Novartis takes $1.9bn hit from Avidity takeover in Q3
The Novartis Pavillon in Park South of the Novartis Campus in Basel, Switzerland.
Novartis's third-quarter results included a $1.9 billion impairment charge relating to its $12 billion takeover of Avidity Biosciences, although chief executive Vas Narasimhan insists it remains a good deal.
The write-down is related to Avidity's antibody-oligonucleotide conjugate (AOC) delpacibart etedesiran (del-desiran), one of three clinical-stage AOCs from the Avidity deal, which is being developed for the neuromuscular disorder myotonic dystrophy type 1 (DM1), but failed a phase 3 trial last month.
Narasimhan said on Novartis' results call that the Avidity acquisition is "absolutely on track" and has merely "hit a bump," as two other AOCs – delpacibart braxlosiran (del-brax) for facioscapulohumeral muscular dystrophy (FSHD) and delpacibart zotadirsen (del-zota) for Duchenne muscular dystrophy (DMD) – are respectively in phase 3 testing and filed for regulatory approval.
The disappointing del-desiran readout "does not change our conviction around [AOCs] and their ability to address neuromuscular disease," added Narasimhan, as he reaffirmed Novartis' commitment to bolt-on acquisitions to boost its pipeline.
In September, Lp(a)-targeted pelacarsen failed to reduce cardiovascular risks in a major phase 3 trial, meaning that two out of Novartis' three most important data readouts this year have been a bust.
The impairment charge was a dark spot in a reasonably good set of results for Novartis, with a 4% increase in third-quarter net sales to $14.52 billion driven by growth products like breast cancer drug Kisqali (ribociclib), multiple sclerosis therapy Kesimpta (ofatumumab), Scemblix (asciminib) for blood cancers, and twice-yearly cholesterol-reducer Leqvio (inclisiran).
The company is taking a hit from generic competition to big-selling products like heart failure therapy Entresto (sacubitril/valsartan), anaemia therapy Promacta (eltrombopag), and immunology blockbuster Cosentyx (secukinumab).
"Novartis delivered solid sales growth in Q3, as priority brands and launches more than offset generic erosion, demonstrating the replacement power of the business," said Narasimhan.
Despite a 61% decline in operating income due to the charge, Novartis raised its full-year guidance from an earlier prediction of a low single-digit decline to either flat or low-single-digit growth. It retained its low single-digit growth forecast for sales.
Narasimhan also highlighted some encouraging pipeline news for the group, including positive phase 3 results with oral BTK inhibitor Rhapsido (remibrutinib) in relapsing multiple sclerosis (RMS), label expansions for Rhapsido and prostate cancer radiotherapy Pluvicto (177Lu vipivotide tetraxetan) in the US, and the first filing for myelofibrosis treatment pelabresib in Europe.
"With continued momentum across the business and pipeline, we remain well on track to deliver our mid- and long-term outlook," he said.
