Novartis Shares Plunge After Muscle Drug Fails Phase III Trial

Novartis shares plunged more than 10% on Tuesday after the Swiss pharmaceutical giant said its experimental muscle disease drug delpacibart etedesiran, or del-desiran, failed to meet the primary endpoint in a late-stage clinical trial.

The setback came from the Phase III HARBOR study evaluating del-desiran in patients with myotonic dystrophy type 1 (DM1), a progressive neuromuscular disorder with no currently approved treatments. The 54-week randomized study included 150 patients and measured video hand opening time, an indicator of muscle stiffness.

Del-desiran did not demonstrate a statistically significant improvement compared with placebo on the primary measure. Novartis said the treatment showed clinical activity across several secondary and exploratory endpoints and plans to consult regulators about potential next steps.

The disappointing results also raised concerns about Novartis' $12 billion acquisition of Avidity Biosciences. Jefferies analyst Michael Leuchten said del-desiran represented roughly one-third of the projected peak sales associated with the acquired pipeline.

Leuchten maintained a "hold" rating and CHF110 price target but warned the trial failure could make Novartis' longer-term growth ambitions harder to achieve without additional acquisitions. He also questioned the company's valuation premium, with Novartis trading above 16 times estimated 2027 earnings compared with a pharmaceutical sector average below 13 times.

The setback could also affect investor confidence in delpacibart braxlosiran, or del-brax, another Avidity therapy targeting facioscapulohumeral muscular dystrophy. Phase III results for that program are not expected until 2028.

However, other assets from the Avidity acquisition continue to progress. Delpacibart zotadirsen, or del-zota, has received FDA Priority Review for Duchenne muscular dystrophy, while Novartis plans discussions with the FDA regarding del-brax following encouraging Phase I/II biomarker results.

Despite the del-desiran trial failure, Novartis maintained its 2025-2030 sales outlook, targeting compound annual growth of 5% to 6%.

Chief Medical Officer Shreeram Aradhye described DM1 as a "complex disease" and said setbacks are part of scientific progress.