Novartis stock falls 10% after second drug setback in a week; analyst cuts PT

Novartis shares fell sharply on Tuesday after the Swiss drugmaker said its experimental treatment for myotonic dystrophy failed in a late-stage clinical trial, marking another setback for a pipeline that investors had been counting on to drive future growth.

The stock fell about 10% following the announcement and has now lost more than 14% over the past five trading sessions.

The failed drug, del-desiran, was being tested against myotonic dystrophy type 1, a muscle-wasting disorder for which there are currently no approved treatments.

Novartis acquired the therapy through its $12 billion purchase of Avidity Biosciences.

The setback came just a day after Novartis reported that another experimental drug, pelacarsen, had failed to reduce cardiovascular risk in a late-stage trial.

Del-desiran misses key trial goal

Novartis said its Phase III HARBOR study of del-desiran failed to demonstrate a statistically significant improvement over placebo on its primary endpoint, known as video hand-opening time.

The measure is used to assess hand myotonia, or muscle stiffness.

Patients are asked to tightly clench their hands for several seconds and then open them as quickly and fully as possible. A shorter opening time indicates less stiffness and better muscle function.

“Despite decades of research, there are still no approved treatment options for DM1, and patients and caregivers continue to face a significant daily burden,” said Shreeram Aradhye, President, Development and Chief Medical Officer, Novartis.

Novartis said it would continue evaluating the full dataset before deciding the next steps for the program.

Pipeline pressure raises investor concerns

The result means Novartis has now missed two of three key pipeline readouts this year, increasing pressure on its remaining experimental treatments.

Investors had been looking to del-desiran, pelacarsen and anti-inflammatory drug remibrutinib to help support growth as the company faces declining sales of its established heart-failure drug Entresto and prepares for patent expiries early in the next decade.

Vontobel had previously estimated that del-desiran could generate peak annual sales of $3 billion, assigning the drug a 50% probability of reaching that level.

Following the trial failure, the brokerage removed those sales estimates from its model and cut its target price for Novartis to 125 Swiss francs from 128 francs.

Novartis shares were trading at 112.56 Swiss francs on Tuesday after the decline.

Novartis maintains long-term guidance

The company said it continues to stand by its guidance for sales to grow at a compound annual rate of 5% to 6% between 2025 and 2030.

However, the recent setbacks have made the path toward that growth target more challenging.

Pelacarsen’s failure came after Novartis said on Monday that the late-stage study did not meet its primary objective of reducing cardiovascular events, including death, heart attack and stroke, compared with placebo.

The development setbacks also follow the company’s decision less than a week earlier to pause eight trials of an experimental cell therapy for autoimmune and neurological diseases after three patients died.

The string of setbacks leaves investors looking for evidence that Novartis can replenish its pipeline quickly enough to offset upcoming patent pressures and declining contributions from older medicines.