ZURICH (Reuters) - Novartis AG NOVN.VX stopped development of its Aurograb treatment for bacterial infections after it showed a lack of efficacy in mid-stage trials, and said it would take a $235 million impairment charge.
The Swiss drugmaker said on Friday the charge, reflecting the full amount allocated to the project, would be taken in its third quarter results.
“That is just part of daily business and should not be overrated,” a trader said. “The development of a new medicine usually entails costs in the millions.”
Novartis shares were indicated to open nearly flat at 61.20 Swiss francs.
Traders said Teva Pharmaceutical Industries Ltd’s TEVA.O law suit against Novartis NOVN.VX and Momenta Pharmaceuticals Inc (MNTA.O) on infringing patents on its multiple sclerosis drug Copaxone was also unlikely to pressure shares much.
Novartis acquired Aurograb, which was being assessed for treating methicillin-resistant staphylococcus aureus (MRSA), in 2006 when it bought NeuTec Pharma, a specialist in fighting hospital superbugs, for nearly $570 million.
That represented a premium of 109 percent to NeuTec’s prior share pice, highlighting big pharmaceutical companies’ drive to snap up biotechnology assets.
Another compound acquired with NeuTec, Mycograb, continues in late-stage trials for the treatment of invasive candidiasis, a life-threatening fungal infection.
Reporting by Sam Cage and Rupert Pretterklieber; Editing by David Cowell