A key Novartis drug failed to meet expectations. The stock price fell

An experimental multiple sclerosis pill from the Swiss company Novartis showed less-than-expected effectiveness in preventing relapses in two late-stage trials. This could give an advantage to the company’s competitor, Roche, which is developing its own similar drug, according to Bloomberg.

Novartis shares fell more than 4% in the U.S. on this news. Roche shares in Switzerland closed Friday down 0.3%.

Novartis is testing its drug for the treatment of chronic urticaria (active ingredient: remibutrinib), which is already on the market under the brand name Rhapsido, for the treatment of multiple sclerosis. On October 23, the company published the results of a Phase 3 trial of remibrutinib in patients with this diagnosis. The studies showed that the Novartis drug reduced the annual rate of disease relapses by 35% and 31% in two late-stage clinical trials compared to Sanofi’s Aubagio. This is lower than the approximately 50 percent reduction anticipated by BNP Paribas analysts, and is weaker than the results of the competing drug fenebrutinib from Roche, which showed a 51% and 59% reduction in relapses in its own trials, Bloomberg notes.

Following this news, Novartis American Depositary Receipts fell 4.5% during trading in New York and ultimately closed the day down 3.3%. Since the beginning of the year, however, Novartis shares in the U.S. are up nearly 9%.

Reducing the frequency of relapses by about one-third is an important step forward for patients with multiple sclerosis, according to Robert Bermel, a neurologist at the Mellen Multiple Sclerosis Center at the Cleveland Clinic, who helped lead the trials. He was particularly encouraged by the absence of signs of liver damage in the patients. “We’re seeing very good results in terms of both efficacy and safety,” he said, adding that the reduction in the number of new lesions detected by MRI “strengthens the evidence that the drug controls the inflammatory activity of the disease.” He believes that, if approved, remibrutinib could become an attractive first-line treatment option for patients who prefer oral medications.

Rhapsido achieved the primary endpoint of the study—reducing the average annual relapse rate compared with Aubagio—according to Bloomberg, which notes that this marks the company’s only successful late-stage development study in recent times. Remibrutinib is viewed as a potential successor to Novartis’s blockbuster multiple sclerosis drug — Kesimpta — making it a key element of the company’s plans as key patents are set to expire early in the next decade, the agency notes.

Meanwhile, Roche was enthusiastic about the opportunity to compare Rhapsido with its own drug, Bloomberg reports. “Our efficacy is hard to beat,” said Roche CEO Thomas Schinecker during a quarterly earnings conference call on Thursday, one day before Novartis released its study results. According to Schinecker, this could open up opportunities for his company’s drug.

Since the beginning of the year, Roche shares have risen 18%. Analysts also view the company’s outlook positively: 11 recommend buying the stock, nine advise holding it in a portfolio, and only one recommends selling it.

Analysts are taking a more cautious approach to Novartis shares traded in the U.S.: six recommend holding them, and three recommend buying them. There are no sell recommendations for Novartis depositary receipts.

In September, Novartis’s U.S. shares were on the verge of their sharpest decline since March 2020—following the failure of trials for two other drugs: del-desiran, a treatment for muscular atrophy, and pelacarsen, a cholesterol drug developed in collaboration with Ionis Pharmaceuticals. Against this backdrop, analysts were already calling remibrutinib a rare bright spot in the company’s portfolio.

This article was AI-translated and verified by a human editor