Novartis shares plummet after another clinical trial setback

A black day for investors in the Swiss pharmaceutical group Novartis: shares in the market heavyweight plummeted by over 10% at one point during early trading on Tuesday following the failure of a trial into a drug for a muscle disorder.

Following this latest research setback, analysts believe that investor confidence, in particular, has been hit. The Zurich Cantonal Bank (ZKB) speaks of a loss of confidence in the entire portfolio of drug candidates that Novartis acquired through its takeover of the US biotech company Avidity Biosciences. This is despite the fact that other compounds from this acquisition have shown positive results in trials to date. Vontobel also describes the trial result as a significant setback for the drug pipeline.

Expectations for the active ingredient Del-desiran were high. Vontobel had estimated that, if developed successfully, it could achieve peak annual sales of $3 billion (CHF2.43 billion), while taking into account the risk of failure. The bank is now removing this sales forecast from its valuation model. UBS had forecast up to $2 billion on a comparable basis and also views the setback as negative.

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Record high last week

In the so-called Harbor study, Del-desiran was tested for the treatment of myotonic dystrophy type 1, a progressive muscle disorder. Around 150 patients were studied over 54 weeks. The primary endpoint measured how quickly patients could open their hands. This allows the muscle stiffness typical of the condition to be assessed.

The drug did not achieve the hoped-for success in relation to this primary endpoint. However, according to Novartis, there were indications of an effect in other criteria examined.

For Novartis, this is already the second trial setback within a few days. On Monday it emerged that a trial of the heart medicine pelacarsen had also failed to meet its primary endpoint. The share price subsequently fell by 3.2%. On Tuesday, at around 9:15am, the share price plummeted by a further 9.6% to CHF113.42 ($140). Just the week before, Novartis shares had reached a record high of CHF132.68.

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Translated from German, reviewed by an English Department journalist.