AbbVie cuts earnings forecast due to milestone payments
By Wallace Witkowski
A day after AbbVie partner CytomX reported 'encouraging clinical activity' in cancer treatment trials, AbbVie discloses charge of nearly a quarter-billion dollars
AbbVie Inc. executives lowered their outlook for the quarter and year in a filing with the Securities and Exchange Commission late Friday, which cited research and development expenses and milestone payments to partners.
AbbVie (ABBV)said it must pay out $243 million in milestone payments to partners for acquired in-process research and development, or IPR&D, in the fourth quarter, bringing the grand total for the year to $697 million. Accounting for IPR&D and milestone payments was recently required by the SEC for drugmakers because the regulatory agency considers creating performance measures that exclude normal expenses to be misleading.
The charge is expected to reduce AbbVie's (ABBV) adjusted earnings by 14 cents a share, to $3.51 a share from a previous forecast of $3.65 a share. Analysts surveyed by FactSet had on average projected $3.65 a share on revenue of $15.31 billion.
Read: Drug companies are making an accounting change after the SEC cracked down on Biogen
For the year, AbbVie now expects $13.70 to $13.74 a share, with a milestone expense of between $3.51 and $3.55 a share, down from a forecast of $13.84 to $13.88 a share. Analysts had expected $13.85 a share on revenue of $58.29 billion.
On Thursday, CytomX Therapeutics Inc. (CTMX) said it was seeing "encouraging clinical activity" in its trials with AbbVie for a cancer treatment candidate. A request for comment on whether CytomX was receiving any of those milestone payment was not returned by time of publication.
AbbVie shares switched between slight gains and losses after hours, following a 1.9% gain to close at $166.55, while the S&P 500 index rose 2.2% and the tech-heavy Nasdaq Composite index gained 2.6%.
The company said it "does not forecast acquired IPR&D and milestones expense due to uncertainty of the future occurrence and timing of these transactions."
AbbVie is scheduled to report quarterly earnings on Feb. 9 before the market opens.
(END) Dow Jones Newswires
January 09, 2023 07:59 ET (12:59 GMT)
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