Artisan Partners calls for Novartis board changes after back-to-back trial failures

A major Novartis shareholder used a Reuters interview on Thursday to put the board on the record over a $12 billion cash deal whose first late-stage test failed this week. David Samra, managing director at Artisan Partners and founding partner of its International Value Group, said Chairman Giovanni Caforio "needs to make changes at the board level," including "improving the team that's doing these deals because clearly they have been uninspiring at best."

Artisan ranks among Novartis' 20 largest shareholders, Reuters said, without giving a stake size. No other holder was named as joining him. Directors sit for terms that run only until the next annual meeting, which Novartis has not scheduled, so Samra has no vote in hand. Reuters described Artisan as the first investor to demand board changes in public. Other holders have voiced concerns about the company's dealmaking.

"The party is over," Samra told Reuters.

The demand is aimed at the board. Samra said successive chairmen had failed Novartis on acquisitions. He said Vas Narasimhan had done a "very good job" running the business and instead questioned whether directors had scrutinized the deals. Caforio was elected chair only at the March 7, 2025, annual meeting, succeeding Joerg Reinhardt. The MorphoSys purchase Samra also cited was a 2024 deal, before Caforio's term; the Avidity acquisition was announced after he took the chair. He also wants compensation rewritten so it tracks "real economic outcomes," arguing that adjusted performance measures exclude writedowns.

Two Phase III misses, four days apart

The fuse was clinical. On Friday, September 4, Novartis said pelacarsen, an Lp(a)-lowering antisense drug it licensed from Ionis Pharmaceuticals in 2019, missed the primary endpoint of the Phase III Lp(a)HORIZON trial: a composite of cardiovascular death, non-fatal heart attack, non-fatal stroke, and urgent coronary revascularization in 8,323 patients with elevated Lp(a) and established cardiovascular disease. The drug lowered Lp(a). It did not cut events versus placebo in the overall population.

U.S. markets then went dark for Labor Day. Zurich did not. Swiss shares fell 1.3% on Friday and another 3.2% on Monday, September 7.

On Tuesday, September 8, Novartis reported that del-desiran, a muscle-directed RNA therapy for myotonic dystrophy type 1, missed the primary endpoint of the global Phase III HARBOR trial: it did not show a statistically significant improvement versus placebo in how quickly patients could open their hands. Del-desiran came with Avidity Biosciences, the San Diego RNA company Novartis bought for $12 billion in cash. Swiss shares closed down 10.9%. Reuters estimated about $32 billion of market value was lost. CNBC said the session was on track for Novartis' worst trading day since 2020. The New York ADR, catching Monday's Zurich slide and Tuesday's HARBOR miss in one session, fell 13.9%.

From the September 3 close through Wednesday, Swiss shares were down 15.0%; the ADR was down 15.7%.

The misses traveled. Reuters had already flagged Amgen's olpasiran and Eli Lilly's lepodisiran as rival late-stage Lp(a) programs, Tuesday was the first U.S. session after pelacarsen, and separately reported that Dyne Therapeutics and Sarepta slumped on the HARBOR read-through into other muscle-disease RNA programs.

Novartis said it is evaluating the full HARBOR dataset and will talk to health authorities about del-desiran's path. Nazem Atassi, its global head of neuroscience, called setbacks "part of scientific progress." Financial guidance, the company told Reuters, is unchanged. It pointed to a broad medicines pipeline and a capital-allocation mix of organic investment, "value-creating bolt-ons," dividends, and buybacks.

The $12 billion acquisition now on trial

Novartis announced the purchase on October 26, 2025, a day after the companies signed the merger agreement, at $72.00 a share in cash, a 46% premium to Avidity's October 24 close, valuing the company at about $12 billion fully diluted and about $11 billion in enterprise value. The deal closed on February 27, 2026. It brought a muscle-directed RNA platform and three late-stage programs: del-desiran for myotonic dystrophy type 1, del-brax for facioscapulohumeral muscular dystrophy, and del-zota for Duchenne muscular dystrophy.

HARBOR was the first of those three to read out in Phase III. "If you do a $12 billion deal and it goes to zero, the management needs to be penalised for that," Samra told Reuters, while noting that other Avidity drugs could still work. "The acquisition track record is not very good." He also pointed to the 2024 purchase of Germany's MorphoSys, which Novartis later wrote down.

Novartis never split the $12 billion across the three programs. At the takeover it presented external forecasts putting peak annual del-desiran sales as high as $6 billion, the largest of the three commercial bets, and called facioscapulohumeral muscular dystrophy another multi-billion-dollar opportunity; outside forecasts for del-brax ran around $4 billion. Narasimhan said two of the three late-stage drugs could reach annual peak sales of many billions of dollars, and the third $500 million to $1 billion. HARBOR was the first and largest sales case to fail; del-brax and del-zota have not had a Phase III verdict.

Barclays, quoted by CNBC on Tuesday, had treated del-desiran as a test case for Avidity and put pelacarsen and del-desiran together at about $5 billion of risk-adjusted peak sales. Jefferies told CNBC that Novartis' stated 5% to 6% annual sales-growth target through 2030 would likely be seen as out of reach without more deals, which the failures made harder to defend. The company has not withdrawn the growth framework.

Directors were last elected at the March 6, 2026, annual meeting, when shareholders re-elected Caforio as chair and member and added Charles Swanton.

What a fund holder actually owns

VanEck's fund of U.S.-listed drugmakers APPH, graded A under etf.net's published method, held Novartis at 9.25% as of Thursday, its third-largest position. From the September 3 close through Wednesday the fund fell 4.88%; Novartis subtracted 1.45 percentage points, the largest drag among the holdings we priced.

iShares' global healthcare tracker BIXJ, also graded A, listed Novartis at 3.59% as of September 7, before Tuesday's drop; State Street's SPDR MSCI Europe Health Care UCITS ETF had it at 15.92% as of September 4, the last factsheet date before the slide.

Reuters noted that public pressure of this kind can encourage other holders to push; it did not say that would happen here. Zurich shares were higher Thursday morning. That is a first reaction, not an answer to whether Caforio changes the board, whether HARBOR has a residual path, or whether the two remaining Avidity programs can carry a $12 billion deal that just failed its first late-stage test.