Pharmaceutical giant Novartis is on track for its worst slump in six years following a series of failed trials

Shares of Swiss pharmaceutical giant Novartis plummeted nearly 9% during trading on September 8 and may post their biggest drop since March 2020,

according to CNBC. At one point, they were down as much as 10%—the sharpest decline in the company’s history. Investors reacted to a series of clinical setbacks: the day before, the stock had fallen 3% due to unsuccessful trials of a cholesterol drug, and now Novartis has announced unsuccessful testing of a drug for muscular atrophy.

In the final stage of clinical trials, a Novartis drug called del-desiran did not show a statistically significant improvement in hand-grip release speed compared with a placebo, the company reported. The drug was tested in patients with myotonic dystrophy type 1—a disease that causes muscle atrophy and for which there is currently no approved treatment.

Del-desiran has been added to Novartis's portfolio of drugs after the pharmaceutical giant acquired Avidity Biosciences last year for $12 billion, Reuters reports.

Novartis stated that it is continuing to review the full set of data from the drug’s clinical trial and plans to work with health authorities to determine its future. The company continues to expect sales growth of 5–6% per year on average through 2030.

On September 4, Novartis announced the failure of the final phase of clinical trials for pelacarsen, a drug developed in collaboration with Ionis Pharmaceuticals. The drug is designed to lower levels of "bad" cholesterol and prevent heart attacks and strokes. It turned out that while the drug met its first objective, it failed to significantly reduce the risk of cardiovascular complications.

A week earlier, the company announced that it had suspended eight clinical trials of the experimental cell therapy rap-cel following the deaths of three patients.

At the same time, the Swiss manufacturer has recently reported positive trial results: testing of the drug remibrutinib showed a clinically significant slowing of disability progression in patients with relapsing multiple sclerosis.

Novartis fell short of expectations for two of the year's three key product launches, missing the mark on a drug that was considered a "must-win," explains an analyst at Verso Investment Management, which covers the Swiss manufacturer.

The pharmaceutical giant’s sales growth target “will most likely be seen as unattainable without further M&A deals, but the feasibility of such deals is now once again in question,” wrote the Jefferies analyst team. Even given the success of remibrutinib—without del-desiran, the company will find it difficult to “gain confidence,” they warned.

According to Barclays’ estimates, del-desiran and pelacarsen could have generated approximately $5 billion in risk-adjusted sales for Novartis at their peak. But more importantly, the trial results were supposed to demonstrate how justified the acquisition of Avidity was. The drug’s failure calls into question both the rationale behind the deal itself and the company’s ability to offset the upcoming expiration of patent protection through mergers and acquisitions, according to the analysts’ note.

"We expect Novartis shares to underperform the market significantly, and the 20 percent premium over the sector may now be in question," they said.

Novartis’s setback with pelacarsen triggered a sell-off of Amgen shares—the American biopharmaceutical giant that is developing a similar cholesterol-lowering drug called olpasiran. The company’s stock fell 5% in premarket trading on September 8. Amgen is expected to present data from its Phase 3 trials in mid-2028, according to Barron’s.

“Given that Wall Street is already pricing in a 65 percent probability of success for the drug in [Amgen’s] stock price, we’re not surprised that the stock is trading lower right now, especially with nearly two years to go before the data is released,” said Cantor analyst Carter Gould.

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