Alios Buy Best Forgotten For Johnson & Johnson As RSV Failure Costs It Dear
Executive Summary
Johnson & Johnson has written off a further $700m against the RSV asset that it obtained with its $1.75bn purchase of Alios.
Johnson & Johnson has taken a further $700m impairment charge after the failure of its respiratory syncytial virus (RSV) asset AL-8176 (lumicitabine) which it obtained via its 2014 acquisition of Alios BioPharma Inc. for $1.75bn.
The new charge, which represents the remaining intangible asset value related to AL-8176 and will be reflected in the company’s first quarter 2019 financial results, follows a previous impairment charge of about $630m booked in its Q3 2018 accounts. That followed the suspension of the Phase IIb study, pending analysis of the data. The decision now to discontinue the product prompted the latest charge, as noted in an SEC filing dated March 21.
It all adds up to a bad bet by J&J on Alios. It bought the private biotech also in a large part for its hepatitis C nucleoside analog products, AL-516 and AL-335, but these fell victim to the profound changes in the hepatitis market that revolutionized treatment of that disease earlier this decade and have already been dropped.
Lumicitabine, an orally bioavailable nucleoside analog, was one of a number of products highlighted by J&J as part of its growth plan back in mid-2017. (Also see "J&J Plots Five-Year Pharma Growth Plan Around Mega-Brands And Launches" - Scrip, 17 May, 2017.)
Its failure also leaves a gap in the late-stage RSV treatment pipeline. Earlier this month, Novavax’s RSV vaccine ResVax, its lead product, missed its endpoint in a first Phase III trial in infants; it is still in studies in other populations (Also see "Novavax Looks To Secondary Endpoints As Phase III RSV Vaccine Trial Fails " - Scrip, 3 Mar, 2019.). All other products in development, both vaccines and drugs, are at Phase I or II, and vaccines make up the majority of these. J&J also has a small-molecule fusion inhibitor JNJ-8678 for the treatment of RSV infection in Phase I.
Current approved treatments include AstraZeneca PLC's Synagis (palivizumab), a monoclonal antibody that targets the RSV F protein, and is used for prophylaxis against RSV disease in high-risk infants. AstraZeneca also markets Respigam, an immunoglobulin product for the prevention of RSV disease in children under 24 months with bronchopulmonary dysplasia or a history of prematurity.