$4 Billion Write-Off Follows Failure Of AbbVie Cancer Drug

NORTH CHICAGO, IL — Drugmaker AbbVie announced a $4 billion write-off last week following news of the failure of a late-stage trial of a lung cancer drug acquired by the firm two years ago.

AbbVie announced its purchase of Stermcentrx, makers of a lung cancer therapy called Rova-T in April 2016. The venture capital-backed acquisition was valued at $5.8 billion in cash and stock and could have risen to more than $10 billion with incentives.

At the time of the deal, AbbVie said Rova-T represented a "multi-billion dollar peak revenue opportunity with expected commercialization in 2018."

But lung cancer patients taking the drug died faster than those treated with standard chemotherapy, and in December the North Chicago-based company announced it was halting the late-stage trial of the drug. Days later it authorized a $5 billion increase to its stock repurchase program.

In a Jan. 4 filing with the Securities and Exchange Commission announcing the $4 billion impairment charge, AbbVie said it would monitor remaining Stemcentrx assets for any further loss in value .

AbbVie spun off from Abbott Labs in 2013 as a research-based pharmaceutical company. More than 65 percent of its $28.3 billion in annual revenue comes from the multi-use drug Humira, which is prescribed for arthritis, Crohn's disease and other autoimmune diseases. The firm has been looking for opportunities to acquire new cancer drugs while fighting off impending competition from generics with litigation, Crain's Chicago Business reported.

After the company announced in March 2018 that it would not seek accelerated Food and Drug Administration approval for Rova-T, financial analysts called the multi-billion acquisition a "dud" and a "thesis-breaker" that "undermines the entire value proposition of Stemcentrx," according to Business Insider. Its stock fell 15 percent at the time.