Novartis AG

Good morning and good afternoon and welcome to the Novartis Q1 2023 Results Release Conference Call and Live Webcast. Please note that during the presentation, all participants will be in a listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions by pressing star 1 and 1 at any time during the conference. Please limit yourself to one question and return to the queue for any follow-up. A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends. With that, I would like to hand over to Mr. Samir Shah, Global Head of Investor Relations. Please go ahead, sir.

Thank you very much, and good morning and good afternoon, everybody. Thank you once again for all the participants on the call and the webcast for taking the time to listen to our quarterly conference call. Before I start, just a safe harbor statement. 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. For a description of some of these factors, please refer to the company's Form 28F, its most recent quarterly results in Form 6K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission. And with that, I'll hand it over to Vas.

Thank you, Samir, and thanks, everyone, for joining today's call. If we move to slide four, Novartis delivered a strong first quarter to start the year. We had strong sales growth, robust margin expansion. We hit our key innovation milestones, and we're raising our full year 2023 guidance, which Harry will go through in more detail. As you saw in this morning's press release, sales were up 8%. Core operating income was up 15% in constant currencies. In innovative medicines, sales were up 7%, and core operating income was up 18%. We achieved a core margin of 38.7% in IM. And Sandoz was up 8%, with core operating income up 3%. I'll go through some of the innovation milestones in the subsequent slides, as well as an update on our recent approvals of our Milburn and Zaragoza manufacturing facilities. Then moving to slide five, our K2023 readouts for our upcoming high-value medicines remain on track. You surely saw earlier in the quarter our Phase III Natalie trial in adjuvant breast cancer, testing this medicine in a broad patient population. has met its primary endpoint at its second interim analysis. PluVicto continues to stay on track with the PSMA-4 trial in metastatic castrate-resistant prostate cancer. Having a positive top-line readout, we expect to achieve the OS endpoints over the course of the summer with a detailed data presentation in the second half of the year and plan for regulatory submissions in the second half of 2023. And Iptacopen continues to stay on track as well. Tomorrow, we will read out the data from the APOINT PNH trial in treatment-naive patients. I'll speak more about that in a moment. And we're on track with both the IGAN and C3G readouts. Now, moving to slide six, our submission-enabling readouts are expected to increase in the 24 and 25 timeframe with a number of, we think, potentially exciting assets if the data continues to hold. Remi Brutnib will achieve its primary analysis in CSU for efficacy in the second half of 2023, and the final analysis, which would include additional safety follow-up alongside potential submission in 2024. We've accelerated our assemblix timeline and first-line CML with a readout and submission now expected in 2024. Also of note, we remain on track with our SMA IT readout for OAV 101 for 2024. And I also wanted to highlight that Ionilumab, across a broad range of indications, has begun Phase III clinical starts, including in first and second line ITP, as well as in SLE and lupus nephritis. And moving to the next slide, slide seven, and turning to a little bit more detail on some of these innovation highlights, the Natalie study met its primary endpoint, demonstrating clinically meaningful IDFS in a broad early breast cancer population. This study looked at Kiptali plus endocrine therapy with a 400-milligram dose, and it significantly reduced the risk of disease recurrence for standard endocrine therapy alone. The benefit was consistent in a broad population of stage two and three early best breast cancer patients. We expect to present this data at an upcoming medical meeting, and we're on track for worldwide regulatory submissions in the second half of 2023. As a reminder, 30 to 60% of patients with stage two and three early breast cancer treated with endocrine therapy alone remain at risk of breast cancer recurrence. And I also wanted to highlight that our 400 milligram dose was used specifically to reduce dose dependent AEs given the importance of a good tolerability profile in treating early breast cancer. Now moving to slide eight, I wanted to get into a little bit more detail on the patient population addressed by the Cascalli-Natalie study. We've previously guided that this is a multibillion-dollar opportunity for Kiskali in addition to the multibillion-dollar opportunity we have in the metastatic setting. You can see here on the left-hand side of the slide the incidence that we now estimate based on updated data sets that we've been able to identify. The Natalie population covers 70% of stage two and 100% of stage three patients, and it's approximately two to three times the size of the competitor study. You can see the profile in a bit more detail on the right-hand side of the slide. You can see that in the Stage 2 population, we have unique to Natalie and a total population across the Stage 3 as well that's unique to Natalie. So it gives you a good sense of the comparison across the Natalie and monarchy profiles. So moving to Slide 9 and turning to etacopam, our point PNH data showed clinically meaningful increases in hemoglobin, and we top-lined this data and the quarter four of last year. This was a single-arm phase three study in adult patients with PNH, with hemolysis and anemia that were naive to complement inhibitors and complement the data we've already demonstrated in patients who were not adequately controlled by C5 inhibitors. The study met its primary endpoint, had a strong safety profile, and as I already mentioned, the data will be presented tomorrow, and we look forward to using that data alongside our already I've completed previous trials as part of our regulatory package. We have completed the submission of Iptaclopan in the U.S., and we are awaiting regulatory acceptance, which we hope will happen soon. Then moving to slide 10, we strengthened our radioligand therapy pipeline with multiple deals over the course of the quarter. Some of the recent business development activities included a discovery collaboration with Bicycle Therapeutics, which employs cyclic peptides. And that allows us to target additional interesting targets from a radioligand therapy perspective, and it supplements our existing discovery platform. In addition, we completed an acquisition of FAP2286 from Clovis Oncology, which is a fibroblast activation protein. And we believe it represents the promising RLT target in a range of solid tumors you see listed here. The asset is in Phase 1-2 development. It's shown for signs of efficacy. And it complements the growing clinical stage pipeline we have outlined on the right-hand side of the slide, which includes taking Lutathera into multiple different solid tumors, the continued expansion of Pluvicto, as I've already outlined, as well as the progress we're making on NeoB and now the acquisition of FAP2286. So we'll look forward to keeping you updated as we continue to progress our radioligand therapy portfolio. Now moving to slide 11 and turning to our growth in the quarter and growth drivers, our key growth drivers deliver 67% growth in constant currencies, and we expect that growth to continue. This growth was highlighted by performance from Entresto, Pluvicto, Kesimpta, and Kaskali. Now turning to these brands, each one in turn, on slide 12, Entrusto delivered strong double-digit growth across geographies. You can see a growth rate of 32% with growth across ex-U.S. and the U.S., a strong weekly TRX trend, which is continuing the trend we've seen now for multiple years with this medicine. The momentum is outpacing the market with the U.S. NBRX now up 30%. We continue to see growth in the EU with hep rest patients, and importantly, in China and Japan, We're not only seeing expansion in heart failure patients, but also significant contribution from our indications in these geographies in hypertension. We remain confident in the future growth profile. We expect further penetration across HEPREP, robust guideline positions to support our overall growth. And importantly, we received CHMP positive opinion for pediatric heart failure, which if ultimately approved by the European Commission, will extend the loss of exclusivity in the EU until the end of 2026. Now, moving to the next slide, slide 13, Cosentix ex-U.S. growth offset our U.S. declines. And as we've guided to, we continue to believe that global full-year sales will be broadly in line with the prior year. Getting into a little bit more on these dynamics. In the U.S., we saw demand growth, which was solid, offset by revenue deductions. About half of the decline that we saw was due to prior year base effects, where the revenue deductions that we disclosed in quarter four were not in Q1 of last year. In addition, we did have some inventory movement. So overall, we do see in the U.S. approximately a high single-digit decline in percentage performance, which is in line with what our expectations were. XUS, we see strong growth in our core indications. Importantly, in China, we're outperforming the market with our NRDL listing with Cosentix, double-digit growth now post-COVID. As I mentioned, we expect our sales to be broadly in line, and our future growth will be driven by lifecycle management. We have the CHMP opinion for hydradenitis expected in quarter two. We're expecting approvals in the U.S. for both hydroadenitis and our IV formulation in the second half. We're on track with our lupus nephritis and GCA studies, and we've initiated two additional studies in polymyalgia rheumatica and rotator cuff tendinopathy. And moving to slide 14, just to highlight some of the data we released in Cosentix in the quarter, in hydradenitis, we had demonstrated durable efficacy sustained up to one year. This is a disease that's characterized by lesions and abscesses. Patients really suffer from the disease. So really, what is critical is that we can address pain and address some of the more problematic manifestations of the disease. On the right-hand side, our data demonstrate durable efficacy, which is sustained out to one year across the various patient populations. Greater than 70% of patients were flare-free. Greater than 65% had solid pain control. And we saw a fast and lasting quality of life improvement. So taken together, we think the medicine is well positioned in what could be a sizable market as more and more therapies become available to treat these patients with the biologics that they likely need. And moving to the next slide, slide 15, Cosimta continued its strong launch trajectory, doubling sales versus prior years. You can see the 100% growth on the chart. This was driven by strong TRX growth, we're up 89% versus prior year, strong NBRX growth, we're up 60% versus prior year. Importantly, the B-cell NBRX share that we have is currently about 50% of the MS market, so there continues to be room for further B-cell expansion. In Europe, there was strong launch momentum as well, with now 65% of the population with access to Cosimta. We're confident in the continued growth of this medicine. We think there's significant room to grow the B cell market share in the U.S. And we also have a compelling product profile, one minute a month dosing from home or anywhere, strong five-year efficacy and safety data. So, we'll continue to drive strong performance with Casimta over the course of this year. Now, you likely saw in slide 16 that Cascalli had an outstanding quarter, and we're gaining momentum globally with increasing recognition of its differentiated profile supported by strong phase three outcomes data. The growth of 81% on the sales line are metastatic breast cancer market share. NBRX share is now at 28% in the U.S. In the EU5, our NBRX share is up to now 38%. We have the favorable NCCN guidelines as the only category one treatment for first-line metastatic breast cancer with an aromatase inhibitor. and the positive readout as we've already discussed for the Phase 3 Natalie study. So we expect continued momentum for Skiskali as it achieves its multibillion-dollar potential in the metastatic setting. Then moving to slide 17 with Lectio, our adoption is continuing to expand as we steadily progress this launch. What we wanted to highlight here is when you look at adoption, the number of facilities that are now ordering Lectio, We're up to 2,200 facilities. Our number of physicians that have experience now with Lectio is up to 9,600. And our focus now is to drive greater depth in these accounts as these accounts get more comfortable with buy and bill, which will absolutely be critical for the long-term success of this product. Our access rate is at 76%. Adherence now to the second dose within 95 days is at 75%. So the foundations are getting put in place for this medicine, and we continue to track well against the Entresto launch curve, which I think gives you an indication of how we expect the launch to progress in the U.S. Globally, we're also seeing now the beginnings of an acceleration as we continue to expand in Europe and also wait for a further acceleration in the U.K. with the NHS national program. Now turning to slide 18, So, Vecto is continuing to see outstanding demand and a strong benefit, driven by its strong benefit-risk profile and the unmet need in the post-vaccine metastatic castrate-resistant prostate cancer setting. You saw the sales evolution now up to $211 million on the quarter. We do expect QT sales to be broadly in line with Q1 as we continue to ramp up the Milburn and Zaragoza facilities. We have 200 unique accounts, but importantly, have over 100 additional accounts we're prepared to add on as supply continues to ramp, moving towards our goal of estimated 500 accounts in the U.S. as we move into broader and broader settings. Our FDA submission for PSMA-4, including the OS data, is on track, as I've previously mentioned. And to get into a little bit more detail on the supply, turning to slide 19, As you saw in our announcement last week, Milburn is approved for Plavicto commercial supply in the U.S., and we already have started production in the facility. We also have Zaragoza approved in the EU, and we expect that facility to start producing for EU patients over the course of the coming week. As we continue to add additional lines, bring additional lines operational in Milburn over the course of the coming months, we will expect to see in the second half of the year significant expansion in capacity. which will allow us to accelerate the launch as we move into the end of 2024 and 2025. Importantly, our Indianapolis facility as well is now in preparation for FDA filing. We hope to have that facility approved before the end of this year. And the last element of our story on production is the building of automated production lines, which have a lot of substantial capacity. We continue to target a capacity of at least 250,000 doses in 2024. Now, lastly, turning to Semblix. Semblix continues to do well in the third-line setting for CML Q1 sales. We're at 76 million. Our global rollout is ongoing with approval in 46 countries. We have access pathways in 19. I think there's a strong recognition of the efficacy and tolerability benefit of this medicine, and that's indicated by the rapid enrollment of the Ask for First study. We've completed enrollment ahead of plan with a readout and filing now expected in 2024. So a strong start to the year, a strong first quarter. And to give you more perspective on the financial performance in Q1, I'll hand it over to Harry. Harry?