Novartis Shares Plunge as Muscular Disease Drug Fails Phase 3 Trial

Reporting by Fabienne Kinzelmann, Novartis AG encountered its third clinical trial disappointment within seven days after a rare muscle-wasting disease treatment came up short in a late-stage evaluation. Acquired as the focal point of Novartis’s $12 billion purchase of Avidity Biosciences and promoted as a prospective blockbuster, the drug is known as del-desiran. This disclosure presents an additional hurdle for the Swiss pharmaceutical firm’s search for fresh revenue streams while it confronts the largest patent expiration wave in its history. Novartis shares plunged as much as 10% in early Zurich trading, reducing their gain for the year to about 4%, trailing rival Roche Holding AG. The failure is a “major pipeline setback” that “has not helped our confidence” in other therapies Novartis gained with Avidity, said Stefan Schneider, an analyst at Vontobel. He maintained his hold rating on the shares. Novartis has put significant commercial hopes on del-desiran, which targets the genetic cause of a muscle disease. Chief Executive Officer Vas Narasimhan told Bloomberg TV in July that the medicine has “$5 billion-plus peak sales potential,” saying a successful trial would make it the first drug to show efficacy in myotonic dystrophy type 1. The trial found patients with the genetic disorder, which causes progressive muscle weakness and stiffness, didn’t significantly improve how quickly they could open their hands on del-desiran compared with placebo, the Swiss drugmaker said Tuesday. The setback caps a turbulent week. The company halted trials of an experimental cell therapy in autoimmune diseases after three patients died, and heart drug pelacarsen failed in a closely watched study. An experimental multiple-sclerosis treatment did deliver positive results. Concerns about the drugmaker’s growth potential after 2030 will likely re-emerge, according to Michael Leuchten, an analyst at Jefferies. Novartis said it will analyze the full trial data and consult regulators before deciding whether and how to continue developing del-desiran after it did show some evidence of clinical activity.

Market Impact and Financial Stakes of the Avidity Acquisition

Novartis shares plunged as much as 10% in early Zurich trading following the announcement, reducing their gain for the year to about 4% and trailing rival Roche Holding AG. The drug was the centerpiece of Novartis’s $12 billion takeover of Avidity Biosciences and was widely touted by the Swiss drugmaker as a potential blockbuster therapy targeting the genetic cause of the muscle-wasting disease. Chief Executive Officer Vas Narasimhan told Bloomberg TV in July that the medicine held over $5 billion in peak sales potential, claiming a successful trial would establish it as the first drug to show efficacy in treating myotonic dystrophy type 1.

A Turbulent Week for the Novartis Clinical Pipeline

The unsuccessful myotonic dystrophy study caps a turbulent week of clinical results for the Swiss pharmaceutical company. Novartis disclosed that it also had to halt trials of an experimental cell therapy in autoimmune diseases after three patients died, and a separate heart drug named pelacarsen failed in a closely watched study.

Next Steps for Del-Desiran Development

Despite missing the trial’s primary endpoint, Novartis stated that del-desiran showed some evidence of clinical activity during the testing phase. The drugmaker intends to analyze the full trial data thoroughly and consult with regulatory authorities before making a final determination on whether and how to continue developing the treatment.