Key Morningstar Metrics for Novartis
- : CHF 105Fair Value Estimate
- : ★★★Morningstar Rating
- : WideMorningstar Economic Moat Rating
- : MediumMorningstar Uncertainty Rating
After the market close on Sept. 4, Novartis NOVN reported that cardiometabolic drug pelacarsen missed its primary endpoint in its Lp(a)HORIZON trial. Separately, on Sept. 8, rare disease drug del-desiran missed its primary endpoint in the HARBOR trial in myotonic dystrophy type 1.
Why it matters: These are surprising late-stage failures for potential blockbuster assets, blemishing Novartis’ recent track record of clinical trial success. At Sept. 8, shares are down about 14% from Sept. 4’s close.
- Del-desiran was one of the key assets from Novartis’ USD 12 billion acquisition of Avidity. It is unclear how much read-through there is for del-brax, which has a similar modality (an antibody-oligonucleotide conjugate causing gene knockdown) but treats a different disease.
- HARBOR and Lp(a)HORIZON cover the primary indications for del-desiran and pelacarsen, respectively. We had modeled USD 2.5 billion, USD 2.3 billion, and USD 2.3 billion of risk-adjusted 2035 revenue for del-desiran, pelacarsen, and del-brax, respectively.
The bottom line: After removing del-desiran and pelacarsen from our pipeline forecast and halving our forecast for del-brax, we lowered our fair value estimate for wide-moat Novartis to USD 130/CHF 105 from USD 140/CHF 109. After Sept. 8’s selloff, shares are trading on the border of 2- and 3-star territory.
- Management maintained its 5%-6% five-year sales CAGR guidance for 2025-30, which we think is achievable depending on the timing of loss-of-exclusivity declines for Cosentyx (immunology). However, growth after 2030 is significantly more uncertain.
Coming up: In addition to data presentations on HARBOR and Lp(a)HORIZON, other catalysts include the presentation of remibrutinib’s full relapsing multiple sclerosis data at MSToronto2026 (Oct. 21-23), remibrutinib’s Phase 3 readout in hidradenitis suppurativa, ianalumab’s Phase 3 readout in first line immune thrombocytopenia, and the US Food and Drug Administration decision on del-zota in Duchenne muscular dystrophy.
