Novartis takes a hit in Zurich, with another setback for its experimental muscle drug

(Il Sole 24 Ore Radiocor) - Yet another wave of selling on Novartis Ag following declines the previous day. During today’s trading session, the share price fell by as much as over 10 per cent on the Zurich Stock Exchange, following the failure of a Phase III trial of del-desiran, an experimental drug for type 1 myotonic dystrophy. The treatment did not show a statistically significant improvement, compared with the placebo, in patients’ ability to open their hands more quickly.

This is a major blow, as del-desiran was one of the key assets acquired as part of the $12 billion deal for Avidity Biosciences, and was regarded as one of the group’s potential new sources of growth in the run-up to the patent expiries expected at the start of the next decade. CEO Vas Narasimhan had told Bloomberg last July that the drug had “peak sales potential in excess of $5 billion”.

For Stefan Schneider of Vontobel, this is a ‘serious setback in the pipeline’ which ‘has not helped our confidence’ even regarding the other assets acquired through Avidity. The bank had incorporated into its model peak annual sales of $3 billion for del-desiran, with a 50 per cent probability of success, whilst it is now “removing this forecast from its model”, explains Vontobel, which has reduced its target price for Novartis from 128 to 125 francs, whilst maintaining its “Hold” rating.

This setback does not come out of the blue, but follows on the heels of disappointing results for the cardiovascular active ingredient pelacarsen, and comes after the suspension of trials into a cell therapy for autoimmune diseases, which had already triggered a sell-off in the share price in the run-up to the announcement. According to Jefferies, this latest setback risks reigniting doubts about Novartis’s ability to grow beyond 2030. Novartis has, however, confirmed its guidance, which forecasts average annual revenue growth of 5–6 per cent between 2025 and 2030.