Novartis Shares Slide After Neuromuscular Candidate Acquired with Avidity Fails Phase III Trial

Novartis shares fell the most in a single day since the COVID-19 pandemic after the pharma giant acknowledged that its neuromuscular candidate delpacibart etedesiran (del-desiran) failed a pivotal Phase III trial assessing the antibody oligonucleotide conjugate (AOC) in patients with myotonic dystrophy type 1 (DM1).

Del-desiran failed the Phase III HARBOR trial (NCT06411288) by missing the study’s primary endpoint of statistically significant improvement vs. placebo in video Hand Opening Time (vHOT) through week 54. vHOT is a frequently used measure of hand myotonia, according to a 2024 study, and involves clinical experts reviewing videos to measure the time from hand grip to opening.

However, Novartis added that it saw evidence of clinical activity in exploratory analyses and secondary endpoints—which included hand grip strength and quantitative Muscle Testing composite score, both measured by dynamometer; MD1 activity and participation scale; and 10-Meter Walk/Run Test. Safety findings from HARBOR were generally consistent with previously reported data, according to Novartis.

Novartis did not disclose details of its data but said it is evaluating the full dataset from the HARBOR trial and will engage with authorities to determine the most appropriate development path for del-desiran.

“Developing therapies for a complex disease like DM1 remains challenging, and setbacks are part of scientific progress,” Shreeram Aradhye, president, development and chief medical officer, Novartis, said in a statement. “As we continue to evaluate the full HARBOR dataset, we remain committed to identifying the most appropriate development path for the del-desiran program and advancing innovative approaches for people living with DM1 and other serious neuromuscular diseases.”

Third clinical setback in a week

Del-desiran’s failure marked Novartis’ third clinical setback in a week. On Friday after the closing bell, the company and partner Ionis Pharmaceuticals acknowledged that their co-developed pelacarsen failed the Phase III Lp(a)HORIZON trial (NCT04023552) by missing its primary endpoint of reducing the risk, compared with placebo, of cardiovascular events—a composite of cardiovascular death, non-fatal myocardial infarction, non-fatal stroke, and urgent coronary revascularization requiring hospitalization.

And on September 2, Novartis paused eight trials assessing its autoimmune and neurological disease candidate rapcabtagene autoleucel (rap-cel), after three patients treated with the personalized, CD19-directed chimeric antigen receptor T cell (CAR T) therapy died after experiencing immune effector cell-associated hemophagocytic syndrome.

Four of the trials were within Novartis’ Phase II AUTOGRAPH program, assessing rap-cel in systemic lupus erythematosus and lupus nephritis (NCT06581198), idiopathic inflammatory myopathies (NCT06665256), diffuse cutaneous systemic sclerosis (NCT06655896), and ANCA-associated vasculitis (NCT06868290). The other four were Phase I/II studies in forms of multiple sclerosis (NCT06617793 and NCT06675864), myasthenia gravis (NCT06704269), and rheumatoid arthritis and Sjögren’s disease (NCT07048197).

As a result, investors did not appear to share Novartis’ apparent optimism on del-desiran on Tuesday, instead punishing the company for its latest pipeline failure with a stock selloff that sent its shares trading on the SIX Swiss Exchange tumbling 11% from CHF 125.46 ($155.01) to CHF 111.80 ($138.13)—the pharma giant’s worst one-day decline since March 2020, early in the COVID-19 pandemic.

On the New York Stock Exchange, Novartis’ American depositary shares fared worse, dropping 14% from $159.99 to $137.72.

Del-desiran is an AOC candidate designed to target the underlying cause of DM1. The therapy consists of a muscle-targeting monoclonal antibody that binds to the transferrin receptor 1 (TfR1) and is conjugated to a small interfering RNA (siRNA) designed to induce degradation of disease-causing toxic DMPK messenger RNA (mRNA). Del-desiran has received the FDA’s Orphan Drug, Fast Track, and Breakthrough Therapy designations, as well as the European Medicines Agency’s Orphan Medicinal Product Designation.

Inherited from Avidity

Del-desiran is one of three pipeline AOCs that Novartis inherited when it acquired Avidity Biosciences for $12 billion in a deal completed February 27 and still among this year’s largest biotech acquisition transactions. In addition to del-desiran, Novartis acquired delpacibart zotadirsen (del-zota™), an Exon 44-targeting AOC designed to treat Duchenne muscular dystrophy (DMD) and delpacibart braxlosiran (del-brax™), an AOC intended to treat facioscapulohumeral muscular dystrophy (FSHD) by targeting DUX4.

Del-zota is under evaluation in the Phase II EXPLORE44OLE™ (NCT06244082) trial following completion in November 2024 of the Phase I/II EXPLORE44™ (NCT05670730) study. Del-brax is being assessed in the Phase III FORTITUDE-3™ trial (NCT07038200). In June, Novartis trumpeted positive data from the FORTITUDE Phase I/II trial (NCT05747924) of del-brax, saying the study’s biomarker cohort met its primary and key secondary endpoints, with reductions in KHDC1L (cDUX) and creatine kinase biomarker levels indicating both strong target engagement and reduction in muscle damage in patients with FSHD.

In acquiring Avidity, Novartis sought to justify the deal by noting that Avidity’s AOCs held potential to develop into therapies with sizeable annual sales. On the day it announced the deal, Novartis raised its expected 2024-2029 sales compound annual growth rate (CAGR) from +5% to +6%,“representing a significant opportunity to deliver substantial shareholder returns over time,” the company stated in its press release, and said the deal would bolster its mid-single-digit long-term growth.

Speaking with CNBC in July, Novartis CEO Vas Narasimhan projected peak year sales of “$5 billion-plus,” while analyst forecasts for del-brax hovered in the $2 billion range, though projections for del-zota called for peak sales ranging between $315 million and $450 million.

Avidity had aligned with the FDA on a path toward accelerated approval for del-zota, while del-desiran and del-brax were on track to be the first globally approved drugs for their respective conditions.

“Avidity’s pioneering AOC platform for RNA therapeutics ​and its late-stage assets bolster our commitment to delivering innovative, targeted, and potentially first-in-class medicines to treat devastating, progressive neuromuscular diseases,” Narasimhan said in a statement at the time.