Novartis board faces investor scrutiny after M&A misfires and R&D setbacks

Novartis is facing heightened investor pressure after several late-stage clinical setbacks raised doubts about its pipeline and acquisition strategy.

The biggest blow was the failure of del-desiran, a muscle-wasting-disease drug acquired in Novartis’s $12 billion purchase of Avidity Biosciences. Novartis shares fell about 11% in one day, erasing nearly $30 billion in market value.

The setback followed disappointing results for pelacarsen, a cholesterol drug that failed to reduce cardiovascular events in a Phase 3 study. Novartis also paused multiple trials of its experimental cell therapy rap-cel after patient deaths.

David Samra of major shareholder Artisan Partners called for changes to the board, stronger acquisition oversight, better board expertise and a dedicated committee to review deals. He criticized Novartis’s acquisition track record but said CEO Vas Narasimhan had done a very good job running the company.

Investors are particularly concerned because Novartis has committed more than $30 billion to acquisitions and partnerships in the past three years, while looming patent expirations will require the company to replenish growth.

Novartis reportedly has no immediate plans to change its M&A or business-development approach, but the setbacks are likely to increase scrutiny of Chairman Giovanni Caforio and the board.