The Swiss pharmaceutical company’s shares fell almost 11% on its worst trading day ever on Tuesday after Novartis (NOVN.S) announced that its experimental medication for a muscle-wasting illness had failed late-stage research, the second significant trial defeat in days.
CEO Vas Narasimhan and his M&A strategy are under further pressure to expand the company’s pipeline in light of the setback for del-desiran, which Novartis acquired through its recent $12 billion acquisition of Avidity.
The medication was being investigated for myotonic dystrophy, a condition that wastes muscle and has no known cure. According to Novartis, the medication’s primary objective of enhancing video hand opening time (vHOT), a test of a patient’s ability to open their hand after creating a fist that measures muscular stiffness, was not achieved.
According to James Eugene, an analyst at Novartis shareholder Verso Investment Management, the drug “should have been a ‘must win’ for the company,” and the failure would put further pressure on dealmaking and other drugs in development. Given the magnitude of the transaction and the very high expectations for del-desiran’s success, this recent loss would have damaged trust in its acquisition strategy.”
Due to the trial’s failure, Novartis has now failed two of this year’s three crucial pipeline tests. Additionally, after three patients passed away, it recently stopped eight out of ten tests for the experimental cell therapy rap-cel.
In a record daily decline, Novartis’ stock closed down 10.9% on Tuesday, erasing over 26 billion Swiss francs ($32 billion) from the company’s market worth.
After promising mid-stage results, Barclays analysts projected $3.1 billion in peak annual sales for del-desiran and gave the medication a 60% chance of success.
Novartis’ chief medical officer and president of development, Shreeram Aradhye, stated that it was still difficult to create treatments for conditions like myotonic dystrophy type 1 and that failures were a necessary part of scientific advancement.
