Three Clinical Misses in Two Weeks Put Novartis's Avidity Bet Under the Microscope

Novartis shares fell about 11% after del-desiran missed its Phase III goal, its third clinical setback in a week; Deutsche Bank downgraded the stock.

A trio of pipeline failures has turned what should have been a routine stretch for Novartis into the most bruising fortnight in its recent corporate history — and left analysts scrambling to work out whether the damage is to sentiment or to substance.

The trouble began in late August, when the company paused eight clinical studies of its CAR-T cell therapy rapcabtagen autoleucel after three patients died from a severe immune reaction. On September 4, the cholesterol candidate pelacarsen missed its primary endpoint in the Phase III Lp(a)HORIZON trial, failing to reduce the risk of cardiovascular events. US-listed shares fell roughly 5% on that news, according to Reuters.

Then came the heaviest blow. On Tuesday of this week, the Phase III HARBOR study of del-desiran in myotonic dystrophy type 1 also missed its primary goal. Reuters reported an approximately 11% slide that day — the worst single trading session in the company's history. CNBC described the del-desiran failure as the third clinical setback in a week.

The Avidity Question

Del-desiran sat at the heart of Novartis's $12 billion acquisition of Avidity Biosciences, and its collapse has shifted the debate from pipeline misfortune to capital allocation. Reuters noted that pressure on the pipeline was already building after the pelacarsen miss, with investors training their attention on further muscle-therapy data tied to the Avidity deal. Del-desiran was precisely such an asset, and its failure feeds doubts about the investment decision itself.

That is the thread Deutsche Bank pulled on September 9, downgrading the stock from Buy to Hold and cutting its price target to CHF 120 from CHF 140. Analyst Emmanuel Papadakis pointed to a second clinical disappointment in quick succession and mounting questions over the company's deal track record. UBS's Matthew Weston stayed at Neutral with a CHF 116 target, while HSBC moved the other way — upgrading to Hold from Reduce on September 10 with a CHF 110 target, on the argument that the negative news flow has "largely run its course."

What the Chart Says

The selling has been severe. The stock trades about 12% below its level of 30 days ago and roughly 17% to 18% beneath its 52-week high of EUR 144.30, reached back in February. The relative strength index sits at 29.3 to 32.1, depending on the reading — oversold territory that could just as easily precede a technical bounce as a further leg down if fresh bad news lands. Annualized volatility of 41% on a 30-day basis underscores how jittery the market has become, and on a year-to-date basis the shares are essentially flat, a testament to how thoroughly this one stretch has overshadowed everything else.

The Other Side of the Ledger

Not everything went wrong in the same window. On September 1, Novartis reported that remibrutinib, an oral treatment for multiple sclerosis, hit its primary endpoints in two Phase III trials — the REMODEL-1/-2 studies — showing a significantly reduced annualized relapse rate versus teriflunomide. The company intends to file for global approvals and will present full data at a congress in Toronto in October. The shares last changed hands at EUR 119.64, up 1.2% from the previous close.

Operationally, Novartis is also still moving. A deal with South Korea's Alteogen, worth up to $3.22 billion, secures access to the company's drug-delivery technology — a sign that management is investing in the future rather than merely playing defense. In Basel, meanwhile, around 130 positions are set to go as production and laboratory operations shift from Kleinbasel to the main campus. That is a cost measure rather than a response to the trial setbacks, but it shows the company is working on efficiency in parallel.

Where the Risk Sits

The concern is less any single failure than the accumulation. Should Novartis have to book write-downs on the Avidity acquisition, or should the rapcabtagen program run into restrictions beyond the autoimmune and neurology studies currently affected, the loss of confidence in management that Deutsche Bank described would likely harden. HSBC, for its part, expects consensus estimates to come down in the near term while treating the catalog of negative news as largely worked through.

The next real test arrives on October 27, with third-quarter and nine-month 2026 results, when management will face its first real opportunity to address how it values the pipeline setbacks and the future of the Avidity assets. A management conference in London on November 18 and 19 should offer further clues on how the company plans the next development steps for its remaining programs. Until then, with analyst opinion clustered between Hold and Neutral, the shares look set to consolidate around current levels — provided no further study disappoints.