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Novartis face $590m impairment charges

Novartis will face impairment charges of $590m following the discontinued development of two investigational compounds

Novartis will face total impairment charges of $590m following the discontinued development of the investigational compounds Mycograb (efungumab), an antifungal treatment for invasive candidiasis in adults, and albinterferon alfa-2b, being assessed as a therapy for chronic hepatitis C.

According to the company, the decision to halt the development of the compounds reflected an "enhanced focus on differentiated medicines most likely to address unmet medical needs."

Feedback from regulatory authorities in the EU and US, as well as data from a recent phase II study involving albinterferon alfa-2b, were also said to have contributed towards the choice.

Impairment and related charges for the Swiss company concerning the discontinuation of albinterferon alfa-2b come to $230m, with a further $390m in charges over the decision to halt Mycograb development.

Impairment charges are a reduction in the value of a company based on poor estimates regarding a company's intangible assets.

These charges will be reflected in Novartis' third quarter results.

The company said the charges will be partially offset through the sale of US rights for overactive bladder treatment Enablex (darifenacin) to Warner Chilcott for $400m.

A statement from Novartis said it expects a gain of around $390m to be recorded in the fourth quarter of 2010.

5th October 2010

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