AbbVie Inc . (NYSE:ABBV), a prominent pharmaceutical company with a market capitalization of $315 billion and a strong financial health rating according to InvestingPro, reported on Thursday that it will take a significant non-cash impairment charge. The company stated it will record an after-tax charge of approximately $3.5 billion related to the impairment of the emraclidine intangible asset, which was acquired through the acquisition of Cerevel Therapeutics Holdings, Inc.
The decision comes after AbbVie announced on November 11, 2024, that its emraclidine treatment for schizophrenia failed to meet the primary endpoint in two Phase 2 trials. The trials aimed to demonstrate a significant reduction in symptoms compared to a placebo, which was not achieved.
Following the trial outcomes, AbbVie undertook an evaluation of the intangible asset's value, resulting in a substantial revision of the estimated future cash flows for emraclidine. This reassessment led to the recognition of the $3.5 billion impairment charge. Despite this setback, the company maintains robust financials with $55.5 billion in trailing twelve-month revenue and a solid 70% gross profit margin.
Despite the setback, the company is continuing to assess the remaining clinical development programs related to Cerevel, with other intangible assets valued at approximately $3.6 billion still under review.
The impairment charge is expected to be reflected in AbbVie's financial statements for the reporting period ending January 9, 2025. This announcement is based on the company's recent filing with the Securities and Exchange Commission.
AbbVie's stock is publicly traded on the New York Stock Exchange under the ticker ABBV, alongside several of its senior notes. The company's headquarters are located in North Chicago, Illinois. With a track record of raising dividends for 12 consecutive years and analysts predicting continued profitability, investors can access detailed financial analysis and 10+ additional ProTips through InvestingPro's comprehensive research reports.
In other recent news, AbbVie has seen several noteworthy developments. The pharmaceutical giant has adjusted its fourth-quarter earnings guidance for 2024 due to significant research and development costs, with an expected impact of $0.88 per share. This adjustment brings the company's full-year 2024 adjusted diluted earnings per share to a projected range of $10.02 to $10.06.
Truist Securities has adjusted its price target for AbbVie, reducing it to $211 from $215, while maintaining a Buy rating on the company's stock. This adjustment comes amid a positive long-term outlook for AbbVie, with Truist Securities highlighting the promising future of newer drugs such as Skyrizi and Rinvoq.
In terms of mergers and acquisitions, AbbVie has recently acquired Nimble Therapeutics for $200 million and Aliada Therapeutics. These strategic acquisitions aim to enhance AbbVie's pipeline in immunology and inflammation, neuropsychiatry, oncology, and aesthetics.
Analysts from TD Cowen and Leerink Partners have expressed positive stances on AbbVie, naming it a top pick for 2025 and upgrading the stock to Outperform, respectively. Piper Sandler also raised its price target for AbbVie to $220, maintaining an Overweight rating on the stock.
Finally, AbbVie reported positive results from its Phase 3 TEMPO-2 trial of tavapadon, a potential treatment for early Parkinson's disease. These are all recent developments indicating ongoing advancements and growth at AbbVie.
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