Novartis lost the market’s benefit of the doubt. he Swiss drugmaker’s investment case cracked this week after setbacks for del-desiran, pelacarsen, and rap-cel.
The blows included a late-stage miss in muscle-wasting disease and a trial pause after patient deaths linked to a rare autoimmune reaction in September. The move comes as Novartis asks investors trust its science and dealmaking while older products face pressure.
The patent cliff needs proof
Novartis makes its money by selling branded drugs, then defending those franchises until patents weaken and competitors arrive. That model can work beautifully when a company replaces aging blockbusters before exclusivity fades.
The problem is that Novartis needs replacement drugs with unusual urgency. CEO Vas Narasimhan has described the company’s coming patent pressure as its steepest in decades.
Del-desiran was supposed to validate more than one medicine. Novartis acquired it through the roughly $12B Avidity Biosciences deal, making the failure a direct test of management’s ability to buy growth.
That’s why the selloff looks rational rather than emotional. A one-off trial failure hurts a pipeline, while back-to-back misses attack the process that created it.
The science stopped cooperating
Pelacarsen’s failure is especially damaging because it hit a popular industry thesis. The drug lowered Lp(a), a harmful inherited cholesterol particle, but failed to significantly reduce cardiovascular events in a late-stage study.
That result weakens read-throughs for Amgen and Eli Lilly, which are testing different Lp(a)-lowering approaches. It also shows why biomarkers can seduce you before outcomes confirm real patient benefit.
"The Lp(a) hypothesis is weakened, but not disproven."
Citi analysts, Citi
Del-desiran created a different problem. Novartis said the drug failed to improve video hand opening time in myotonic dystrophy type 1, a muscle-wasting disease with no approved treatments, and the setback erased roughly $32B in market value.
Shreeram Aradhye, Novartis’ chief medical officer, said developing therapies for myotonic dystrophy type 1 remains challenging.
The stock needs a lower bar
Novartis still has real assets. Remibrutinib produced positive late-stage data in relapsing multiple sclerosis, and management still expects average annual sales growth of 5% to 6% through 2030 despite the setbacks.
The problem is that the stock had been priced for confidence. Barclays said del-desiran and pelacarsen represented roughly $5B in risk-adjusted peak sales opportunities, while analysts questioned whether Novartis’ sector premium can hold.
A good defensive pharma stock gives you cash flows today and credible replacements tomorrow. Novartis still has the first part, while the second now requires fresh evidence.
Ionis Pharmaceuticals, Sarepta Therapeutics, and Dyne Therapeutics all fell as the market treated Novartis’ misses as warnings for adjacent programs, showing how quickly one company’s failed trial can reset sentiment across biotech this week.
That contagion comes as Novartis depends on the same belief that future science can outrun present patent erosion. Novartis belongs on a watchlist until the trial record improves. The company may recover if clean trial wins restore confidence in management’s next promise.