Novartis AG (NYSE:NVS) has discontinued development of VHB937, also known as lifonebart, after the experimental ALS drug failed to meet both its primary and secondary endpoints in a Phase II trial involving 251 patients with early-stage ALS. The drug targeted TREM2, a protein involved in immune responses and inflammation in the brain. Novartis will stop the ALS program but continues to study VHB937 in Alzheimer’s disease, where a mid-stage trial is still recruiting.
The setback comes only days after Novartis reported a Phase III failure for del-desiran in myotonic dystrophy and a September 4 failure for pelacarsen in cardiovascular disease. Reuters reported that the del-desiran failure erased nearly $30 billion from Novartis’ market value in one trading session, increasing scrutiny of the company’s pipeline and acquisition strategy.
Why Novartis Can Absorb Another Clinical Setback
The immediate financial impact from VHB937 should be limited because the drug was still in mid-stage development and had not generated commercial revenue. Discontinuing the ALS program also prevents Novartis from committing additional late-stage development costs to a drug that failed on both primary and secondary measures. That could help contain future R&D spending and preserve cash for programs with stronger evidence.
Novartis AG also has several growing commercial products that can offset individual pipeline failures. In Q2 2026, Kisqali sales increased 43% year over year at constant currencies, Kesimpta rose 32%, Scemblix increased 89%, Pluvicto gained 43%, and Leqvio grew 59%. The company generated $5.6 billion in free cash flow during the quarter and reaffirmed its full-year outlook for low-single-digit sales growth.
The pipeline is not uniformly deteriorating. Remibrutinib recently delivered positive Phase III results in relapsing multiple sclerosis, reducing annualized relapse rates versus teriflunomide in two trials. Novartis AG also continues development of its Avidity-related medicines and other late-stage programs.
Novartis Faces a Bigger Challenge Replacing Aging Revenue Streams
The bigger concern is cumulative pipeline attrition rather than the direct loss of VHB937. Novartis AG has now experienced several significant clinical setbacks in a short period. Pelacarsen failed its Phase III cardiovascular endpoint, while del-desiran failed its primary endpoint in Phase III. Reuters has reported that investors are increasingly scrutinizing Novartis’ M&A strategy following these failures, particularly after the company spent $12 billion to acquire Avidity.
That matters because Novartis needs successful new medicines to replace products facing patent-related pressure. Entresto sales already fell 50% in Q2 because of U.S. generic competition, while Reuters previously reported that the company faces roughly $4 billion of revenue exposure from upcoming patent expiries. The failure of another development program therefore increases the importance of successful launches from the remaining pipeline.
The financial cushion is also not unlimited. Q2 free cash flow declined 12% to $5.6 billion, while core operating margin fell 70 basis points to 41.2%. Repeated unsuccessful trials can increase the amount of capital required to replenish the portfolio while reducing the number of potential future products capable of generating high-margin revenue.
Conclusion
VHB937’s discontinuation is unlikely to materially affect Novartis AG’s near-term revenue because the ALS drug was still experimental, but its significance is greater when viewed alongside the recent failures of pelacarsen and del-desiran. Novartis still has strong growth from Kisqali, Kesimpta, Scemblix and Pluvicto, as well as positive Phase III data for remibrutinib. Yet the succession of setbacks raises the execution risk around replacing aging products and makes the success of the remaining pipeline and recent acquisitions increasingly important to sustaining Novartis’ 5–6% five-year sales CAGR target.
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This article is originally published at Insider Monkey.
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