Novartis Halts Blood Cancer Drug Development, Reports Weak Q4

Novartis provided its financial results for the fourth quarter and the entire year of 2023, which were below analysts' expectations. The company revealed the discontinuation of a late-stage blood cancer treatment due to disappointing Phase III trial results.

The pharmaceutical giant decided to halt development of the monoclonal antibody sabatolimab, targeting TIM-3, following the Phase III STIMULUS-MDS2 study. This study failed to show a significant improvement in overall survival for patients with high- or very high-risk myelodysplastic syndrome (MDS) who were unsuitable for intensive chemotherapy or stem cell transplantation. Previously, Novartis included ongoing Phase I and Phase II studies of sabatolimab in its pipeline reports. However, these studies were not mentioned in the latest update, signaling a complete discontinuation of the drug's development.

The decision comes amidst lackluster fourth-quarter revenues, which were reported at $11.4 billion. Though this shows a strong 10% year-on-year growth in constant currencies, it was lower than the $11.56 billion analysts projected. Core net income for the fourth quarter rose by 11% to almost $3.13 billion, but again, it fell short of analysts’ expectations of around $3.3 billion.

On the stock market, Novartis saw a 3.6% decline in premarket trading following the release of its earnings report. Despite not meeting projections, CEO Vas Narasimhan emphasized the strong performance of key growth drivers. For instance, the heart failure drug Entresto generated $1.635 billion in revenue for the fourth quarter, reflecting a 26% annual growth in constant currencies. Psoriasis treatment Cosentyx also performed well, bringing in $1.3 billion in sales. Additionally, the multiple sclerosis treatment Kesimpta and the breast cancer drug Kisqali contributed $641 million and $610 million, respectively.

Novartis also noted a net income of $5.8 billion from its discontinued operations related to the spinoff of its generics business, Sandoz. Looking to the future, the company forecasts mid-single-digit growth in net sales for the upcoming year, assuming no unforeseen events and no new generic competition to Entresto in the U.S. during 2024. In the fourth quarter of 2023, generics accounted for a three-percentage-point reduction in Novartis’ growth.

To achieve its growth targets, Novartis is focusing on several regulatory submissions this year. These include submissions for the endothelin A receptor agonist atrasentan for IgA nephropathy (IgAN), the oral BTK inhibitor remibrutinib for chronic spontaneous urticaria, and the oral factor B inhibitor iptacopan for both IgAN and C3 glomerulopathy.