Novartis’ Cholesterol Drug Fails To Get FDA Approval; Shares Drop 3%

Shares of Novartis were down more than 3% in Monday’s pre-market trading after the Swiss drugmaker said that the US Food and Drug Administration (FDA) did not approve its new drug application (NDA) for inclisiran used in the treatment of patients with elevated low-density lipoprotein cholesterol.

The FDA stated in a response letter that it cannot approve the NDA for inclisiran by the Prescription Drug User Fee Act (PDUFA) action date set for December 23, due to “unresolved facility inspection-related conditions.” The US regulator said that it will inform the European manufacturing facility, which is responsible for drug product supply, within 10 business days about the conditions needed to resolve the inspection issues.

Novartis’ (NVS) inclisiran is a potential treatment for hyperlipidemia in adults who have elevated low-density lipoprotein cholesterol while being on a maximum tolerated dose of a statin therapy. On Dec. 11, the European Commission granted Novartis marketing authorization for Leqvio (inclisiran) in Europe.

“Novartis is confident in the quality of the regulatory submission for inclisiran, which includes a robust body of evidence related to efficacy and safety. We look forward to meeting with the FDA and our third-party manufacturing partner to discuss the feedback received and next steps,” said John Tsai, Chief Medical Officer at Novartis. “We are committed to bringing this potential first-in-class small interfering RNA cholesterol-lowering treatment to patients as soon as possible.”

The FDA emphasized that “satisfactory” resolution of the unresolved facility inspection-related conditions is needed before the Novartis NDA for inclisiran may be approved. However, no onsite inspection was conducted, Novartis said.

In November last year, Novartis obtained the global rights to develop, manufacture and commercialize inclisiran as part of its $9.7 billion takeover of The Medicines Co.

Shares of Novartis have declined 4% year-to-date, but the stock scores a cautiously optimistic Moderate Buy analyst consensus. That’s based on 2 recent Buy ratings vs just 1 Hold rating. Meanwhile, the average analyst price target stands at $108.55, indicating 19% upside potential lies ahead over the coming 12 months.

Earlier this month, Argus analyst David Toung lifted the stock’s price target to $112 from $100 and reiterated a Buy rating, citing management’s updated guidance, along with the recently approved products and new indications for existing products.

The analyst also raised his FY20 EPS expectation by 5c to $5.80 and FY21 EPS outlook by 10c to $6.40. (See Novartis stock analysis on TipRanks)