Novartis twin drug setbacks pile pressure on pipeline and CEO
By Bhanvi Satija, Dave Graham and Marleen Kaesebier
Tue, September 8, 2026 at 2:26 PM GMT+3 3 min read
By Bhanvi Satija, Dave Graham and Marleen Kaesebier
ZURICH, Sept 8 (Reuters) - Novartis said on Tuesday its experimental drug for a muscle-wasting disorder failed a late-stage study, the second major trial setback in days and sending the Swiss drugmaker's shares down about 9% in one of its worst trading days on record.
The setback for del-desiran, which Novartis acquired through its recent $12 billion acquisition of Avidity, increases pressure on CEO Vas Narasimhan and his M&A strategy to build up the firm's pipeline.
The drug was being tested in myotonic dystrophy, a muscle-wasting disease with no approved treatments.
The drug "should have been a 'must win' for the company," said James Eugene, an analyst at Novartis shareholder Verso Investment Management, adding the failure would put more pressure on dealmaking and other drugs in development.
"This recent setback would have dented confidence in its acquisition strategy given the size of the deal and the relatively high expectations of success for del-desiran."
The trial failure means Novartis has now missed on two of its three key pipeline readouts this year.
TRIAL DENTS CONFIDENCE IN NOVARTIS PIPELINE
Novartis' shares, which fell more than 10% at one point and were headed for a record drop, are trading back near their level around the start of the year. The slide has wiped about 24 billion Swiss francs ($29.6 billion) off the company's market value.
Barclays analysts had estimated peak annual sales of $3.1 billion for del-desiran and assigned the drug a 60% chance of success following positive Phase II data.
The results also weighed on other drug developers in U.S. premarket trading. Shares of Dyne Therapeutics and Sarepta Therapeutics, which are developing treatments for muscular dystrophy, fell 30% and 15.5%, respectively.
Investors had been counting on del-desiran, heart drug pelacarsen and anti-inflammatory drug remibrutinib to drive growth as Novartis faces declining sales of older drug Entresto and prepares for patent expiries early in the next decade.
"A lot is riding on remibrutinib, and there is now a greater burden for it to perform," Eugene said.
Vontobel analyst Stefan Schneider said he was not changing his assessments of the other two therapies Novartis acquired via Avidity, although the latest setback had further weakened confidence.
PRESSURE ON CEO NARASIMHAN
The news adds pressure on Narasimhan who has focused on rebuilding Novartis' pipeline after spinning off its generics and consumer businesses while confronting what he has called the company's steepest patent cliff in decades.
Despite the setbacks, Novartis reiterated its full-year guidance and continues to expect sales to grow at a compound annual rate of 5% to 6% between 2025 and 2030.
Shreeram Aradhye, Novartis' president of development and chief medical officer, said developing therapies for diseases such as myotonic dystrophy type 1 remained challenging and that setbacks were part of scientific progress.
Novartis said the Phase III HARBOR study on del-desiran failed to show a statistically significant improvement over placebo on the primary endpoint of video hand-opening time, a measure of hand myotonia.
The announcement came a day after Novartis shares fell more than 3% after its cholesterol drug failed in a closely watched study.
($1 = 0.8107 Swiss francs)
(Reporting by Dave Graham, Bhanvi Satija, Marleen Kaesebier and Sriparna Roy; Editing by Ludwig Burger and Mark Potter)
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