Novartis stock tumbled Wednesday as fourth-quarter earnings lagged and after the Swiss pharma behemoth scrapped a promising early-stage eczema drug.
Novartis previously touted the drug as a pan-JAK inhibitor. The company hoped it would treat a long list of diseases tied to janus kinases, a key component in inflammatory conditions. Novartis was first testing it in eczema where it would have rivaled Incyte's Opzelura, another JAK inhibitor.
But in an update Wednesday, Novartis said it discontinued the program due to an "unfavorable benefit/risk profile." The company was aiming for the large mild-to-moderate eczema market. In response, Novartis stock dipped 2.6% to 85.91 on today's stock market.
The company is far from alone in its eczema struggles. Last week, Eli Lilly and Incyte announced the Food and Drug Administration might reject their treatment for moderate-to-severe eczema. The companies and the agency don't agree on which patients should receive the drug.
Novartis Stock: Earnings, Sales Lag
In addition to the eczema disappointment, fourth-quarter metrics lagged.
Sales increased 6% in constant currency to $13.23 billion, but missed Novartis stock analysts' call for $13.33 billion. Core profit rose 7% to $1.40 per share, yet was 2 pennies short of views.
The lion's share of growth in the quarter stemmed from Novartis' "innovative medicines" division which generated $10.7 billion in sales, growing 7% in constant currency. Generic competition had a 3 percentage point impact on growth.
Meanwhile, Novartis' own generic drugs business struggled. Revenue inched up 2% to $2.5 billion, minus the impact of exchange rates. Pricing hammered growth by 9 percentage points.
Novartis is continuing its strategic review of that business, dubbed Sandoz. The company has said it's considering spinning it out, selling it or keeping the business as is. That review should wrap no later than year-end, the company said in its news release.
For 2022, Novartis now expects mid-single-digit sales growth. That's in line with Novartis stock analysts' projection for 4% growth to $53.79 billion in sales. Analysts also expect adjusted profit of $6.49 per share, according to FactSet.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
