NVS Stock Clocks Worst Day In Over 20 Years After Second Trial Failure In A Week — DYN, SRPT Slip In Sympathy

• The Phase 3 HARBOR study compared the experimental drug with a dummy treatment in people with DM1, a progressive illness that stiffens and weakens muscles and has no approved medicine.
• Patients did not open a clenched hand faster in a statistically meaningful way on the trial’s main measure.
• The disappointment follows Friday’s failure of pelacarsen, Novartis’s late-stage heart drug licensed from Ionis Pharmaceuticals.

Novartis shares (NVS) sold off hard on Tuesday after the company said a late-stage study of del-desiran in myotonic dystrophy type 1 failed its primary test, marking its second failed trial in a week.  

The stock closed down 14%, clocking its worst day in over 20 years. 

Hand-Stiffness Test Falls Short

The Phase 3 HARBOR study compared the experimental drug with a dummy treatment in people with DM1, a progressive illness that stiffens and weakens muscles and has no approved medicine. Patients did not open a clenched hand faster in a statistically meaningful way on the trial’s main measure. Novartis said the drug showed signs of activity on secondary measures and that safety was in line with earlier studies. The company is reviewing the full data and will talk with regulators about next steps.

“Developing therapies for a complex disease like DM1 remains challenging, and setbacks are part of scientific progress,” said Shreeram Aradhye, Novartis’s president of development and chief medical officer. 

Del-desiran came into the company through its $12 billion purchase of Avidity Biosciences. Novartis said work continues on two other drugs from that deal and that its longer-term sales growth outlook is unchanged. 

A Second Miss In One Week

The disappointment follows Friday’s failure of pelacarsen, Novartis’s late-stage heart drug licensed from Ionis Pharmaceuticals. That study lowered the targeted blood fat but did not cut the risk of heart attacks, strokes and related events. 

“These are not the results we hoped for,” Aradhye said on Friday. 

Other Stocks Slide; Analysts Split On Fallout

Companies working on related muscle diseases moved with Novartis. Shares of Dyne Therapeutics (DYN), which is developing zbasivarsen for DM1, fell 16%. Sarepta Therapeutics (SRPT) was down 7%.

Jefferies said the HARBOR miss “may negatively impact the space,” but argued Dyne’s zbasivarsen could still work and “even generate superior data.” The firm called Dyne the “frontrunner” in DM1 after Novartis’s failure and kept a Buy rating and $50 target. 

Stifel said many investors had treated HARBOR as likely to succeed and that Dyne will stay under pressure. The bear case, it said, is that the drugs look similar and Dyne’s pivotal study is smaller. Stifel still likes Dyne’s scientific case, would buy the selloff, and rates the stock Buy with a $37 target. 

H.C. Wainwright kept a Sell rating and $5 target on Sarepta. It said the miss is “particularly relevant” as support for Sarepta’s marketed Duchenne story has faded, and it raises the bar for Sarepta’s SRP-1003 being developed to treat DM1. 

How Did Retail Traders React?

On Stocktwits, retail sentiment around NVS stock remained ‘extremely bullish’ over the past 24 hours, while message volume rose from ‘high’ to ‘extremely high’ levels. 

A few Stocktwits users opined that Novartis should strengthen its pipeline with other buyouts. 

Another user called Tuesday's selloff a good opportunity and expressed hopes for a recovery.

NVS stock is trading flat year-to-date. 

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