Heartache For Novartis As Serelaxin Failure Ups Pressure On Entresto

Novartis's latest Phase III study of serelaxin has failed, deleting a significant chunk of forecasted revenue that analysts had attributed to the heart failure drug candidate.

Novartis AG's relaxin receptor agonist serelaxin (RLX030; recombinant relaxin) – touted as a potential blockbuster by some analysts – has failed in the RELAX-AHF-2 Phase III clinical trial for acute heart failure (AHF). The drug missed both co-primary endpoints of worsening of heart failure and cardiovascular death in the RELAX-AHF-2 study, which had been required by regulators to confirm serelaxin's potential benefits following mixed results from an earlier trial. (Also see "FDA reviewers advise no go for Novartis' serelaxin " - Scrip, 26 Mar, 2014.)

"We had included the product in our pipeline forecasts at $500m in 2021 and $750m in 2025," admitted Bernstein's Tim Anderson in a March 22 note. "Removing those revenues represents a loss of $0.10 (1.5%) from 2021 [earnings per share (EPS)]."

But Deutsche Bank's Tim Race suggested in a same-day report that investors were prepared for bad news from the serelaxin program.

"The trial was always high-risk and investors appeared well aware of this in our view," Race wrote on March 22. However, "due to the scale of the opportunity, [it] carried near blockbuster expectations." The failure of serelaxin will shine an even broader spotlight on revenue from Novartis's approved heart failure drug Entresto (sacubitril/valsartan), which missed a 2016 sales target of $200m, "as well as the importance for management to bolster its pipeline," the Deutsche Bank analyst pointed out. (Also see "Can Slow Selling Heart Drug Entresto Perk Up In 2017? Novartis Hopes So" - Scrip, 25 Jan, 2017.)

Few would disagree that Novartis is going through a difficult patch. "Coming after the Entresto misfire, the Alcon [sell-off] delays, the on-again/off-again Roche stake divestiture – we understand why some investors express frustration," Bernstein's Anderson said.

Novartis presented heart failure as one of its areas of focus together with oncology, dermatology and respiratory back in 2014. But with RELAX-AHF-2 missing its endpoints, Bryan, Garnier & Co. analyst Eric Le Berrigaud wrote in a March 22 report that Entresto has "full responsibility to build Novartis's expertise in heart failure." In the meantime, "Respiratory was relegated to a secondary role and with recent mixed feedbacks about [Kisqali (ribociclib; LEE0110)] (questionable label in the US) and [BAF312 (siponimod)] (second study required, unlikely to be conducted by the company), we see poor momentum for the stock." (Also see "Novartis Chief: Good Things Come To Those Who Wait" - Scrip, 26 Oct, 2016.)

Novartis Chief Medical Officer and Global Head of Drug Development Vas Narasimhan said in regard to the latest serelaxin data that the company is "disappointed" the efficacy of the drug was not confirmed in acute heart failure, "especially given the urgent need for effective new treatments for this condition." The Swiss Firm "will continue to further analyze the data to better understand and learn from these results as well as evaluate next steps for the overall program," Narasimhan said.

RELAX-AHF-2 was an event-driven, multicenter, randomized, double-blind, placebo-controlled, Phase III trial of serelaxin added to standard of care in patients with acute heart failure (AHF). It included 6,600 patients hospitalized for AHF and was initiated in October 2013.