Novartis loses 24 billion francs in market value after del-desiran trial failure

Clinical trial misses primary endpoint

Swiss pharmaceutical group Novartis announced that its late-stage Phase III HARBOR clinical study evaluating del-desiran did not achieve its primary endpoint. The trial evaluated approximately 150 patients with myotonic dystrophy type 1, a progressive genetic neuromuscular condition that causes muscle wasting, over a duration of 54 weeks. The primary metric evaluated hand muscle opening speed through video analysis after patients clenched their fist for several seconds to measure muscle stiffness. Novartis reported that del-desiran failed to achieve statistically significant improvement compared to a placebo, though the company observed indications of activity across other secondary criteria. The company stated that it is currently assessing the complete clinical dataset and plans to discuss the results with regulatory health authorities. Shreeram Aradhye, President of Development and Chief Medical Officer at Novartis, stated in the company release that developing therapies for complex conditions like myotonic dystrophy type 1 remains challenging and noted that setbacks are part of scientific progress.

Market value drops on Zurich exchange

Following the announcement, Novartis shares fell by up to 11% in early trading on Tuesday, sliding 9.6% to 113.42 Swiss francs at around 9:15 am. The price decline eliminated approximately 24 billion Swiss francs in market capitalization, marking the largest single-day loss for the stock since 2020. The retreat weighed on the Swiss Market Index, which dropped 1.39%, while French competitor Sanofi dropped 1.5% due to its active research in myotonic dystrophy type 1 therapies. Prior to the decline, Novartis stock had reached a high of 132.68 Swiss francs during the previous week. Following Tuesday's session, the company's year-to-date share gains narrowed to 4%.

Cumulative pipeline setbacks and acquisition review

The outcome follows another clinical setback for Novartis, coming one day after cardiovascular candidate pelacarsen failed its primary study endpoint and triggered a 3.2% stock drop on Monday. The company had also temporarily paused experimental CAR-T cell therapy trials across autoimmune and neurological conditions following three patient deaths. Del-desiran served as the centerpiece of Novartis's $12 billion acquisition of Avidity Biosciences, a transaction finalized in February as the drugmaker's largest deal in a decade. Novartis chief executive Vas Narasimhan had projected multi-billion-dollar blockbuster revenue for the treatment, anticipating commercial distribution as early as 2026. Brokerage analysts pointed to broader risks surrounding the remaining development portfolio acquired from Avidity.

The problem goes beyond the failure of this trial.

Brokerage downgrades and reaffirmed sales targets

Investment banks responded to the trial data by lowering their valuation models and target prices for Novartis equity. Vontobel removed its estimate of $3 billion in peak annual sales for del-desiran entirely, while UBS had projected up to $2 billion in annual revenue. Stefan Schneider, an analyst at Vontobel, stated that market disappointment stemmed from high revenue expectations matched with comparatively low perceived development risk. James Eugene of Verso Investment Management noted that Novartis has now fallen short of expectations on two of its three key clinical readouts this year. Despite the research setbacks, Novartis reaffirmed its financial guidance projecting compound annual net sales growth of 5% to 6% from 2025 to 2030.