Novartis AG

And thank you for taking the time to join us on this Q4 full year. Good morning and good afternoon to everybody. And thank you for taking the time to join us on this Q4 full year results presentation. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors. These may cause actual results to be materially different from any future results, performance, or achievements expressed or implied by such statements. Please refer to the company's Form 20F on file with the U.S. Securities and Exchange Commission for a description of some of these factors. And thank you again for joining us, and I'll hand across to Raz Narasimhan. Thanks.

Thank you, Samira. I also wanted to say thank you all for joining today's conference call. If we move to slide three, with me today, I have a number of my ECN colleagues, Harry, Susanna, Murray Frantz, John Tsai, Richard, and Shannon. And we'll be available to take your questions and also will be joining me for parts of the presentation. So if we move to slide five, Over the past three years, we've been executing on a strategy we set out in 2018 to focus the company, focus on certain geographies to accelerate our growth, and to focus on five strategic priorities that we remain committed to and believe in the long run will enable Novartis to sustainably grow and sustainably have impact on healthcare around the world and deliver on our purpose to reimagine medicine. Now, when you look at some of the proof points, As we've set out on this journey, we believe we're making good progress. Always more to do, always things to learn, but we're making good progress. We're 100% focused now as a medicines company. We have a leading pipeline across 10 therapeutic areas, four advanced therapy platforms, unique in that having only 8% of our sales in one product and over 15 blockbusters. We've achieved $2 billion in cost savings over the last three years, a leading data science platform that's enabling us to weather this pandemic, and I believe sets us up for the medium and long term, consistently improving ESG scores, now with sector-leading performance in four key indices, and from a culture standpoint, record high engagement scores across multiple different measures. Now, moving to slide six, when you look at how the strategy is translated into operational performance, We see solid operational performance over the past three years, with sales growing 5% from $42 billion now to approaching $49 billion, core opt-in growing double-digit at 10%, exceeding now $15 billion. And we've reached our initial goal of innovative medicines core margin to 35% on our way to our midterm goal of the high 30s, which we are well on track to achieve. Now, turning to this year's performance, sorry, the 2020 performance and Q4 performance, on slide seven, you can see a breakdown of some of the key drivers. As you saw in our release, net sales for the full year were up 3% and core operating income up 13%. Our overall performance in Q4, as well as the full year, were driven by our key growth drivers, Entresto and Cosentix, continuing to demonstrate double-digit growth. A broad range of oncology medicines also demonstrating double-digit growth. And taken together, we now have over half of our sales coming from our key growth drivers and launches in innovative medicines, positioning us well for the future and positioning us well to overcome challenges the patent expiries we have in this period and continue to drive growth through 2025 and beyond. Now moving to slide eight, I wanted to dive into a few of the products and Sandoz before turning it over to my colleagues. First on Zilgensma, full year sales were 920 million in the first full year since launch. Medicine is now registered in 37 countries. We're making very good progress in the rollout of this medicine around the world. As you saw in Q4, we had sales of $254 million, which were lower than Q3. This was driven primarily by COVID-19-related impacts, delaying new starts as hospitals face disruption, and we saw physicians delaying starts or switches to the product, as well as delays in reimbursement decisions in some of the European and emerging markets we're currently working with. We expect this impact to continue through the first half of 2021. We would expect sales in that Q3, Q4 range before an acceleration in the second half of the year. But we remain confident in the longer-term potential of the medicine in the IV form to reach ultimately $2 billion. It remains the treatment of choice for newly diagnosed patients. We're seeing about 15% of patients in the EU in the older than two-year age range. We're on our way to get access in nine EU countries, which would be about 25% of the population. And we have important formal reimbursement decisions in 15 countries over the coming year to two years. So taken together, we think we're on the right track. When you look at the IT program, we continue to await the animal data, which we expect to have in the middle of this year, to the back half of this year, though. Remove the partial clinical hold if the data confirms the safety profile. We are working with the FDA to finalize the design of a pivotal confirmatory study, which we then rapidly plan on implementing. We continue to progress our 10 early stage programs in gene therapies with two INDs and clinical trial starts planned in 2021. So moving to slide nine, I also wanted to say a word regarding our performance in China. Now, as you saw in our release, we were very pleased with our growth in China with sales growing 16%, second fastest amongst multinationals in China. Our goal is to double our sales in the country by 2024, making China the second largest market for Novartis in the world. Our key growth drivers, similar to what we see in other geographies, are Entresto, Cosentex, as well as our other oncology strategic bands. What's very notable, I think, is the number of NRDL listings we achieved. We believe the highest in the industry in 2020. We also have a rich pipeline with seven approvals expected in 2021. So taken together, we think we're on the right track to reach our goals in China and really continue to drive dynamic growth in this important market. Moving to slide 10. With respect to Sandoz, you saw in the full year Sandoz managed the sales guidance largely in line for the full year and the quarter. Importantly, Sandoz was able to drive 15% core operating income growth, moving its core margin up to 24.2%. Some of the pushes and pulls for Sandoz are continued strong biopharmaceuticals performance with 19% growth, primarily in the European markets. but also held back a bit by our retail declines we saw driven by COVID-19 and the U.S. oil solids business that we now retain. I think taking a longer-term view on Sandoz, we remain determined to build a business that can grow mid-single-digit with margins in the mid-to-high 20s, really competitive with the top end of the peer set. And we expect to be able to do that through a robust biosimilar pipeline, as well as high LOE coverage amongst small molecules through the 2024 period. Now, moving to slide 11. I did want to say a word about the company's efforts to overcome the COVID-19 challenges we see in the marketplace. Harry will talk a little bit more about our guidance. But certainly, when you look at the healthcare system's performance over the back half of last year, we continue to see a situation where healthcare systems didn't return fully to their pre-pandemic status. Here on the left-hand side of the chart, you see two examples in dermatology. We continue to see patient visits and NBRX below the pre-pandemic levels. On the bottom, you can see in the oncology markets, depending on the cancer setting, you have biopsy and surgery rates below pre-pandemic levels, also the CDK4-6 market. So for the first half of 2021, we expect to continue to see challenges for certain therapeutic areas, such as dermatology and ophthalmology, as well as in Sandoz retail. We expect that some of our new launches will be impacted, though we expect to continue to see solid progress, and you'll hear more about that from Mary France, on preparing for these launches to accelerate in the back half of the year, such as Cosimta and Mazin. And we also know products that involve hospital initiation, such as Kimriah, Lutathera, and Vilgensma, will face a tougher situation in the first part of the year. Again, we would plan to overcome that in this period and then hopefully see acceleration in the second half of the year. So moving to slide 12. Returning to our innovation performance and innovation milestones in Q4, we saw the approval of Lectio in the EU six months ahead of schedule. We saw the positive FDA adcom for Entresto and preserved ejection fraction heart failure, as well as a number of other notable achievements, a number of designations achieved for Toclopan and Ligalizumab, I think demonstrating the potential of these medicines as they continue to progress in late-stage development. We also signed an important in-licensing deal on Tisalizumab with Beijing for anti-PD-1, which we hope we'll be able to file later this year in the U.S. and other markets. I also wanted to say a word, as I know there have been a number of questions on Lectio and an update on the CRL. Now, first and foremost, it's important to note that there are no safety, efficacy, or product-related concerns with respect to Lectio in the CRL. As I mentioned, the EU fully approved this product out of the same facilities that we also filed for the US FDA. The CRL was related to facility inspection-related conditions, primarily related to documentation and certain control systems at a third-party manufacturer in Europe. We expect, based on the third party's readiness to complete the request made by FDA, to be able to submit the documentation and other requests of FDA in the Q2, Q3 time period. We still do not know if the FDA will ultimately want to inspect this facility. As noted previously, the FDA had originally planned to inspect this facility in May of 2020. They're currently not conducting overseas inspections in situations like this, so we'll continue to have to work with the FDA to try to expedite that inspection. And we're concurrently working on a tech transfer to add our own Novartis facility in Shaftanau, for the production supply chain of Lyfeio. So we remain confident we will get this product approved as fast as possible and then continue our plans to launch this medicine in a highly effective way, which Marie-France will go through in a bit more detail in a moment. Now moving to slide 13, other innovation milestones that we expect for 2021. Multiple major approvals, Cosimta in the EU, Entresto, a half pass for an expanded indication for Entresto. A number of major submissions you can see listed here, including Asimeneb in CML. We have also a range of major readouts which would enable submissions in 2021, notably canakinumab, sabatolumab, MBG453, and lupusma, amongst others. We also will hope to see the readouts of ligaluzumab and cosentix, which would enable submissions in 2022. And I also wanted to say a word on our next wave of assets, which you can see on slide 14. Here we lay out the five life cycle management programs, five pharmaceutical programs, five oncology programs, and five wildcards we highlighted in our Meet the Management meetings. And in many of these programs, we have milestones expected in 2021. You can also see the milestone chart in the appendix of this document. I'll note a few. We expect the Paradise Post-MI trial to read out in the first half of 2021. I already mentioned Cosentix and Hydradonitis Superativa, the Kiskali Mona Lisa 2 OS in the second half of 21. We'll see important mid-stage readouts for Eptaclopan in IgA nephropathy and C3G. We'll see also an important Phase IIb start for Branoplam in Huntington's disease. And then, of course, the range of oncology milestones as well across the various oncology molecules. Important to note, in all of these projects, we have full teams working to accelerate them and working as fast as possible to maintain their progress through the pandemic and beyond. Particularly, we're looking forward to continuing to advance our SHIP2 inhibitor and our C. raf inhibitor as well in the oncology portfolio. So I hope that gives you an overview of our story, well, mid- and long-term story most importantly, but also our story in Q4 and for 2021. And with that, I'll hand it over to Mary Franz. Mary Franz.

Thank you, Vas. So going on to slide 16, good morning, good afternoon, and pleased to update you on the 2020 performance for pharma. We grew 5 percent year-over-year in a challenging environment, and our growth drivers, Cosentix and Entresto, showed continued momentum and now account for $6.5 billion in revenues. But the story that stands out here is the shift that you see in our portfolio. The contribution from growth drivers and launches went from 33 to 43 percent, and that demonstrates our replacement power in light of several patent expiries expected. We're delivering strong operational performance in the in-market growth drivers. We also made progress in the next wave of potential launches, providing the basis for growth in 2021 and beyond. Slide 17. Once again, Cosentex delivered double-digit growth and reached $4 billion for the full year. Our focus is on continuing to compete strongly to maintain our position in dermatology and accelerate in rheumatology. We know what we need to do to grow. We need to make sure we maintain broad access and balance that with a long-term value of Cosentix. And you can expect us to continue to do that. We'll expand into new geographies. In fact, we're now the only innovative biologic with broad NRDL listing in China. And we'll make sure that we're competitive in the marketplace with our industry-leading approach to data and presence. as well as a number of new indications as we deliver on our ambitious lifecycle management program. There is still tremendous opportunity in this market, and between the data, the access, and our outstanding teams, we have what it takes for Cosentix to continue to grow. On slide 18, Entrusto continues to deliver 44% full-year growth, and the momentum continues across all of the geographies. As you know, we're the only single-use medicine proven to be superior to previous standard of care, and thus we're in a strong competitive position. It's also great to see that the American College of Cardiologists expert consensus now recommends that heart failure patients go direct to ARNI, and this puts Entresto in a pole position for the 75% of patients who are still on previous standard of care. We also have exciting opportunities for growth with expansion in China and Japan, as well as our lifecycle management program for PEPs, or preserved ejection fraction, and post-AMI. If we move to the next slide, the ADCOM discussion for PEPs reinforced the unmet need, as well as entrust those value in the treatment of preserved ejection fraction, and specifically in patients with ejection fraction below normal. Ultimately, the addressable patient pool will depend on the label. What I can tell you is that the total population is about 3 million in the U.S., and about 2 million of them have an ejection fraction below normal. We know from our deep experience in RUF that guidelines matter in this market, so our update will be gradual as the guidelines evolve. Overall, we're very comfortable with Entresto's peak consensus, and we're confident that Entresto is going to continue on its impressive growth trajectory. If we move to slide 20 and on to Cosimta, we've said we have high expectations for this product. Our team is executing very effectively on the launch. In fact, we have beat all of our plans on gaining access. We're seeing broad adoption. We have leading share of attention. Onboarding is fast and initiation is simple. But we do feel that it is more challenging to launch during a pandemic. We cannot move as fast as we would like due to the limited face-to-face access to physicians. And what we're also seeing is a hesitancy to switch as physicians and patients prefer to wait. But this does not change our ambition for this product. We think that B-cell therapies have the potential to account to up to 40 percent of market share in MS, and we're positioning Kesimpta as a first-choice DMT as we relentlessly track for the highest customer satisfaction. We have the foundational elements in place. We're focusing on breadth. And with our free drug program, once we're out of this pandemic and we can pull our full promotional power behind Kesimpta, we will really see the potential of this product. If we move on to slide 21, We're also enthusiastically preparing for the launch of Lectio. Lectio received EU approval in December, and we expect a slow and steady start. We also plan to roll out our first population health agreement with the UK NHS in quarter three. In the U.S., as you've heard, we have a manufacturing-related delay, which we're working to resolve. But what is important to remember is that we're thinking about this launch very differently. Our aim is to partner with healthcare systems on ASCVD management to overcome the non-clinical barriers to tackling this disease at scale. We're now using this time to advance our engagement with healthcare systems and to set up the needed infrastructure so that we can be stronger out of the gate once we get the green light from FDA. Slide 22, 2020 was definitely a year like no other. but the external environment did not stop us from doing what we're passionate about, and that is bringing medicines to patients. Our teams have worked hard and demonstrated great agility and resilience, and I am very proud of this team. Our 2021 strategy builds on the good work done. Number one, we want to maintain the momentum on Cosentix and Entresto, penetrating markets further and delivering on our lifecycle management programs. Two, executing our launches. ramping up Casimta, bringing Lectio to market, and restoring confidence in VOV. And three, getting ready for the next wave of launches. Geographically, we have a clear focus on the U.S. and China, and we're putting our customers at the core of our strategy. You will see us working in a much more personalized fashion with physicians, leveraging the investments that we've made in data and digital, and with healthcare systems to deliver access to more patients faster. Over to Suzanne.