A muscular dystrophy drug acquired through Novartis's $12 billion Avidity Biosciences purchase failed its phase 3 trial, marking the third clinical setback in a week and triggering the company's largest stock drop since March 2020. Analysts at Jefferies and Barclays now question whether Novartis can hit its 2030 sales growth target without additional acquisitions.
Swiss drugmaker Novartis lost more than 9 percent of its European share value on Sept. 8, its worst trading session since the early pandemic, after the phase 3 HARBOR study of del-desiran in myotonic dystrophy type 1 missed its primary endpoint — the third pipeline setback in seven days.
"The 5 percent to 6 percent annual sales growth target through 2030 is likely to be viewed as unachievable unless Novartis fills the gap through further acquisitions," Jefferies analysts said.
The HARBOR trial evaluated del-desiran (delpacibart etedesiran) against placebo on video hand opening time, a measure of hand myotonia in DM1 patients. The drug failed to show a statistically significant improvement on that endpoint. Novartis said secondary endpoints tracking muscle strength, daily living activities and mobility showed signs of clinical activity, and the company will analyze the full dataset to determine next steps with regulators.
Del-desiran was a core asset in Novartis's roughly $12 billion acquisition of Avidity Biosciences last year and one of three antibody-oligonucleotide conjugate drugs from that deal. It had received Orphan Drug, Fast Track and Breakthrough Therapy designations from the US Food and Drug Administration. The failure follows two other setbacks within the same week: pelacarsen, a cardiovascular candidate targeting lipoprotein(a), missed its primary endpoint in a phase 3 trial, and rap-cel, an experimental cell therapy, was paused across eight trials after three patient deaths.
Barclays said del-desiran and pelacarsen together represented roughly $5 billion in potential peak sales, and the setbacks could compress Novartis's approximately 20 percent valuation premium over peers. Jefferies noted that del-brax, another Avidity-acquired candidate, may not report phase 3 data until at least 2028, meaning acquisitions and business development remain essential to meeting medium-term growth goals.
Novartis last week reported positive phase 3 results for remibrutinib, an experimental multiple sclerosis treatment that showed clinically meaningful delays in disability progression. But the single positive readout does little to offset the damage from three consecutive failures.
The company reiterated its 5 percent to 6 percent annual sales growth target through 2030. Yet the market's reaction suggests investors are reassessing whether Novartis's internal R&D plus external M&A strategy can sustain growth, particularly as patent expirations on core drugs such as Entresto approach. Future large-scale acquisitions will face stricter scrutiny.
US pre-market trading saw shares fall roughly 13 percent, extending the selloff. The stock's decline puts Novartis at its lowest level since the early pandemic period. The next major pipeline catalyst is del-brax phase 3 data, not expected before 2028.
This article is for informational purposes only and does not constitute investment advice.
