Novartis's Heart Drug Flop Erases $2 Billion From Royalty Pharma — But Does the Deal Structure Limit the Pain?

Shares of Royalty Pharma sank 6.5% to $59.81 after Novartis revealed that pelacarsen — a drug designed to lower a cholesterol-like blood particle called Lp(a) — failed to prevent heart attacks, strokes, or cardiac deaths in an 8,323-patient late-stage trial. The Phase 3 Lp(a)HORIZON study did not meet its primary endpoint of reducing the risk of cardiovascular events compared to placebo. The result removes what investors had priced in as a potentially lucrative future royalty stream and raises questions about how much growth is left in Royalty Pharma's pipeline bets.

• The Drug Lowered the Target but Didn't Save Lives. Pelacarsen had shown up to an 80% reduction in Lp(a) levels in earlier studies. But the HORIZON trial proved that lowering Lp(a) in the blood did not translate into fewer cardiovascular events. Analysts say the failure "marks a meaningful setback" for other companies taking a similar approach, including Eli Lilly and Amgen. For Royalty Pharma, it means the drug is unlikely to ever generate the blockbuster sales on which a royalty would be collected.

• The $500 Million Deal Had a Safety Net — and It's Now All That's Left. Royalty Pharma's January 2023 funding agreement with Ionis ascribed $150 million of value to pelacarsen royalties and $350 million to royalties on Spinraza , an existing spinal muscular atrophy drug. Following the HORIZON results, Royalty Pharma's royalty interest in Spinraza will revert to Ionis after royalty payments reach $550 million, representing a 1.1x return on the total amount funded. That means the company will get its money back with a sliver of profit — but the big upside scenario is gone.

• Management Says the Long-Term Target Still Holds — the Market Isn't So Sure. Royalty Pharma reiterated its 2030 Portfolio Receipts target of $4.7 billion or more. And in Q2 2026, the company reported Portfolio Receipts growth of 6% to $773 million with Royalty Receipts growth of 14%. Yet a 6.5% single-day drop suggests investors worry that future deals carry similar binary risk — where one failed trial can erase hundreds of millions in expected value overnight.

• The Entire Lp(a) Thesis Is Now in Question. Novartis's failure "raises the burden of proof for Lilly's lepodisiran and Amgen's olpasiran,"

with outcome data not expected until 2028 and 2029, respectively. If the whole drug class is in doubt, Royalty Pharma's broader strategy of buying into early-stage cardiovascular royalties could face higher scrutiny from investors who now see Lp(a) as an unproven bet rather than a coming wave.