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September 8, 2026 - 11:50
3 minutes
(Bloomberg) — Novartis AG suffered its third clinical-trial setback in a week after a treatment for a rare muscle-wasting disease failed a late-stage study, raising questions about the drugmaker’s growth prospects.The medicine, del-desiran, was the centerpiece of Novartis’s $12 billion takeover of Avidity Biosciences and touted by Chief Executive Officer Vas Narasimhan as a potential blockbuster.The failure of two of three key experimental drugs wipes about $3.6 billion in potential annual sales and cast doubt over the quality of Novartis’s deal-making as the Swiss drugmaker faces the biggest patent cliff in its history, analysts said.It also heaps heaps pressure on Narasimhan to clarify future growth expectations, according to Bloomberg Intelligence. His strategy will be scrutinized in November when he faces investors at the company’s annual management event.Novartis shares plunged as much as 11% in Zurich trading, the most in more than six years. The gain for the year is now about 4%, trailing rival Roche Holding AG.The “major pipeline setback” on Tuesday “has not helped our confidence” in other therapies gained with Avidity, said Stefan Schneider, an analyst at Vontobel. He maintained his hold rating on the shares.The drugmaker’s growth targets will now “likely be perceived as unattainable without further M&A,” wrote Michael Leuchten, an analyst at Jefferies.Yet the del-desiran setback raises questions about the company’s choice of targets, he said, noting that at the time of the Avidity deal “other assets with different data and different approaches were available.”Novartis has put significant commercial hopes on del-desiran, which targets the genetic cause of a muscle disease. Narasimhan told Bloomberg TV in July that the medicine has “$5 billion-plus peak sales potential,” saying a successful trial would make it the first drug to show efficacy in myotonic dystrophy type 1.The CEO, who has been at the helm since 2018, has pushed Novartis to cast off consumer and generics businesses to focus on innovative drugs, which can deliver higher profit margins when they succeed but come with a greater risk of failure.The del-desiran study found patients with the genetic disorder, which causes progressive muscle weakness and stiffness, didn’t significantly improve how quickly they could open their hands on the drug compared with placebo.The setback caps a turbulent week. The company halted trials of an experimental cell therapy in autoimmune diseases after three patients died, and heart drug pelacarsen failed in a closely watched study. An experimental multiple-sclerosis treatment did deliver positive results.Novartis said it will analyze the full trial data and consult regulators before deciding whether and how to continue developing del-desiran after it did show some evidence of clinical activity.–With assistance from Joshua Gaunt-Warner and Michael Msika.(Updates with analyst comment on M&A from seventh paragraph)©2026 Bloomberg L.P.
