient safety.
Large pharmaceutical companies are currently looking for mergers in order to stem the revenue loss caused by generic competition.
Gilead Sciences Inc. (GILD) also acquired a similar nucleotide polymerase inhibitor, GS-7977, already in late-stage study, through its $11.2 billion acquisition of hepatitis C drug developer Pharmasset, Inc. in mid-January, again at a hefty premium of 89 percent. However, the compound has not faced any safety issues until now.
Another drugmaker Vertex Pharmaceuticals Inc. (VRTX) reported positive results in late July from a very small, early stage trial of a hepatitis C compound licensed from Alios BioPharma, Inc. called ALS-2200. The FDA is reportedly yet to contact them on the safety issue.
In Friday's regular trading session, BMY is currently trading at $32.44, up $0.29 or 0.89% on a volume of 2.80 million shares.
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