Board Shake-Up Demanded
Major Novartis Shareholder Demands Board Shake-Up Following Costly Deal Failures and Clinical Setbacks
Anonymous
Key Points
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Novartis suffered three pipeline setbacks within roughly a week: del-desiran, acquired through the Avidity deal, failed a late-stage trial in myotonic dystrophy type 1; the cardiovascular drug pelacarsen failed its trial; and the company pulled back the rap-cel cell-therapy program after patient deaths.
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Novartis shares fell about 11% on the day of the del-desiran trial failure—the company’s worst trading day on record—and the setbacks erased approximately $30 billion in market value over a week.
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Samra specifically argued that Novartis should penalize management for major deal failures, citing the $12 billion Avidity acquisition, which he said had lost its entire value, and the $2.9 billion MorphoSys purchase, followed by an $800 million writedown only months after closing.
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Samra described the situation bluntly by saying, “the party is over,” and said the board’s acquisition team had been “uninspiring at best.”
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Despite the recent losses, CEO Vas Narasimhan has overseen an approximately 60% increase in Novartis’s share price during his tenure, a performance Samra cited in separating his criticism of the board from his assessment of the chief executive.
Novartis faces a shareholder revolt over its dealmaking strategy after three major clinical setbacks in a single week wiped roughly $30 billion from the company's market value. Yahoo Finance reports that Artisan Partners managing director David Samra is demanding board changes, including removal of acquisition oversight failures and new directors with M&A expertise. The crisis has exposed the company's troubled track record: the $12 billion Avidity Biosciences deal lost its entire value, and the $2.9 billion MorphoSys purchase followed up with an $800 million writedown within months.
Shares plummeted 11% on the day del-desiran, a drug acquired through Avidity, failed a late-stage trial for myotonic dystrophy type 1. The company also scrapped a cell-therapy program after patient deaths and saw pelacarsen, a cardiovascular drug, fail its trial. Despite the damage, CEO Vas Narasimhan has driven a 60% stock price gain during his tenure, earning him credit from Samra while the board faces criticism.
Three Disasters Strike Within Days
Novartis's troubles began when del-desiran stumbled in a late-stage myotonic dystrophy type 1 trial. The drug came from the Avidity acquisition, a $12 billion bet that the board now acknowledges has wiped away all its value. Days later, pelacarsen, a cardiovascular candidate, failed its trial. Then the company pulled the plug on rap-cel, a cell-therapy program, after patient deaths emerged. These setbacks, compressed into a week, triggered the worst trading day in company history.
A Shareholder Revolt Over Deal Failures
David Samra from Artisan Partners bluntly told Novartis that 'the party is over.' Yahoo Finance reports he called the board's acquisition work 'uninspiring at best' and demanded accountability. Samra wants Chairman Giovanni Caforio to strengthen oversight, hire directors with dealmaking skills, and create a dedicated acquisition committee. Most sharply, he argued executives should face penalties when major deals collapse, not rewards.
CEO Praised While Board Takes Heat
Samra separated his critique of the board from his assessment of CEO Vas Narasimhan, crediting him with an approximately 60% share price increase during his tenure. The shareholder explicitly said Narasimhan was not responsible for the acquisition failures—positioning the blame squarely on the board and its dealmaking process. Novartis has defended its pipeline and maintained financial guidance, but the market damage is stark: roughly $30 billion in value erased in seven days.
The MorphoSys Wound Still Fresh
The MorphoSys acquisition for $2.9 billion now serves as a cautionary tale. Months after closing, Novartis took an $800 million writedown on the deal, signaling early trouble that foreshadowed this week's pipeline collapse. Combined with the Avidity debacle, the pattern of failed acquisitions has shaken investor confidence. Samra's call for change reflects growing pressure on Novartis to tighten how it vets and manages major purchases moving forward.
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