Investor Demands Board and Pay Overhaul at Novartis After Two Costly Setbacks; Kura Spins Out Diabetes Unit and Payers Tighten Orphan Access

# What happened

Investor pressure on Novartis intensified after two clinical setbacks caused a rapid, large market-cap decline. David Samra, managing director at Artisan Partners and one of Novartis' largest shareholders, publicly called for changes to the company's board and its executive compensation structure.

Samra linked the losses to oversight failures tied to dealmaking. The most prominent deal at issue was Novartis' $12 billion acquisition of Avidity, whose muscle-wasting program failed in clinical testing. Additional weak results for pelacarsen further accelerated the market reaction. Samra acknowledged Novartis CEO Vas Narasimhan's operational performance but held the board accountable for approving and overseeing the failed transactions.

# The investor argument

Samra recommends two concrete shifts:

• Penalize executives responsible for failed deals.
• Align executive pay with GAAP-based economic outcomes rather than adjusted metrics that exclude write-downs.

# Kura spins out Caspian Therapeutics

Kura Oncology created Caspian Therapeutics as a separately financed entity to pursue menin inhibition as a disease-modifying approach for diabetes and cardiometabolic disease.

• Financing: $50 million syndicate led by BVF Partners.
• Investors include Eli Lilly and the T1D Fund among others.
• Program: KO-7246, a menin inhibitor intended to block menin's suppression of pancreatic beta-cell proliferation.
• Preclinical results: Durable increases in insulin-producing capacity in both Type 1 and Type 2 diabetes models, according to the summary provided.

# Payer behavior on orphan drugs

Ira Studin, president of Stellar Managed Care Consulting, argued that payers are narrowing the practical definition of unmet need for orphan products. The tactics payers are using include:

• Requiring meaningful, not marginal, clinical improvement over standard of care.
• Expanding step therapy requirements before covering orphan therapies.
• Imposing coverage criteria that are tighter than the label.
• Increasing reauthorization denials during ongoing treatment.

Studin's view: Manufacturers that build a robust case for meaningful unmet need during pivotal trial design will improve their chances for launch access and pricing.

# Why this matters

For Novartis, the episode raises short-term investor governance pressure and could lead to changes in board composition or pay structures if shareholders back Samra's recommendations.

For commercial strategy, payers' tougher posture on orphan access means clinical differentiation must be demonstrable at launch to secure coverage and avoid step edits or reauthorizations that restrict patient access.

# Immediate implications to watch

• Development milestones and clinical readouts for KO-7246 under Caspian's independent financing.
• Early payer coverage policies for novel orphan and disease‑modifying cardiometabolic agents that will show how strict access criteria are applied in practice.