Novartis AG

Good morning and good afternoon and welcome to the Novartis Q1 2025 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 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, Heidi. Good morning and good afternoon, everyone, and welcome to our Q1 2025 earnings call. The information presented today contains forward-looking statements that have involved 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 20-S and its most recent quarterly results on Form 6-K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission. Before we get started, I just want to reiterate Heidi's guidance. For our analysts, please limit yourselves to one question at a time, and we'll cycle through the queue as many times as we can. And with that, I will hand over to Vas.

Thank you, Sloan. And thanks, everyone, for joining today's conference call. If we could move forward to slide four. Novartis delivered double-digit sales growth in the quarter, a really strong start to the year. We had robust margin expansion. And that all supported an upgrade to our full year 2025 guidance, which Harry will go through in more detail. Sales were up 15%, core operating income up 27%, our core margin reached 42.1% of 400 basis points. And we also had important innovation highlights in the quarter, some of which I'll go through in detail in a moment. Pluvicto, Venrafia, and Fabhalta all achieved approvals in their relevant indications. We had a global submission for remibrutinib in CSU. And our OAV101 IT gene therapy for patients with SMA older than two years of age had a positive readout. And we're in process now of filing that globally. So taking together a very strong start to the year. And going into a little bit more detail, starting on slide five, we had strong growth momentum from all of our priority brands in the quarter. And I think that really demonstrates the replacement power, which gives us confidence in our midterm guide of 5% plus, and also our confidence that we have the levers that we need to continue to grow into the 2030s. You can see strong growth of 32% constant currency, excluding Entresto, the portfolio was up 38%. And I wanted to go through on each of these key brands, some of the key highlights. So moving to slide six. So Casali grew 56% in constant currency, and that reflects our positioning globally, reflects our positioning as the preferred CDK4-6 inhibitor in both metastatic and early breast cancer. You can see that the growth was strong both outside of the United States and in the U.S. I'll go through that in a bit more detail in a moment. In the central panel, you can see that our total brand, NBRX, now is market-leading, trending very strongly, really powered by the early breast cancer launch, which is leading to strong performance both in early breast cancer and metastatic breast cancer. Now turning to each region, in the US, we were up 87% in the quarter. We have leading share in metastatic NBRX now at 48%. And we're also now tied for TRX leadership, really demonstrating now those NBRXs are impacting our TRX growth. In early breast cancer, our NBRX grew 65%, and we've reached 60% NBRX share. And what's important to note here is 56% of that volume we estimate is from the population that's exclusive to the Cascali label. Now, outside of the US, we're still in the early stages of the early breast cancer launch. We were up 24% in constant currency. We're the metastatic breast cancer leader in 10 of our top countries with 46% share, our NBRX share at 35% TRX share, and our early breast cancer indication has now improved in the EU plus nine other countries. And I think you all know, we have strong guidelines support with category one and CCN guidelines. And we've also achieved very strong guidelines as well with ESMO. So overall, really pleased with the performance of Kaskali as it continues to grow towards our peak sales guidance of $8 billion plus. And moving to slide seven, Casinta grew 43% in constant currency. It's outpacing both the B-cell and MS market. Our overall sales were robust, both in the U.S. and ex-U.S. markets. In the U.S., 41% TRX growth. We're outpacing the B-cell and MS markets, as I mentioned, in the U.S. Outside of the U.S., we have leading NBRX share in 8 out of 10 major markets, really reflecting the ease of use of the medicine. We continue to generate further long-term data to support the profile of Kesimpta. Seven-year data was presented at AAN, which reinforced the benefit-risk profile of the medicine. And as a reminder, we continue to believe the profile of Kesimpta with convenient at-home self-administration makes it the preferred medicine for patients who don't want to have IV administration at a doctor's office. So I think that really positions us well outside the U.S. and in a large segment inside the U.S. where there continues to be robust growth of B-cell therapies, which we plan to participate in. And moving to slide eight, Plavicto grew 21% in quarter one. And most importantly for us, we laid the foundation, continue to lay the foundation for our pre-taxing launch with the PSMA4 population. When you look at some of the dynamics for PluVicto, first with the post-taxane setting, we have now leading NBRX share in the first line vision population setting, so post-taxane at 40%. And this, I think, really demonstrates that we are getting strongly established in this post-taxane population. Now, when you look at some of the momentum we're seeing, we're seeing that we have are gaining traction in the community setting with 4,000 TRXs. That's 11% up versus prior year. We also see overall, I'd say, encouraging signs that more and more community practices want to take on radioligand therapy. Outside of the U.S., we see continuous growth driven primarily by European markets, which are increasingly adopting RLT and also with improved pricing that we're seeing in key markets, and now with expansion in over 20-plus countries. most importantly for this brand we had the march fda approval of the psma4 population the pre-taxing population as a reminder pluvicto doubled the median pfs and had a very a very favorable safety profile versus a daily oral arpi the final os analysis for the medicine when unadjusted for crossover was 0.91 but importantly crossover adjusted was 0.59 and that's been very well received in the community And we already have NCCN guidelines support for the use of PluVicto in this setting. We're also continuing to advance our PluVicto lifecycle management efforts. The PSMA edition readout is on track for the second half of 2025. And as a reminder, the PSMA edition incidence is similar to that we see in the pre-taxing setting. So moving to slide nine, just a little bit more on our preparations for the PSMA4 launch in the U.S. We have a strong foundation in place, 620 sites open, large population now that we've expanded into, a pre-filled syringe that's enabling broad adoption is now nationally launched. 50% of PSMA4 patients are treated by HCPs who have already prescribed in the vision population. And we're also continuing to increase and have increased our promotional spend. We've doubled our field force and are maintaining a very robust direct-to-consumer advertising campaign. Now, in terms of the launch dynamics we expect to see, it would take about four to seven weeks of lead time for new patients to be treated, for them to get the necessary scans, as well as the necessary laboratory tests to be able to receive the medicine. We expect initial uptake to be driven by depth in our established accounts in the vision setting. And also, we expect to, over time, expand our breadth in the community and urology settings. And as I mentioned, we also have the favorable NCCN guidelines. So I think set up well, this will really be a second half story. And really in the next few months, we want to ensure we start to build the momentum that will allow this brand now to break through past the $2 billion mark and then forward to the $4 billion plus guidance that we've given. Now moving to slide 10. Lectio grew 72% in the quarter on track to achieve blockbuster status. We have the steady march upwards that we're very pleased with. We're seeing solid growth both in the U.S. and ex-U.S. We see a steady climb in monthly TRXs at 70% up versus prior year, and that's growth across all of the key channels we're targeting. We're also seeing increasing depth in the priority systems that we're trying to establish the medicine, and that's up 51% versus prior year. We've also evolved our field operating model to better serve physicians and systems that would like to use Letheo to manage their patients to goal for cholesterol lowering. Outside of the US, we're seeing robust growth across our key markets, 74% growth. I would want to highlight the solid pricing and access we've secured in Japan, as well as the continued out-of-pocket expansion we're seeing in China, which I think bodes well for the future of this medicine in Asia. We know there's a significant runway ahead of us. Only about 2% of secondary prevention patients receive any advanced lipid-lowering therapy. And there's increasing guideline recommendations that recommend these patients receive advanced lipid-lowering therapy. So a big market opportunity, and step-by-step, we're on track to fully realize the potential of this medicine. And moving to slide 11. Now, Semblix, as you know, establishes itself as a leader in the third-line plus setting. And now our focus is switched to really establishing the medicine in earlier lines, given our recent approvals. Now, in the third line setting, we are up at 54% NBRX share. We're three times higher than the next competitor, reflecting the excellent profile of Semblitz. Outside of the U.S. in key markets, 68% in Japan and 47% in Germany for NBRX share and an overall share of 47%. So I think really well positioned now in the third line setting. So our focus has shifted to driving our performance in earlier lines. We see continued momentum in the US. We have a very strong start building off the NCCN guidelines for our category one preferred recommendation. We have 54% of commercial lives covered now to label. We're seeing expanding prescriber drafts, 16% for prior quarter, and a strong uptake in second line where we've already achieved 40% share. and steady progress as well in first line, where we have 10% NBRX share. And as a reminder, we are, of course, working against generic imatinib and the generic second-generation TKIs, but we feel confident that step-by-step we'll continue to be able to take significant share from those medicines. Our early line approvals are on track globally. We have already approval in 10 countries, and our submission is now completed in Europe. So moving to slide 12 and turning to Cosentix. Cosentix grew 18% on the quarter. It was driven by both our launches in HS and IV, but also importantly, very good performance in our core indication. In the US, we saw a strong demand growth, 29%, more than offsetting the expected impact of the Part D redesign. Our NVRX volume is outperforming the market in our core indications, 15% versus the market in psoriasis. 12% in the spondyloarthropathies. And we also have continued NBRS leadership in HS at 53%, even in the face of a new competitor entry. Now, when you look at the IV formulation, we have 1,900 accounts using the medicine. That's a 13% growth. I think it's still early stages for the IV launch, but we're confident that step by step, now that we have the relevant reimbursement and support in place, that the IV launch can also accelerate over the years to come. Outside the U.S., we delivered 15% volume growth, mainly in the core indications. We're the leading originator biologic now in Europe and China, and we've also achieved now HS reimbursement across our key markets. So taken together, we're confident in continued growth. We are on track to get the Phase III readouts in both GCA and PMR, and we're also well prepared to launch in those indications when and if approved. Moving to slide 13. And now turning to Entresto, which continues to have strong performance at 22% growth. You can see here on the quarter reaching over $2.2 billion in global sales. We expect continued growth in the US up until LOE. We continue to guide to a mid-2025 LOE, but we can get into that in more detail on the call. But in terms of outside the US, we have a very strong guideline position. We have balanced geographic sales with 50% of our sales outside of the US. We expect RDP protection in Europe to November 2026. And also, of course, we'll continue to pursue other avenues to fully protect the medicine in Europe. June 2030 in Japan with possible additional protections as well. And I would say that the hypertension indication is performing extremely well in China and Japan, and the possibility for that to drive our growth through the end of the decade is something we're continuing to remain focused on. Now moving to slide 14, I did want to say a word about our renal portfolio. As you know, we've been building out a strong renal portfolio around the globe. We have the ongoing launch now of Fabhalta and the recent approval of Van Raffia. When you look at Fabhalta or Igann, we've already seen 100% volume growth and 60% increase in riders versus the prior quarter. I think that reflects the excitement around the impact the medicine could have for these patients. We have over 90% of patients remaining on treatment out at five months. We have 68% commercial coverage to label. And in C3G, while we're only improved in March, we already see positive signs. Over 2,000 physicians are REM certified. And that's applicable across both indications. Now, Vanrafia was approved by FDA in April. Once a day, non-steroidal oral treatment. What's exciting about this medicine is from an efficacy standpoint, can be seamlessly added on to existing RAS inhibitors that a patient may be on without any discontinuation needed. But also importantly, there was no REMS for the label for hepatotoxicity or pregnancy. So a nice clean label as well, which was business case for this medicine so we really have now a safe effective oral medicine to be given for the management of the endothelium in the kidney with this medicine so overall we're driving strong synergies across this portfolio and our aspiration will be to continue to build out the strength of our renal pipeline to really ensure we can establish ourselves as a long-term renal leader and moving to slide 15 I did want to say a word about the OAV101-IT gene therapy readout that we had in the quarter. So looking at the left-hand part of the slide, you can see the primary endpoint was achieved in patients 2 to 18 years of age. But I wanted to focus in on the patients 5 to 18 years of age, particularly given that Zolgensma has been in the market for some period of time. The treatment effect versus placebo of 2.45 is really very strong, and I think differentiating versus competition, and positions us well, we believe, to get both hopefully the approval and ultimately payer support for the use of this one-time therapy in patients 5 to 18 years of age. And so we're excited about this year and strength studies, the overall favorable safety profiles we've been able to deliver with the medicine, And as I mentioned, we're on track for global regulatory submissions over the course of the first half of 2025. So moving to the next slide, also from a clinical data standpoint, we did have long-term data on remibrutinib and CSU, which we think further supports the differentiated profile of the medicine. Strong efficacy was maintained out to 52 weeks, even as the placebo group crossed over. onto active 25 milligrams BID. You can see that we have meaningful improvements in symptom control across all measures, but I think really importantly that symptom control starts as early as week one in a highly symptomatic disease where itch can lead to disruption in quality of life and quality of sleep. Patients want something that will hopefully impact their disease very soon after initiating a therapy. We also had a very, very favorable safety profile in the data set, including balanced LFTs. I can say that in our mid-cycle review, we did not receive any questions from FDA with respect to the liver profile of the medicine. So I think in CSU, that bodes well for the profile of remibrutinib. We continue to achieve our key milestones. We had the New England Journal of Medicine publication. We've completed submissions now in the US, EU, and China. We've initiated a head-to-head study versus dupilumab with a readout expected in 2027, where we'll focus very much on the speed of onset of action of remibrutinib. And we continue to advance a full range of indications. Our phase three in chronic inducible urticaria is ongoing and targeted for a 2026 submission. We've initiated our HS phase three study. We also have phase two A, B studies ongoing for food allergy with a readout expected in the second half of this year. And as you all know, at a higher dose, we also are looking at, in neuroscience, at relapsing MS as well as myasthenia gravis. So the next milestone for us will be an FDA decision on CSU in the second half of the year. So moving to slide 17, to take it all together, we're on track for our innovation milestones for the year. I will continue to keep you updated as we continue to get readouts. But importantly as well, the progress on our early and mid-stage pipeline which we believe will generate the replacement power to enable us to grow strongly into the next decade. So with that, I'll hand it over to Harry.