Key facts
- Novartis investors are scrutinizing upcoming drug trial results for three key experimental drugs.
- These drugs, pelacarsen, remibrutinib, and del-desiran, are seen as crucial for future growth.
- The potential peak annual sales for these three drugs are estimated to exceed $10 billion.
- This revenue is needed to offset patent expirations on current top-selling drugs.
- Novartis' current valuation is considered high, with much of the pipeline's potential upside already priced in.
Novartis investors are closely monitoring upcoming clinical trial results for three key experimental drugs, which are seen as vital for the Swiss pharmaceutical company to maintain its premium valuation. The success of pelacarsen (for cardiovascular disease), remibrutinib (for multiple sclerosis), and del-desiran (for a genetic disorder) is critical as Novartis faces significant patent expirations on its top-selling products like Cosentyx and Kisqali around the end of the decade.
Analysts estimate that these three pipeline drugs could collectively achieve over $10 billion in peak annual sales, a figure necessary to offset declining revenues from established treatments such as Entresto, which is already facing generic competition and is expected to see sales drop by $4 billion this year.
The market's focus on these readouts is heightened because Novartis' shares have already risen 11% this year and 25% over the past 12 months, trading at a sector-leading valuation of approximately 16 times forward earnings. Analysts, including James Quigley from Goldman Sachs, have indicated that at this valuation, the company needs at least two of the three major trials to succeed to avoid significant share price vulnerability.
Investors will be looking for management's confidence in the trial outcomes and clear definitions of "clinically meaningful" benefits. For pelacarsen, the HORIZON study is evaluating its potential to reduce heart attacks or strokes by lowering lipoprotein(a). If Novartis' drug is the first to market for this condition, it could become a substantial long-term revenue generator, given the chronic nature of the condition.