Novartis's failed trial for cholesterol drug leads to broad biopharma stock selloff

By Jaimy Lee

Shares of Novartis, Amgen and Ionis closed lower on Tuesday

Novartis' disclosure that a Lp(a)-lowering drug failed to reduce the risk of cardiovascular events like heart attacks and stroke in a Phase 3 study rippled across biopharma stocks on Tuesday.

A major clinical-trial failure last week is rippling across biopharma stocks on Tuesday morning, showing yet again how risky it is to invest in drug development.

Novartis announced late Friday that its Phase 3 study evaluating pelacarsen showed the drug designed to lower lipoprotein (a), or Lp(a), didn't reduce the risk of serious cardiovascular events, including heart attacks and stroke. The Swiss drugmaker is expected to share data from the trial at a later date.

Along with several other drugmakers, Novartis has bet that lowering Lp(a) will cut the risk of these sometimes fatal events. Pelacarsen did lower Lp(a), a cholesterol-carrying particle that raises the risk of those events, but it didn't lessen those risks.

The failure raises questions about whether lowering Lp(a) is a viable way to lower the risk of cardiovascular events, though analysts and industry insiders are still debating what's possible. "Historically, we've been mixed on Lp(a) as a therapeutic target," Jefferies analyst Akash Tewari told investors over the weekend.

"A different outcome remains plausible with an asset that delivers deeper, more consistent and more durable Lp(a) lowering," BMO Capital Markets analyst David Lebowitz wrote in a note on Monday.

Novartis licensed pelacarsen from biotech Ionis Pharmaceuticals for $60 million upfront in 2023. Switzerland-listed shares of Novartis (CH:NOVN) closed 10.9% lower on Tuesday in its worst two-day stretch on record, while Ionis's stock (IONS) closed 2.4% down.

In a note on Monday, Leerink Partners analyst David Risinger described the trial's failure "as negative for biopharma-sector perception." By Tuesday morning, several biopharma stocks, including Amgen (AMGN) and Eli Lilly (LLY), were trading lower in reaction to the failed trial and broader concerns about lowering Lp(a) as a therapeutic tool for these patients.

About one in five people in the U.S. have high Lp(a), according to the Family Heart Foundation. High Lp(a) is hereditary, and interventions like diet or taking a statin rarely help lower Lp(a) levels in these patients. That's why drugmakers are working on new therapies to see whether a different mechanism of action will improve outcomes for these patients.

Pelacarsen is an antisense oligonucleotide, while Amgen and Lilly are each working on siRNA therapies that aim to lower Lp(a). A small interfering RNA drug, or siRNA, "turns off" specific genes.

Amgen, which has a Phase 3 trial under way for its own Lp(a) drug candidate, saw its shares close 10.9% lower. Its stock was also downgraded on Tuesday by BMO over concerns about the biotech's future, dragging down the Dow on Tuesday morning. Lilly's shares ended up dropping 2.2% - it has an Lp(a) drug in a Phase 3 trial.

The impact of the Novartis failure extended to biotechs working on adjacent therapies.

NewAmsterdam Pharma (NAMS) is developing an LDL-C-lowering therapy, though analysts noted that lowering Lp(a) in this study is an add-on benefit rather than the main focus. Its stock ended up closing 1% higher.

Separately, Novartis on Tuesday disclosed another Phase 3 failure of an experimental treatment for people with myotonic dystrophy type 1, which came from its $12 billion acquisition of Avidity Biosciences last year. Sarepta Therapeutics (SRPT), which is working on siRNA therapies to treat people with two types of muscular dystrophy, saw its stock tumble 6.9%. Shares of Dyne Therapeutics (DYN), which is also working on an early-stage siRNA treatment for a type of muscular dystrophy, also closed lower, by 16.4%.

The State Street Health Care Select Sector SPDR Exchange-Traded Fund XLV closed 2.5% lower.

-Jaimy Lee

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-08-26 1623ET