Novartis disclosed on Tuesday that del-desiran - the experimental therapy it obtained through its $12 billion acquisition of Avidity - did not achieve a statistically significant improvement over placebo on the primary endpoint in a Phase III study, intensifying concern about the Swiss drugmaker's drug-development trajectory and corporate strategy.
The HARBOR study assessed del-desiran in patients with myotonic dystrophy type 1, a muscle-wasting condition currently without approved therapies. According to the company, the trial failed to show a statistically significant benefit on video hand-opening time, a measure used to evaluate hand myotonia.
Investors reacted strongly. Novartis shares plunged about 9% on the day, sliding more than 10% at one point in what has been described as one of the company's worst trading sessions. The decline erased approximately 24 billion Swiss francs - about $29.6 billion - from Novartis's market capitalization, bringing the stock back toward levels seen around the start of the year.
The del-desiran setback comes on the heels of another recent trial failure for Novartis, meaning the company has missed two of three high-profile pipeline readouts this year. The consecutive disappointments are amplifying scrutiny of Chief Executive Officer Vas Narasimhan's plan to rebuild the firm's product slate after divesting generic and consumer units and to rely in part on M&A to replenish late-stage assets.
Analysts and shareholders expressed concern about the implications for Novartis's acquisition strategy. James Eugene, an analyst at Verso Investment Management, said del-desiran "should have been a 'must win' for the company" given expectations tied to the Avidity deal, and that the failure raises additional pressure on dealmaking and on other candidates in development.
Before the Phase III outcome, Barclays had projected peak annual sales for del-desiran of $3.1 billion and assigned the compound a 60% probability of success based on earlier positive Phase II results. Those estimates underline the extent to which market participants had been banking on the asset to contribute meaningfully to Novartis's future revenue mix.
The trial news also weighed on other companies with muscle-dystrophy programs. In U.S. premarket trading, shares of Dyne Therapeutics and Sarepta Therapeutics fell sharply - by about 30% and 15.5%, respectively - as investors reassessed the competitive and clinical landscape for muscular dystrophy treatments.
Internally, Novartis is counting on a set of late-stage candidates, including the cardiovascular agent pelacarsen and the anti-inflammatory remibrutinib, to offset fading sales of legacy products such as Entresto and to manage an anticipated wave of patent expiries early next decade. The company reiterated its full-year guidance and maintained its expectation for sales to grow at a compound annual rate of 5% to 6% between 2025 and 2030.
Vontobel analyst Stefan Schneider said the del-desiran result had weakened investor confidence in the pipeline, although he was not revising his assessments of the other two therapies Novartis acquired through Avidity. James Eugene highlighted remibrutinib in particular, noting the compound now bears a heavier burden to deliver results.
Novartis's president of development and chief medical officer, Shreeram Aradhye, emphasized the scientific challenges inherent in developing treatments for disorders such as myotonic dystrophy type 1 and framed setbacks as part of the research process. The company acknowledged the difficulty of translating earlier-phase promise into confirmatory Phase III success.
The del-desiran announcement arrived a day after the stock fell more than 3% following the failure of a separate cholesterol study, compounding pressure on management and the broader perception of near-term pipeline risk. The company provided the exchange rate context that $1 equals 0.8107 Swiss francs.
As shareholders and analysts digest the implications of a second major clinical disappointment in short order, attention will likely remain fixed on Novartis's remaining late-stage programs, the execution of its M&A strategy and the company's ability to deliver the growth it has forecast for the coming half-decade.