Bristol to take $1.8 billion charge on hepatitis C drug failure

Fri Aug 24, 2012 9:06am EDT

(Reuters) - Bristol-Myers Squibb Co (BMY.N) said it would record a $1.8 billion charge related to the discontinuation of its much-anticipated hepatitis C drug that was dropped after a patient died of heart failure.

The company will recognize the charge in the third quarter of 2012, it said in a regulatory filing on Friday. It does not expect the charge to result in future cash expenses.

The pharmaceutical company said on Thursday it would drop development of the drug, called BMS-986094, after a patient who was treated with the drug in a mid-stage trial died of heart failure and several others had to be hospitalized.

Bristol had voluntarily stopped the mid-stage trial earlier this month.

The drug, which was acquired by Bristol through its $2.5 billion purchase of Inhibitex Inc, belongs to a promising new class of hepatitis C drugs known as nucleotide polymerase inhibitors, or nucs.

Nucs work by targeting polymerase, an enzyme essential for the replication of the hepatitis C virus, and are expected to be a game changer.

Thursday's news will also cast a shadow on Idenix Pharmaceuticals Inc IDIX.O, which is developing a hepatitis C treatment that belongs to the same class as Bristol's.

Idenix's drug was put on partial hold by the U.S. health regulator last week, just two weeks after Bristol stopped its hepatitis C trial.

The hepatitis C virus is the most common cause of viral hepatitis, an inflammation of the liver. It affects about 170 million people worldwide and the market for its treatments is expected to reach around $15 billion by 2019.

Bristol shares were marginally up in premarket trade. They closed at $32.15 on Thursday on the New York Stock Exchange.

Idenix shares were down 6.7 percent in premarket trade. They had closed at $6.09 on the Nasdaq on Thursday.

(Reporting by Esha Dey in Bangalore; Editing by Maju Samuel and Sriraj Kalluvila)

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