Q1 2020 Earnings Call

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Good morning, and good afternoon, and know what come to the Novartis Q1, or two thoughts and then twinkie results release conference gold and not allowing audio webcast. Please note that during the presentation. All participants will be not listen only mode and the conference is being recorded that after the presentation there will be but can you.

Operator: , Microsoft Office Word Document MSWordDoc Word. Document.8 Good morning and good afternoon, and welcome to the Novartis Q1 2020 results release conference call and live audio 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 and one at any time during the conference. A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends. Should anyone need assistance during the conference call, they may signal the operator by pressing star and zero. With that, I would like to hand over to Mr. Samir Shah, Global Head of Investor Relations. Please go ahead, sir.

Thank you to ask question by pressing star and one at anytime during the conference.

Recording of the conference call, including the Jonae session would be available on our website shortly after the call and.

Should anyone need assistance during the conference call. They may be seeking out of the operator by pressing star in zero.

With that I would like to hand over to Mr. Samir shot global head of Investor Relations. Please go ahead Sir.

Thank you and welcome everybody to Novartis quarter Twentytwenty Conference call before we get started I just want to read the safe Harbor statement information presented today contains forward looking statements that involve known and unknown risks.

Samir Shah: Thank you.

Samir Shah: Thank you and welcome everybody to Novartis' first quarter 2020 conference call. Before we get started, I just want to read you the Safe Harbor Statement. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors that may cause actual results to be materially different from any. For a description of some of these factors, please refer to the company's Form 20-F and its most recent quarterly results on Form 6-K, which were respectively filed with and furnished to the U.S. Securities and Exchange Commission. I'd like to thank you all for participating in today's call and now pass the call on to Vas.

Second.

Other factors.

May cause actual results to be materially different from any future results performance or achievements expressed or implied by such statements.

A description of some of these factors please refer to the company's form 20-F, and its most recent quarterly results on form 6K that respectively were filed with furnished to the U.S. Securities and Exchange Commission.

I'd like to thank you also participating in today's call I now hand across too.

Thank you submit and thanks, everyone for joining todays call with me today I have Harry for certain Chief Financial Officer, Mary Friends Jordan.

No Novartis pharmaceuticals, Shafir, President Novartis oncology, John side, or head of global drug development, and CMO, Richard Saner, Seo Sandoz and shit, including our group General Councilor household so moving to slide five this quarter, we were able to maintain strong operational performance while supporting the goal.

Vasant Narasimhan: Thank you, Samir, and thanks, everyone, for joining today's call. With me today, I have Harry Kirsch, our Chief Financial Officer, Mary France Chudin, President of Novartis Pharmaceuticals, Susanna Schaffer, President of Novartis Oncology, John Tsai, our Head of Global Drug Development and CMO, Richard Saynor, the CEO of Sandoz, and Shannon Klinger, our Group General Counsel. So moving to slide five, this quarter, we were able to maintain strong operational performance while supporting the global response to COVID-19.

Mobile response to covert 19, when you look at our operational performance sales grew 13% core operating income grew 34%. This included the effect of approximately $400 million forward buying we saw across a range of brands. When you strip out that 400 million dollar affect sales grew 9%.

Vasant Narasimhan: This included the effect of approximately $400 million of forward buying we saw across a range of brands. When you strip out that $400 million, you end up with $400 million of forward buying.

And in core operating income grew 22%, so very healthy as strong growth in the quarter with solid margin expansion, both in innovative medicines and sandoz, excluding the cobot effect.

Now moving to our pipeline, we had a busy quarter once again in delivering our pipeline to deliver long term growth first with respect to zero Gentiva positive CH empty opinion.

Vasant Narasimhan: [inaudible] Now, moving to our pipeline, we had a busy quarter once again in delivering our pipeline to deliver long-term growth. First, with respect to Zolgensma, we received a positive CHMP opinion and a Japanese approval. With respect to Cosentix, we had a positive CHMP opinion in non-radiographic axial spots.

And the Japanese approval with respect to Cosentyx, we had a positive CHP opinion to non radiographic axiall spot opens tomorrow, and and Clusterin had their filings accepted in us and you and both filings are on track with with FDA and trust. So we submitted the half past submission.

Vasant Narasimhan: Ofatumumab and Inclustarin had their filings accepted in the U.S. and EU, and both filings are on track with FDA. In Tresta, we submitted the HEP-PAS submission to the FDA. Bayovu received its approval in a range of markets.

The FDA Bayview had its approval in a range of market and we also had a priority review for Capmatinib and fast track designation for TQ J.R. antisense, our M&A for LPG little.

Now we also I think demonstrated in the quarter a very robust endemic response I'd like to walk you through in a little bit more detail, how would that up to respond to the pandemic at novartis, So moving to slide six.

Vasant Narasimhan: And we also had a priority review for Capmatinib and a Fast-Track designation for TQJ, our antisense RNA for Lp-a. Now, we also, I think, demonstrated in the quarter a very robust pandemic response. I'd like to walk you through in a little bit more detail how we are set up to respond to the pandemic at Novartis. So moving to slide six.

Throughout the quarter and through the remainder of this year, we want to demonstrate our relentless commitment to associated patient health care providers and society in each one of these areas. We've set up clear efforts tasks task forces to ensure that we're really trying to do the right thing to ensure our business continuity.

Vasant Narasimhan: Throughout the quarter and through the remainder of this year, we want to demonstrate a relentless commitment to our patients, health care providers, and society. In each one of these areas, we've set up clear efforts and task forces to ensure that we're really trying to do the right things to ensure our business continuity, but also that we're serving all of these stakeholders. So taking each in turn, if we move to slide seven, starting with business continuity and the manufacturing and supply chain operations, we've put in place robust plans across our suppliers, our own operations, and our dealing with customers to ensure there's no disruption in our ability to deliver medicines to patients. With respect to suppliers, we have excellent transparency across the value chain.

But also that we're serving all stakeholders so taking each in turn if we move to slide seven starting with business continuity and the manufacturing and supply chain operations, we put in place robust plan across our suppliers our own operations NR dealing with customers to ensure theres no disruption in our ability to.

Vasant Narasimhan: We've been working in real time to adjust our inventory levels. And it's worth noting that less than 2% of our sales are supported by APIs that are single-sourced from China and India, giving us strong resilience in that supply chain. With respect to our own operations, we've really put in place excellent plans across our supply network to ensure that we're able to maintain solid manufacturing operations that are currently maintaining greater than six months of inventory on key brands. And then lastly, in terms of supply reliability with customers, we are currently achieving 99.5% customer service levels across our innovative medicines portfolio. Now, moving to clinical trials on slide eight, first and foremost, it's important to highlight that our regulatory submissions for 2020 remain on track, and our COVID-19 impact on our clinical trials is largely manageable. You can see a list of our key regulatory submissions here.

Deliver medicines to patients with respect to suppliers, we have excellent transparency across the value chain, we've been working in real time to adjust or adjust our inventory levels and it's worth noting that less than 2% of our sales are supported by eight that are single sourced from China, India, giving us strong resilience in that supply chain.

With respect to our own operations Weve really put in place excellent plans across our supply network to ensure that we're able to maintain solid manufacturing operations and are currently maintaining greater than six months of inventory on key brands and then lastly in terms of supply reliability with customers. We are achieving currently 99 point.

5% customer service levels across our innovative medicines portfolio.

Moving to clinical trials on slide eight first and foremost it's important to highlight our regulatory submissions for 2020 remain on track and our covert cobot 19 impact on our clinical trials. This is largely manageable you can see here a list of our key regulatory submission, they're continuing to progress.

Vasant Narasimhan: They are continuing to progress. We're managing them well with the relevant regulators. Now, with respect to clinical trials, we have over 300 trials currently operating with 96,000 patients. The only disruptions we're seeing are primarily studies that are in the startup phase or in the planning phase, where we have some slowdown in new enrollments on ongoing studies and startup with new studies. But I would say that in studies that are more in a maintenance or closeout situation, we've been able to manage extremely well with minimal disruptions. Some of the highlights include a significant number of remote monitoring visits, which will continue to scale up. And we also hope to use post-pandemic as an ongoing normal course of business to increase the efficiency of our operations.

We are managing them well with the relevant regulators now with respect to clinical trials. We have over 300 trials currently operating with 96000 patients are the only disruptions were seeing as primarily studies that are in the startup phase or in the planning phase, where we have some slowdown in new enrollments of on ongoing studies in the and.

Startup with new studies, but I would say that in studies that are more in a maintenance or close out situation, we've been able to manage extremely well with minimal disruptions overall across the portfolio our ability to deploy digital technologies to look at real time across all of our clinical trial sites across our clinical trial Paul.

Polio is enabling us to intervene to ensure that we minimize the disruption. Some of the highlights include a significant number of remote monitoring visits which were continuing to scale up and we also hope to use post pandemic as an ongoing normal course of business to increase the efficiency of our operations, we have 2500 use.

There is on our artificial intelligence driven fence platform to predict where their issues are where there are issues in clinical trials and to intervene and we're having a very rapid ability across the network to detect evaluate and respond to any site level issues now moving to slide nine when you looked at our approach to ensuring the wellbeing of our.

Vasant Narasimhan: We have two thousand five hundred users on our artificial intelligence driven sense platform to predict where their issues are, where there are issues in clinical trials, and to intervene. And we have a very rapid ability across the network to detect, evaluate, and respond to any site-level issues. Now moving to slide nine, when you look at our approach to ensuring the well-being of our associates, we've tried to ensure job safety with no job-related losses due to COVID-19. We've paused ongoing restructurings, provided additional leave, and childcare assistance.

So see it we've tried to ensure job safety with no job related losses to covert 19, we paused ongoing restructuring provided additional even childcare assistance, we have a range of employee wellbeing programs and we're also looking to adapt and have adapted or ways of working with our field force protecting.

Vasant Narasimhan: We have a range of employee well-being programs, and we're also looking to adapt and have adapted our ways of working with our field force, protecting our associates in the field and changing the way we look at incentive compensation and schemes to ensure our associates are treated fairly. This is a critically important slide because I believe it's what enables us to really see the kind of operating performance we've seen in the first quarter and expect to see over the course of this year. We have very high engagement levels across our associate base. Moving to slide 10, when you look at our engagement with HCPs and with patients, we've moved very quickly to look at digital solutions to enable patients to have online drug refills, access disease education, and access direct-to-patient services. With respect to HCPs, we've scaled quickly on web meetings, WeChat, and email in China. We've provided a range of tools for our sales associates to be able to engage in real time, and we are building additional portals to really try to be at the leading edge of how digital technologies can improve the ability to engage with customers.

Our associates into field and changing the way, we look at incentive comp and schemes to ensure our associates are treated fairly this is a critically important slide because I believe it's what enables us to to really see the kind of operating performance. We've seen in the first quarter and expect to see over the course is here, we are very high engagement levels across.

Our associate base.

Moving to slide 10, when you look at our engagement with HCP is and with patients. We've moved very quick quickly to look at digital solutions to enable patients to have online drug refills.

Access disease education access direct to patient services with respect to HCP is we've scaled quickly on web meetings, we chat and email in China, we provided a range of tools to our of our sales associates to be able to engage in real time and are building additional portals to really try to be at the.

Leading edge about digital technologies can improve the ability to engage with customers.

Lastly, I wanted to turn to the important role we're playing in responding to the cobot 19, a pandemic on slides 11, and 12 first starting on the left hand side you can see with our covert 19 response funds and donations, we've committed $40 million to countries across the globe to really support local efforts.

Vasant Narasimhan: Now, lastly, I wanted to turn to the important role we're playing in responding to the COVID-19 pandemic on slides 11 and 12. First, starting on the left-hand side, you can see that with our COVID-19 response funds and donations, we've committed $40 million to countries across the globe to really support local efforts at relief, and local efforts by health care systems to build resilience in the face of this challenging situation. We've also committed over 130 million doses of donated drugs with hydroxychloroquine, which are reaching now over 60 countries with 50 million doses shipped to date. And that's, of course, at the request of those ministries of health.

Leaf local efforts for healthcare systems to build resilience in the face of this challenging situation. We've also committed over 130 million doses of donated drugs with hydroxy koricho, which are reaching now over 60 countries, who 50 million doses ship today and that's of course at the request of those administer.

In terms of how we're working on a range of external collaborations the covert accelerator, where with Bill and Melinda Gates Foundation I serve as the co chair and we're working very hard to accelerate the next generation of treatments that we hope will come about from our collaborations as well as a range of other partnerships you see here.

Vasant Narasimhan: We're working on a range of external collaborations. The COVID Accelerator, with the Bill and Melinda Gates Foundation, I serve as the co-chair, and we're working very hard to accelerate the next generation of treatments that we hope will come about from our collaborations, as well as a range of other partnerships you see here. From an internal discovery standpoint, we've launched our own drug discovery efforts to try to find our own direct antivirals in collaboration with a number of academic and other collaborators. Jay Bradner and the NIBRA team are working hard to bring these efforts forward. And then, lastly and importantly, we've engaged in our own clinical investigations with Novartis-sponsored studies and IITs. Going to slide 12, just to briefly review some of those efforts.

From an internal discovery standpoint, we've launched our own drug discovery efforts to try to find the our own direct anti viral in collaboration with a number of academic and the other collaborators and Jay Bradner and the number team are working hard to bring these efforts forward and then lastly, and importantly, we've engaged in our own clinical investigation.

As with Novartis Novartis sponsored studies and I am is going to slide 12, just to briefly review some of those efforts with respect to Novartis sponsored phase III studies, we have three phase three studies now endorsed by the FDA I've kind of kinda Mab Ruxolitinib and hydroxy core upland of course, it's important to note that.

Vasant Narasimhan: With respect to Novartis-sponsored phase 3 studies, we have three phase 3 studies now endorsed by the FDA, canakinamab, ruxolitinib, and hydroxychloroquine. Of course, it's important to note that we have to be humble with respect to any time we try to repurpose drugs in this kind of setting. And we've seen, of course, with the early IL-6 data, that this will be a challenge. Nonetheless, we think it's critical that we focus now on generating double-blind, randomized, controlled, adequately powered studies to really figure out which of these interventions could help patients.

We have to be humble with respect to anytime we try to re purpose drugs and this kind of setting and we've seen of course with the early Iosix data. This will be a challenge. Nonetheless, we think it's critical that we focus now on generating double blind randomized controlled adequately powered studies to really figure out which of these interventions could help patients.

We've supported over 32 to I see proposals from a full range of our portfolio ranging from drugs like second AMAP cosentyx as well as a madness valsartan animal is a map solar and then lastly, with respect to access initiatives. We've approved now 697 individual requests and a 23 from.

Vasant Narasimhan: Supported over 32 IIT proposals from a full range of our portfolio, ranging from drugs like speckicinimab, cosentic, as well as imatinib, valsartan, and nomalizumab, Zolaire. And then lastly, with respect to access initiatives, we've approved 697 individual requests and 23 from governments all around the world.

Burmans all around the world. So slide 13 thinking about not taking a step back on the dynamics, we expect to see on on the full year I.

I think one of the thing that things were watching very carefully our pay an inpatient physician dynamics on the positive side, we see longer script blends, we see higher rates of compliance to many of our medicines, but on the flip side. We have I think all seeing the declines in visits to providers in hospitals over the course of.

Vasant Narasimhan: So in slide 13, thinking about now taking a step back on the dynamics we expect to see for the full year, I think one of the things we're watching very carefully are inpatient physician dynamics. On the positive side, we see longer script length. We see higher rates of compliance with many of our medicines. But on the flip side, we have, I think, all seen declines in visits to providers and hospitals over the course of recent weeks, particularly for us in certain therapeutic areas like ophthalmology. So we're watching those dynamics closely.

Recent weeks, particularly for us and certain therapeutic areas like ophthalmology. So we're watching those dynamics coke closely we're optimistic that given the desire of physicians and their health care community not to have the hidden cost of deferral of care for patients as well as these healthcare systems own economic incentives to get their healthcare systems run.

Vasant Narasimhan: I'm optimistic that given the desire of physicians in the healthcare community not to have the hidden cost of deferral of care for patients, as well as these healthcare systems' own economic incentives to get their healthcare systems running appropriately again, we'll get to a balanced situation in the coming months. Also, important payer and healthcare system dynamics we're going to see, I think, over the course of the year, shifts in sources of reimbursement in the United States as patients shift their insurance to whether government insurance or private insurance plans. In addition, in Europe, we may see some delays in reimbursement decisions based on where different health authorities decide to take things in the coming year. So those are dynamics we're watching. It's hard to say exactly how it will play out, but important dynamics.

Appropriately again, we'll get to a balanced situation in the coming months also important payer in health care system dynamics, we're gonna see I think over the course of your ships in reimbursed and sources of reimbursement in the United States as patients shipped their insurance to whether a government insurance and private insurance plans.

In addition in Europe, we may see some delays and reimbursement decisions based on where different health authorities decide to take things in the coming year. So those are dynamics were watching hard to say exactly how will play an important dynamics and then lastly from a clinical trial regulatory dynamics standpoint, FDA is working very hard.

Based on all of our engagement to maintain clinical review timeline that is our current expectation but of course, we need to watch those dynamics are very closely as the year unfolds. So.

Vasant Narasimhan: And then lastly, from a clinical trial regulatory dynamic standpoint, FDA is working very hard, based on all of our engagement, to maintain the clinical review timeline. That is our current expectation. But of course, we need to watch those dynamics very closely as the year unfolds. So that, I think, summarizes where we are with the pandemic. You can see we have stable operations, trying to be a leader in respect to the global response to overcoming this situation and taking care of our associates people and putting ourselves in the right place to have resilience for the long term. Now turning to our operational performance on slide 14, you can see that in

So that I think summarizes where we are underpinned dynamic you can see with stable operations trying to be a leader in respect to the global response to overcoming this situation and taking care of our associates people and putting ourselves in the right place of resilience for the long term now turning to our operational performance on slide 14, you can see that in the core.

Order, we had very strong growth across our key growth drivers highlights included of course and trust, though they'll Jensen Cosentyx also is very solid performance and then across the full range of oncology assets again, you can see that our medicines are doing well across the key brands in Novartis and on the right hand side now.

Vasant Narasimhan: And on the right hand side, now we've moved up to 46% of our total innovative medicine sales coming from key growth drivers and launches demonstrating the rejuvenation in our portfolio for the mid to long term. Now turning to slide 15, a few words on Sandoz.

We've moved up to 46% of our total innovative medicines sales coming from key growth drivers and launches demonstrating the rejuvenation in our portfolio for the mid to long term now turning to slide 15, a few words on Sandoz Sandoz had an outstanding quarter benefiting in part from covert 19 related for repurchasing but also.

Very strong underlying performance with sales growth of 11% in constant currency. This was driven by strong bio similars performance with 31% constant currency growth as well as excellent performance in Europe with 19% constant currency growth now with respect to the U.S. a divestment aboard window, we mutually agreed as weve.

Vasant Narasimhan: Sandoz had an outstanding quarter, benefiting in part from COVID-19 related forward purchasing, but also very strong underlying performance with sales growth of 11% in constant currency. This was driven by a strong biosimilars performance with 31% constant currency growth, as well as excellent performance in Europe with 19% constant currency growth. Now, with respect to the US divestment of Ourobindo, we've mutually agreed, as we've announced, to terminate that transaction, and we'll be focused now on optimizing that US business, and Harry will have some more comments as well on the overall size and dynamics of that portfolio. Now, moving to Zoltan Zmar on slide 16.

Announced to terminate that transaction and we'll be focused now on optimizing that U.S. business and Harry will have some more comments as well on the overall size and dynamics of that portfolio.

Now moving to fill agenda on slide 16.

Our U.S. growth momentum continues you saw in the quarter as we guided our Q1 sales were in line with our Q4 2019 sales. The next catalyst for zones, but we'll certainly be the two launches in Japan in Europe, and that's what's I think going to lead to the next sales ramp for this product, but in Q1, we also now.

Vasant Narasimhan: Our U.S. growth momentum continues. As we guided our Q1 sales, we're in line with our Q4 2019 sales. The next catalyst for Zolgensma will certainly be the launches in Japan and Europe. And that's what I think is going to lead to the next sales ramp for this product. But in Q1, we also announced important data at MDA, which demonstrated the intravenous formulation had outstanding results, both in terms of persistence out beyond five years, as well as in asymptomatic patients meeting their WHO motor milestones. And we also announced in the quarter that FDA has completed its review of its August 2019 R4M483 response with no further enforcement action. So upcoming milestones, a CH&P positive opinion achieved, a European Commission decision expected shortly, Japan reimbursement decision expected shortly, and I think importantly, and perhaps underestimated, the launches we'll have in a range of other countries around the world providing additional opportunities for growth. Then moving to slide 17, with Avexis 101 IT, we believe in the

It's important data at M.D.A., which demonstrated the intravenous formulation had an outstanding results both for a terms the persistence out beyond five years as well as in asymptomatic patients meeting their whr motor milestones and law and we also announced in the quarter that FDA completed its review of it.

20 August 29 team for inquiries are for form 43 response with no further enforcement actions, so upcoming milestones I see it shouldn't be positive opinion.

Achieved a European Commission decision expected shortly Japan reimbursement decision expected shortly and I think importantly in prop underestimated the launches will have and range of other countries around the world providing additional opportunities for growth.

Moving to slide 17 with Vectus, one on one I T., we believe in the quarter. We also showed with the strong data very compelling clinical profile using the gold standard Hammersmith score demonstrating a very robust respond to the means six point increase in Hammersmith twice, the clinical meaningful threshold as.

Vasant Narasimhan: Medical Profile, using the gold standard Hammersmith score, demonstrating a very robust response with a mean six point increase in Hammersmith, twice the clinically meaningful threshold, as well as 92% of patients in that study in the two to five year old age group achieving a clinically meaningful response. So we're in the process now of working with FDA to resolve the clinical hold with the ongoing preclinical studies that we currently have initiated. We'll be meeting with FDA in the course of Q2 to clarify the scope of the data required and then moving to a pre-BLA meeting where we hope to clarify then our ability to file a BLA for ABXS 101 IT. Now moving to slide 18 for 2020. Overall, our catalysts remain on track. You can see the full range of catalysts here.

Was 92% of patients in that study in the two to five year old age group, achieving a clinically meaningful response. So during the process now working with Sta to resolve the clinical hold with on the ongoing preclinical studies that we currently have initiated.

We'll be meeting with EFI da in the course of Q2 to clarify the scope of the data required and then moving to a pre be allay meeting whatever we hope to clarify that our ability to file a deal life for Adx as one of one I T.

Now moving to slide 18 for 2020 overall, our catalyst to remain on track you can see the full range of catalyst here I look forward to continuing to provide you updates on the various approval submissions readouts in phase three starts so I think a very strong start to the year you can see great operational performance strong innovation.

Vasant Narasimhan: I look forward to continuing to provide you updates on the various approvals, submissions, readouts, and phase three starts. So I think a very strong start to the year. You can see great operational performance, strong innovation performance, and they are well prepared for the pandemic and showing resilience throughout the coming period. With that, I'll hand it to Mary France to give you some more details on the farm.

Performance and well prepared for the pandemic and showing resilience throughout the coming period, so with that I'll hand, it to marry fronts to give you. Some more details on the pharmaceuticals performance. Thank you back Q1 was a very solid start to the year for Fivenine was strong underlying demand across.

The board, 14% growth, we did see impact of Cobot, 19, which was a net positive and we do anticipate this too we reverse later on in the year before purchasing and stocking that we saw was mainly in Europe and Dan as you previously mentioned that the after knowledge you franchises are not negatively impacted.

Mary France Chudin: Thank you, Vas. Q1 was a very solid start to the year for pharma, with strong underlying demand across the board and 14% growth. We did see the impact of COVID-19, which was a net positive, and we do anticipate this to reverse later on in the year. The forward purchasing and stocking that we saw was mainly in Europe.

So far we've seen some new patient starts starting to slow down across the portfolio, but having said that we also made great progress Tonight innovation agenda. During Q1, we passed regulatory milestones for Bill you nascent Cosentyx non radiographic access includes ran off the T lab.

Mary France Chudin: And as you previously mentioned, Vas, the ophthalmology franchise was the most negatively impacted so far. We've seen some new patient starts starting to slow down across the portfolio. But having said that, we also made great progress in our innovation agenda during Q1. We passed regulatory milestones for B.O.U., Masons, Cosentix, Non-Radiographic, Exospa, Incliziran, and Opitumumab. Our launches are on track, and, of course, we'll work closely with customers, authorities, and healthcare systems to navigate some of the uncertainties related to the pandemic. Now, we move to the context

Our launches on track and of course will work closely with customers authorities and health care systems to navigate some of the uncertainties related to the pandemic.

If we moved to Cosentyx.

Our demand for Concentrix continues to outperform the market in dermatology in rheumatology, we saw some stocking in Europe very little in the U.S.

And our first line access strategy, which is our focus is working the majority of our growth is coming from first line and this is 70% of the market.

Mary France Chudin: Our demand for Cosensics continues to outperform the market in dermatology and rheumatology. We saw some stocking in Europe, but very little in the U.S. And our FirstLine access strategy, which is our focus, is working. The majority of our growth is coming from FirstLine, and this is 70% of the market.

We also continue to strengthen our value proposition. We're on track for non radiographic Axios I went to the our fourth indication.

We continue to release compelling data.

Mary France Chudin: We also continue to strengthen our value proposition. We're on track for a non-radiographic axial style, which will be our fourth indication. We continue to release compelling data, and if you look at the example of ULTIMATE, it's the first large randomized ultrasound study in PSA that shows the rapid impact of cosmetics on joint inflammation. And this just reinforces our profile as a complete treatment for skin and joints. We've also just received Chinese approval in AS. So we're very confident about the year ahead.

And if you look at the example of ultimate it's the first large ran randomized ultra sound study in tier say shows rapid impact of Cosentyx and join inflammation and that's just reinforces our profile as a complete treatment in skin enjoying.

I also just received the Chinese approval and area.

So we're very confident for the here in the current environment, we expect that Cosentyx will continue to do well in repeat prescriptions and physicians are asking their patients to stay on therapy.

Mary France Chudin: In the current environment, we expect that Cosentix will continue to do well in repeat prescriptions, and physicians are asking their patients to stay on therapy. Cosentic should also be the preferred choice for biologics once patients get back to the office given its strong safety profile and the rapid regain of response after treatment interruption. We've got five-year data. It's very compelling.

Cosentyx should also be that before choice for biologics once patients get back to the office given its strong safety profile and the rapidly gain of response after treatment interruption at least got five year data, it's very compelling.

[noise] when interest, though we signed impressive growth across the globe than Q1.

We've reached a tipping point within trust, though and it's truly seen as standard of care in the U.S. in Europe.

Mary France Chudin: With Interesco, we saw impressive growth across the globe in Q1. We've reached a tipping point within Terrestro, and it's truly seen as the standard of care in the US and Europe. We were seeing pre-COVID NBRXs at an all-time high of 4,500, and China also saw the fastest uptake of primary care to date, which speaks very highly to the unmet need and the strong product profile. We also expect to launch in Japan in the second half of the year, and we now have a strong local partner. We submitted PEP in the U.S., and our growth in Q1 was demand driven with only a small boost from stock.

We were seeing pre cobot NBR axes at an all time high 4500, and China also saw the fastest uptake of the primary care to date, which speaks very highly to the unmet need and the strong product profile.

We also expect to launch in Japan in second half of the year and we now have a low a strong local partner.

We submitted pass in the U.S.

And our growth in Q1 with demand driven with only a small numbers from stocking.

We obviously expect to see a covered related slowdown to new initiation is in Q2, but the need for products like interest so that keep stations Adam Hospital is now more important than ever.

Mary France Chudin: We obviously expect to see a COVID-related slowdown to new initiations in Q2, but the need for a product like Entresto that keeps patients out of hospitals is now more important than ever. If we move to the OVU, DOV was off to a very strong start, possibly one of our best launches ever. And now we've been impacted by the safety signal.

If we moved to the L. view.

We have you is off to a very strong start, possibly one of our best launches ever.

And now we've been impacted by the safety signal.

It's it's confirmed and where there are two principles that are guiding us in what we're doing the first is patient safety and for US This is paramount.

Mary France Chudin: It's confirmed and where there are two principles that are guiding us in what we're doing. The first is patient safety. And for us, this is paramount. And the second is transparency with the regulators, prescribers, and all stakeholders. The initial investigation is being completed, the labels are being updated, and we are now working with the retina experts to find out how to best understand and mitigate the safety concerns. We see that retina specialists are really keen to help us, and this is a reflection of the efficacy they saw in the real world. We remain totally committed to VOVU, as evidenced by our comprehensive phase three clinical trial program. We now have approval in nine markets outside the US. So for patients all over the world, our priority is to safely deliver the benefits that VOVU can provide. It's probably worthwhile spending a little bit of time on the Osta franchise because this is clearly the one that's most affected by COVID.

And the second is transparency with the regulators prescribers and all stakeholders.

Initial investigation is being completed the labels are being updated and we're now working with that retina experts to find out how to best understand and mitigate the safety concerns.

We see that retina specialists are really keen to help us and this is a reflection of the efficacy. They saw no real world, we remain totally committed to be overview as evidenced by our comprehensive phase three clinical trial program. We've now have approval in nine markets outside the U.S. so for patients Oliver the.

World our priority is to safely deliver the benefits that deals you can provide.

It's maybe worthwhile spending a little bit of time on the after franchise. Because this is clearly the one that's most affected by coal that.

We've seen clinic visit some prescription drop in March and April and week by week, we saw those numbers coming down.

It's clear that in retina, we're talking about a very vulnerable patient population and of course is there a physician administered products.

Mary France Chudin: We've seen clinic visits and prescriptions drop in March and April, and week by week, we saw those numbers coming down. It's clear that in retina, we're talking about a very vulnerable patient population. And, of course, these are physician-administered products. In addition, if we look at dry eye disease, which is not considered life savings, we've seen a lot of cancellation of appointments and visits being delayed.

In addition, if we look at dry eye disease, which is not considered life savings, we've seen a lot of cancellations appointments and visits being delayed.

It it's hard to predict when things will get back to normal. However, it's also true that retina patients will need their treatment. So right now our focus is to work with providers to find solutions to the capacity issues once patients start getting back to the centers.

Mary France Chudin: It's hard to predict when things will get back to normal. However, it's also true that retina patients will need their treatments. So right now, our focus is to work with providers to find solutions to the capacity issues once patients start coming back to the center. If we move to Afatuma map, we are very excited about the potential of Afatuma map.

If we move to offer T lab, we are very excited about the potential of attitude than that.

The opportunity to have a highly efficacious b cell therapy for a broad population early and the impact that that could have on disease progression could potentially change the way physicians are treating hammonds. So we are saying solely focused on bringing up until now to market.

Mary France Chudin: The opportunity to have a highly efficacious B-cell therapy for a broad population early and the impact that that could have on disease progression could potentially change the way physicians are treating MS. So we are staying fully focused on bringing Alpha Tumamab to market. Currently, we do not expect any regulatory delays. And from a launch standpoint, we're ready for whatever the situation is when we launch, whether we're seeing prescribers or other stakeholders face-to-face or virtually on a state-by-state basis. Now more than ever, bringing a B-cell therapy that's highly efficacious and administered at home is highly attractive, and our goal is that when patients come back, we'll make it easy for them to start on Opitumumab. Last but not least, Inquisiran, we're moving full speed ahead.

Currently we do not expect any regulatory delays.

And from a launch standpoint, we're ready for whatever the situation is when we launch whether we're seeing prescribers or other stakeholders face to face are virtually on a state by state basis.

Now more than ever bringing a b cell therapy, that's highly efficacious and administered at home is highly attractive and our goal is that when patients come back we'll make it easy for them to start on African than that.

Last but not least enclaves around we're moving full speed ahead towards launch our regulatory filings had been accepted in both the U.S. Yoo, we published our data and the New England Journal on Madison, We've completed our integration of the medicines company. Our teams are being recruited and trained.

Mary France Chudin: Towards launch, our regulatory dossiers have been accepted in both the U.S. and the E.U., and we've published our data in the New England Journal of Medicine. We've completed our integration of the medicines company. Our teams are being recruited and trained. Our agreement with the NHS is progressing, and we're excited about this asset because it has the real potential to change CV mortality in a very broad patient population. We continue to expect U.S. approval in December. So overall, it's been a strong quarter. Clearly, this year we will have challenges with COVID, but despite all of that, we will have strong growth across the portfolio, our growth drivers, and our launch. Now, over to Suzanne.

Our agreement with the NHS is progressing and we're excited about this asset because it has the wheel potential to change CV mortality in a very broad patient population.

We continue to expect U.S. approval in December.

So overall, it's been a strong quarter.

Clearly this year, we will have challenges of coal that but despite all of that we will have strong growth across the portfolio our growth drivers and our lunches.

Over to Suzanne.

Good morning fraud, moving to slide 28.

So so far on quality you had a very strong clauses one he just saying some 3.6 billion and delivered a strong gross charge person.

Susanna Schaffer: Thank you, Maureen Kraut. Moving on to slide 28. So also for oncology, we had a very strong quarter one. We reached sales of $3.6 billion and delivered strong growth of 12%. And we have seen very good momentum across our portfolio, mainly driven by the excellent performance of our recent launches, PICRE and ADACVIO, and continued double-digit growth of our growth drivers. KISCALI delivered 82% growth, making it the fastest growing CDK4-6 inhibitor in the quarter. And also REVOLAY, PROMACTA, and AFINA mechanists, as well as JAKAVI, continued with a very strong trajectory.

Very good momentum across our portfolio, mainly driven by excellent performance. Our recent launches picoway about dr. meal and continued double digit growth our gross drivers kids cagny seemed like 82% growth, making it the fastest growing CDK for six inhibitor.

The quarter and also rebel Lady Promacta and Jonathan on making its assortments Chuck of any continued with very strong trajectory.

Well, let's try and much more than compensated for the impact from generics entry in Sydney Tour and exchange in the U.S. and tender in India, India.

Susanna Schaffer: These growth drivers more than compensated for the impact of generic entry into Afinitor and X-Shade in the U.S. and Sangostatin-LAR in Europe. From a COVID-19 pandemic standpoint, we have seen some additional demand across our portfolio, driven by forward purchasing mainly across Europe, China, and the U.S. Obviously, these days, healthcare practitioners and patients are trying to minimize hospital and office visits, which will have a potential impact on products that require a hospital stay like Hemriah and Lutathera. But overall, the oncology field is very resilient, and we remain very positive about the full-year performance. Moving to the next slide.

From a cobiz, 19th and then nicknames I've seen some additional demand across our portfolio given thoughts for blood purchases made me across Europe, China and yes.

Obviously these days has kept practitioners and patients I'm trying to minimize hospital and office. This is maturing has potential impact I'm proud that that require hospital expanding like him die out into the death era.

But overall the oncology Smith is very resilient and we remain very positive that full year performance moving to the next flight.

Great continues to perform very well, it's Q1 stage of 74 million I think it's a first in class pick through this year inhibitor indicated dropped 40% of H. appointed they've tried to make it into metastatic breast cancer patients, let's just pick through T. a mutation the product category.

Susanna Schaffer: PICC-RAY continued to perform very well, with Q1 sales of $74 million. This is a first-in-class PICC-3CA inhibitor indicated for 40% of HR-positive, HER2-negative metastatic breast cancer patients with a PICC-3CA mutation. The product had a great start in 2020 with expanded formulary policy coverage and continued RX momentum in the U.S. We are expecting a continued uptake in PIK3CA testing, and our goal is to reach 40% by year-end 2020 and also anticipate the plasma test of foundation metal to be approved by Q2 2020. Also, this quarter, we have expanded our Geographical Footprint Ex-US with PigRay now being approved in 13 markets globally, including Switzerland We expect CHMP approval later this year.

It's tied to them Twentytwenty. This expanded formerly policies coverage and continued Rx momentum in the U.S.. Yeah. We're expecting a continued taken pick through testing and our goal is to reach 40% by year end Twentytwenty and also I think.

Great last month is foundational med tend to be approved by key to put into 20.

Also this quarter if he has expanded to hitting footprint exceeded its peak right now being approved in smart TV markets globally, including Switzerland, Canada, and Australia, which is expected to be additional grows from second half of trying to change.

Yes expect kitchen P. approval later this year.

So overall the Americans progressing also this Alabama brought development program called uptake and you have very piece to share with you that study protocols for her two positive advanced breast cancer indication for triple negative breast cancer ovarian cancer and support growth has been a lot.

Susanna Schaffer: So overall, we are progressing very well with our very broad development program called EPIC, and we are very pleased to share with you that study protocols for the HER2-positive advanced breast cancer indication for triple negative breast cancer, for ovarian cancer, and for Crohn's have been aligned with the FDA. Moving to the next slide, our most recent launch, Adacnio, also had a very strong start, reaching 16 million sales in Q Just to remind you, ADACLIO is the only approved monthly therapy for the reduction of vaso-occlusive crisis in sickle cell disease. In the U.S., there are more than 64,000 patients suffering from sickle cell disease and having more than one VOC per year. Therefore, there is a huge medical need.

Good afternoon.

Moving to the next site. Our most recent launch docking you also had a very strong start reaching 50 million of sales in Q1.

Just to remind you that can you just only approved much this therapy for the reduction of Vaso Occlusive Crisis Institute.

In the U.S., yeah, I'm more than 64000 patients suffering from stick to cibcs and having more than one do you see Craig yes, that's a huge medical need.

So cool loss on access and that is paying off that's more than 320 accounts ordering a document including over half of logistic side its incentives.

Susanna Schaffer: Our focus was on access, and that is paying off with more than 320 accounts ordering a duck meal, including over half of the largest sickle cell receipt centers. We have received positive feedback from hematologists and are very pleased to see very high brand awareness. Already, 12 state Medicaid agencies from the top 23 high-prevalence states have published their guidelines for abductio.

We have received positive feedback from Hepatologists and I'm very pleased to see a very high brand awareness.

[noise] already close state Medicaid agencies from the top traded between high prevalence they publish that guideline for attack meal, Yes, we see C code on April 1st we expect to receive J code onto lies.

That's true further drive reimbursement confidence you continue to expand our global footprint to Exelis approval and expect aim not be solution.

Susanna Schaffer: We received C code on April 1st, and we expect to receive J code on July 1st, which will further drive reimbursement confidence. We continue to expand our global footprint with 2x US approval and expect an EMA decision in the second half of 2020. Clearly, as for all HCP administered treatment amid COVID-19, we expect some delays in new starts as physicians are trying to avoid putting patients at risk of infection. But overall, we remain very positive about the full year performance of ADACRIO. So with that, I will hand it over to Hari.

The second half of trying to change.

Clearly as for all HBP administer treatment I'm. Its Cobiz 19, you expect Sunday night, New starts its conclusion I trying to avoid putting patients at risk off infection, but overall, we remain very positive for the full year performance of attack yeah. So this bad.

I will hand over to high.

And thank you Susan and good morning, and good afternoon everybody.

And that's always my comments.

Before I turn the size of continuing operation.

Harry Kirsch: Thank you, Susana. Good morning and good afternoon, everybody. And as always, my comments refer to the results of continuing operations and growth rates in constant currencies unless otherwise noted. So, on slide 32. This shows the summary of our quarter one continuing operations and performance. The table shows a very strong reported set of numbers, and the sales crew 13%. Co-operating Income Crew, 34% There were two main factors contributing to these results. Clearly, and mainly, the very strong underlying operational performance.

Growth rates in constant currencies, unless otherwise noted.

On slide 32.

This show the summary of our quarter, one continuing operations and performance.

The table shows a very strong reported number set of numbers.

Sales grew 13% core operating income grew 34% there were two main factors contributing to these results clearly and mainly very strong underlying operational performance and secondly, some coal with my team related for that.

Harry Kirsch: And secondly, some COVID-19 related forward purchasing and lower spending. We estimate the favorable financial impacts of COVID-19 in Q1 to be approximately $0.4 billion in sales and about the same in core operating income. Including these impacts, we estimate that sales would have grown 9% and co-operating income would have grown 22%. Clearly, our quarter one operating income and sales performance was very strong, as anticipated when we provided our full year guidance in January. Net income growth was mainly impacted by higher legal programs.

Purchasing and lower spending.

We estimate the favorable financial impact of covert 19 in quarter, one to be approximately 0.4 billion on sales and about the same on core operating income.

Excluding these impacts the estimate let's say, it's would accrual 9% and core operating income would have grown 22%.

Clearly our quarter one operating income.

And sales performance was very strong.

Yes, I anticipate that when we provided our full year guidance in January.

Net income growth was mainly impacted by higher legal provisions.

Cash flow was also strong increasing 8% U.S. dollar to 2 billion and I'll give a bit more detail later on the presentation.

Harry Kirsch: Cash flow was also strong, increasing 8% in U.S. dollars to $2 billion, and I'll give a bit more detail later in the presentation. However, we expect the COVID-19-related financial benefits in Q1 and in sales and cooperating income to reverse later in the year, on slide 33. Here you see the quarter one sales growth and core margins by division and for continuing operations. On the left side, you see sales and core margins as reported.

We expect the corporate machinery led financial benefits quarter, one and in sales for operating income to reverse later this year.

On slide 33.

You see the quarter once its growth and core margins by division and for continuing operations on the left side you see says at core margins.

Reported on the Rightside, you see underlying sales and margin.

Excluding our estimated financial impacts from corporate 19 in quarter one.

I would like to focus on the underlying financial performance on the Rightside. So if we exclude yet to covert 19 impact sales for quarter, one have increased about 10% innovative medicines.

Harry Kirsch: On the right side, you see underlying sales and margins, excluding our estimated financial impacts from COVID-19 in quarter one. I would like to focus on the underlying financial performance on the right side. So if we exclude the impact of COVID-19, sales for quarter one increased about 10% for innovative medicine, 7% for Sandoz, and 9% for continuing operations. Continuing operations margins have improved by approximately 3 points to 32% of net sales; on Innovative Medicine, core margin has improved approximately two points to 35% of net sales. Sandusky.

[noise], 7% for Sandoz has 9% for continuing operations.

Continue operations margins have improved by approximately 3.2, 32% of let's say it.

Well innovative medicines core margin has improved approximately two point.

To 35% of net sales.

No as long as already mentioned had a really outstanding quarter and significantly improved underlying core margin by approximately 6% points to 25% of sales crage work on productivity programs further proof to sandals gross margin.

Harry Kirsch: As already mentioned, Vas had a really outstanding quarter and significantly improved the underlying core margin by approximately 6% points to 25% of sales. Great work on productivity programs further improved the Sandals-Crowes margin and SG&A cost structure. Also, Sandoz's quarter one benefited from lower pricing impact and first to market launches in the U.S. Slide 34 shows the dynamics of how we expect to bridge from the very strong reported Quarter 1 numbers to the full year guidelines. First, we expect the COVID-19 impact, as mentioned, to reverse later in the year. It's, of course, hard to say when exactly.

And as she in a cost structure.

Oh, so sandals quarter, one benefited from lower pricing impact and first to market launches can do it.

[noise] slide 34 [noise].

[noise] shows the dynamics of probably expect to bridge from the very strong reported quarter, one numbers to full year guidance.

First we expect to covert MACI impact as mentioned to reverse later this year. It's of course hard to say when exactly probably makes of quarter to quarter three but also please keep in mind 0.4 billion forward buying it's in the end only true.

Harry Kirsch: It's probably a mix of quarter two and quarter three, but also, please keep in mind that 0.4 billion forward buying is, in the end, only two shipping days for us. So unwinding could also fully happen in quarter two. We also expect greater generic impacts, mainly on Affinitur, X-Jail, and Trabant. In quarter one, we have seen some effects of the respective generic impacts, but expect those to become bigger as the year progresses. Additionally, we will start lapping the CITRA exposition and a couple of other prior year launches in the second half.

These days for us so unwinding could also fully happened in quarter two.

We also expect greater generic impact mainly on the affinity for Exterran, how about in quarter. One we have seen some effect off the respective generic impacts, but expect those to become bigger as the year progresses.

Additionally, we will start lapping the sidetracked acquisition and a couple of other prior year launches in the second tough.

Lastly, we plan to increase launch and prelaunch investments for of tumor up kept mapping that.

Click through and the remainder of two year.

Harry Kirsch: Lastly, we plan to increase launch and pre-launch investments for our Futurama, Katmatnip, and Eklisiran programs in the remainder of the year. On slide 35, I want to share our key assumptions, which we have based our full-year guidance on. The prior guidance in January excluded the Sundance U.S. oil, solid, and dermatology portfolio.

On slide 34 35.

I want to share our key assumptions.

Which we have outpaced our full year guidance on.

The prior guidance in January excluded the sandals U.S. oral solid dermatology portfolio as we are now retaining this portfolio. We expect both to close on sales and growth of core operating income to be about 1% point lower.

Harry Kirsch: As we are now retaining this portfolio, we expect both the growth in sales and growth of co-operating income to be about 1 percent points lower than the guidance provided under the previous assessment. Of course, the base we grow from is also about $1 billion higher in 2019, exactly $1,074,000,000, as we retain the business now. We continue to assume that without Jelenia, without Sandor Staten et al.

And the Guy has provided the previous assumption of course the base we grow from its also about 1 billion higher and 29 gene exactly 1.074 billion as we retain the business now.

We continue to assume that northern California, No Thunder started there they are generics and certain 22 engines U.S.

Also show you see live we just got use of positive. Joe then your IP or a pure ruling of course, we closely monitor the district Court decision, let you know when we know more.

Harry Kirsch: Generics enter 2020 in the U.S. Also, I'm sure you have seen this, we just got news of a positive Jelenia IPR appeal ruling. Of course, we closely monitor the district court decision, and we'll let you know when we know more. Now to some rough assumptions as it relates to COVID-19 impact. Of course, nobody knows exactly what will happen over the next months and quarters. Here is what we have roughly assumed for our unchanged guidance. We do include the forecast assumption that healthcare systems will return to normal prescription and consumption dynamics during quarter two in our major markets. So not economies, but healthcare and prescribing.

Now to some rough assumption as it relates to cope with my team impacts of course, nobody knows exactly what will happen over the next month quarter.

Here's what we have roughly assumed fall unchanged guidance.

We do include the forecast assumption that healthcare systems return to normal prescription consumption dynamics true in quarter, two and our major markets. So not a cup economies, but health care and prescribing.

We assume that quarterback benefits afforded purchasing a lower spending reverse later in the year.

Cost, we we're closely monitoring those business dynamics and we'll update you.

Harry Kirsch: We assume that a quarter of our benefits of forward purchasing and lower spending will reverse later in the year. Of course, we will closely monitor those business dynamics and will update you on the guidance, if needed, at quarter to early, with these assumptions on slide 36. We confirm our full-year outlook. Continuing operations sales are expected to grow mid to high single digits, and core operating income is expected to grow ahead of sales, increasing the margin at high single to low double digits. For the Innovative Medicines Division, also unchanged, we expect sales to grow mid to high single digits and for Sandoz to grow low single digits. Let me add a few words on quarter two dynamics.

Also on the guidance if needed at quarter to earnings.

With these assumptions on slide 36.

We confirm our full year outlook [noise].

Continuous operation sales expected to grow mid to high single digit and core operating income expected to grow head of sales and increasing the margin at high single to low double digit.

For innovative medicines Division also unchanged, we expect sales to grow mid to high single digit and for Thunderx accrual no single digit.

Let me add a few words quarter two dynamics.

Of course quarterly growth rates are likely more volatiles. This covert 19 situation.

Fourth quarter to say its growth is likely to be low to mid single digits.

Harry Kirsch: Of course, quarterly growth rates are likely more volatile in this COVID-19 situation. For us, quarter two sales growth is likely to be low to mid-single digits. This mainly depends on how much COVID-19 forward of Q1 unwinds in Q2, and how sales of our OFDA portfolio are impacted by significantly lower physician visits, as Murray Frost also has laid out. On the bottom line, please remember that in quarter two of 2019, we had roughly $0.1 billion benefit from pre-launch inventory provision releases, mainly for consul gensma approval. This is, of course, considered in our full year 2020 guidance, but please include this also in your quarter two core operating income model, on page 37. Just a quick word on cash flow. Of course, cash flow remains very important for us, particularly in view of the current situation.

This is mainly depends on how much covert 19 forward by of Q1 Unwinds in Q2.

And how sales of our off to a portfolio is impacted by significantly lower physician visits as smartphones also has laid out.

On the bottom line. Please remember that in quarter two of 29 team. We had roughly 0.1 billion benefit from pre launch inventory provision releases, mainly for James from a a convergence more approval.

This is of course considered in our full year Twentytwenty guidance, but please include this also in New York water to core operating income modeling.

On page 37.

Just a quick word on cash flow of course cash flow remains very important for us, particularly in few off the current situation.

And you see here strong cash flow growing 8%, mainly driven by higher operating income, we do have higher working capital in the quarter.

Harry Kirsch: And you see here, strong cash flow growing 8%, mainly driven by higher operating income. We do have higher working capital in the quarter, mainly impacted by higher accounts receivables as the forward purchasing mostly happened in March. But no worries here; we are absolutely on track to collect that, and that's also what we see overall. Our cash collections remain very strong. It's of course a big focus of the organizations, and base sales outstanding remain totally in line with year-end 2019, so very good cash collection discipline and cash flows. Finally, on slide 38, I want to bring to your attention the significant change in the estimated currency impact of our results since the last time we spoke three months ago. We do update each month, but maybe not everybody looks at the website. And it's, of course, a result of the dollar, the U.S.

Mainly impacted by higher accounts receivables as the forward purchasing mostly habit in March but nobody is here. We are absolutely on track to collect that and that's also what we see overall our cost could cash collections remain very strong it's of course, a big focus of.

Issuance and days sales outstanding remain totally in line with year end 2019, so very good cash collection discipline and cash flows.

Finally on slide 38.

I want to bring to attention a significant change in the estimated currency impacts while results since last summer we spoke three months ago B to update each month, but maybe not everybody looks at the website every month.

It is of course resides off the dollar U.S. dollar strengthening those most other currencies. So it's late April rates prevail for the remainder of 2020 to 40 impact of currency or sales would be makes a 3% points and core operating income that gets a 6% points for quarter two.

Harry Kirsch: And it's, of course.

Harry Kirsch: So if late April rates prevail for the remainder of 2020, the full year impact of currencies on sales would be negative 3% points and on co-operating income, negative 6%; for quarter two, it would be negative four and negative seven, respectively. And again, as a reminder, we do update this monthly website. I do recommend that you look at it. Not only business situations, but currencies, of course, are volatile, and it's worthwhile watching. So with that, I turn it back to Voss.

It would be I guess for negative seven respectively.

And again as a reminder, be do update this month ago website do recommend that you look at it you know not only business situations or the currencies of course, our volatiles and it's worthwhile to watching so with that I'll turn it back to us.

Thank you.

Vince.

Vasant Narasimhan: Great. Thank you.

In Q1, and we're maintaining our full year outlook at various nicely outline. So we remain excited for the future acts optimistic about 2020, and we look forward to taking your questions. So with that operator, we can open the line.

Vasant Narasimhan: We remain excited for the future, optimistic about 2020, and we look forward to taking your questions.

Thank you our first question comes from the line.

Your body Lisa's question.

Good afternoon, and thank you for the constraints to places I mean, one rasta you from a big picture perspective put love your thoughts on how you see the current and damage impacting the B you were doing business in the longer term, how do you think the value of the product I'm guessing.

Operator: Thank you. Our first question comes from the line of Cleo Paret. Please ask your question. Good afternoon, and thank you for the questions, too, if I may.

Vasant Narasimhan: One huge question for you, from a big picture perspective, would love your thoughts on how you see the current pandemic impacting the way you are doing business in the longer term? How do you think the value of the broader healthcare system, kind of within the healthcare system, will change? And what do you think kind of a young new CEO like you can do to make the industry a better place given the previous public perception of the industry? That's kind of question number one.

Some kind of within the healthcare system changes and what do you think kind of your new CEO with like you can do to me get the industry I got better place given dubious public perception of the in discrete that's kind of question number one and then question number two from what difference I'm kind of given the.

New findings on their view would love to hear your views on Brady you think there, but you should be used if the patient subset or you think this might be better fit that or do you still see there's a lot tend to be across the entire patient population base, how should we think about the peak sales.

Mary France Chudin: And then question number two for Marie France, kind of given the new findings on BayerView. Would love to hear your views on where you think BayerView should be used. If there's a patient subset where you think this might be better suited for, or do you still see this as a broad therapy across the entire patient population base? How should we think about the peak sales opportunity for BayerView today? Thank you.

Washington, D. compared to you today. Thank you.

Thank you care or so first I'll divide my comments into big picture comments for the sector or the industry and then from specific comments on new ways of working I think will reshape how we think about running our company in the years ahead. First this is a I think a remarkable perhaps once in a a generator.

Vasant Narasimhan: Thank you, Keyur. So first, I'll divide my comments into big picture comments for the sector or the industry and then some specific comments on new ways of working, which I think will reshape how we think about running our company in the years ahead. First, this is, I think, a remarkable, perhaps once in a generation for a company, opportunity to reset our reputation in the broader public mind. When you look today, we're in a moment in time where our industry, combined with the work of academia and the broader ecosystem, has stepped up to make unprecedented, I think, collaborations with over 170 drug candidates now somewhere in the clinic or in preclinical testing, over 90 vaccine candidates, well over 500 clinical trials now running, and massive efforts to do this on a non-profit or donation basis to really lead the charge in trying to overcome this pan

Question for a company operates companies opportunity to reset our reputation in the broader public mind. When you look today, we were in a moment in time, where our industry combined with the work of academia and the broader ecosystem has stepped up to make unprecedented I think collaborations with over 100.

Vasant Narasimhan: And I think that's leading to, as you see already in survey data, a shift in the perception of the value of this sector. I hope we can seize this moment to remind the world that this industry is why we've seen such remarkable, part of the reason at least, why we've seen such remarkable gains in life expectancy over the last 100 years. It's why we're able to withstand pandemics of the past and will ultimately be able to withstand this pandemic.

In 70, no drug candidate somewhere in the clinic or in preclinical testing over 90 vaccine candidates.

Well over 500 clinical trials now running.

Massive efforts to do this and then in a nonprofit or donation basis to really lead the charge and trying to overcome this pandemic and I think what that's leading to do you see already in survey data a shift in the perception of the value of this sector I hope we can see this moment to remind the work.

All that this industry is why we've seen such remarkable part of the reason at least why we've seen such remarkable gave life expectancy over the last 100 years. It's why we were able to withstand pandemics of the path and movie ultimately able to withstand this pandemic. So I think it the remarkable opportunity to reset our reputation as an industry.

And I also I think for Novartis part of the reason we took the time to walk you through all the things. We're doing is we take it as a significant opportunity to make a major contribution around the world and also completely repositioned ourselves as a company that's truly trying to devalued, maybe most valued by society that spirit.

Vasant Narasimhan: So I think it's a remarkable opportunity to reset our reputation as an industry. And also, I think for Novartis, part of the reason we took the time to walk you through all the things we're doing is we take it as a significant opportunity to make a major contribution around the world and also completely reposition ourselves as a company that's truly trying to be valued, maybe most valued by society. Specifically, I think three things will shift healthcare systems. I think the rise of telemedicine, the rise of digital technologies, and all the physicians we talk to are clearly seeing a big shift in how they engage with patients. Alongside that, of course, we're going to have a short-term impact of the shifts because of unemployment.

Typically I think three things will ship healthcare systems I think the rise of Tele medicine. The rise of digital technologies. All the physicians, we talk about the talk to clearly our thing or a big shift in how they engage with a with patients alongside that of course, we're gonna have a short term impact of the ships because of unemployment but longer term.

I I believe that the digital technologies have now really on taking hold in healthcare systems and then on the same aside within our company digital technologies in how we run our Salesforce manufacturing lines or R&D operations have now also been forced to go to scale I mean, all of our AI there.

Vasant Narasimhan: But longer term, I believe that digital technologies have now really taken hold in healthcare systems. And then, on the same side, within our company, digital technologies and how we run our sales force, manufacturing lines, and R&D operations have now also been forced to go to scale. I mean, all of our AI and data science efforts are now being taken to scale simply because we have no choice. And that, I think, will ultimately lead to more distributed ways of working across large companies. If companies can embrace distributed ways of working, shift from just taking office-based work and moving it into an out-of-office setting, but really rethink how we work, you could see dramatic increases in productivity, further margin expansions, and hopefully, a better So that's just some brief perspectives. Mary France, I'm back with you.

Hi, its efforts are now being taken to scale simply because we have no no choice and that I think will ultimately lead to more distributed ways of working across large companies, which accompanies can embrace distributed ways of working ship from this taking office based work and moving it into a out of office setting, but really rethink.

How we work you could see dramatic increases in productivity margin further margin expansions and hopefully a better output and innovation from our company longer term. So other than that so just some brief perspectives very France and Belgium.

Okay.

So as you know then their view is off to an incredible start in our lunch and we still believe that this product will be a blockbuster of course safety does come first and we have a signal it's where.

Mary France Chudin: So, as you have noted, VeoView is off to an incredible start in our launch, and we still believe that this product will be a blockbuster. But, of course, safety does come first, and we have a signal. It's rare, but the benefit-risk profile for the product remains positive. We have to understand the root cause. This may take some time, but we also have long-term exclusivity in the U.S. and EU, and so we will play the long game on this one. What we're seeing in the marketplace from physicians is that they are in two camps. They're either pausing and waiting to understand more, or they're actually taking a more cautious approach with their patients. We see approximately half the centers continue to order. Of course, now with the COVID situation, it's hard to say what is impacting what. But we are, I think the fundamental point is that we're committed to resolving this issue. We have approval across 10 markets, and as we launch this product across the world, we will also learn about different treatment practices and how these have an impact on outcomes.

But the benefit risk profile for the product remains positive we have to understand the root cause. This nice takes some time.

We also have a lie exclusivity in the U.S. CEO and so we were playing the long game on this one what we're seeing in the marketplace from physicians is that physicians are into camps, there, they're either causing.

And waiting to understand more or they're actually taking a more cautious approach with their patients.

We see approximately half the centers continue to order of course now with the current situation, it's hard to say and what is impacting what but we are I think the fundamental point is that we're committed to resolving this issue we have approval across 10 markets and as we launch this product across the.

The World, we will learn also about different treatment practices and how these have an impact on outcomes.

Great. Thank you very fast and thank you Karen next question operator.

Our next question comes from the alignment.

Parry from Bank of America.

Hey, Thanks, taking my question say and says he he expressed confidence in meeting your PDUFA date on X T map and then I think at your last stuff that you said the S.J. haven't inspected the manufacturing site in Stein, yet and that is obviously, an international inspection, which they had to at least temporarily shut down say you have a date span inspection has it.

Vasant Narasimhan: Thank you, Mary Fonse, and thank you, Kerr. Next question, operator?

Operator: Our next question comes from the line of Graham Parry from Bank of America. Great, thanks for taking all the questions.

Vasant Narasimhan: So firstly, you expressed confidence in meeting your PDUFA date on Ofatimumab, but I think at your last update, you said the FDA hadn't inspected the manufacturing site in Stein yet, and that is obviously an international inspection which they had to at least temporarily shut down. So do you have a date for that inspection? Has it already happened? Perhaps an update on your confidence in achieving that prior to the PDUFA date? And then, secondly, when you talk about the $400 million COVID benefit to sales and EBIT, is that just purely an inventory calculation, and have you also included in that the impact of the surge in prescriptions for chronic therapies like Entresta and Cosentix as people rush to get their prescriptions filled?

The happened and perhaps not based on your confidence in achieving that sat prior to that the d. today and then secondly, when you talk about a 400 million dollar Teva benefit to sales and eat it is not just purely an inventory calculation and if you will see included in that the impact to the surge in and prescriptions for chronic therapy.

Like interest incomes and takes his people rush to get that prescriptions filled and also in your full year guidance talked extensively and today the that reduction missing in new to brand on a strike said and the lack of new patient starts. So you just thinking these are getting warehouse and you should see them actually pick up and then usage and the chief.

Vasant Narasimhan: And also, in your full-year guidance, to what extent have you factored in the reduction we're seeing in the need to brand those drugs, the lack of new patient starts, or are you just thinking these are getting warehoused, and you should see them actually pick up with a new surge in Ender-2 Q3 as patient visits start to return? Thank you.

Keith Keith screens patient visit start treatment. Thank you.

So thanks tariffs I'll make a general comment on our engagement with our FDA has an industry and then Johnson comment specifically I know for tumor and we've had a and I'm sure. The FDA BRC for a for the pharma industry organization and all are interactions with FDA draft is committed to there.

Vasant Narasimhan: So, thanks, Graham. I'll make a general comment on our engagement with FDA as an industry, and then John can comment specifically on El Fatuma. I mean, we've had, and I chair the FDA BRC for the pharma industry organization, and in all our interactions with FDA, FDA has stayed committed to their view that they can meet their PDUFA timelines, and they will be using technology, virtual inspections, paper inspections, et cetera, to do their best to meet their PDUFA timelines. And in particular, when they look at prioritizing, priority reviews would, John, specifically on El Fatuma.

A view that they can meet their produce the timelines and they will be using our technology, where a virtual inspections that paper inspections et cetera to do their best to meet their or their PDUFA timelines and in particular when they look at prioritizing our priority reviews or would of course be the ones they want to ensure they hit.

Their timelines on it it's worth noting it over to that I've had the a priority review with the priority review Boucher, John specifically on auto Yeah. Thanks, Graham specific to over to my map. We've had good discussions with the regulatory agency FDIC specifically in terms of inspections. As you noted we had a clinical trial site inspection in the U.S. very rich.

John Tsai: Yeah, thanks, Graham. Specific to Ovacumumab, we've had good discussions with the regulatory agency, the FDA specifically. In terms of inspections, as you noted, we had a clinical trial site inspection in the U.S. very recently, and that went very well. In terms of manufacturing inspections, the manufacturing site is in Switzerland, and we had that site inspected about a year ago, and that went well. Now, as Voss said, sometimes they're granting waivers or asking other agencies to do the inspection, and we've not heard anything else in terms of the current inspection, but the most recent inspection that occurred a year ago was.

Recently and that went very well in terms of the manufacturing inspection. The manufacturing site is in Switzerland, and we have that site inspected about a year ago and that went well now as Bob said that sometimes they're granting waivers or asking other agencies to duty inspection and we've not heard anything else.

In terms of the current inspection, but the most recent inspection that occurred a year ago, which went very well and then Harry on the on the guidance in the 401, yeah. Thank you Graham.

400 million roughly it's never easy tool to approximate these but that's why they did it at a company level as well as a division level, but not further down easier to triangulate at a higher level and the point 4 billion is very little actually at wholesale.

Harry Kirsch: And then Harry on the guidance and the $400 million.

Harry Kirsch: Yeah, thank you, Graham. So 400 million, roughly. It's never easy to approximate these, but that's why we did it at the company level, as well as at the division level, but not further down. It's easier to triangulate at a higher level. And the 0.4 billion is very little, actually, at the wholesalers. So we actually also held back orders where we felt they just would fill the wholesaler pipeline, and in good discussions with our customers, we reassured them that our supply chains are extremely robust and customer service levels are at normal record highs. So most of this effect we see in longer scripts and basically, maybe patients filling early or getting longer scripts depends on the country and the payer allowing that. It is only two days on average, but it's mostly at the patient level, not so much at the wholesaler level, and so we do expect that this unwinds.

Yes, so we actually also head back orders, where we felt it they just would fill the wholesaler pipelines and good discussions with our customers. We reassure them that our supply chains are extremely robust and customer service levels are at normal record high so most of this affair.

We see a longer script.

And there's you maybe patients filling early or getting longer scripts depends of the country, a payer, allowing that it is only two days an average but its majorly at the patient level not so much to wholesale endeavor.

And so we do expect that is on while.

On the other could have a positive effect on more adherence to chronic medicines.

And so that's a positive on the other hand off course, depending on the therapeutic areas. We also expect and that's also needed for the full year guidance that systems returned back to normal physician visits.

Harry Kirsch: On the other hand, it could have a positive effect on more adherence to chronic medicine. And so that's a positive. On the other hand, of course, depending on the therapeutic areas, we also expect, and that's also needed for the full year guidance, that systems return back to normal physician visits, certainly for new patient starts in the launch area. And then, on the other hand, of course, in ophthalmology, where injections are necessary. And there we see in April a bigger impact; you don't see it yet so much in Q1. And that's also where we need this assumption that the system starts back up. Voss mentioned that there's a big urge and also a healthcare system looking at the unintended consequences of COVID, which means other diseases may be neglected.

That's certainly a new patient starts and the launch area and then on the other hand of course in ophthalmology, Brett injections are necessary and there we see in April bigger impact you don't see it yet so much in Q1, and that's also where we need this assumption that the system start back up.

As mentioned the big urge and also healthcare system looking at the unintended consequences of call it which means other diseases maybe neglected.

Good thing here. Thank you.

Next question operator.

Yes next question comes from the line on the Steve Scala. Please ask your question.

Well. Thank you I have two questions first why didnt cosentyx appear to benefit from forward buying and it even sell a but short of your guidance provided on the Q4 call and then secondly, one theories or be reviews safety issues.

Vasant Narasimhan: Good. Thank you, Harry. Thank you, Graham. Next question.

Operator: Yes, the next question comes from the line of Steve Scala. Please ask your question. Oh, thank you.

Vasant Narasimhan: I have two questions. First, why didn't Cosentyx appear to benefit from forward buying? And it even fell a bit short of your guidance provided on the Q4 call. And then, secondly, one theory for B of U's safety issues is a contaminant or impurity in the formulation. I'm curious, was the delay in filing B of U several years ago due to the need to purify the formulation? I don't recall the company ever actually being specific about why the filing was delayed. Thank you.

Contaminant or impurity and the formulation I'm curious was the delay in filing reviews several years ago due to the need to purify the formulation I don't recall the company ever actually being specific on why the filing was delayed thanks.

Thanks, Steve on a on Cosentyx marathon.

So as we mentioned before there is a very strong performance across the board both the German ran markets, which we did see some small stocking, but it was mostly in Europe and there was no stocking in the U.S. It was a very demand driven result, we did see obviously Q1 he's now.

Mary France Chudin: Thanks Steve, on Cothentics. Any thoughts?

Vasant Narasimhan: So, as we mentioned before, there was very strong performance across the board in both the DERM and ROOM markets. We did see some slight overstocking, but it was mostly in Europe. There was no stocking in the U.S. It was a very demand-driven result. We did see, obviously, Q1 seasonality around the re-verification and further strengthening of our first-line access strategy, but we continue to grow and be strong, and clearly, we do anticipate a COVID effect on our NDRXs, but we have a very solid TRX base, and strong market share, so we're confident on our trajectory.

Bloody around the we verification and there are further strengthening of our first line access strategy, but we continue to grow and these strong and clearly we do anticipate a coal that effect on our NDR access, but we have a very solid trx base and strong market share. So we're confident on.

Our trajectory and it just sounds good centex, we're confident.

This brand will continue on it's trended to exceed $5 billion ER and you know so we're very confident in where cosentyx is heading the small variations quarter to quarter that get to scrutinize I think mix Miss the bigger picture. The this is a brand that is on its way to nine indications that has an outstanding market share position.

Vasant Narasimhan: And I'd just say on Cosentix, we're confident, you know, that this brand will continue its trend to exceed $5 billion. And, you know, so we're very confident in where Cosentix is heading.

Vasant Narasimhan: These small variations, quarter to quarter, that get so scrutinized, I think, make the bigger picture that this is a brand that's on its way to nine indications, that has an outstanding market share position across its various therapeutic areas and a very unique positioning in rheumatology. So it's important to take a step back, I think, for our investors and not always focus on these small variances in the quarter. Now, with respect to Bayview, just to remind everyone, this is history, so you've got a good memory.

Across its various therapeutic areas and a very unique positioning in rheumatology. So it's important to take a step back I think for our investors and not always focus on this the small variances on the quarter now with respect to Bayview just to remind everyone. We.

This is a history sees gotta good memory. If you. If you go back in time, we the original phase three program took into phase three or the phase one two formulation and then after phase three we did a bridging study to the final marketing image that ultimately went into into the market. So we are doing.

Vasant Narasimhan: If you go back in time, the original Phase 3 program took the Phase 1-2 formulation into Phase 3, and then after Phase 3, we did a bridging study to the final marketing image that ultimately went into the market. So we are doing a very detailed technical analysis just to understand whether there was anything that happened in that process. We have not identified anything to date that would be causative, but nonetheless, we are very carefully assessing that to fully understand it. These are very rare events. I mean, if you look at these numbers, we're talking about, you know, one to two cases per 10,000. So this is not easy to find causative relationships. The other nuance to note is that outside the U.S., we've launched it in a prefilled syringe. In the U.S., we launched it in a vial.

Very detailed technical analysis, just to understand or was there anything that happened in that process. We have not identified anything to date that we'd be causative, but nonetheless, we are very carefully assessing that to fully understand fully understand that these are very rare events. I mean, if you look at these numbers were talking about.

You know one to two cases per 10000. So this is not easy to find cause it relationships. The other nuance to note is in your outside the U.S., we launch into Prefilled syringe you asked we launch in a vial how that might impact the dynamic is thing something as well we'll have to watch.

Good So next question.

Next question comes from the line of Peter like Ford from Jefferies. Please ask your question.

Vasant Narasimhan: How that might impact the dynamic is something we'll have to watch as well. Good. So, next question.

Hi, Thanks for taking my questions, but two please firstly just on the cost base I Wonder if you could just comment perhaps on how we should think about cobot 19, potentially impacting that obviously significant efforts by you based on supplying drugs like I don't see for quite a as well as obviously investing in need study.

Operator: The next question comes from the line of Peter Welford from Jefferies. Please ask your question. Hi, thanks for taking my questions. I've got two, please.

Vasant Narasimhan: Firstly, just on the cost space, I wonder if you could just comment perhaps on how we should think about COVID-19 potentially impacting that. Obviously, significant efforts by you both on supplying drugs like hydroxychloroquine as well as obviously investing in new studies and perhaps also having to increase costs on existing studies to keep them going. But at the same time, obviously, like us, the travel budget is significantly down. I wonder if you could just talk us through the varying dynamics that we should think about for costs this year. And then secondly, just on marketing, I guess with all the efforts now that have gone into digital marketing and some of the significant changes that have been there, starting in China and now other major markets, have you got any data so far in house that can point to how effective digital marketing is or could be? And how could this potentially shape your thinking in the future? Or do you think things will largely return to normal once the COVID situation ends?

Harry Kirsch: Thank you.

And perhaps also having to increase cost some existing studies to keep them going but at the same time of the say you'd like us travel budget significantly down I will give you could just you could sort of took us through the very dynamics that we should think about for cost this year.

And then secondly, just on marketing and I still the assets now that's going into digital marketing than some of the a significant changes that have been that starting in China right now with the major markets.

You got any data so far in house that can point to how effective that digital marketing ease or could be and how could this potentially shape. Your thinking in the future I'll do you think things largely returned to normal once the type of situation finishes. Thank you.

Oh, so Harry on the cost this yeah. Thank you Peter.

So on the cost base as you're seeing in quarter one.

Roughly right I mean 400 million topline 400 million bottom line, we have little over 20% cost of goods. So at roughly 80 million most cost base and that's both effective two weeks. So you can imagine that there's never a formula don't don't know take 80 times, how many weeks, but are they ask why.

Mary France Chudin: So Harry, on the cost, please.

Harry Kirsch: Yeah, thank you, Peter. So on the cost base, as you have seen in quarter one, roughly, right, I mean, 400 million top line, 400 million bottom line, we have a little over 20% cost of goods. So that roughly 80 million was the cost base. And that's basically for two weeks.

Some variable.

Spend so that of course has to do with what is the possibility. So how much is working from home how much are locked down procedures basically also impacting the cost base and the positive way. It would right of course, we rather don't habit and tough the topline be extremely done that.

Harry Kirsch: So you can imagine that there's never a formula, don't now take the 80 times how many weeks, but there's quite some variable spend that, of course, has to do with what is the possibility, you know, how much is working from home, how much are the lockdown procedures basically impacting the cost base in a positive way, right? Of course, we'd rather not have it and have the top line be extremely dynamic, but there is clearly quite a potential, which is partly a natural hedge for some of the top line if there were a slowdown. And then, in the overall scheme of things, of course, we do a lot as a company, but it's not so material in terms of.

Nick.

But there's clearly a quite a potential which is partly a natural hedge for some of the topline if there would be a slowdown and then in the overall scheme of things of course, we do a lot as a company, but it's not so curious in terms of.

50 billion dollar company, Rafi fraud, and or significant amount of profit and cash flow. So we are in a range that is manageable within our forecast and we also make very good progress slightly or even the head of of target on our productivity efforts. So.

Harry Kirsch: $50 billion company, roughly, right, and our significant amount of profit and cash flow. So we are in a range that is manageable within our forecast. And we also make very good progress, slightly even ahead of target on our productivity efforts. So, what not, I would not see that our COVID-related efforts would hinder us from margin progression or would bend it, really. More important is to see how the top line is developing and our healthcare systems for the areas and therapeutic areas that are important to us, you know, starting to work normally again as we go through quarter two.

Or whatnot I would not see that our coal which related efforts would hinder us from margin progression over them to truthfully more important is to see how the topline developing and our healthcare systems for the areas and therapeutic area for the important to US you know I'm starting to work no.

Well again as we go through quarter tool.

And reference on a on digital digital marketing.

Yeah. So it clearly has to pay that very quickly to a very very different land working and that we think we've seen some remarkable initiatives across the globe. We've been able for example in China to reach at 900000, HCP will we chat and went triggered email us we've seen in.

Mary France Chudin: I'm in the Marine Front for digital marketing.

Vasant Narasimhan: Yeah, so we've clearly had to pivot very quickly to a very, very different way of working, and we've seen some remarkable initiatives across the globe. We've been able, for example, in China to reach 900,000 HCPs through WeChat and web-triggered emails. We've seen in the U.S. a 1,500% increase in telemedicine. And so clearly, digital is going to play a new role in the future if we think about online drug refills, education, direct-to-patient, and, of course, how we can enhance our face-to-face interactions with physicians. So one of the clear opportunities that we see at this stage is to understand what physicians prefer, what the markets prefer, and then really clearly understand what are the most effective tactics that we have out there. The goal is to really just increase our effectiveness or our productivity in the marketplace, the efficiencies of the system, such as diagnosis and maybe adherence. And clearly, we're seeing opportunities also for how quickly we can bring products to market. So we've seen, for example, in the case of Zolaire, home delivery being accelerated across different markets.

The U.S. that 1600% increase in Tele medicine, and sell clearly digital is gonna take and new role in the future. If we think about online John drug Resells education direct to patient and of course, how we can enhance our face to face interactions with physicians so why not.

There are opportunities that we see is really in this stages to understand what physicians prefer what the market's prefer and then really clearly understand what what are what are the most effective and tactics that we have out there. The goal is to really just increase our effectiveness our productivity.

Okay in the marketplace and the efficiencies of the systems, such as diagnosis and maybe adherence and clearly we're seeing opportunities else on and how quickly we can bring and products to market. So we seen for example in the cases xolair home delivery being accelerated across different markets. So yes, there there.

There are some challenges, but there clearly opportunities for us in the future in here I'd say overall our goal is how can we make these changes stick and really not accelerate that transformation not go back I think your point to the old ways of working.

Operator: And Peter, I'd say overall, our goal is how can we make these changes stick and really accelerate that transformation, not go back, I think, to your point, to the old ways of doing things. Thanks, Peter. Next question.

Peter next question.

Next question comes from the line of a Simon Baker from Redburn. Please ask your question.

Thank you for taking my two questions. Firstly on assumptions about you talked about the next catalyst for growth between Europe, and 10, but I Wonder if you could give us an update on the potential growth sources U.S., given the cognizant of stay testing and Medicaid reimbursement.

Vasant Narasimhan: The next question comes from the line of Simon Baker from Redburn. Please ask your question. Thank you for taking my two questions. Firstly, on Zolgensma, you talked about the next catalysts for growth being Europe and Japan, but I wondered if you could give us an update on the potential growth sources in the US given the current level of state testing and Medicaid reimbursement. And then a question for you, Vas, going back to Kea's opening question. Rather than just thinking about the long-term potential benefits for the perception of the industry from COVID-19 and the industry's response, I wonder if you could give us any thoughts on your interactions with governments here and now and how the perception of the industry has changed.

And then a question so you've asked going back to kind of thing question.

<unk>.

Robin just thinking about the long term potential benefits for the perception of the industry Cozy 19 in the industry's response I Wonder if you could give us any thoughts on your interactions with governments human now and how the perception of the industry has changed.

Yes.

So.

Great. Thanks damage.

I think it Brittany Henderson.

I think we losses on but I think I got the gist of the a of the of the second question. So first on on a on Xeljanz My in the U.S. right now we're at a steady state of around 100 patients per quarter within the current indication that's in part as we grow in newborn screening. We of course also the aging out of the older too.

Vasant Narasimhan: I think you're breaking down. I think we've lost you, Simon. I think I got the gist of the second question. So first on zilgensma, in the US right now, we're at a steady state of around 100 patients per quarter within the current indication. That's in part as we grow in newborn screening, but we also have the aging out of older kids in the older cohort. I think the other element that did dampen Q1 a little bit was that with the COVID pandemic, fewer patients were coming in for switches, and we see that dynamic as well in the early part of April.

The the older cohorts I think the other element that that did dampen a little bit Q1 was that a with the covert pandemic fewer patients were coming in for switches and we see that dynamic as well in the early part of it but nonetheless, we feel confident we're in that study state of approximately a 100 patients corridor with.

Then the current indication now when you look in Europe. As a reminder, we have very broad indication within Europe. We've already seen early access agreement announced by Germany, a few German SBIC funds that would be available as soon as we are approved in Europe. So what we expect to see very.

Vasant Narasimhan: Nonetheless, we feel confident we're in that steady state of approximately 100 patients per quarter within the current indication. Now, when you look at Europe, as a reminder, we have a very broad indication in Europe. We've already seen early access agreements announced by a few German sick funds that would be available as soon as they're approved in Europe. So we expect to see very rapid uptake in some countries within Europe on launch. So that will give us the next, I think, inflection point is our launch across a range of European markets, and our teams are working hard to get early access agreements in place to enable patients to receive the therapy even ahead of the final reimbursement agreement. And then, of course, Japan and a range of other markets around the world. So that will be the next set of inflection points for the brand, and then following on from that, the US expansion beyond two years of age.

Rapid uptake in some countries within Europe on launch so that will give us. The next I think inflection point is our launch across a range of European markets and our teams are working hard to get early access agreements in place to enable patients to receive the therapy. Even ahead of the final reimbursement agreement and then of course, Japan and earn.

Range of other markets around the world. So that will be the next set of inflection points for the brand and then following on that the U.S. expansion beyond two years of age. So when you take each of those in turn we were still well on track to a multibillion dollar product with respect to drill times, but I would say on government or I would say broad.

Within your range of stick was if you look at the the engagement from governments government groups ranging from the G 20, individual government, reaching out to industry and asking for our support at a very positive way a range of collaborations that involve a.

Vasant Narasimhan: So when you take each of those in turn, we're still well on track to a multi-billion dollar product with respect to Zolgen. I would say on government, I would say broadly among a range of stakeholders. If you look at the engagement from government groups ranging from the G20, individual governments reaching out to industry and asking for our support in a very positive way, a range of collaborations that involve the biopharmaceutical industry, nonprofits, government, and academic institutions, I certainly feel that the overall tone is very positive towards the industry at this time. I think if we can do our part and behave in a way that is really supportive of the overall pandemic response, this is an opportunity, I think, to reset the overall relationship between the industry and government. So I am hopeful on that front, but, of course, it's still early days, and we'll have to see how the situation evolves over the coming weeks. Thank you for the question. Next question, operator.

Nickel industry, a nonprofit government academic institutions.

I certainly feel that the overall tone is very positive towards towards the industry. At this time I think if we can do our part and behave in a way that is really supportive to the overall pandemic responses is an opportunity as well to reset I think the overall relationship between the industry and.

Cover minutes I am hopeful on that front, but of course, it's still early days and we'll have to see how the situation evolves over the coming here.

Thank you for the question next question operator.

Next question comes from the line of team and there's some from Wolfe Research. Please ask your question.

Thank you a couple of questions. Please on Entresto ER and the filing for has passed that was on is a primary endpoint that technically sales NFC is usually quite strange and how to interpret cardiovascular trials. So I'm wondering what your realistically.

Operator: The next question comes from the line of Tim Anderson from Wharf Research. Please ask your question. Thank you.

John Tsai: A couple of questions, please. On Entresto and the filing for HF-PAS, that was on a primary endpoint that technically failed, and FDA is usually quite stringent on how they interpret cardiovascular trials. So I'm wondering what you're realistically hoping to accomplish with that filing and if you could just kind of identify what you think is the subgroup of most relevance there. And then there is a second question on Enclosuran. You'll be launching that years ahead of having outcomes data. I think one potential strategy, especially with this very novel, type of product, would be to be disruptive on price if you're positioning it almost as a vaccine-like product. So I'm just wondering if you can comment on launch dynamics in the absence of outcomes data and how price may play a role.

Hoping to accomplish with that filing.

And if he was just kind of identifying what you think because the subgroup of most relevant there.

And then a second question on and closer in you'll be launching bad years ahead of having outcomes data.

I'm thinking one potential strategy, especially with this very novel.

Type of product would be to be disruptive on price if you're positioning it almost sounds like a vaccine like product. So I'm. Just wondering if you can comment on launch dynamics in the absence of outcomes data and how price may play a role.

Thanks, Tim first on Entresto her John Yeah. Thanks, Tim. Thanks for the question I'm not have passed as you know we <unk> narrowly missed this statistical significance for the broader population or we've had good dialogue with the agency on this I think as you know a P value.

Mary France Chudin: Thanks, Tim. The first on Entresto has passed. John?

John Tsai: Yeah, thanks, Tim. Thanks for the question.

0.05, or 6.06 is the 6% chance versus the 5% chance that it was by type one error. So given that we see that benefit in a broader overall population. We've also re adjudicated and looked at the end points with another group that does this time with that DCR eye and we're having good.

Conversations with the FDA in terms of looking at these endpoints. So we are moving forward and have have had good dialogue with the agency and we look forward to having these discussions with them.

Mary France Chudin: On HFPEF, as you know, we narrowly missed the statistical significance for the broader population. We've had good dialogue with the agency on this. I think, as you know, a p-value of 0.05 versus 0.06 is a 6% chance versus a 5% chance that it was caused by a Type I error. So given that, we see the benefit in the broader overall population. We've also re-adjudicated and looked at the endpoints with another group, this time with DCRI, and we're having good conversations with the FDA in terms of looking at these endpoints. So we are moving forward and have had good dialogue with the agency, and we look forward to having these discussions with you.

And then restaurants on the increased.

So clearly the idea.

Within close around is is to bring the product to a very broad patient population, we know that there's a huge unmet need in the cardiovascular area. We now its leading cause of death and we know that this is hugely costly to health care systems.

Vasant Narasimhan: and then Mary France on the inquisitor.

Mary France Chudin: So, clearly, the idea within glycerin is to bring the product to a very broad patient population. We know that there's a huge unmet need in the cardiovascular area. We know it's a leading cause of death, and we know that this is hugely costly to health care systems. What we want to do is price this product responsibly, and what we're learning from payers is that they have an interest in entering much broader agreements with us on this product. So it's early to talk about what that could potentially look like, but certainly, the idea behind the acquisition of this product was to bring it to a broad patient population who can benefit from it and potentially bend the curve of life.

And what we what we want to do is prices product responsibly and what Weve learning from payers is that there is an interest in entering much broader agreement with us on on this product. So it's early to talk about what that would potentially look flat, but certainly the the idea.

Behind the acquisition of this of this product was to bring into a broad patient population, who can benefit from it and potentially bend the curve of life.

Thanks, very much just one more comment I'm thinking on how fast I think maybe three nuances one that that study this under central adjudication Miss the primary endpoint, but on physician adjudication actually was statistically significant and then there were two groups women as well as a patients with.

Vasant Narasimhan: Thanks very much. Just one more comment; I was thinking about HFPAF. I think maybe three nuances. One, that the study under central adjudication missed the primary endpoint, but on physician adjudication, actually was statistically significant. And then there were two groups, women, as well as patients with an ejection fraction less than, I think, 68% or 69% that also had positive results. So there's a lot of dynamics, I think, here. But, as John pointed out, most important, great dialogue with FDA to agree on a re-adjudication approach. We've completed that, and we'll submit the full data package. I've already submitted the full data package to the agency.

Ejection fraction less than I think six theaters, 69% that also had positive result, so there's a lot of dynamics I think here, but as John pointed at most important great dialogue with FDA to agree on a re adjudication approach, we've completed that and we'll submit the full data package I've already submitted the full data package the agency.

Our next question operator.

Next question comes from the line of any color you from buyer Bryan Garnier. Please ask your question.

Operator: Next question, operator.

Yes, hi, Thank you and two questions first is after the impressive operating margin for Sandoz in Q1, excluding totaling 19 effects of 25% and maybe to understand what was behind that in terms of to make some different businesses.

Operator: The next question comes from the line of Eric Lebril from Brian Garnier. Please ask your question. Yes, hi, thank you.

Richard Saynor: Two questions. First, after the impressive operating margin for Sandoz in Q1, excluding COVID-19 effects of 25%. Maybe to understand what was behind that in terms of the mix of different businesses, but also productivity gains and the sustainability of that going forward. Maizant was pretty much in line.

Also productivity gains and the sustainability of that going forward.

And the second question is a is maybe to a took a little bit about the dynamics behind the mess.

Market and maybe for the different classes and the as one P. class in particular.

Excluding covered 19 impact so how is that do linear doing especially in the U.S., maybe that was pretty much in nine and how are they doing versus all the other products in the class how do you see them going forward then it's fair to expect a significant shifting your resources.

Mary France Chudin: How are they doing versus other products in the class? How do you see them going forward? And is it fair to expect a significant shift in your resources when Ofatimumab is available? And since you reiterated confidence in reaching $1 billion, with their view, would you say the same for Maizant, please? Thank you.

No wonder if I can imagine is available and then since you reiterated confidence in reaching 1 billion. We believe you would you say the same to amazing. Please thank you.

Thank you Eric So first on a sandoz margins Richard.

Thank you Eric I'm pleased to see such a strong quarters, the sandoz really across all geographies and most of the portfolio.

Richard Saynor: Thank you, Eric. So first on the Sandoz margins, Richard.

The margin growth really came from a number of places like good cost control with washed out through excellent work that we sold last year mix on the portfolio has evolved particularly around strong performance around the biologics, which have generally have higher margins and pricing has not a rounded to the same degree plus we sort.

Richard Saynor: Thank you, Eric. Yes, it's pleasing to see such a strong quarter for Sandoz, really across all geographies and most of the portfolio. The margin growth really came from a number of places. Good cost control, which washed out through the excellent work that we saw last year. In addition, the portfolio has evolved, particularly around strong performance in the biologics, which generally have higher margins, and pricing has not eroded to the same degree. Plus, we saw a delay in some of the pricing reforms that we expected in quarter one, which we'll expect later in the year. Clearly, margin is always variable in the generics business. So clearly, we're still focusing on maintaining cost control and driving margin forward, and we'll continue on that basis.

Delay of some of the pricing reforms that we expected in quarter, one which will expect in later into the yeah 30 margin is always variable in generics business. So can you were still focusing on timing maintaining cost control and driving margin pool would and we'll continue on that basis.

Thanks, Richard and on a mass market dynamics restaurants.

So if I start with John Yeah, I'm, just remind you that Giovanni remains the second largest prescribed DMT brand worldwide I still at a strong price product and it's it's actually doing very well in this coal bed or period due to obviously the very strong trx space. So we.

Richard Saynor: Thanks, Richard. And on MMS Market Dynamics, where are you from?

Mary France Chudin: So if I start with Gilenya, just remind you that Gilenya remains the second most prescribed DMT brand worldwide. It's still a strong product, and it's actually doing very well in this COVID period due to, obviously, the very strong TRX base. So we expect relatively stable performance with Gilenya.

We expect relatively stable performance with Joanna.

If I can make some comments on needs and we actually saw very good momentum in Q1, So we had 76% quarter over quarter growth and a NDR access plus 16% in the U.S. So that was the highest growth of any DMT with that prescriber base that's growing steadily.

Mary France Chudin: If I can make some comments on Mason, we actually saw very good momentum in Q1. So we had 76% quarter over quarter growth and NDRX plus 16% in the U.S. So that was the highest growth of any DMT with a prescriber base that's growing steadily. Again, we have a strong value proposition in this space. We're the only product that has been studied and has shown data in the typical SPMS population. We still believe that Mason has blockbuster potential, but we do acknowledge that this is going to take time as we try to identify patients and make sure that we have the right positioning in the marketplace. As we're in this COVID period, clearly, the MS space is being affected, especially the dynamic side of the market. So we do expect a slowdown.

Again, we have a strong value proposition in this space, where the only product that has been studied and has shown data in a typical at S.P.M.S. population, we still believe that needs and has blockbuster potential that we do acknowledge that this is going to take time as we try to identify.

Patients and make sure that we have the right positioning in the marketplace.

Mary France Chudin: But as things get back to normal, we believe we have a good foundation for Mason in this patient population. Lastly, on Opitumimab, that's clearly the focus. Bringing a highly efficacious B-cell therapy, which is safe, which can be administered at home, and particularly now in a post-COVID period, this is going to be absolutely paramount for the market and for patients. So we're very excited about this prospect, and clearly we're focusing on a big launch in this area.

Clearly to focus, bringing a highly efficacious d. cell therapy, which is safe.

Which can be administered at home and particularly now in in a post covert period. This is going to be absolutely paramount for that for the marketing and for for patients. So we're very excited about this prospect and clearly we're focusing for for a big launch in this area.

<unk> next question opera.

The next question comes from the line over she must for numbers from Guggenheim <unk> questions.

Oh, thanks, very much could be a question so.

Mary France Chudin: Great. Thanks, Mary France. Next question, operator.

Operator: The next question comes from the line of Simons Fernandez from Guggenheim. Please ask your question. Oh, thanks very much for the question. I just wanted to get a couple of updates. One, could you guys just update us on the timeline for your factor B inhibitor? I know that that's one agent that many investors are really interested to see updates on. Just hoping to get a better understanding of that. And perhaps data presentations that could occur later this year or timelines for completion of some of the phase two studies. And then, second, you know, can you just help us understand a little bit better the relative impacts of the Jelenia settlement opportunity? We saw the successful conclusion of the IPR. Just wanted to get a quick sense of how you're thinking about the duration of Jelenia going forward. Thanks so much.

To get a couple of updates one could you could just updated on timeline for your facts or be a inhibitor I know that that's one agent that that many investors are really interested to see updates on just hoping to to get a better understanding that.

And perhaps data presentations that could occur later this year or timeline for completion of some of the phase two studies and then seconds. You know can you to come up with understand a little bit better the the the the relative impacts be a digital any.

Settlement opportunity, we saw the the successful conclusion.

Of the I.P.R. just wanted to get a quick sense of of how you're thinking about the the duration of July the going forward. Thanks, so much.

<unk> the first on M.T. zero to three or effect for being able to John Hi, Seamus. Thanks for the question on on T.O. 23 are factor D. inhibitor.

We're going for multiple indications first and P.N.H. Proxsys mall nocturnal nocturnal humor Goldman area. We're moving forward. The approach that we're taking his mixed phase two A.B. approach with interim analyses.

John Tsai: Thanks, Seamus.

John Tsai: Hi, it's Seamus. Thanks for the question. On LNP023, our factor B inhibitor, as you know, we're going for multiple indications, first in PNH, paroxysmal nocturnal hemoglobinuria. We're moving forward. The approach that we're taking is a mixed phase IIaB approach with interim analyses, and we're looking to get results at the end of this year. This is tracking on time, and we'll be seeing those results and moving forward with phase III at the close of this year. The second set of indications is in our nephropathy, so we've got C3 glomerulonephropathy membranous and IgA nephropathy. Those are also combined phase IIaB studies. Those are moving forward also. We expect to see results in the early part of next year, and those also are on time. Once we get those results based on the interim, we could either file with the interim, or we would move forward in terms of a full phase III at the beginning of next year.

And we're looking to get results at the end of this year. This is tracking on time and it will be seen those results and moving forward with the phase three at the close of this year. The second set of indications is in our <unk>. So we've got <unk> membranous and I <unk> those.

We're also combined phase two A.D. studies those are moving forward also we expect to see results.

Part of next year in those also around on time and once we get those results based on the interim we could either file with the interim or we would move forward in terms of a full phase three at the beginning of next year.

They shot and and Jill any it's it's worthwhile notoriously two separate there were two separate thoughts one is the I.P.R. hearing when it's a district court. The the I.P.R. cases, you saw in Seamus reported in his no. It was was dismiss that was based on procedural grounds for the standing up the claimant.

Vasant Narasimhan: Thanks, Sean. And on Jelenia, it's worthwhile noting there are really two separate paths. One is the IPR hearing, and one is the district court. The IPR case, as you saw, and Seamus reported in his note, was dismissed on procedural grounds for the standing of the claimant. And so on the district court, there really is no read across from the IPR hearing to the district court hearing.

And so on the district court there really is no read across from the I.T.R. to the district court hearing during the single filers still remaining in the district Court and we expect a ruling admitted this year and we stand fully behind the I.P. until any both the current Pat and as well as the additional path.

Vasant Narasimhan: There is a single filer still remaining in the district court, and we expect a ruling in the mid-term of this year. And we stand fully behind the IP of Jelenia, both the current patent, as well as the additional patents that we've subsequently been granted. And so we'll look forward to keeping you up to date on that, and, of course, giving the market clarity as soon as we have clarity ourselves. Next question, operator.

That we've subsequently been granted and so we'll look forward to keeping you up to date on that and of course gives the markets clarity as soon as we have clarity ourselves.

Next question operator.

Next question comes from the line of floated suspicious from sea fishing. It on these asking a question.

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Operator: The next question comes from the line of Florent Cespedes from Société Générale. Please ask your question. Good afternoon, everyone. This is Florent Cespedes from Société Générale.

Vasant Narasimhan: Two quick questions. The first one is for Marie-France on Ofatimumab, the follow-up to Ofatimumab. Marie-France, could you share with us how you see the launch of this important product mid-year, given the current environment and also given the fact that MS is pretty competitive? You have given some examples during your presentation.

<unk> <unk> <unk> I'll do you see the the long trophies Boston product me your given the current environment and also given the fact that M.S. <unk> <unk> <unk> <unk>. He's you have given some examples of during your on your presentation, but to.

Who'd the <unk> small details it's would be great. My second question a whole Jonah Susan it's on.

Mary France Chudin: But if you could share with us a little more details, that would be great. My second question for John and Susan is about PSMA 617 for prostate cancer. As this year we anticipate, and you expect, phase three trials, could you please share with us the opportunity for this product and the positioning on the prostate cancer market? Thank you.

P S. They may <unk> on the plus that cancer as a d. sure we had a P.C.M.U.R. expect them to the face free trial.

Could you may even share with us a duplicate cheap all these product and the <unk> on the cross has cancer in Boston. Thank you.

So first I don't know for two memory huh.

So the first thing I'd say is that we we have very well established relationships with physicians in this area. So we have a very strong portfolio across M.S.N. and bringing off 15 than that to a physician population that we know and more familiar with.

Vasant Narasimhan: So first, I'd like to put it to you, Marie-France.

Mary France Chudin: So the first thing I'd say is that we have very well-established relationships with physicians in this area. So we have a very strong portfolio across MS and are bringing Opitumumab to a physician population that we know and we're familiar with. Having said that, clearly, this is going to be a different launch from what we're used to, and that's exactly what we're preparing for. We're looking at this from a prescriber and other key stakeholder perspective, whether they're going to be digital interactions at first. We're playing it flexible, whether we have different approaches, country by country, state by state. But clearly, what we're not going to do is slow down, because if there was any time for us to bring a highly efficacious product to a broad population in a setting where our patients don't have to be in the hospital, it is now. So we're going to continue to work with payers, and our first priority is clearly We understand that there's going to be a slowdown in the dynamic market in MS, but our clear priority is to make sure that we make it as easy as possible so that when patients do go back to their physicians, they can easily transition to Alpha-Tumamab.

Having said that clearly this is going to be a different launch from from what we're used to and and that's exactly what we're preparing for we're looking at this from a prescriber and other key stake holder perspective, whether they're going to be digital interactions.

First we're playing at flexible whether we we have different approaches country by country state by state, but clearly what we're not going to do is is slow down because if there was any time for us to bring a highly efficacious market products, sorry to a broad population in in a setting.

Where it says there's our patients don't have to be in the hospital. It is now so we're going to continue to work with Paris in our in our first priority is clearly we we understand that there'd been going to be a slow down in the dynamics, marking and M.S., but our <unk> clear priorities to make sure that we make it as easy as possible. So.

When patients do go back to their physicians, they can easily transition to <unk>.

And then on the P. estimated 617 opportunities to the data.

Yeah. Thank you. Thank you blow off on the question. So it can mean prostate cancer. The second most commonly diagnose cancer in man.

Vasant Narasimhan: And then on the PSMA 617 opportunity, Susanna.

Incidents off 1.3 million, nobody and <unk> around 175000 patients.

Susanna Schaffer: Yeah, thank you. Thank you, Florent, for the question.

And what we know is bad about 10% to 20% of patients with prostate cancer become constraints tend to assist them make that five year <unk> <unk> and 80 per cent 80 per cent costs here follow up so and 80% of these patients.

Susanna Schaffer: So actually, prostate cancer is the second most commonly diagnosed cancer in men. There's an incidence of 1.3 million globally. And for the US, you have to assume around 175,000 patients. And what we know is that about 10 to 20% of patients with prostate cancer become castration resistant. It's a five-year follow-up, and 80% of these patients become metastatic. So there's a very, very high medical need, and we're very much looking forward to having a PCM, PFMA, 617, moving out later in the year. As I said, the VISION trial is fully recruited. It's an event-based trial, and we expect readout versus the end of the year.

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Yeah.

[noise] right. Thanks to then no next question generator.

Next questions come from the line of Matthew Westin from Credit Suisse leads us to a question.

Vasant Narasimhan: Great, thanks Susanna. Next question, operator?

Thank you very much just too quick follow up please on previous question.

Operator: The next questions come from the line of Matthew Weston from Credit Suisse. Please ask your question. Thank you very much.

All of the two of them at night, both you may declare a number of times. How confident you are on the on taking the loans to market irrespective of the underlying circumstances can you just remind me is it correct studies has to be I've listed in the clinic and that before we do at least me some degree of normality with.

Vasant Narasimhan: Just two quick follow-ups, please, on previous questions. The first is on ofatumumab marifos. You made it clear a number of times how confident you are in taking the launch to market, irrespective of the underlying circumstances. Can you just remind me, is it correct that the first dose has to be administered in the clinic? And therefore, do we at least need some degree of normality within the healthcare system before we can see patients getting dosed? Or do you expect that there's going to be some waiver around that requirement?

Health care system before we can see patients getting diced or do you expect this is going to be some ways around that requirement.

And then the second question regarding some days.

Are you planning stuff out.

We could drive is Tonight just check.

Given that we have seen a meaningful impact all the generic in the old college in setting what's that any benefit within the somebody's business.

Mary France Chudin: And then the second question regarding Sandoz margins. You clearly set out, you know, the positive drivers. Can I just check, particularly given that we have seen a meaningful impact of generics in the oncology setting, was there any benefit within the Sandoz business of you launching generics against your own product at the beginning of this cycle? And therefore, we're in a very positive mix environment for U.S. exclusivity launches, which should erode rapidly in the second half of the year. Thank you.

Launching generic against your own pulled up at the beginning of this cycle that whole. We're in a very positive mix environment of U.S. exclusivity launches, which should eroded rapidly and the second off of the thank you.

Thank you Matthew so on over to my <unk>.

So as as I mentioned before I clearly, we do we do see some disruption happening in the multiple sclerosis market certainly in the dynamics sector, and and and we can't say that that's not going to affect us but aren't regarding the first us observation.

Mary France Chudin: Thank you, Matthew. So, on Ofatimumab versus Smurfon?

Mary France Chudin: So, as I mentioned before, clearly, we do see some disruption happening in the multiple sclerosis market, certainly in the dynamic sector, and we can't say that that's not going to affect us. But regarding the first dose observation, it can be done by the observation of a health care professional. So, technically, we could be sending nurses home, so we think that that's definitely going to address the current situation as it is. Clearly, we're very ambitious about the value proposition that Opitumumab brings to market. And like we said, we feel that there's no reason for us to slow down, even though, clearly, in this dynamic sector, we will see fewer switches to new therapies in this marketplace.

Can be done my observation of health care professionals. So technically we could be sending nurses home. So we think that that's that's definitely an opportunity to to to basically.

They address the current situation as it is.

Clearly were very ambitious about the value proposition that opportunity that brings to market.

And like we said, we we feel that there's there's no reason for us to to slow down even though clearly in the dynamics sector. We we will see fewer switches to new therapies in in this market place.

Expert month and Richard on the defendants.

Generic dynamics and Novartis products.

I'm thinking about I mean, nothing nothing really significant I mean, the bulk of launching cards has really come from similar and we'll probably lotusan supposed to mark it launches that we sort of ended lost in the beginning of this year rather than generics of the ontology business. So we don't see any any <unk> really material link between the two things.

Mary France Chudin: Thanks very much. And Richard, on this end is Generic Dynamics on Novartis products.

Richard Saynor: I mean, nothing really significant. I mean, the bulk of the margin growth has really come from biosimilar product launches and first-to-market launches that we saw at the end of last year and the beginning of this year, rather than generics in the oncology business. So we don't see any really material link between the two things. Thank you.

Thanks for setting.

The question operator.

Next question comes from the line of Mark or some from Morgan Stanley. Please ask a question.

Thank you very much it's small personal from on this time you'd see Christians, especially on the there's two and instead of a follow up five could help us understand which region since our terrorism, most ready could adopt t. or new dish too and it's just when it comes to compete in patients and which of the great to subsidize the long term.

Vasant Narasimhan: Next question, operator.

Operator: Next question comes from the line of Mark Purcell from Morgan Stanley. Please ask your question. Yes, thank you very much. It's Mark Purcell from Mormon Stanley.

Vasant Narasimhan: Two questions. Firstly, on the digital camera, and it's a bit of a follow up. Could you help us understand which regions and therapy areas are most ready to adapt to your new digital initiatives when it comes to HCPs and patients, and which have the greatest upside over the long term? The reason why I ask this question is that, if you look at the UK and Germany, over 60% of patient initiations are remote already, whereas in Italy, where it was very low, you've seen a 146% increase in remote initiations over the last Some thought on that would be fantastic. If you could help us understand the evolution of prices in the US, that would be fantastic as well. Thank you.

The way off the question is there I guess it to look you care in Germany, or the 60 to 70 patients associations, all remotes were ready, whereas commit to see whether it was very low you've seen a 146% increase in in in in remotes initiations over the last so today's will so it could be an ontology Teddy medicine U.S. penetration.

Around 5%, whereas neurosciences away, it's been a 20 to 30 type of time, so <unk> some folks will now be fantastic.

And secondly in sentences.

C.M.U.S. at the beginning of the Yeah, you guys did too and that price just upon by bouncing off the sense in the U.S. with the U.S. This plus increases you put it through given this last pricing push it seems in sunday's them and when we look at implied part in this place. So I didn't quite met price increase on consent to it looks pretty stable than.

In one q.

By the fact within a lot as a as new entrants and and the perception those can be increased pricing pressure with that so.

If I understand even newsmen price in the U.S. that'd be fantastic as well. Thank you.

You think you Mark I think on on on digital as if you dynamics you know I would I, let it dry sleep on a different countries are are in different places, but in my mind up for us, Germany being a in I think a relatively positive outlook, but there are three markets. In particular, we have an opportunity to make a significant inroads first and foremost of course, the United States.

Vasant Narasimhan: Okay, thank you, Mark. I think on digital, there's a few dynamics, you know, I would highlight. And you rightfully point out that different countries are in different places. But in my mind, for us, Germany being, I think, a relatively positive outlier. But there are three markets in particular where we have an opportunity to make a significant inroad. First and foremost, of course, the United States, where all of our conversations with physicians and healthcare systems indicate a sudden and dramatic shift to telehealth. And as long as some of that can stick, as well as the use of digital tools, and digital engagement, that can be a significant upside.

All of our conversations with divisions in health care systems indicates a sudden a dramatic shift to tell a health and as long as some of that can stick as well as digital user digital tools digital engagement that can be a significant upside tie knots Berry funds already noted we've taken this now to scale ourselves.

Partnerships with tens and partnerships with other companies, we're now reaching many thousands tens of thousands sometimes hundreds of thousands of physicians outward from ourselves to reach our customers, but they're also enabling patients in positions to interact on digital channels at scale and we have a few of the example, though.

Vasant Narasimhan: China, as Mary France already noted, we've taken this now to scale ourselves; we have partnerships with Tencent, partnerships with other companies. We're now reaching many thousands, tens of thousands, sometimes hundreds of thousands of physicians outside of ourselves to reach our customers. But they're also enabling patients and physicians to interact on digital channels at scale, and we have a few examples of this already with Tencent but plan to add more. Probably one of the most striking ones as an example would be Japan.

This already with tennis into plan to add another others, probably one of them a striking ones at an example would be Japan in Japan problem. Prior to cope in 19. It was unheard of for physicians to engage via digital channels with a medical teams are sales representative now it's been forced upon the system.

Vasant Narasimhan: In Japan, probably prior to COVID-19, it was unheard of for physicians to engage via digital channels with medical teams or sales representatives. Now it's been forced upon the system, and that has to happen now digitally. And the uptake is actually quite rapid and quite striking, and that could be a market that sees a complete switch in the dynamic in terms of the use of digital technologies. Therapeutic areas, of course, you know, I don't have time to get into all of it, but there's a lot of variation.

That has to happen no digitally uptake is actually quite rapidly.

Striking.

It could be a market. It seems now a complete switching the dynamic in terms of the use of digital technologies therapeutic areas of course.

No no time to get as all of it there's a lot of variation it of course across therapeutic or some are more digitally savvy than others in our mind the kids to build platforms integrated data set.

The lot on our data plumbing the hard work the on sexy, where it would just getting your data straight and they're trying to build scale platforms around that and we're trying to collect talent from outside of the sector whether from the digital consumer health consumer other places that have really crack this at scale and then try the deployed.

Harry Kirsch: And of course, across therapeutic areas, some are more digitally savvy than others. In our mind, the key is to build platforms and integrated data sets. And we invest a lot in our data plumbing, the hard work, the unsexy work of just getting your data straight, and then trying to build scalable platforms around that. And we're trying to recruit talent from outside of the sector, whether from the digital, consumer health, consumer, other places that have really cracked this at scale, and then trying to deploy that within Novartis. And so we'll look forward to keeping everyone up to date as we progress on that. Anything on price dynamics, Harry?

That within Novartis, it's a little at four to keeping everyone up to date as we progress on the on price dynamics hair.

So just a few words are fundamentally innovative medicines nothing has changed those walk the F.T. in three months ago, you'll see this also reflected in the overall pricing effects in quarter, one which is minus 3% on prices innovative medicines and the total company.

Vasant Narasimhan: So just a few words. Fundamentally, for innovative medicines, nothing has changed with what we saw three months ago. You see this also reflected in our overall pricing effect in quarter one, which is minus 3% on prices for innovative medicines and the total company. Well, we potentially have a bit of an upside, and that's, of course, what Richard also alluded to, is that the Sandoz pricing negative impact is much lower than usual. It's minus four on a worldwide basis. But there we have to watch, is this a temporary effect because maybe other supply chains are a bit more stressed than ours? Or how will that develop? So there may be, at Sandoz, maybe a little bit less negative pricing. But overall, also Innovative Medicines, we are at quarter one minus three, and nothing from our initial assumption has changed there.

Well, we potentially have a bit over upside is of course was Richard also alluded to this the subtle surprising negative impact is much lower than you are it's minus four on a worldwide basis of W. have to watch is this a temporary effect because maybe other supply chain.

Are a bit more stressed and hours.

Oh, what how would adaptive belt, so their baby sandals baby Elizabeth less negative pricing, but overall <unk> medicines at the moment, we've seen quarter, one minus three and nothing from our initial assumption has changed their.

Hey, thanks, Thanks for for the buttons next week.

Next question comes from the line over Richard Busser from J.P. Morgan. Please ask a question.

Harry Kirsch: All right, thanks, Mark, for the questions. The next question, I believe, is...

Oh I think to take my question cheaply just you get your thoughts on that and second nice good cleaning up in your garden, but.

Operator: The next question comes from the line of Richard Vosser from J.P. Morgan. Please ask your question. Hi, thanks for taking my question. Two, please. Just to get your thoughts on second waves, clearly not in your guidance, but we're seeing second waves come through in Asia, in Singapore and other areas, and it's, I suppose, reasonably likely that we'll see them across Europe and the US.

Vasant Narasimhan: So just your thoughts of that impact maybe on the overall business and maybe particularly with ophthalmology, the ophthalmology division, and then linked to that in ophthalmology. I think there was some idea that patients could, there could be some catch-up dosing of patients, maybe in the retinal space. Just a thought in terms of capacity there and how you might do that, given stretched capacity previously, and of course, COVID being the greatest morbidity and mortality in the above 65. Second question just on Ultabro, clearly benefiting from being a respiratory product in this space and up a lot. Do you see a new level for Ultabro going forward? How much of that will be with stockings? How much do you think you've got a new level? Thanks very much.

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Vasant Narasimhan: Thanks, Richard. First of all, with respect to the second wave, the way I like to think about, you know, how these things happen, and especially in this instance, is that human beings tend to be caught off guard by the exponential nature of outbreaks in general, and especially these kinds of global viral outbreaks. So the exponential curve hits us, healthcare systems have to respond, we're not always well prepared, and we have to then, as a society, then have to scale up to respond. Now, for subsequent waves, what's going to happen, I believe, over the course of the coming months, is an exponential expansion of our knowledge of the underlying epidemiology of the virus, how healthcare systems need to respond, how public health systems need to track, trace, and respond to, you know, outbreaks, and improvement, of course, in medical technology if we are able to repurpose drugs or identify better technological solutions.

Healthcare systems have to respond we're not always well prepared and we have to then.

Society, and then have to scale up to to respond enough for subsequent wait what's gonna happen I believe over the course of becoming month there'll be an exponential expansion of our knowledge of the underlying epidemiology, if the virus how to healthcare systems need to respond how to public health systems needs attract race and responses you know outbreaks.

Vasant Narasimhan: So all of that makes us think, it made me think that if there are future waves, we can manage them more effectively without having, hopefully, the same level of disruption to the healthcare system. Because I think one of the things that will become more clear, and we hear this from our conversations with physicians and healthcare systems, is that there is a hidden cost, a significant hidden cost, to all of the averted and delayed care that's happening for patients with chronic That's okay for a little bit of time, but it's not something that's sustainable, and there will be significant morbidity and mortality associated with it. So I think we're aligned with healthcare systems, physicians, and patients to get people back into the clinic in a safe, sustainable way, and hopefully keep it that way, independent of future COVID outbreaks. Now, specific on ophthalmology, Mary

The improvement of course, and medical technology for are able to read purpose drugs or identify a better technological solution. So all of that make us think it made me think that if they're our future ways. We can manage them more effectively without having hopefully the same level of disruption to that health care system, because I think one of the.

Things that will become more clear and we hear this from our conversations with physicians in health care system.

As a hidden costs, a significant hidden costs to all of the averted and delayed care that happening for patients with chronic diseases all around the world. That's okay for a little bit of time, but it's not something that sustainable and there will be significant morbidity and mortality associated with that so I think we're aligned with health care systems physicians and patients.

To get people back into the clinic in a safe sustainable way hopefully keep it that way independent of future covert outbreaks now a specific on <unk> very fronts, but yeah. So maybe I mean, it's a very good segue because clearly retina patients are not going to the center is meant that cannot lie.

They're going to have to go back to to their therapies. So we do we do anticipate capacity issues for sure and clearly a social distancing rules will probably continue in this space, but what we're doing right. Now is we're we're trying to work with clinics in health care centres to to improve first.

Vasant Narasimhan: Yeah, so maybe I mean, it's a very good segue because clearly, retina patients are not going to the centers, but that cannot last. They're going to have to go back to their therapies. So we do anticipate capacity issues, for sure. And clearly, as social distancing rules will probably continue in this space.

Mary France Chudin: But what we're doing right now is trying to work with clinics and health care centers to improve, first of all, how that capacity can look, and how we can work with centers to help them with their flow of patients. We're also looking at home monitoring solutions for patients to track their own vision and connect with the HCP from home so they really only go to the centers when they need to go. There are some remote care solutions where HCPs can move nearer to the patient. We're looking at sort of mobile units in the UK and trying to just address some of these capacity issues post the confinement period.

How how that capacity can look like how we can work with us centres to to help them with that flows patient.

We're also looking at home monitoring solutions for patients to track their own vision and connect with the H.T.P. from home. So they really only going to the centers.

Need to go there are some Reno care solutions, where H.D. peace can move near to the patient we're looking at <unk> at sort of mobile units in the U.K. and trying to just address some of these capacity issues.

The confinement period.

And you know the only thing I I would add it.

Stations, we've had with a specialist positions and ophthalmology dermatology neurology in the U.S. all point to a readiness enough preparations have weekend clinics after our clinic to to kind of rapidly catch up on the backlog of patience l. on respiratory I'll just briefly answer that Ultibro I think continues in a very steady way.

Mary France Chudin: The only thing I would add is that the conversations we've had with specialist physicians in ophthalmology, dermatology, and neurology in the U.S. all point to a readiness and preparation to have weekend clinics, after-hour clinics to kind of rapidly catch up on the backlog of patients. Now, on respiratory, I'll just briefly answer that. Algebra, I think, continues in a very steady way. We did have a positive PHMP opinion for Atectura, and hopefully, we'll soon be launching a triple in asthma, so really, for us, the next inflection point in inhaled respiratory will be the launch of our triple. Thanks Richard. Next question?

We did out of a positive it should be opinion for attacked or and hopefully we'll soon be launching a triple in ads from us really for us. The next inflection point it inhaled respiratory will be launch of art or triple combination.

Thanks, Richard next question.

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Vasant Narasimhan: The next questions come from the line of Laura Sutley from UB. Yes, please ask your question.

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Operator: Hello, thank you for taking the time to join us today. My questions.

Operator: Firstly, on D.O.V., we know you've instigated new sorts of safety monitoring investigations and so on, but what is it?

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Yeah. So just in the interests of time I'll take a I'll take the remaining questions. If you only have a few minutes left so on on Bayview right now the the goal is to reassure positions on the political profiles I ensure that we are only injecting the product in patients who don't have inflammation in a in their eyes. As we can we believe as we continue to get.

Operator: Thank you so much for joining us today. We're going to move on to the Q&A section, and we'll start with the first question, which is, how do you plan to get this back on track commercially? Is it a specific data point? Or is it a publication? Is it just looking at it for a long time? So that's the first question. And then the second question is on Sandoz. You've mentioned that terminating the Aurobindo agreement

More experience, while the better sense of of these rates and gets traditions more comfortable it's notable that outside the U.S. there isn't flipped lamp examination for any inflammation in D.I., which doesn't always happen in the U.S.B. hopeful that that could potentially mitigate any of these rare signals outside the U.S. and the medium term we have a full team that's working.

Around the clock to try to find any of the specific determinants either from a patient standpoint, a product standpoint, or a setting and the clinic standpoint that might be leading to these are rare rare events and if we can find any insights including potential treatment with steroids or other interventions well of course and roll roll that.

And then or longer term, we have a full range the largest range of faith three head to head studies and other studies fully characterize the product, which we hope will demonstrate that clear clinical benefit and overall profile of the product to support it says significant Houston, we continue to the damn behind our belief we can make this a blockbuster medicine I would note.

We had similar challenges with Jill any other products and other classes that challenges, but based on a strong profile can ultimately overcome them.

At work window, I think has been highlighted on the call, but still important to see really the pricing dynamic that word into a business. So the world's solid business of or not retaining important to see the pricing dynamics in the U.S. Richard in team or investing now in a full scale portfolio longer term that will bring hopefully a steady flow.

And does the into the into the U.S. market and this will form a a base for that but really the key now is really to look at the pricing dynamics will be able to formulate a clearer strategy over the coming months and provide you a clear outlook alongside that at that time.

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Questions come from the line of Emmanuel stopped by back he's from Bikinis. Please ask a question.

That same questions.

Maybe a couple of pick right.

Great initial mentioned seem to slow the little bits.

The testing ambition 40, 10, but then to see it seems.

Operator: Perhaps you could say a little bit more about that and what you think is the right sort of shape for sandals in the US. Thank you.

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Vasant Narasimhan: So just in the interest of time, I'll take the remaining questions because we only have a few minutes left. So with Bayview, right now, the goal is to reassure physicians about the clinical profile, ensure that we are only injecting the product into patients who don't have inflammation in their eye. We believe as we continue to get more experience, we'll have a better sense of these rates and make physicians more comfortable. It's notable that outside the U.S., there is split-lamp examination for any inflammation in the eye, which doesn't always happen in the U.S., so we're hopeful that that could potentially mitigate any of these rare signals outside the U.S.

Vasant Narasimhan: In the medium term, we have a full team that's working around the clock to try to find any of the specific determinants, either from a patient standpoint, a product standpoint, or a setting in the clinic that might be leading to these rare events. And if we can find any insights, including potential treatment with steroids or other interventions, we'll, of course, then roll that out. And then, in the longer term, we have a full range, the largest range, of phase 3 head-to-head studies and other studies to fully characterize the product, which we hope will demonstrate the clear clinical benefit and overall profile of the product to support its significant use. And we continue to stand behind our belief that we can make this a blockbuster medicine.

Collection of population could you just concerned I'm planning to combination study with this kind of gets pump of the program.

And then maybe just get your thoughts on business about could you couldn't paulson tend to be envelope.

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Thanks, a lot.

So.

Vasant Narasimhan: I would note that we had similar challenges with Gilenya; other products and other classes have had challenges, but based on a strong profile, they can ultimately overcome them. With respect to Oravindo, I think it's been highlighted on the call, we still need to see really the pricing dynamics, the Oravindo business, the oral solids business that we're now retaining, and it's important to see the pricing dynamics in the U.S. Richard and team are investing now in a full-scale portfolio longer term that will hopefully bring a steady flow of ANDAs into the U.S. market, We'll be able to formulate a clearer strategy over the coming months and provide you with a clearer outlook alongside that. Thanks, Laura. Next question, operator?

Just the performance of P. Gray and we see really continued strong momentum and uptake in alright.

Operator: The next questions come from the line of Emmanuel Papadakis from Barclays. Please ask your question. Thanks for taking the questions; I'll try to be brief. Maybe a couple of them will pick right.

Vasant Narasimhan: The great initial momentum seems to have slowed a little bit. The Testing Ambition before we turn back to this year's themes. Although a little on the low side, I think it was north of 25% by the end of Q4. So just what's the hurdle there? Is that the main gating factor for driving commercial uptake? Any thoughts on competitive risks from AKT inhibitors would be welcome. There's clear overlap in terms of the biomarker, selection of population. Could you just confirm they're not planning to do a combined study with Kiskeli as part of the EPIC program? And then Vaz, maybe just your thoughts on business development. You've been pretty clear in the past in terms of the envelope, trying to remain relatively active. Does the current situation offer opportunities, or does it rather force you to concentrate?

I mean as you say testing is critical and we believe it's really think Oh so.

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Expected B.D. you know, we we are considering our business development program capital allocation priorities remaining in place you've seen a conductor early stage deals out of never research unit over the course of the first quarter. So we continue to look at a dissolve and opportunities that fit our our overall pro.

<unk> I think overall as you can imagine with the current turmoils in the market. There is oh, a sector wide decline and they activity and I think that's that's going to be true for the foreseeable future. So things stabilize a bit more but I think from a business development and licensing standpoint, but still active it remains.

Lot of opportunity and on in close friend primary Camry phone, yeah, just to say that clearly we see a lot of synergies with with <unk>, we'll have been very clear focus on cardiology, where they can actually put also looking at governments and systems of care.

Thank you made your last question operator.

Yes last question comes from the line of Kerry how forward from there.

That's good question.

Vasant Narasimhan: On which product, Emmanuel? Your last question was about which product?

Vasant Narasimhan: Thank you.

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Vasant Narasimhan: I'm sorry. Okay. Thank you. So Susanna on the two Pickering questions.

Susanna Schaffer: [inaudible]

Susanna Schaffer: Thanks a lot, Emmanuel, for the question. So we were actually quite pleased with the performance of PICRE, and we see really continued strong momentum and uptake in Rx. I mean, as you say, testing is critical, and we believe it's realistic also, particularly if the foundation is met in a plasma test to be approved in Q2, that we will reach these numbers and testing will continue. Maybe just a quick comment on the ACT inhibitors. I mean, we have to be clear, it's a fundamentally different MOEA, so it's really a very different mode of action. And just to get too much into science, PIC3K is mechanistically upstream of ACT, so we would expect a potential greater inhibition of the pathway. And just to emphasize, there is no study, as far as we know, with an ACT inhibitor specifically designed for a PIC3K mutation cohort, and so far, PICRE is the only product approved for patients with this specific mutation. So we still remain very confident with PICRE and stay very optimistic.

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Vasant Narasimhan: And we don't have, we've already completed earlier stage studies of combinations of our PI3 kinase inhibitors, so CDK4,6 and aromatase inhibitors and are now taking forward that combination as part of the EPIC program. With respect to BD, you know, we are continuing our business development program, and capital allocation priorities remain in place. You've seen us conduct early stage deals out of NIBR, our research unit, over the course of the first quarter. And we continue to look at business development opportunities that fit our overall profile. I think overall, as you can imagine, with the current turmoil in the market, there is a sector-wide decline in M&A activity, and I think that's going to be true for the foreseeable future until things stabilize a bit more. But I think from a business development and licensing standpoint, which is still active, there remains a lot of opportunity.

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The things carries on U.S. unemployment I mean, I think you know first I think of course, we're all saddened to see the incredible tide of rising unemployment in the United States in and around the world. So I think this will of course have disruptions to the provision of health insurance I think it's important to know there's a lot of uncertainties right now.

Well first of of course extended coverage through Cobra and similar policy initiative second at the ability of patience to tend to get coverage through.

The the various care consortia that now exists if they drew Obamacare and then ultimately to see how many patients move onto it to Medicaid there's an additional dynamic the different products of different exposure in terms of the rebate gap between what we have in in the private market.

And and Medicaid.

Related related segments newer products of of course, a much smaller split because of if you're a price increases older products of course up a a much bigger.

Bigger gap in terms of differences on gross to net so all of these dynamics are in their overall I would say, we don't expect significant impacts in 2020, if we saw impact of being 2021 and respected as impacts should be limited based on all it'd be assessments that that we've done I don't have a specific.

Breakout in hand, but we view this as a manageable topic of your force monitor at doing all the assessment, but from what we can tell within our portfolio worth noting were roughly a third U.S.

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Good so thank you all for joining apologies we want a few minutes late I. We hope you found the updates and informative. Thank you for investing in Nevada, then we'll look forward to to keep you updated into year to come to stay safe and healthy and wishing you all about.

Vasant Narasimhan: Yeah, just to say that clearly, we see a lot of synergies with Entresto; we'll have a very clear focus on cardiology, lipid clinics, but also looking at governments and systems of care.

Mary France Chudin: Thank you, Emmanuel. One last question, and then I'll bring her in.

Vasant Narasimhan: Yes, the last question comes from the line of Kerry Holford from Bernberg. Please ask your question. Thank you very much for taking my question. There is just one left.

Vasant Narasimhan: You mentioned this briefly earlier. I wonder if you can help us understand the potential risk to Novartis fitness from rising U.S. unemployment. Where do you see those risks across your portfolio, and, in relative terms, do you have lower exposure to the US? It would be good to get your thoughts on where there could be pockets of risk, and if you're able, can you remind us of the broad split of the US-South-Based Black Channel? [inaudible]

These concludes the conference with today, Thank you for participating Q. mail disconnect.

Vasant Narasimhan: Thanks, Kerry. So on US unemployment, I mean, I think, you know, first, I think, of course, we're all saddened to see the incredible tide of rising unemployment in the United States and around the world. So I think this will, of course, have disruptions to the provision of health insurance. I think it's important to note that there are a lot of uncertainties right now. First, of course, extended coverage through COBRA and similar policy initiatives. Second is the ability of patients to potentially get coverage through the various care consortia that now exist in states through Obamacare. And then, ultimately, to see how many patients move on to Medicaid.

Vasant Narasimhan: Then there's an additional dynamic that different products have different exposure in terms of the rebate gap between what we have in the private markets and in Medicaid and related segments. Newer products, of course, have a much smaller split because there have been fewer pricing increases. Older products, of course, have a much bigger gap in terms of differences in growth to net. So all of these dynamics are there. Overall, I would say we don't expect significant impacts in 2020. If we saw an impact, it would be in 2021.

Vasant Narasimhan: And we expect those impacts to be limited based on all of the assessments that we've done. I don't have a specific breakdown in hand, but we view this as a manageable topic. We, of course, monitor it doing all the assessments. But from what we can tell within our portfolio, worth noting, we're roughly a third U.S., the remainder ex-U.S. Within our U.S. business, lots of new product launches, and within our overall portfolio, relatively limited exposure to Medicaid compared to our peer sets.

Vasant Narasimhan: Good. So thank you all for joining us. Apologies, we went a few minutes late. We hope you found the updates informative. Thank you for investing in Novartis and we'll look forward to keeping you updated in the year to come. Please stay safe and healthy, and we wish you all the best.

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