Shares of Formycon AG (FSE:ETR:FYB) plummeted by 35% following the company's announcement that it expects a significant hit to its earnings in fiscal 2024. The drop comes as the German biosimilar drug developer anticipates impairments due to price reductions in the U.S. for biosimilar drugs.
Formycon's stock experienced a sharp decline in early European trade on Monday, with shares falling to 32.90 euros. The company disclosed that it foresees its net result being adversely impacted by impairments related to its biosimilars FYB202 and FYB201.
The biosimilar market in the U.S. has become increasingly competitive, leading to higher-than-expected price discounts. As a result, Formycon is compelled to revise the valuation model and balance sheet measurement for its Crohn's disease drug, FYB202.
RBC analysts commented on the situation, stating, "Formycon is facing two significant portfolio write-downs due to increasingly difficult biosimilar pricing in the US. Assuming the valuation corrections could be €100m for FYB202 and €10m for FYB201 this would be equivalent to €6.2 per share."
