Novartis Reports 3 Patient Deaths. Why the Stock Is Heading for Its Best Day Since 2023.

Novartis reported positive Phase III data for remibrutinib, just hours after announcing it had paused clinical trials for a different drug candidate in late August following patient deaths. (Photograph by Fabrice Coffrini/AFP/Getty Images)

Key Points

• Novartis pauses clinical trials for its experimental cell therapy rapcabtagene autoleucel following three patient deaths.
• The drugmaker links the patient deaths to a rare reaction in which the immune system attacks the body’s own organs.
• Novartis shares rise after the company reports positive Phase III trial data for its experimental multiple sclerosis pill, remibrutinib.

Novartis released a mixed bag of clinical updates, pausing trials for one drug after a spate of patient deaths, while simultaneously revealing positive data for a pill that analysts view as a potential blockbuster.

The Swiss drugmaker said late Monday it had halted trials for its experimental cell therapy rapcabtagene autoleucel, or rap-cel, in patients with certain autoimmune diseases.

The decision followed three deaths, which the drugmaker linked to immune effector cell-associated hemophagocytic syndrome, a rare reaction in which the immune system attacks the body’s own organs.

Novartis confirmed it paused trials in patients with lupus, myasthenia gravis, multiple sclerosis, and other autoimmune diseases on Aug. 24, as it reviews the safety events. The company said it is working with regulators and independent safety boards for each paused study while cancer trials continue uninterrupted.

None of the named conditions are typically fatal with proper management, though secondary health complications that arise during advanced stages of multiple sclerosis can be life-threatening.

The news failed to dent shares, which was to be expected. Analysts had been cautious about rap-cel’s market potential, forecasting under $650 million in revenue in 2032. A drug must generate $1 billion or more annually in order to be considered a blockbuster.

Rather, Novartis stock was heading for its best day in three years in U.S. trading Tuesday, jumping 4.3% to $158.59 in the premarket session. Shares rose nearly as much in Zurich.

Those gains came on the back of an update for the drugmaker’s experimental pill for multiple sclerosis, remibrutinib. Patients taking the pill had fewer relapses and brain lesions than those given Sanofi Genzyme’s teriflunomide in a Phase III trial.

While rap-cel isn’t expected to be a blockbuster, analysts hold higher hopes for remibrutinib. Jefferies analyst Michael Leuchten believes consensus estimates are “likely too conservative,” arguing that opportunities across other clinical trials could transform it into a franchise generating high single-digit billions in sales.

Remibrutinib has the potential to achieve “multi-blockbuster status” and outperform Sanofi’s rival drug, according to Morgan Stanley’s Thibault Boutherin. That being said, Boutherin acknowledged that its commercial success ultimately hinges on how well the pill holds up against existing oral treatments.

The pill would serve as a follow-on to Kesimpta, Novartis’s blockbuster monthly injection that treats relapsing forms of multiple sclerosis. Remibrutinib’s success would also strengthen the case for a class of drugs known as BTK inhibitors, which block an enzyme called Bruton’s tyrosine kinase to prevent abnormal white blood cells from growing. Similar medications from Merck and Sanofi have failed to outperform teriflunomide in late-stage trials.

Analysts at BofA Securities project remibrutinib could generate $3 billion annually in sales in multiple sclerosis alone and potentially top $10 billion across indications.

Although the market was looking past the deaths, the news triggered caution across the broader pharmaceutical sector. Also on Monday, Bristol Myers Squibb announced it had paused trials for its own autoimmune drug candidate, zola-cel, as a precautionary measure.

A spokesperson said researchers had identified “transient and reversible inflammatory events” during regular study protocol, triggering the pause.

Both rap-cel and zola-cel are CAR-T therapies, a personalized form of immunotherapy that trains the body to target and destroy specific cells. Both therapies target the CD19 protein found on the surface of faulty immune cells in order to eliminate them.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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