Novartis reported late-stage clinical trial failures for two experimental medicines in September, including del-desiran, which was being developed for myotonic dystrophy, and pelacarsen, a drug being tested for heart disease. The setbacks resulted in substantial charges for the Swiss pharmaceutical company, although it continues to believe del-desiran could succeed.
Del-desiran was being investigated for myotonic dystrophy, a muscle-wasting disease with no approved treatments. Novartis acquired the drug through its $12 billion purchase of Avidity, announced in 2025. Following delays in development, the estimated value of del-desiran was reduced from its original $7.48 billion.
Chief Financial Officer Mukul Mehta said Novartis continued to see potential for del-desiran, distinguishing it from pelacarsen, the other experimental medicine affected by a late-stage trial setback in September.
Different Outcomes for the Two Drug Candidates
Novartis recorded a $1.9 billion partial impairment charge for del-desiran after reducing its estimated value because of development delays. The company also recorded a $300 million charge for pelacarsen, which was completely written off following its trial failure.
The two setbacks contributed to approximately $2.2 billion in charges during the third quarter. They also intensified scrutiny of the company’s business development strategy following its acquisition of Avidity.
The trial announcements in September coincided with a loss of nearly $30 billion in Novartis’ market value. Artisan Partners, one of the company’s 20 largest shareholders, subsequently called for a board shake-up to improve corporate governance.
Novartis Maintains Its Acquisition Strategy
Despite the setbacks, Chief Executive Officer Vas Narasimhan said the company remained confident in its approach to acquisitions. He described the failed trials as part of drug development and said some market participants had overreacted to the announcements.
Speaking during a call with journalists, Narasimhan said, “We don’t need to change our M&A strategy,” adding that Novartis remained satisfied with the Avidity acquisition, which included other experimental drug candidates.
Chief Financial Officer Mukul Mehta also said the company expected improving free cash flow to provide room for additional acquisitions. He projected that free cash flow would exceed $20 billion over the next five years, supporting smaller deals valued at approximately $2 billion.
Profit Outlook Improves Despite Trial Charges
Novartis’ operating income declined 61% in the third quarter, reflecting higher research and development costs and the partial impairment charge for del-desiran.
However, core operating income, adjusted for special items, increased 10% at constant exchange rates, supported by higher net sales. The company said the result exceeded analysts’ expectations, with demand for its key cancer and multiple sclerosis medicines contributing to the performance.
Novartis raised its full-year core operating income forecast to low single-digit percentage growth, reversing its previous expectation of a low single-digit decline. Its outlook for net sales remained unchanged, with low single-digit growth still expected.
The company’s shares were trading 1.5% higher at 1040 GMT on Tuesday.
The results leave Novartis managing the financial impact of two late-stage drug setbacks while maintaining its position on the Avidity acquisition and its broader acquisition strategy.
Pelacarsen and Del-Desiran Deliver Disappointing Phase 3 Results
Novartis has faced two major late-stage clinical trial setbacks after Pelacarsen and del-desiran failed to meet their respective primary endpoints in September 2026. The results affected two important areas of drug development: cardiovascular disease prevention and the treatment of myotonic dystrophy type 1 (DM1), a progressive neuromuscular disorder. While Pelacarsen lowered levels of lipoprotein(a), an inherited cardiovascular risk factor, it did not demonstrate a significant reduction in major cardiovascular events. Separately, del-desiran showed signs of clinical activity in exploratory analyses but did not achieve its primary endpoint for improving hand function. These outcomes have prompted Novartis to reassess the development prospects of both experimental medicines.
What Pelacarsen’s Setback Means for Pharmaceutical Research
The Pelacarsen outcome highlights the challenges of translating promising biological mechanisms into meaningful clinical benefits. Lowering a biomarker does not necessarily guarantee fewer heart attacks, strokes, or deaths. Clinical outcomes trials remain essential for determining whether a treatment improves patient health beyond established therapies.
For Novartis, the next steps include evaluating the complete trial datasets, determining whether further development is justified, and allocating resources across other research programs. The company continues to advance treatments in cardiovascular medicine, oncology, immunology, and neuroscience. The setbacks demonstrate why pharmaceutical research portfolios depend on multiple development programs rather than the success of individual experimental medicines.
