Novartis Just Shook Up a Multibillion-Dollar Drug Race. What It Means for Eli Lilly Stock.

Novartis (NYSE: NVS) just reported its third clinical failure in only seven days. One of the company's pipeline setbacks triggered a ripple impact throughout one of the most hotly anticipated drug races in the biopharmaceutical industry.

Analysts are still trying to fully assess how much Novartis shook up the cardiovascular medicine space. But the world's largest healthcare company by market cap has found itself caught in the crossfire -- Eli Lilly (NYSE: LLY).

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What happened

On Sept. 4, 2026, Novartis announced that its late-stage clinical study evaluating pelacarsen didn't meet its primary endpoint of reducing the risk of cardiovascular events compared to placebo. Pelacarsen was initially discovered by Ionis Pharmaceuticals (NASDAQ: IONS) and licensed to Novartis in 2019.

Pelacarsen is an antisense oligonucleotide (ASO) that was designed to inhibit the production of lipoprotein(a), or Lp(a) for short. Lp(a) was discovered 63 years ago. It can cause plaque buildup in arteries and blood clotting.

Around 20% of people worldwide have elevated Lp(a) levels. Unlike low-density lipoprotein (LDL) cholesterol, commonly referred to as "bad cholesterol," neither diet nor lifestyle changes usually help much to lower Lp(a).

Novartis reported that pelacarsen did lower Lp(a) levels. The drug didn't achieve a statistically significant reduction in cardiovascular events, though. Analysts expected pelacarsen to achieve peak annual sales of $4 billion to $5 billion if it had been successful.

Why Lilly's stock didn't drop much

Amgen (NASDAQ: AMGN) and Lilly are also developing drugs for lowering Lp(a). Following Novartis' bad news about pelacarsen, Amgen's share price sank 10%. The biotech stock still hasn't recovered. However, Lilly's shares declined by only about 3%. What's behind this relatively muted impact?

For one thing, the premise that reducing Lp(a) levels could improve cardiovascular outcomes wasn't disproven by Novartis' pelacarsen results. Not enough data have been released to go that far.

Importantly, Lilly is taking a different approach to lowering Lp(a) with lepodisiran than both Novartis and Amgen. Lepodisiran also achieved a greater reduction of Lp(a) in phase 2 testing than pelacarsen did. Another key differentiator for Lilly is that its late-stage study of lepodisiran includes a broader group of patients.

Probably the biggest reason Lilly's shares didn't move much on the pelacarsen flop is the company's dominance in the enormous diabetes and obesity markets. Lilly generated $23 billion in the second quarter of 2026 alone, with roughly $14.9 billion of that total stemming from type 2 diabetes drug Mounjaro and weight-loss therapy Zepbound.

A potential impact on Lilly, but not a game changer

To be sure, pelacarsen's clinical flop may increase the risk that Lilly won't be successful with lepodisiran. Novartis could release additional data from its late-stage study of pelacarsen, sowing more doubts about Lilly's chances. The pharmaceutical company stated that full trial data "will be presented at an upcoming medical congress."

However, Lilly has another shot on goal at improving cardiovascular outcomes that takes an entirely different approach. Thanks to its 2025 acquisition of Verve Therapeutics, the company's pipeline includes base-editing therapy VERVE-102. This experimental therapy edits DNA to turn off the PCSK9 gene, which results in lower LDL cholesterol.

VERVE-102 delivered impressive results in a Phase 1 clinical trial. One intravenous infusion of the therapy achieved dose-dependent lowering of both PCSK9 and LDL cholesterol in patients at high risk for cardiovascular disease. And those reductions were sustained over an 18-month follow-up period.

Of course, the most important story for Lilly will continue to be its diabetes and obesity franchise. The company is also a major player in cancer treatment and neurology. Novartis' pelacarsen failure may impact Lilly, but it's not a game changer for the huge drugmaker by any stretch of the imagination. No predictions of where Lilly's stock is headed will be affected much by Novartis' setback.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amgen, Eli Lilly, and Ionis Pharmaceuticals. The Motley Fool has a disclosure policy.