Novartis shares tumbled 10% on Tuesday, posting their worst single-day loss in more than six years, after the company disclosed a second major clinical failure within 48 hours. The stock had already shed over 3% on Monday following the collapse of a key cholesterol drug candidate.
The combined losses from the two failed programs represented nearly $4 billion in potential annual revenue. Tuesday's decline wiped out almost all of Novartis's gains this year, returning the stock to where it started rather than extending toward new highs.
The most consequential failure was that of Del-Desiran, a drug targeting a rare muscle disease, which served as the centerpiece of Novartis's $12 billion acquisition of Avidity Biosciences. James Eugene, a Novartis shareholder at Verso Investment Management, told Reuters the setback undermined confidence in the company's acquisition strategy, noting expectations for the drug had been high.
According to Zürcher Kantonalbank, the Del-Desiran failure also damaged trust in the broader purchased technology platform behind it.
The setbacks intensify existing questions about CEO Vas Narasimhan's future at the Basel-based pharmaceutical giant. Speculation has grown over whether he will return to the United States, given his unusual dual role as a board member at AI company Anthropic and because his wife, Srishti Gupta, recently took the chief executive position at U.S. biotech firm Novabridge Biosciences.
Narasimhan attempted to quell those rumors during the company's late-July earnings announcement, stating he intended to lead Novartis through its next growth phase. "No change to my plans," he said at the time.
The failure of two of three major pipeline hope-children may force a recalibration. An analyst at Jefferies wrote that management's growth targets beyond 2030 now appear likely unachievable without additional mergers and acquisitions. Jefferies maintains a Hold rating with a CHF 110 price target—roughly in line with the current level of CHF 113—and suggested the stock remains overvalued, trading at a P/E ratio above 16 for 2027 compared with under 13 for the broader pharma sector.
