Novartis investors demand M&A overhaul after trial failures

Novartis ↘ 0.23% shareholders are stepping up scrutiny of the Swiss drugmaker's dealmaking strategy after back-to-back clinical trial failures sent its stock to a record single-day decline, wiping nearly $30 billion off its market value and erasing all gains since the start of 2026.

Eight shareholders told Reuters that the failure of del-desiran, a muscle-wasting disorder drug and the centerpiece of Novartis's $12 billion acquisition of Avidity Biosciences, had raised questions about the company's broader acquisition approach. A source familiar with the matter said there are currently no plans to change the company's approach to M&A or business development.reuters

A Week of Setbacks

The troubles began on September 4 when pelacarsen, a heart drug, failed to meet its primary endpoint in the Phase III Lp(a)HORIZON trial. Days later, on September 8, Novartis announced that del-desiran missed the primary endpoint in its Phase III HARBOR study for myotonic dystrophy type 1, a progressive neuromuscular disease with no approved treatments. Novartis shares fell roughly 11% that day. The company had also recently paused autoimmune trials of rap-cel after three patient deaths, making del-desiran the third major clinical setback in about a week.benzinga+5

Calls for Board Changes

Artisan Partners, a top-20 Novartis investor, became the first shareholder to publicly call for board changes. Managing director David Samra urged chairman Giovanni Caforio to overhaul the board's acquisition oversight. "The party is over," Samra told Reuters. "I think he needs to make changes at the board level. One of them should be on improving the team that's doing these deals because clearly they have been uninspiring at best".pharmexec+3

Other investors struck a more measured tone. Michael Hannig, portfolio manager at DJE Kapital, said Novartis should pursue deals in the $5 billion to $10 billion range for late-stage assets rather than larger bets. Daniel Bolanowski of Arctic Asset Management said the sell-off reflected a "deeper trust issue" about business development but called it "a little bit premature to call for heads".reuters

Narasimhan Under the Spotlight

CEO Vas Narasimhan, who has committed more than $30 billion over the past three years to acquisitions and partnerships, now faces heightened investor scrutiny over how he plans to navigate looming patent expirations. Novartis pointed to strong returns under his leadership — shares up more than 60% and total returns of about 120% since he took the helm in 2018. The next major test comes in October, when detailed data for remibrutinib in relapsing multiple sclerosis are due at a medical meeting. "They have to work harder to fulfill their post-2030 goals," said Markus Manns, portfolio manager at Union Investment, adding that while the M&A strategy "needed to be better, Narasimhan had a strong vision".reuters