Novartis books $2.2 billion hit from drug trial setbacks, but lifts guidance
NVS•Novartis recorded about $2.2 billion in charges related to two drugs that failed late-stage studies, while raising its full-year core operating income guidance to low single-digit growth from a previously expected low single-digit decline.
1. Trial-related charges
Novartis recorded a $1.9 billion partial impairment charge for del-desiran, reducing the drug’s estimated value from $7.48 billion because of development delays. The company also recorded a $300 million charge for pelacarsen, which it wrote off completely. CFO Mukul Mehta said Novartis still believes del-desiran can succeed.
2. Guidance and strategy
Third-quarter operating income fell 61%, while core operating income, adjusted for special items, rose 10% at constant exchange rates. Novartis raised its full-year core operating income guidance after strong demand for key cancer and multiple sclerosis drugs, while maintaining its forecast for low single-digit net sales growth. CEO Vas Narasimhan said the company did not need to change its M&A strategy.
