Novartis AG

Good morning and good afternoon and welcome to the Novartis Q1 2024 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'll 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-ups. 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 Ms. Sloane Simpson, Head of Investor Relations.

Please go ahead, Madam. Thank you so much, Operator. Good morning and good afternoon, everyone. Thank you for joining our first quarter 2024 earnings call. 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 20F and its most recent quarterly results on Form 6K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission. And with that, I will hand across to Bas.

Thank you, Sloan. I'd like to open today's call by first thanking Sameer Shah for his incredible tenure as our head of investor relations for over a decade. We're grateful for all of his contributions. We look forward to his continued contributions in a new role at Novartis. And I want to welcome Sloane Simpson. I think Sloane will do an absolutely outstanding job serving all of you as our head of investor relations. I've worked with her for many, many years. I think we're really pleased and grateful to have her on board. So let's turn to the quarter. Novartis delivered a really strong start to the year with double digit sales growth, core margin expansion, which enabled us to upgrade our guidance. And Harry will go through the guidance in more detail. Sales were up 11% in constant currencies. Core operating income was up 22%. Our core margin reached 38.4% as we steadily marched to our goal of 40% plus by 2027. In addition, we had a number of important innovation milestones in the quarter, which I'll go through over the course of the call. But a few I'd want to particularly highlight, the Fabhalta positive opinion enabled us to launch Fabhalta in Europe. Semblix first-line readout we think will be very important for a major medicine for the company. And we also had the updated PSMA4 OS results, which will enable us now to move forward with the filing of PluVicto in the United States. Now, moving to slide five. Now, our growth in the quarter was broad-based and we had strong contributions from many of our key growth drivers, including Entresto, Cosimta, Cosentix, which had a very strong quarter, as well as Kaskali. I would also say geographically, our performance was broad-based with strong growth across US, Europe, China with very strong growth and Japan. Now, as you can see on the chart, that strong growth was indicated by 41% constant currency growth. And we expect this growth to continue over the course of the year, which is what gives us confidence to do the upgraded guidance that we've outlined this morning. Now, moving to slide six, and we'll walk through the brands one by one, as we always do. First, with Entresto, we had double-digit growth up 36% in quarter one. That was, again, geographically broad-based U.S. and ex-U.S. In the U.S., our weekly TRX continue to reach new highs. We have 38% constant currency growth outside of the U.S. And we continue to see momentum for this brand. We're in a strong guideline position both in the U.S. and in Europe. We have further penetration opportunities in heart failure globally and specifically in hypertension in China, in Japan, and in Japan. we have protection into the early 2030s with this medicine. For forecasting purposes, no change in our Entresto LOE outlook, continue to guide to a mid 2025 LOE while continuing to aggressively defend our various patents. And then in terms of the EU, we continue to guide to RDP in November, 2026, benefiting from our pediatric extension. Then moving to slide seven, Cosentix grew 25% in the quarter, and I think really got back to the dynamic growth we expect for this medicine. This was fueled both by our core indications, but also some strong launches. I'll go through that in a bit more detail. U.S. was up 25% in constant currencies, ex-U.S. 24%. We were highly competitive in our core indications, and so we saw a return to market share improvement in psoriasis and in the rheumatoid rheumatology indications, both in the US and in Europe. And we're now the leading originator biologic in the IL-17 class in the EU and China. Now, in terms of our new launches, we saw very strong performance in HS, Hydroadenitis Superativia, where we have over 50% now NBRX share versus adalimumab in US and Germany. When we compare our launch on a comparable basis to the adalimumab launch in this indication, we currently see ourselves at nearly three times the performance of that previous launch. I think really highlighting how strong the uptake for Cosentix has been in this new indication. We also had very strong performance in the intravenous indication ahead of the J-code, which we expect in July. I think, again, that indicates there is strong interest in having an IV option for patients with Cosentix in the rheumatology indications. So we'll look forward to further acceleration in the back half of the year once we have that J-code in place. Now, moving to slide eight, Cosimpta delivered 66% growth on the quarter. And this was, again, global US and ex-US driven. We have over 100,000 patients treated worldwide on the medicine, and the majority of these patients are either naive or first switch, which reflects the strategy we have for this brand. In the U.S., we saw a very strong demand-driven growth with NBRX volume at plus 26% versus prior quarter. And one of our key priorities now in the U.S. is to increase our B-cell market share over the coming quarters. Outside of the U.S., we have leadership now in 7 out of 10 major markets, and we look forward to continuing to drive the convenience and high-efficacy story that Kesimpta presents in these markets. In the quarter as well, we announced the Aletheos six-year long-term data, which demonstrated sustained efficacy and the consistent safety profile for Kesimpta. In this study, 9 out of 10 patients were free on the NETA-3 score of disease activity. And we also saw treatment naive patients derive substantial benefits across multiple markers of disease activity. So even in the face of some competitor launches, we feel very confident about the one minute a month self-administered dosing, high efficacy, strong safety profile of Kesimpta. Now moving to slide nine, Kaskali grew 54% in metastatic breast cancer with now a continued leading share in new patient starts. U.S. was up 72%, and I think there's increasing recognition of the unique profile that Kaskali offers given its broad data set of OS across three different studies in metastatic breast cancer. We have leading NBRX share at 45%, and we see a steady growth in riders. We're also working to increase depth as well as improve our market access position across key accounts ahead of the early breast cancer launch. Now, outside of the United States, 39% growth. We're the fastest growing CDK4-6 in Europe and a market leader in the pre-menopausal indication. We also successfully entered the NRDL list in China in quarter one. In its early days in China, but given the strength of our China operations, we're hopeful we can drive dynamic growth for Scali in China over time. regulatory review in early breast cancer is ongoing we're filed in the u.s and eu and currently expect regulatory review to proceed as planned our manufacturing adjustments which we disclosed a few weeks ago are on track to a journal alignment with the latest regulatory standards in early breast cancer by the end of q2 and we continue to expect to be able to launch this medicine in the second half of this year now moving to slide 10 fluvicto It had strong growth of 47% in the quarter driven by new patient starts and very early beginnings of growth as well outside of the U.S. QN, we have 400 treatment sites now up and running in the U.S. on steady progress to our goal to get well over 500 sites fully certified for the use of Fluvicto. Also, our supply performance is now consistently at a very high level with over 99.5% of injections administered on the planned day so ample supply indianapolis facility up and running uh continued expansion of our manufacturing network so we really feel like we're now we're in a position to fully supply the market consistently globally in for this for this medicine now over the course of 2024 we're going to focus on share expansion within existing sites and particularly expanding the referral network of medical oncologists who can refer into a pluvicto treating center We feel like this will be the key now in the post-tax day setting. We also want to build our business outside of the United States with some important launches in Europe, as we also build towards planned launches in Japan and China, both countries where we have planned new manufacturing facilities to support the Pluvicto and Lutathera business. Our existing indications are also on track. We announced earlier this quarter that the PSMA-4 submission enabling OS readouts was achieved. And this will put us in a position to file PluVicto early in the second half, so a mid-year filing for this medicine. And then PSMA addition also on track, as well as the PSMA delayed castration localized alga metastatic program as well. Now, a little more detail on the PSMA4 submission enabling OS readout. We had a primary endpoint that we read out last year where we met the primary endpoints as well as really strong data across all of the secondary and exploratory endpoints, a very impressive relative risk reduction for RPFS, strong profile across the patient reported outcomes, as well as the various response ORR, DCR, and DOR. What we announced earlier in the quarter was the updated third interim, which gave us a higher proportion of OS events. The OS hazard ratio was less than one, which puts us in a position to file mid-year. And other secondary endpoints were consistent with the previous results, as was the RPFS. And what we feel and see is with the additional eight months of follow-up, we have high confidence in the safety profile of PluVicto. And so these results will be presented at an upcoming medical Congress. And of course, we're working as quickly as we can to get this file in. And moving to slide 12, Lectio also had a really strong quarter. Adoption expanded steadily in the U.S., but also outside of the United States, as you can see here on the left-hand chart, very strong performance, both in the U.S. and outside of the U.S., taking the U.S. first. We had growth outpacing the advanced lipid lowering market. We have now nearly 3,900 facilities that are ordering Lectio, increased breadth and depth across our key accounts. We continue to see buy and build as the key driver overall of the business, but we do see also the use of other channels as well. Outside of the US, we have a consistent rollout now. We have 29 countries where Lectio is publicly reimbursed in an additional 39 with private commercial coverage. This puts us in a strong position with our top three European markets contributing 50% of international sales, but really strong growth across the international region. And strong early uptake in China in the self-pay setting with over 200 new patients a day ahead of our planned NRDL listing in the first part of next year. Lastly, we had new data at ACC and a publication as well, which supported the early initiation of Lectio, demonstrating that starting Lectio early in patients requiring secondary prevention for a cardiovascular event allowed these patients to achieve their LDL-C goals earlier. Now, moving to the next slide, slide 14, Semblix grew 83% in the quarter, again, primarily driven by the third-line indication with our first-line submission on track to be completed in the coming months. We had continued momentum in the core third-line indication, over 40% NBRX share. Outside of the U.S., we're at a 32% total market share driven by key markets, Japan, France, and Germany. And here in the third-line setting, we primarily focus on early identification of patients who could benefit from a switch to Semblik post-2 TKIs. As a reminder, our ASCO first study enabled first in line submission, first line submission in half one. Primary endpoints were met versus all standard of care TKIs and versus Gleevec as well, favorable safety and tolerability profile. And we can confirm that the full data will be presented at ASCO in 2024. Now turning to Fabhalta, we're at the early stages of the PNH launch, and we didn't expect really to see significant sales at this very early stage given the complexity of this launch, but we are very pleased with the early launch indicators. We've had a rapid increase in the number of HCPs who are certified under the REMS program, an increase in new riders and patient starts which are exceeding our internal expectations. We see uptake across naive and switch patients for this medicine. And we also are really happy to see HCPs willing to work through the medical exception process to get patients on this medicine. So we've also had the positive CHMP opinion for PNH, and we expect that full approval to happen in the coming few months. And we'll consistently work to launch this medicine across the globe, as well as drive rapid uptake in the United States. Turning to slide 15, we also announced our Phase III APLAUSE IGAN study full results earlier in the quarter, where we demonstrated 38% proteinuria reduction relative to placebo. In this study, we randomized patients to Iptaclopan versus placebo. The results we read out was a nine-month interim proteinuria analysis. These patients will continue to be followed out to month 24. for the full EGFR analysis. You can see on the right-hand panel, very impressive proteinuria reduction of 43.8% versus placebo at 9%, clinically meaningful and statistically significant. We know that complement activation is a key driver of inflammation in IGAN, and importantly, the overall safety profile was consistent with data we've previously reported. We've submitted this data to FDA, and just one clarification, we did not use a priority review voucher for this medicine. The FDA had granted us priority review based on the data set that we provided. So this study continues as well for EGFR readout in 2025, and we look forward to really getting a full approval very shortly, or getting the initial approval in the coming period. Moving to slide 16. Now, remibrutinib had already demonstrated in an earlier study at 12 weeks robust efficacy and safety, but we needed to wait for the 52-week data to be in a position to file in chronic spontaneous urticaria. And this data came out positive, enabling us now to move forward towards this important filing. As a reminder, there's about 400,000 CSU patients in the U.S. not controlled or refractory to antihistamines. And only less than 20% of these patients are currently on biologics. So there's a large opportunity for a high efficacy oral medicine. The previous primary endpoint data at week 12 is shown here, where we very consistently showed improvements versus placebo at the week 12 on the UAS7 score. And so we'll look forward to presenting the full data set in the second quarter for this medicine out to 52 weeks. And with the consistent favorable safety profile we've demonstrated with overall rates of AE comparable to placebo and balanced liver function tests, as well as the clear efficacy data, we'll look forward to global submissions in the second half of remibrutinib. So all taken together, we're on track across our innovation goals for the year. I did want to highlight that we have shifted our Ataclopan C3G US submission to the second half. There is no great correlate for efficacy in C3G given the ultra-rare nature of this disease. We provided the FDA our six-month data. While certainly we believe that six-month data was very compelling, the FDA wanted to see the additional six-month follow-up for these patients. After all patients had rolled over onto active, the first six-month period was randomized. Second six-month period, all patients are on active. So we will complete that six-month follow-up and then file in the second half. And we remain very excited about the opportunity to bring PEP-HALSA as well to patients with C3G. So moving to the next slide, we also are on track for our range of submissions, 24, 25, and 26 to 28. So we'll continue to keep you abreast of how data sets unfold as well as potential readout timelines as we understand those readout timelines better and really excited about the catalyst-rich profile that we have out through the coming years. So moving to slide 19, I'll hand it over to Harry.