Royalty Pharma plc (NASDAQ:RPRX) disclosed that pelacarsen failed the Phase 3 Lp(a)HORIZON cardiovascular-outcomes trial conducted by Novartis AG (NYSE:NVS). The randomized, double-blind study enrolled 8,323 patients with elevated lipoprotein(a), or Lp(a), and established cardiovascular disease.
Pelacarsen lowered Lp(a), but the study did not meet its primary endpoint of reducing cardiovascular events compared with placebo in the overall population. The endpoint combined cardiovascular death, nonfatal heart attack, nonfatal stroke, and urgent coronary revascularization requiring hospitalization. Complete results have not yet been presented.
Royalty Pharma plc (NASDAQ:RPRX) provided Ionis Pharmaceuticals, Inc. (NASDAQ:IONS) with $500 million in January 2023. The transaction allocated $150 million to pelacarsen royalties and $350 million to Spinraza royalties. The clinical failure shifts the financial focus from uncertain pelacarsen upside to recovery through Spinraza.
Bull Case
Royalty Pharma plc (NASDAQ:RPRX) acquired 25% of the Spinraza royalties received by Ionis Pharmaceuticals, Inc. through 2027. That share increases to 45% in 2028 on Spinraza annual sales of up to $1.5 billion.
Following the HORIZON result, the Spinraza interest will revert after aggregate payments to Royalty Pharma plc (NASDAQ:RPRX) reach $550 million, equal to 1.1 times the original funding. Management expects the structure to recover the entire investment and generate a modest positive return despite the clinical failure.
Royalty Pharma plc (NASDAQ:RPRX) does not anticipate paying any pelacarsen milestone payments. The original agreement included up to $625 million of potential regulatory and commercial milestones, limiting further capital exposure after the unsuccessful trial.
Royalty Pharma plc (NASDAQ:RPRX) also maintained its 2030 target of at least $4.7 billion in company-defined Portfolio Receipts. The metric combines attributable royalty receipts with milestones and other contractual receipts, net of relevant payments to legacy non-controlling interests, and excludes specified accelerated receipts and securities proceeds.
Bear Case
Expected recovery may not produce an attractive annualized return. The $550 million threshold is only $50 million above the original funding, and Royalty Pharma plc (NASDAQ:RPRX) did not disclose when it may be reached.
Recovery depends on the continuing performance of Spinraza because the agreement provides a percentage of royalty payments rather than a fixed repayment schedule. Slower sales or collections would extend the recovery period and reduce the annualized return.
The clinical miss also makes the potential pelacarsen royalty stream less likely to materialize. The agreement provided 25% of the royalty received by Ionis Pharmaceuticals, Inc., producing a mid-single-digit royalty on potential pelacarsen net sales. A successful cardiovascular therapy could have generated long-duration receipts, but that opportunity is now materially less probable.
Novartis AG has not presented complete results, including effect sizes and outcomes in the higher-Lp(a) subgroup. Future development decisions therefore leave some residual uncertainty, even as the failed primary endpoint and absence of expected milestones sharply reduce the likelihood of meaningful pelacarsen receipts.
Hedge Fund Sentiment
The filings available so far reflect positions held before Royalty Pharma plc (NASDAQ:RPRX) reported the pelacarsen Phase 3 failure. Insider Monkey’s database showed 47 hedge funds holding Royalty Pharma plc (NASDAQ:RPRX) at the end of 2Q2026, up from 42 funds three months earlier.
Conclusion
The contract appears to have contained the principal risk, but downside protection cannot replace pelacarsen upside that now appears unlikely to materialize. Spinraza receipts will determine how quickly the modest return is realized, while any remaining pelacarsen optionality depends on complete trial data and future development decisions.
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This article is originally published at Insider Monkey.
