Novartis AG

Good morning and good afternoon and welcome to the Novartis Q3 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-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 Ms.

Sloane Simpson, Head of Investor Relations. Please go ahead, Madam. Thank you so much. Good morning and good afternoon, everyone. Thank you for joining our Q3 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, and thanks, everyone, for joining today's webcast. So we'll dive right in. I have Harry Kirsch on the line with me as well as always. So moving to slide four, you saw this morning the Novartis delivered strong operational performance in quarter three, really continuing now what's been two years of very strong operating performance for the company. Sales grew 10%. Core operating income was up 20% in constant currencies. In the quarter, our core margin went all the way up now to 40.1%. And we also had important innovation highlights, which we'll talk about a bit more over the course of the call. Cascalli's FDA approval and CHMP positive opinion in hormone receptor positive HER2 negative stage 2 and 3 early breast cancer, our Fab-Halta accelerated approval in IgA nephropathy. So, VICTO had its filing accepted for the PSMA4 population in metastatic castrate-resistant prostate cancer. And then we expect the Semblitz approval in the coming weeks. We received FDA priority review for first line CML. And lastly and importantly, we had our third guidance raised for the year, raising both our top and bottom line guidance. And Harry will go through that in more detail. So moving to slide five. Quarter three growth again reflected strong performance across our key growth drivers. You see 34% currency growth, which we expect to continue and help drive our 5% guide out to 2028 and also enable us to continue that strong margin expansion that you've seen. And let's go through each one of these brands in more detail. So moving to slide six, Entrestos sales continued to climb as they have now for multiple years. increasing 26% in quarter three. It's the 10th year now of continued momentum on this brand, which I think really shows our ability to create large and lasting cardiovascular medicines. 25% TRX growth, 20% NBRX growth, 500,000 TRXs per month. Ex-US, we're growing 26%. So we're confident in the growth up to the LOE. We have strong guideline positions in the US and EU. We continue to see very strong performance in hypertension in China, in Japan. We don't expect an LOE in Japan until 2031 at the earliest, and we continue to see protection for our business in China. For forecasting purposes, we maintain our guidance of the LOE for Entresso in the United States for mid-2025. And in the EU, regulatory data protection would expire in November of 2026. So moving to slide seven, Cosentix grew 28%, and this was primarily driven by the strong performance we've had in our new launches in HS and in the IV formulation. You can see 28% growth overall, but driven by very strong performance in the United States of 38% outside the US, 16% in constant currencies. We remain the number one IL-17 in the US dynamic market, and we're the leading originator biologic now in the EU and in China. In HS, we've achieved dynamic market leadership with over 60% NBRX share. In Germany, we're at over 50%, and we increasingly secured reimbursement in our key market. So we see the opportunity to continue to grow dynamically. We think we have an outstanding data profile, even versus the incoming competitors. And we also see an opportunity for a market that's going to continue to expand. A market that's probably 3 billion plus today, but has the potential to be a 5 billion plus market over time or even larger, depending on how patients continue to see their physician. In the IV, we have accelerated adoption in the US with over 1,250 accounts now ordering. That's a 52% growth. I think we'll continue to see more sales delivery in IV now that we have the permanent J-code, but that, of course, will take time, and we look forward to delivering that. We have two important LCM opportunities that will beat out in 2025 in polymyalgia rheumatica, as well as in giant cell arteritis, both sizable indications that could give us even further opportunity to well exceed Cosentix's $7 billion peak sales forecast. Now moving to slide eight, Simpta continues to see stronger men globally, and it's a unique profile that this medicine provides for patients and physicians. So 28% growth, but when you strip out the one-time RD adjustment that we had from a European market last year, our sales growth was 56% in constant currencies. We now have over 100,000 patients treated worldwide, either naive or first switch. The US, our growth, TRX volume growth was 38% versus prior year, gaining 3.7% share. Ex-US, we had strong underlying growth, excluding the one-time RD adjustment from last year. We also presented some important new data at ECTRIMS in the Aletheos trial. 90% of first-line Cosimsa patients had no disability progression independent of relapse activity up to six years. And we had an additional study that demonstrated no new active lesions 12 months after switching from an anti-CD20 IV therapy. So we remain confident in the continued momentum on this brand. We're annualizing now well above $3 billion and have the opportunity, I think, to well exceed our $4 billion peak sales guidance to date. To our knowledge, there are no Kesimpta biosimilars currently in clinical development, which should give us a long runway looking forward for this medicine. And moving to slide nine, Kaskali continued to cement its leadership in metastatic breast cancer and launched, importantly, in early breast cancer, as I mentioned. But perhaps most importantly, we achieved a Category 1 NCCN guideline recommendation for the full Kaskali population. Overall growth in the quarter was 43%. U.S. is up 50%. It's really gaining widespread adoption. Our NBRX share at 48%. We're now second in TRX share overall. We have over 7,000 physicians now actively prescribing Qiskali and I think reflecting our strong guideline position. Outside of the U.S., 36% constant currency growth as the preferred CDK4-6 inhibitor in the class. We have a leading share of 43% in those international markets. We're the fastest growing CDK4-6 in Europe. Now, as I mentioned, the FDA approved Qiskali with a broad label, fully in line with the Natalie population. CHMP has issued a positive opinion, and we're looking forward to a European Commission approval to allow us to launch in Europe. The Qiskali, if we go back to slide nine, the Category 1 guideline recommendation for the full study population, I believe, gives us the opportunity now to really fully realize the potential of this medicine, including a node-negative patient. And the early feedback we're getting from the market is very strong. The early scripts we're seeing show a very strong trend. And we look forward to now building upon that as we get broad access for this medicine. We would expect access in the early breast cancer setting in the range of 90%, which is what we have for Cascalli in the metastatic setting. Now, moving to slide 10, as a reminder, Kiskali showed a really strong deepening benefit in the update that we showed at ESMO. When you look at the graph on the left, across the intention to treat population, as well as stage 2 and stage 3 patients, as well as a node-negative disease, and a really strong four-year IDFS absolute benefit, benefit that's consistent, consistent also across secondary endpoints. We have a trend of improved OS, which which we expect to continue to deepen over time. No new safety signals were identified. So overall, we think we now have really the perfect positioning that we would want for Cascali to succeed in the long run. As a reminder, the early breast cancer indication doubles the number of patients that are eligible for Cascali versus the metastatic indication. And we estimate it is a three times larger population than is currently labeled for the competitor product in the class in early breast cancer. And moving to slide 11, PluVicto continued what we would characterize as steady performance in the post-taxing setting. Our focus at the moment is really laying the foundation for the PSMA4 launch in 2025, which would triple the number of patients eligible for PluVicto. We saw 50% growth in the quarter. When you adjust for the one-time price adjustment in Europe, our sales growth grew 36%. Just to provide more context, that was true volume growth that we had in earlier quarters. as is always the case in certain European markets, our prices get adjusted over time. So that was the reason for the uplift we saw in Europe. Overall, we would expect quarter four to be broadly in line with quarter three, excluding the RD adjustment. And I think for us now, it's really about preparing the market for PluVicto and PSMA4 opportunity. Our U.S. field force has now expanded. We've launched a DTC to drive HCP and patient awareness. We now have 530 treatment sites in the U.S., which we feel like covers the key geographic areas. We will continue to expand that over time quite significantly, but we feel comfortable that we have capacity now to fully support the PluVicto PSMA 4 launch, and we'll expand deeper into the community setting step by step. Our ExuEdge launch is progressing well with good pricing reimbursement discussions, and so we feel very good about where we are to prepare for that launch next year. Now, in terms of new indications and geographies, the PSMA-4 filing was accepted by FDA. We're preparing for a launch in the first part, first half of 2025. In China, both the post-taxing and in Japan, the pre- and post-taxing submissions have happened. We're in the midst of building up manufacturing facilities in both of those markets as we expect them to be sizable opportunities. The PSMA edition and PSMA-DC studies are progressing according to plan. And we've also begun construction of two additional facilities in the U.S. to support our expanding RLT portfolio, which now includes multiple additional programs that have entered the clinic, including assets such as a B7H3 actinium RLT, as well as a HER2 RLT and a folate RLT, all of which now either have first patient first visit or will soon have first patient first visit, giving us a broad portfolio that we need to now prepare for. Moving to slide 12. Now, Lectio continued its strong growth trend with accelerating adoption outside of the U.S. And we're very pleased by both the solid U.S. performance, but that acceleration we're seeing in our international markets. We have continued growth that's outpacing the overall advanced lipid lowering market. 4,600 facilities have ordered Lectio, which is a substantial increase versus prior year. We see demand increasing across all channels. And I'd say our targeting strategy in the U.S. to really focus on patients and physicians that are treated in the post-event setting where there's a high propensity to add an additional lipid-lowering therapy has worked really well. Now, outside of the U.S., we're reimbursed in 39 countries commercially available in 73. And as I said, we're seeing steady and strong uptake, particularly in markets such as Japan, where we recently launched, and our launch is well exceeding our expectations. Now, adding to the overall Lectio body of evidence, we did read out the V-mono trial, which demonstrated superiority as Lectio monotherapy in both placebo and azitomib versus placebo and azitomib in LDL-C reduction. And we are looking over time to think about how we can further expand Lectio into the monotherapy or frontline indication, depending on the geography. So moving to slide 13, Semblix grew 72% in quarter three, As you know, it has really become the preferred option for a third line CML. It's the market leader in NBRX and TRX across geographies with 26% TRX share growth. It's driven by 18% quarter over quarter demand. Outside of the US, we see a very strong sales trajectory for the product with a growing total market share and growing prescriber base. And that's critical for us to continue to build that strong base and third line. Because as we approach the first line launch, those physicians get more and more comfortable with the overall profile of Semblich. So as I mentioned, we have FDA priority review. We do expect the approval in the coming weeks. We're fully prepared for launch. We're also fully prepared to obtain rapid market access to really ensure a rapid launch in the US and eventually around the world. And outside of the US, China and Japan submissions have now been completed. And we're also on track for a European submission in 2025. Moving to slide 14. Fopalta, it's early days, but we were pleased by the performance in PNH, ultra-rare disease, not a lot of cycling of these patients. So it will take time to build this brand, but it's the only monotherapy, oral monotherapy, to provide extravascular and intravascular hemolysis control. We're seeing strong launch performance overall. We see a high compliance and continuation rate on the medicine. We have over 70% coverage to label. have nbr external now of over 30 percent and outside of the us as well we're seeing solid early signs of success with good patient activation with over a thousand htps now reached in the first three months post launch we're seeing utilization across naive and switch patients and we also have recent launches in japan uk and we were granted early access as well in france so taken together Early days, but step-by-step, this is an important building block as we build Febhalta across multiple indications to be over a $3 billion-plus medicine over time. And moving to slide 15, in addition, Febhalta received the accelerated approval in the U.S. as the first and only complement inhibitor in IgA nephropathy. That was based on the positive interim results of the APLAS Phase III study. The study is continuing to the confirmatory endpoint of EGFR at 24 months. We expect a completion date in 2025. We see very positive HCP feedback on the efficacy and safety and an understanding of the role of the complement pathway in this disease. We also see important early signs from a utilization standpoint. Over 1,000 HCPs are now REM certified, and we're leveraging our portfolio to ensure that we have broad and quick access for this medicine. perhaps most importantly, we're seeing patients with a positioning of this medicine for patients with persistent prone urea and glomerular inflammation as really getting traction in the marketplace. And that's enabling us to maintain the price of Fopalta consistent with the PNH indication, which will also be important for the subsequent indications that we have for Fopalta, including C3G. And if we go to the next slide, slide 16, We released results over the weekend of the 12 months of pure C3G data at ASN. On the left-hand side, you see the sustained proteinuria reduction over 12 months, and that that was replicated in the placebo arm after switch to etaclopan, so that was very positive and something the regulators had asked us for. But importantly, as well, we're seeing stabilization of the EGFR slope versus the historic slope decline, and that's been maintained now for 12 months. So we're seeing on the important outcome measure as well, very positive data. So we have ongoing health authority reviews in the EU and other countries, and we expect to make this submission now in the US before the end of the year. So moving to slide 17. Overall, we had good progress on our innovation milestones. We did suffer a few setbacks. With XXB, we will terminate this program. We saw a safety signal in heart failure. And overall, the hypertension blood pressure reduction we saw on top of standard of care was not sufficient to meet the TPP we think we need to achieve for this medicine. So we'll be stepping back and focusing on our siRNAs for hypertension, as well as other assets we have in our cardiovascular portfolio. So with that, let me hand it over to Harry.