Q2 2020 Novartis AG Earnings Call

Good morning, good afternoon and welcome.

Operator: Good morning, good afternoon, and welcome to the Novartis Q2 2020 results release conference call and live audio webinar. 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 stars and 1 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. If anyone needs assistance during the conference call, they may signal the operator by pressing stars and zero. With that said, I would like to hand over to Mr. Samir Shah, Global Head of Investor Relations. Go ahead, sir.

Q2, Twentytwenty resolved to release conference call life audio webcast. Please note that.

Contagion, all participants will be that listen only mode.

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 Imputing, the QD session will be available on our website shortly after the call.

Sure anyone need assistance during the conference calls they may seek another operator by pressing star zero.

With that I would like to try to over to Mr. Sameer shop Global head of Investor Relations.

Please go ahead Sir.

Operator: Thank you very much, and thank you to all the participants for taking the time to join us today for our quarterly and first half-yearly results for Novartis. Before we start, I just wanted 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 future results, performance, or achievements expressed or implied by such statements. For a description of some of these factors, please refer to the company's Form 20-F and its most recent quarterly results on Form 6-K, which were filed with and furnished to the U.S. Securities and Exchange Commission.

Thank you very much and thank you to all the participants for taking the time to join us today for a quarter true.

Called beauty resells from Novartis.

Before we start I just wanted to redo the safe Harbor statement. The information presented today contains forward looking statements that involve known and unknown risks uncertainties and other factors.

It 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 <unk>. Most recent quarterly results on form 6K, such respectively were fraud waste and furnished to the U.S. Securities and Exchange Commission.

Samir Shah: Thank you, Samir. And thanks, everyone, for joining today's conference call. With me today, I have Harry Kirsch, our Chief Financial Officer, Mary France Chudin, our President of Novartis Pharmaceuticals, Susanna Schaffert, the President of Novartis Oncology, John Tsai, our Head of Global Drug Development and Chief Medical Officer, Richard Saynor, our CEO of Sandoz, and Shannon Klinger, our Chief Legal Officer. So moving to slide five, overall, we had a strong start to the year with a strong H1 performance.

With that I'll kind of close to five associates.

You Samir and thanks, everyone for joining todays conference call with me today I have Harry Karish, Our Chief Financial Officer, very France trade in our President Novartis pharmaceuticals to than a shopper the president Novartis oncology, John Sire head of global drug development, and Chief Medical Officer, Richard Saner, our COO Sandoz and.

Shannon thing or our chief legal officer, so moving to slide five overall.

We had a strong start to the year with a strong each one performance when you look at it despite the impact of Cobot 19, we believe the first half results are more representative of performance as largely the Q1 forward purchasing reversed out in Q2 looking at our first half performance you see sales grew at 6% crop.

Unknown Executive: When you look at it, despite the impact of COVID-19, we believe the first half results are more representative of performance as largely the Q1 forward purchasing reversed out in Q2. Looking at our first half performance, you see sales grew at 6%, and core operating income at 19%. And this underlying performance, I think, demonstrates the overall agility and resilience of the organization. When you look at our ability to deliver innovation in the quarter, there are a few highlights I would like to note. First, Tabracta received its approval in non-small cell lung cancer.

Turning income at 19%.

And this underlying performance I think demonstrates the overall agility and resilience of the organization.

You look at our ability to deliver innovation in the quarter a few highlights I would like to note first to Brian received its approval in non small cell lung cancer. This will be an important addition to our portfolio of targeted cancer therapies.

Unknown Executive: This will be an important addition to our portfolio of targeted cancer therapies. Cothentics received US and EU approval for its non-radiographic axial spa therapy, as well as a number of other approvals around the world. We are continuing our effort to expand Cothentics across a range of indications and continuing our long-term trajectory of strong growth with the brand, and Mary France will cover that a bit more in a future slide. Zolgensma received EU approval with a broad label for IV FMA therapy. Bayview, we had a label update with respect to recent reports of retinal vasculitis and retinal vein occlusion.

Centex receive U.S. and EU approval for non radiographic axiall spot as well as a number of other approvals around the world continuing our effort to expand cosentyx across a range of indications and continuing our long term trajectory of strong growth with the Brad and Mary fronts will cover that a bit more in the future slide zone.

Well received EU approval with a broad label for Ivy estimate therapy Bellevue, We had a label update with respect to the recent reports of retinal vasculitis and retinal vein occlusion.

Unknown Executive: The label update was modest and I think it reflects the fact that, you know, we continue to see a strong benefit-risk profile for Bayview. And then lastly, notably, we had five simultaneous approvals in Japan, enabling us to set up Japan for our next wave of innovation and growth. I did want to note we are continuing our robust pandemic response, both in terms of human capital, the safety of our associates, and our ability to supply for patients and third parties. Our supply chain operations remain very stable.

Label update was modest and I think reflects the fact that we continue to see a strong benefit risk profile for Bellevue and then lastly, notably we had five simultaneous approvals in Japan, enabling us to set up Japan for next wave of innovation and growth.

Just want to note we have.

Continuing our robust pandemic response, both in terms of human capital safety of our associates and our ability to supply for patients and third parties. Our supply chain operations remained very stable customer service levels are at record high and we're very pleased with our overall manufacturing performance within our investments and data science and digit.

Unknown Executive: Customer service levels are at record highs, and we're very pleased with our overall manufacturing performance. With our investments in data science and digital technologies, we've been able to manage and minimize any disruptions to clinical trials. And you know, I think overall, we're very pleased with our ability to maintain our clinical trial timelines. And then lastly, we continue our efforts both in phase three pivotal studies with Kanekinimab and Ruxolitinib, as well as 35 investigator-initiated trials covering over 20 Novartis medicines currently in the clinic. And lastly, we announced last week a COVID-19 access portfolio for 15 medicines and 79 low-income and low-middle-income countries with a goal to have no profit for the distribution of those medicines. Turning to slide six, as you saw in our press release, our growth drivers continued their strong momentum, notably Entrusto had a very strong first half of the year.

Technologies, we've been able to manage and disrupt minimize any disruptions on clinical trial and.

I think overall, we're very pleased with our ability to maintain our clinical trial timelines and then lastly, we continue our efforts both on phase three pivotal studies with cannot can map and ruxolitinib as well as 35 investigator initiated trial covering over 20 Novartis medicines currently in the clinic and lastly, we announced last week.

Cobot Nineteena axis portfolio for 15 medicines and.

29, low income and low middle income countries with a goal to happen no profit for the distribution of those medicine.

Turning to slide six as you saw in our press release, our growth drivers continued their strong momentum, notably in trust, though had a very strong first half the year Zogenix is continuing to grow well talk about that a bit bid more detail Cosentyx also had a strong quarter. Despite the challenging that dynamic.

Unknown Executive: Zolgensma is continuing to grow well, and I'll talk about that in a bit more detail. Cosentix also had a strong quarter, despite the challenging dynamics in the dermatology market, and Mary France will cover that in more detail. And then in Oncology, Kisgali, Kimraya, Tafenlar, and Mekinus all, I think, demonstrated very strong growth profiles, which Susanna will cover later in the presentation. Taken together, if you look on the right side of the slide, our growth drivers and launches now constitute 47% of our innovative medicine sales, which I think shows we're well set up for the future. Now going to slide seven, when you look at Zolgensma, we had $205 million in sales in the quarter, and that growth was driven primarily by geographic expansion.

And the dermatology market Mary fronts will cover that in more detail and then in oncology Tiscali Kim right on top and larger mechanist, all I think demonstrated very strong growth profiles, which does and I will cover later on in the presentation.

Taken together you look on the right side of the slide our growth drivers and launches now constitute 47% of our innovative medicines sales, which I think demonstrates we are well set up for the future.

Now going to slide seven when you look at low gens.

We had $205 million hills.

In the quarter and that growth was driven primarily by geographic expansion and just to go into little bit more detail into that dynamics in the U.S., we have about 60% of newborn being screened for estimate as of the end of Q2 strong Medicaid access 86% of lives now covered with the profit Jake.

Unknown Executive: And just to go into a little bit more detail about the dynamics, in the US, we have about 60% of newborns being screened for SMA as of the end of Q2, strong Medicaid access, and 86% of lives now covered with a permanent J code in place. I think we did see some COVID-related disruptions in both April and May, given the hospital-based infusion of Zolgensma, but we did see a recovery in the second half of June. And the July dynamics are again, positive, back on the trend that we would expect. In Europe, we received broad label conditional approval; we had a day one access program in place in many key markets, including in Germany, where we had agreements with 90% of the SICK funds in the country.

Okay and place I think we did see some coven related disruptions in both April and May given the hospital based infusion of as old Gen. But we did see a recovery in the second half of June into July dynamics are again positive back on the trend that we would expect in Europe, we receive.

A broad label conditional approval, we had a day one access program in place in many key markets, including in Germany, where we had agreements at 90% of the sick.

In the country as well as early access programs in the remainder of Europe. This enabled us to get off to a very strong start in Europe in the quarter. We're very pleased with that even just having an approval Lilly in late May we already saw strong uptake in Europe, and then our Japan launch has exceeded expectations fast uptake in the first month.

Unknown Executive: And then we had some early access programs in the remainder of Europe. This enabled us to get off to a very strong start in Europe during the quarter. We're very pleased with that, even in just having an approval really in late May, we already saw a strong uptake in Europe. And then our Japan launch exceeded expectations, with fast uptake in the first month of launch, and we continue to see requests from other pre-approved market countries through the named patient IND program. So overall, we did see some overall a strong global dynamic now for Zolgensma.

Launch and we continue to see requests from other pre approved market countries with through the.

Named patient in the program. So overall, a strong global dynamic now for Xeljanz MUP now in terms of the regulatory and other milestones for the.

Unknown Executive: Now, in terms of the regulatory and other milestones for the AVXS 101 IT partial clinical hold, we had a type A meeting with FDA and a very positive dialogue. FDA is open to either a six month or a one month data readout in our non-human primate study. We have taken the decision to go to a one year readout in the non-human primate study just to ensure that we have a very robust data package, so that when we move to a hopeful filing next year, we'll have the best possible data to support our filing. We plan to have a pre-BLA meeting. This year, a pre-BLA meeting can be held while the product is on clinical hold. And assuming these meetings and discussions and, ultimately, non-human primate data are positive, we would plan to submit a BLA in 2021.

VX 101, IC partial clinical hold we added type a meeting with FDA and a very positive dialogue FDA is open to either a six month or a one month data read out in our non human Primate study, we have taken the decision to go to the one year readout of the non human Primate study just to ensure.

We have a very robust data package, so that when we move to hopeful filing in next year, we'll have the best possible data to support our filing we plan to CBLI meeting. This year. Our previously meeting can be held while on clinical hold and assuming these meetings and discussions and ultimately mine.

Human Primate data is positive we would plan to submitted la in 2021 in terms of geographical expansions, we have a number of approvals expected.

Unknown Executive: In terms of geographical expansions, we have a number of approvals expected.

Unknown Executive: In the second half of 2020, as well as in early 2021, you can see the countries listed here. And we continue, as well, to progress our manufacturing efforts, including the expected plants in Colorado and North Carolina coming online in 2021. So overall, Ziljenzma is on a positive track. We're positive about the outlook and looking forward to keeping you up to date. Now, moving to slide eight on Sandoz, our first half results really highlight our continuing good performance. When you look at it in Q1, we had some significant effects of stocking, which largely reversed in Q2. But the underlying performance of the business was solid, with 1% sales growth and 26% core operating income growth when you look at the first half in total. Some important performance drivers, including biopharmaceuticals growing at 25%, as well as good gross margin improvement and ROS improvement over this period of time. So we'll look forward to the second half.

In the second half 2020 as well as in early 2021, you can see the country's listed here and we continue as well to progress our manufacturing efforts, including.

The expected.

Plants in Colorado, and North Carolina coming online in 2021, so overall gens on a positive track we're positive on the outlook and looking forward to keeping you up to date.

Moving to slide eight on Sandoz, our first half results really highlight continuing good performance. When you look at it in Q1, we had some significant effects of stocking, which largely reversed in Q2, but the underlying performance of the business was with solid with 1% sales growth in 2006% core operate.

Adding in gross income growth when you look at the first half in total some important performance drivers, including Biopharmaceuticals growing at 25% as well as good gross margin improvement and Ross improvement over this period of time. So we'll look forward for the second half of course, it remains a volatile environment in the generics industry, but.

Unknown Executive: Of course, it remains a volatile environment in the generics industry, but we remain confident that Sandoz is well positioned for the remainder of 2020. Now moving to slide nine, and taking a bit of a step back, I think it's important to keep the longer term in view, despite the, I think, significant focus on COVID-19 and the impact on our business. And when you look at Novartis, overall strong in market growth drivers, a significant number of major launches ongoing, a solid portfolio of novel assets, and a range of new indications. In summary, 15 ongoing launches, 80 major submissions planned to 2022, and 50 late stage programs. And it is this collection of assets that we have such a strong view that we can maintain solid growth well into the coming years. And I wanted to take a moment just to give the community, the investor community, an update on both our late stage pipeline and our mid stage pipeline. So moving to the next slide.

Remain confident that Sandoz is well positioned for the remainder of 2020.

Moving to slide nine and taking a bit of a step back I think it's important to despite the I think.

Significant focus on cobot 19 in the impacts on our business to keep the longer term view and when you look at Novartis overall strong end market growth drivers significant number of major launches ongoing.

Solid portfolio of novel assets in a range of new indications in summary, 15 ongoing launches 80 major submissions planned 2022 and 50 late stage programs and is this collection of assets is why we have such a strong view that we can maintain solid growth well into the coming.

Years, and I wanted to take a moment just to give the community investor community at update on both our late stage pipeline and our mid stage pipeline moving to the next slide when you look at our late stage pipeline just to go through some of the key assets deep detail opened to move out we continue to have very good discussions with FDA. We're on track for.

Unknown Executive: When you look at our late stage pipeline, just to go through some of the key assets in detail, Opatumama, we continue to have very good discussions with FDA. We're on track for our action date in September of 2020. No major issues, and happy to, of course, answer any questions, but we feel very good about where we are in that discussion and in the ongoing label negotiation.

Our action date.

In September 2020, no major issues and happy that of course answer any questions, but we feel very good about where we are in that.

And that discussion and the ongoing label negotiation with respect to Inclisiran. Our US you submissions are complete review is on track.

Unknown Executive: With respect to Inquisirin, our US and EU submissions are complete, and the review is on track. As far as we know right now, all the manufacturing reviews are happening on time, and we maintain an FDA action date of December 2020 for BYL-719 in PROSE, which is a more rare disease, but I think it is a very important medicine for this rare disease.

We know right now all of the manufacturing reviews are happening on time, and we maintained an FDA action date of December 2020.

While 719 in pros, which is a more rare disease, but I think very important medicines for this rare disease, we have a real world evidence phase two ongoing and we submit expected submission in the second half of 2020, which will enable us to continue the momentum for that medicine.

Certainly our mechanist with BARDA lose them out of our PD, one inhibitor triplett in BRAF mutant melanoma. We're on track for the Phase three readout also in 2020 and expect to submission if the data as positive as well before the end of the year.

Unknown Executive: We have real-world evidence phase two ongoing, and we expect a submission in the second half of 2020, which will enable us to continue the momentum for that medicine. For Tafenlar, our enrollment is complete, and we have both the first line and second line studies now moving towards important milestones. The first-line study will have a DMC interim analysis in Q4 2020 for both PFS and OS. There will also be an additional interim analysis next year, with a final readout expected toward the end of next year. And, of course, the decision-making with respect to the status of that program will depend on the data.

Sentiment, our ABL 001 hour Derrick inhibitor of the Bcr able for third line CML pivotal study is on track for a readout in 2020 with the for submission in Q1 21.

With kentuckian among our enrollment is complete and we have both the first line and second line studies now moving towards.

Important milestones. The first line study will have a DMC interim analysis in Q4 2020 for both PFS and OS Theres also an additional interim next year with the final readout expected towards the end of next year and of course, the decision, making with respect to the status of that program will depend on.

On the data cannot be too will have its final readout in the start of next year in second line non small cell lung cancer with Rps the may asset.

Unknown Executive: Canopy 2 will have its final readout at the start of next year in second-line non-small cell lung cancer. With our PSMA asset, Lu PSMA 617, the Vision Phase 3 trial, we've recently done an updated review of the pace of event accumulation, and those events are accruing at a slower rate than we initially projected.

Yes, I May 617 Division phase three trial, we've recently done an updated review of the pace of event accumulation and those events are accrued accruing at a slower rate than we initially projected that as leading for us to now predict a readout in the first half of 2021 and a filing as well in that time.

Unknown Executive: That is leading us to now predict a readout in the first half of 2021 and a filing as well in that timeframe. Because this is an event-driven trial, we'll continue to monitor this closely and keep the markets up to date as we see the events unfold. In TRESTO, in HFPAF, the HFPAF indication is now available. The PARADISE MI enrollment is complete. We expect FDA action on the HFPAF indication in the first half of next year, and we expect the PARADISE results as well in 21. And then ligalizumab is an anti-IgE monoclonal antibody for CSU. Both superiority studies versus Zoller are ongoing and on track for readout and submission in 2021. And lastly, Kaskali in the adjuvant breast cancer setting, we continue to progress towards the NATALIE Phase 3 readout, which we expect in 2022, both in intermediate and high-risk patients, where we believe we have a unique study design and a unique opportunity to bring a broad label to this indication, as well as the MONALISA 2 OS readout in 2021.

Rain because this is an event driven trial will continue to monitor this closely and keep the market up to date as we see the events unfold in trust, though and half path to have passed indication is now filed the Paradise. My enrollment is complete we expect FDA action on the have passed indication.

The first half of next year, and we expect the Paradise results as well in 21, and then legalism Mab are.

Sure.

Anti GE monoclonal antibody for see US you. Both superiority studies were still are ongoing and on track to read out in submission in 2021, and lastly, tiscali in the additive in breast cancer setting we continue to progress toward Natalie phase three read out, which we expect in 2000.

22, both intermediate and high risk patients.

Where we believe we have a unique study design in a unique opportunity to bring a broad label to this this indication as well as the Mona Lisa to Oes readout in 2021.

Now moving to slide.

Unknown Executive: 11. Some of the emerging pipeline assets that we discussed in our recent R&D days continue to progress as well, and I think many of these assets are underappreciated. LNP023, our Factor B inhibitor, is being developed in a range of renal diseases as well as PNH. The single PNH pivotal trial will be expected to start in 2020 as well as the full range of renal studies in 2021. Remibrutinib, our BTK inhibitor, which we believe has a truly unique profile in terms of its overall chemistry, is progressing well in both CSU and Sjogren's disease. Escalomab, our anti-CD4 monoclonal antibody, is also progressing well in kidney transplantation and is on track, we hope, for a regulatory submission in 2023 as we negotiate a unique endpoint for that study IQJ, our first-in-class antisense oligonucleotide-targeting LPa, is continuing to progress well in its outcome study, and we're on track for a readout in 2024.

11, some of the emerging pipeline assets that we've discussed in our recent R&D continue to progress as well and I think many of these assets are under appreciated LMP zero to three our factor be inhibitor is being developed in a range of renal diseases as well as pn age the single Pn, a pivotal trial will Ics.

We expect started 2020 as well as the full range of renal studies as well in 2021, Remy Ibrutinib, our BTK inhibitor, which we believe has a truly unique profile in terms of its overall chemistry is progressing well in both CSC sjogrens disease ask allomap, our anti CD for Moneta.

I will antibody also progressing well in kidney transplant and is on track we hope for a regulatory submission in 23 as we negotiated unique endpoint for that study CQ J R.

First in class antisense oligonucleotides targeting LP little a.

It's continuing to progress while and its outcome study and we're on track for a readout in 2024, and then three oncology assets, which we recently highlighted NBG and our anti Tim three monoclonal antibody in Mds as well as AML Alec H R. C RAF inhibitor, which were progressing and CNO.

Unknown Executive: And then three oncology assets, which we recently highlighted, MBG and our anti-TYM3 monoclonal antibody in MDS as well as AML, LXH, our BC-RAS inhibitor, which we're progressing, and TNO, our SHP2 inhibitor, are all progressing rapidly into pivotal stage studies. I would note we have a significant effort to accelerate LXH and TNO as well as a number of other early-stage oncology assets where we look now to take our molecules more quickly into pivotal studies, and we look forward to keeping you up to speed on that progress. So I hope that gives you a sense of the strength and the scale and breadth of our portfolio and pipeline and gives you confidence that we have all of the assets we need for long-term growth. Oh, sorry. I have one more slide. My apologies.

Our ship to inhibitor are all progressing rapidly into pivotal stage studies I wouldn't know we have a significant effort to accelerate Alex stage and CNO as well as a number of other early stage oncology assets, where we look now to take our molecules more quickly and pivotal studies, we look forward to keeping you up to speed.

On that progress.

So I hope that gives you a sense of this strength and the scale and breadth of our portfolio and pipeline and gives you confidence that we have all the assets, we need for long term growth and with that I'll hand, it over to area.

Oh, sorry, one more side my apologies.

You have one more important update is progressing on our journey of building trust with with the society. So as you saw over the course of the quarter, we were able to resolve a number of our longstanding legacy legal matters I won't go through all of them, but I think it's important to note. These primarily relate to events between 2002 and.

Unknown Executive: We have one more important update, which is progress on our journey of building trust with society. So, as you saw over the course of the quarter, we were able to resolve a number of our longstanding legacy legal matters. I won't go through all of them, but I think it's important to note these primarily relate to events between 2002 and 2015.

2015 since that time, we've put in place a number of important efforts that we've outlined to all of you are code of ethics, our enterprise risk management approach, having a trust and reputation committee new head of.

Unknown Executive: Since that time, we've put in place a number of important efforts that we've outlined to all of you, such as our code of ethics, our enterprise risk management approach, having a trust and reputation committee, a new head of ethics, risk, and compliance, as well as a robust set of activities around governance, which you can see here. This is starting to be reflected as well in the ESG ratings. We'll note that Sustainalytics has upgraded our rating in terms of their risk scores and in terms of their overall score in the risk area from 30 to a little less than 21, which puts us at the top end of our pharma peer group. I would encourage investors to ensure their ESG analysts are up to speed on the latest data from Sustainalytics, and we'll continue to work with the other ESG agencies to properly reflect the efforts Nov And with that, I'll hand it over to Harry.

Ethics risk and compliance as well as robust set of activities around governance, which you can see here. This is starting to be reflected as well in the G. Ratings I will note that say analytics has upgraded our rating from in terms of their risk scores and in terms of their overall score from in the.

Risk area from 32, a little less than 21, which puts us at the top end of our pharma peer group would encourage investors to ensure SG analysts are up to speed on the latest data from sustain analytics and we'll continue to work with the other SG agencies to proper Lee reflect the efforts novartis is making and with that I'll end.

It over there.

Harry Kirsch: Thank you, Voss. Good morning, good afternoon, everybody.

Thank you have good morning, good afternoon everybody.

I'll now going to walk you through some of the financials for the second quarter in the first half elsewhere.

Harry Kirsch: I'm now going to walk you through some of the financials for the second quarter and the first half, as well as provide an update on our full year guidance. My comments refer to the results of our continuing operations and growth rates and constant currencies unless otherwise noted.

Provide an update on our full year guidance.

My comments refer to right size will continue operations and growth rates in constant currencies unless otherwise noted.

On slide 14.

You see the summary of our Q2 and first half continuing operations performance.

Harry Kirsch: You see the summary of our Q2 and first half continuing operations performance. I will focus on the first half as this is the better indicator of our underlying performance as we saw Q1 forward purchasing largely reverse in Q2. The first half was strong, with sales growing 6%, driving core operating income and EPS growth of 19%. Sales growth was mainly driven, as Vard laid out, by Adresto, Solzhenitsyn, and Cosentex, and operating income growth was driven by higher sales and productivity, particularly in cross-margin, and partly offset by some launch investment. Net income, as you can see here, grew slower than operating income, as it was impacted by slightly higher tax rates and higher net financial expenses due to the acquisition of the medicines company and quarter. Free cash flow grew 3% to $5.7 billion in the half year, and I will give a bit more detail on that later in the presentation.

Focus on the first half as this is the better indicator of our underlying performance.

So Q1 for repurchasing largely a reverse in quanta true.

The first half was strong with say, it's growing 6% driving core operating income and EPS growth of 19%.

Sales growth was mainly driven that's lost laid out by Adestos on Jan Smiell Cosentyx and core operating income growth was driven by the higher sales.

And productivity, particularly in gross margin.

And partially offset by some launch investments.

Net income as you can see here crews lower than operating income as it was impacted by slightly higher tax rates and higher net financial expenses due to the acquisition of the medicines company in quarter one.

Free cash flow crew, 3% to 5.7 billion.

Here and there were given a bit more depend on that later in the presentation.

Harry Kirsch: Next, let's focus on core margins on slide 15, again broken down both by quarter and first half. The first half sales of 6% plus the productivity and savings have resulted in a significant. In the first half, margin was 36.5%, up 2.8% points versus prior year. Sandoz significantly grew margins by almost 5 points to 24.5 percent, driven by a favorable product and geographic mix, as well as ongoing productivity improvements. Please consider in your modeling that our second half margin tends to be somewhat lower in the first half, mainly due to higher spending patterns in the fourth quarter. Clearly, we are very well on track to deliver the mid-30s margin this year and the mid to high-30s margin in the medium term. If you now turn to slide 16.

Next let's focus on core margin.

Slide 15, again broken down both by quarter and first half.

First tough sales of 6% last productivity savings have reside.

If we can to increase our core margins as you can see here for innovative medicines.

In the first half margin was 36.5% up 2.8% points was prior year.

Sandals significantly crew margin by almost five point.

To 24.5% driven by favorable product and geographic mix as well as ongoing productivity improvements.

Please consider in your modeling.

That's our second half margin tends to be somewhat lower than the first half mainly due to higher spending patterns in the fourth quarter.

Clearly, we have very well on track to deliver mid Thirtys margin this year and to mid to high thirtys much in the midterm.

If he now turn to slide 16.

So many of you have asked us about impact.

Harry Kirsch: So many of you have asked us about the impact that COVID-19 has had on the therapeutic areas we work in. We wanted to describe to you in some detail what we are seeing in our business. So the key message is that most therapeutic areas were somewhat impacted at the start of Q2, as you can see here, the grey shaded area, but the magnitude of that impact was quite different. COVID affected demand most notably for those centers and mature ophthalmology, where we saw also in quarter two of this year about 0.3 billion lower sales versus quarter two of last year. Of course, new prescription starts requiring hospital administration were also impacted, which is reflected in some of the growth rates by brand.

Covert 19 has had on the therapeutic area. So we work.

We wanted to describe to you in some detail what we're seeing and our business. So the key messages that most therapeutic areas were somewhat impacted at the start of Q2 as you can see here to create shaded area, but the magnitude of that impact was quite different.

Covert affected demand, most notably onto centers and mature ophthalmology.

Where we saw also in quarter two of this year about you will point 3 billion lower sales this quarter two of last year.

Of course, new prescription starts requiring hospital administration, but also impacted which is reflected in some of the growth rates by Pratt.

Harry Kirsch: Now on slide 16, we show Innovative Medicine's weekly sales evolution based on a rolling four-week average, just to take some of the variability out but show the trends, indexed back to quarter four weekly sales of 2019. We have divided this up into a few different categories, which we believe is helpful as to describe the different behaviors. First, the recent launches, then the growth drivers, excluding Cosentyx, which we show separately on the slide, and then we group Biofuel, Lucentis, and Excitra all together, and we have other more mature ophthalmology products. So our recent launches and key growth drivers, excluding Cosentic, which are here shown by the lines of blue and black, did see a bit of an impact on sales growth at the beginning of Cosentics, here the line in orange, also saw a decline in sales at the start of the quarter and another dip in June but is now normalizing in the second half of June. In fact, Cosentics increased its U.S. market share in both dermatology and rheumatology. So these are our two demands.

On slide 16.

Sure the innovative medicines weekly said its evolution based on a rolling four week rich just take several.

The variability out but short of trends indexed back into quarter. Four we say is 29 teams.

We have divided up in.

A few different categories, which we believe it's helpful to describe the different behaviors first the recent launches.

Then to growth driver, excluding Cosentyx, which we show separately on the slides and then we group view fuel ascendance et cetera, all together.

So the more mature ophthalmology product.

So our recent launches and key growth drivers, excluding cosentyx, which have shown by the alliances and black.

Let's see the bid to have an impact on sales growth at the beginning of quarter, but the remained flat resilient and by early may we're continuing to grow again.

Cosentyx via the line in Orange also saw a decline in sales at the start of two quarters. Another June let us know normalizing in the second titles.

In fact, Cosentyx increased U.S. market share both dermatology.

Jamie.

So outgrew the market.

The ophthalmology portfolio shown here into Cray, and Creed line trend lines, so more to bottom.

Harry Kirsch: The ophthalmology portfolio, shown here in the grey and green lines, was the most affected, with a significant impact on sales at the start of the quarter. However, importantly, we have seen a rebound, with levels beginning to return to Q4 weekly sales averages by the end of June. I think that's also quite important for the outlook. Generally, we do not anticipate a COVID-related sales decline in Q2 and after to continue as we are seeing this recovery. However, we do expect some of the COVID-related cost savings on productivity that we have seen during the quarter to stick also in the midterm as we continue with our new ways of working internally and externally. It is for these reasons that we remain confident in our margin goals and existing guidance, both for the full year and the midterm. Again, I will get into some more detail on the guidance later.

What's the most affected with a significant impact on sales at the start of the quarter Importantly, we have seen as rebound with Devon is beginning to return to quarter four we can say its.

Just by the end of Q1 I.

I think thats also quite important for for the outlook.

Generally we do not anticipate the coal, which we led sales decline of Q2 and often continue.

We are seeing this recovery. However, we do expect some of the covert related cost savings on productivity that we have seen during the quarter to stick also limits.

As we continue with our new ways of working internally and externally.

It is for these reasons that we remain confident lower margin goals and existing guidance both for the full year at the mid term.

Again that will get into some more details on the guidance later.

Harry Kirsch: Slide 17, shows here the key factors that impacted the first half of the co-operating profit performance and what we anticipate in the second. Clearly, the first half of the co-operating income growth was driven by the continued momentum of our growth drivers, especially innovative medicines, and the key launches. In addition, there was increased productivity driven by our transformation programs, both at NTO and NBS.

Slide 17.

Shows you the key factors that impacted the first half cooperating.

Profit performance and what we anticipate the second tough.

Clearly the first half cooperating income growth was driven by the continued momentum of our growth drivers, especially innovative medicines and to key launches. In addition, there was increased productivity driven by our transformation programs, both in MTO and MBS.

Harry Kirsch: And, of course, lower spending driven by COVID-19-related lockdowns. We saw some generic erosion, particularly among mature after and oncology brands, and as discussed earlier, the negative impact on those centers and mature after sales. Now, as we turn to the second half.

And of course, lower spending driven by coal with 19 related locked balance.

We saw some generic erosion, particularly to mature off.

And quality brands and as discussed earlier, the negative impact on Lucentis and mature after sale.

No.

As we turn to the second tough.

We anticipate core operating income growth to be somewhat lower than the first half of course, the expected momentum of our growth drivers launches.

Harry Kirsch: We anticipate co-operating income growth to be somewhat lower than the first. Of course, we expect the momentum of our growth drivers and launches, as well as the productivity benefits, to continue. But we also expect increased generic erosion, mainly on Affinitor and XJ, as well as increased investments to support upcoming launches, particularly Atumumab and Ecclyseram. In addition, we will also start lapping the acquisition of Exitra as of Q3 of this year. Slide 18 shows our guidance and key assumptions. We are confirming our guidance and tightening the prior ranges to be at the higher end for co-operating income and at the lower end of the range for sales. So we now expect continued operation sales to grow mid-single digit. Co-operating income is expected to grow ahead of sales at a low double digit rate.

What is the productivity benefits to continue but we also expect increase generic erosion, mainly on affinity for an exchange rate.

As well as increased investments to support upcoming launches.

Finally of tumor map and it can disrupt.

Further we will also start lapping the acquisition.

Hi trial.

Q3 of this year.

Slide 18.

Shows our guidance and key assumption, we are confirming our guidance and tightening the given prior ranges to be at the higher end for core operating income and as low end of the range for sale.

So we now expect continued operations said some grow mid single digit core operating income is expected to grow ahead of sales at that low double digit and within this division.

Harry Kirsch: And within this, the division, we expect Innovative Medicines to grow mid-single-digit and Sandoz to grow low-single-digit. Our guidance assumes that we see a continuation of the return to normal global healthcare systems, including prescribing dynamics, particularly in ophthalmology, in the second half of the year. In addition, we assume that no Jelenia and no Sandoz-Datun LAR generics enter the U.S. On to free cash flow on slide 19.

We expect innovative medicines to grow mid single digit and Sandoz accrual low single digit our guidance assumes that we see continuation of to return to normal global healthcare systems, including prescribing dynamics, particularly after margie and the second half of the year.

In addition, we assume that no gel in north central stats, Leon generics and Twentytwenty into us.

On the free cash flow.

Harry Kirsch: Of course, cash flow remains very important, particularly in light of the current situation, but, of course, always important for us. And on slide 19, you see our free cash flow growing 3% in the first half. It's mainly driven by our operating income growth, of course, adjusted for non-cash items, and somewhat a bit underrepresents the operational growth because of lower divestment proceeds. You may recall last year, we had quite a large divestment of parts of our barter campuses and overall, very strong operational cash collection. That's very important because the day sales outstanding are also in line with the year 2019, so we don't see any issue with cash collections. And maybe one additional point as we look into quarter three; we do expect to pay most of the legal settlement fees in quarter three.

Slide 19 of course cash flow remains very important, particularly in light of to current situation Thats of course, all these important for us and on slide 19.

Free cash flow growing 3% in the first half, it's mainly driven by our operating income growth cause adjusted for noncash items and somewhat a bit underrepresented operational growth because of lower divestment proceeds.

Recall last year, we had quite large divestment of parts of our bonds accomplices.

And overall very strong operation cash collection.

Important because also to day sales outstanding are in line with year end to end in 19, So we don't see any issue and cash connections.

And maybe one additional point as we look into quarter three we do expect to pay most of the legal settlement fees in quarter three.

Harry Kirsch: Finally, on slide 20... As currencies are constantly changing, I want to bring to your attention what we see as the estimated currency impact on our results using the current exchange rates. So if mid-July rates prevail for the remainder of 2020, the full-year impact of currencies on sales would be a negative 1% to 2% points, and on core operating income, a negative 4% points. For quarter 3, it would be 0 to negative 1 points on sales and negative 3 points on co-operating income. As you know, we update this every month. I encourage you to look at it, because, like the US dollar, the euro is quite volatile.

Finally on slide 20.

That's currencies are constantly changing I want to bring it to your attention what we see as the estimate currency impact impacted our results using the current exchange rates. So for mid July rate prevail for remainder of 2020 to fully effect of currencies on sales would be.

Negative, 1% to 2% points and core operating income negative 4% points for quarter three it would be zero two negative one point on sales and negative three points on core operating income.

You know we do update this every month I encourage you look at it because it is also with US dollar euro quite volatile.

Harry Kirsch: With that, I hand over to my

Harry Kirsch: Thank you, Eric. Thank you, Harry. Good morning. Good afternoon.

With that I hand over to Mike.

Thanks.

Thank you very good morning, good afternoon.

If we take a look at slide 22.

Mary France Chudin: If we take a look at slide 22, pharma had solid growth of 8% for the first half of 2020, despite the significant market disruptions in Q2. The products that had a strong TR base and that are self-administered saw very solid performance, and in particular, our main growth drivers Entresto and Cosentix outperformed the market. We've stayed focused on our strategy, and we've quickly pivoted to virtual execution.

Finally, I had a solid growth of 8% for the first half of 2020, despite the significant market disruptions in Q2.

The products that had a strong key our base.

And that our self administered saw very solid performance and in particular, our main growth drivers interest on cosentyx outperformed the market.

Stay focused on our strategy and Weve quickly pivoted to virtual execution.

We've learned a lot how to accelerate the patient journey, how to make our engagement more seamless and how to deliver our promotion in a more customized way.

Mary France Chudin: We've learned a lot, how to accelerate the patient journey, how to make our engagement more seamless, and how to deliver our promotion in a more customized way. We will continue to think boldly about how we use digital to enhance the way we activate patients, tailor education, and execute launches. If we take a look at Cosentyx on slide 23,

We will continue to think boldly about how we use digital to enhance the way, we activate patients Taylor education and execute launches.

If we take a look at Cosentyx on slide 23.

Mary France Chudin: Cosentyx has been resilient despite a significant COVID impact on dermatology and rheumatology new starts. Consent Act outperformed in the U.S. as a cross indication. As I said, Cosentix has a strong TRX base. In fact, 75% of our business is TRX based.

Gentex has been resilient despite the significant coven impact on dermatology in rheumatology new starts.

Centex outperformed in the U.S. across indications as I said Cosentyx has a strong trx base in fact, 75% of our businesses Trx based.

Supported by five years of safety and efficacy data and Brad first line access.

Mary France Chudin: Supported by five years of safety and efficacy data and broad first-line access. Our focus during this time has been on maintaining patients on therapy and supporting the physician community. Now we're seeing recovery in the market. We've been back in the field since June 1st, and we expect to continue to outperform the market. Before I go to the next slide, I wanted to spend a little bit of time talking about Cosentis.

Our focus during his time has been on maintaining patients on therapy and supporting the physician community.

Now, we're seeing recovering the market we've been back in the field since June 1st and we expect to continue to outperform the market.

If I go to the next slide I wanted to spend a little bit of time talking about Cosentyx theres been a lot of news flow within the space recently this market space is very competitive and is becoming more and more competitive and although we should never underestimate. The competition. There are very good reasons why cosentyx will come.

Mary France Chudin: There's been a lot of news flow within this space recently. This market space is very competitive and is becoming more and more competitive. And although we should never underestimate the competition, there are very good reasons why Cosensics will continue to grow and go beyond $5 billion. If we take a look at the dermatology market, it's a big market, and despite all of the good treatments, biologic penetration is still low. Remember that Cosentix offers a complete treatment approach. We have robust evidence in the skin and unique data in the scalp, nail, and palmar plantar.

Thank you to grow and go beyond 5 billion sales.

If we take a look at the dermatology market, it's a big market and despite the good treatments biologic penetration is still now.

Remember that Cosentyx offers a complete treatment approach, we have robust evidence in skin and unique data ensconced now and power plant.

Together with broad first line access we have everything we need in the space to continue to grow.

Mary France Chudin: Together, with broad first-line access, we have everything we need in this space to continue to grow. If we look at rheumatology, it's a less competitive market space, as the IL-23s are not proven across the actual spa spectrum. And obviously, then, IL-17s are the class of choice for this indication.

If we look at rheumatology, it's a less competitive market space as the eye on 20 threes are not proven across the actual spa spectrum.

And obviously then I on 17, the class of choice for this indication we have a strong momentum to continue to grow and in fact, we're growing faster in rheumatology than we are in dermatology. We've also just received our non radiographic axiall approval, completing our label and allowing us to lose earlier in the disease spectrum.

Mary France Chudin: We have strong momentum to continue to grow, and in fact, we're growing faster in rheumatology than we are in dermatology. We've also just received our non-radiographic axial spa approval, completing our label and allowing us to move earlier in the disease spectrum. If we look at the way forward, we want to trailblaze with Cofentix. We want to bring this drug to a potential 3.5 million additional patients with an LCM strategy that takes us from 5 to 10 indicators. If we move on to Entresto, Intresto is Intresto.

If we look at the way forward, we want to trailblaze with Cosentyx, we want to bring this trend to a potential 3.5 million additional patients within LCM strategy that brings us from five to 10 indication.

If we move onto Entresto.

Interest, though isn't trust down it continues to do well demand was resilient as physicians.

Mary France Chudin: It continues to do well. Demand was resilient as physicians were keen to keep patients out of hospital. Cardiologists now see Intresto as standard of care, and Q2 has only reinforced this. While our NBR racks were affected, the TRX space remained solid. In Q1, we talked about NBRX at $4,500. We saw a drop to almost half of that, and now we're back to $3,800.

We're keen to keep patients out of hospital cardiologists now see interest of a standard of care in Q2 has only reinforce this.

While our NBR racks were affected the Trx base remains solid.

In Q1, we talked about NBR acts and for 4500, we saw on dropped to almost half of that and now we're back to 3800. So we have complete confidence that we'll see interest so back to its Q1 trend line.

Mary France Chudin: So we have complete confidence that we'll see interest go back to its Q1 trend line. In addition, we've passed some milestones toward opening up new patient populations. The FDA has accepted our file for HF-PF, we've seen approval in Japan, and we continue to progress our Paradise MI for heart failure prevention. Moving on to slide 26. With B of U, our focus continues to be on safety and transparency, and we're staying fully committed to B of U. We concluded the SRC review.

In addition, we passed the milestones towards opening up new patient populations.

FDA accepted our file for has passed we seen approval in Japan, and we continue to progress our Paradise Eni for heart failure prevention.

Moving on to slide 26.

With video view, our focus continues to be on safety and transparency and we're staying fully committed to be ASEAN.

We concluded the Src we view we've also continued to publish all of the post marketing data on our website in full transparency, we've had that health authority decisions on label update and approvals, which confirmed the benefit risk profile remains positive.

Mary France Chudin: We've also continued to publish all of the post-marketing data on our website in full transparency. We have had health authority decisions on the label updates and approvals, which confirm that the benefit risk profile remains positive. We're also working with 25 external experts to help us work on root causes, risk factors, mitigation, and treatment options. The reason why we're staying committed to B.O.V.U. is that patients need treatment that provides better fluid resolution. 25% of patients receive monthly injections, and many of them abandon treatment due to the burden of treatment. They need a different solution.

We're also working with 25 external experts.

To help us work on root causes Rick risk factors mitigation and treatment options.

The reason why we're staying committed to be view is that patients need treatment that provide better fluid resolution.

25% of patients receive monthly injections and many as an abandoned treatment due to the burden of treatment.

They need a different solution.

On the gecko, we had great feedback from retina specialists on the efficacy of be of him.

Mary France Chudin: From the get-go, we had great feedback from retina specialists on the efficacy of BOP. Now we've just presented post-doc data that was presented at Arvo that firmly establishes the link between fluid and visual outcomes, something we always believed in, and now we can prove. We know from Hawken Harria that B.O.V.U. is better at reducing retinal fluid. We're playing the long game here, and we're staying committed to this product. If I move to slide 27,

Now, we just presented a post Doc data that was presented are.

That firmly establishes the link between fluid and visual outcomes, something we always believed and now we can.

We know from Hakan area that you view is better in reducing retinal fluid, we're playing the long game here and we're staying committed to this product.

If I move to slide 27.

We're very much looking forward to bring up until now to market and we believe the FDA now has all the data they need to give us a green light.

Mary France Chudin: We're very much looking forward to bringing Offa Tumumab to market, and we believe the FDA now has all the data they need to give us the green light. What is most compelling about Ofitumumab is that it can give patients the possibility to live relapse-free for nine to ten years. What Ofatumumab does is it effectively depletes B-cells.

What is most compelling about off until now is that it can give patients the possibility to live relapse free for nine to 10 years.

What opportune lab does is it effectively deplete de Sal. This is a lost efficacious way to treat Ns. We've also develop this products specifically for Ns, where the favorable safety.

Mary France Chudin: This is the most efficient way to treat MS. We've also developed this product specifically for MS with favorable safety. It's also dosed precisely to sustain B-cell depletion, and it comes in a sub-Q injection. This has the potential to truly change how physicians treat MS in first line and first switch. Our focus in these past months has been to make it as easy as possible to prescribe and access this product. We've invested significantly in patient services and are rethinking our onboarding process to make it seamless and flexible. Our launch will be tailored to a very different environment, but with a very different approach, state-by-state, prescriber-by-prescriber, and as soon as we get the green light from FDA, we'll be ready to launch. If I move to slide 28,

Also dose precisely to sustain b cell depletion and it comes in is Subcu injection.

This has the potential to truly change how physicians treat emmis in first line in for switch.

Our focus in these past months has been to make it as easy as possible to prescribe access this product we've invested significantly inpatient services and are we thinking onboarding to make a seamless and flexible.

Our launch will be tailored in a very different environment with a very different approach state by state prescriber by prescriber and as soon as we get the Green line from the FDA will be ready to launch.

If I move to slide 28.

Last but not least were progressing on our launch preparations for includes ran.

Mary France Chudin: Last but not least, we're progressing on our launch preparations for InquisiRAN. ASCVD is a major burden for patients and for healthcare. In fact, in the U.S., more than 15 million patients have uncontrolled LDL-C despite treatment. It's also a major burden on healthcare systems. The U.S. spends $350 billion on CVDs every year, and although there are effective options available, the problem persists. We think we can tackle ASCVD much more effectively by leveraging the unique aspects of Inclisiran with a new commercial model that addresses the non-clinical barrier. That means addressing affordability for systems and patients. Enabling access that ensures rapid patient onboarding at the point of care and impacts adherence with an HCP-administered product.

CBD is a major burden for patients and for healthcare systems.

Tony you asked more than 15 million patients have uncontrolled LDL C. Despite treatment.

It's also a major burden for healthcare systems. The U.S. spends 350 billion CV diseases every year and although there are effective options available the problem persists.

We think we can tackle CVD much more effectively by leveraging the unique aspects of includes around with a new commercial model that addresses the nonclinical barriers that means addressing affordability for systems and patients.

Enabling access that ensures rapid patient onboarding and point of care and impacting adherence with an HCP administered product. If we can do that we have a real chance tackling CVD and a completely different scale.

Mary France Chudin: If we can do that, we have a real chance of tackling ASCVD at a completely different scale. So, in conclusion, our growth drivers, Cosentix and Intresto, have delivered solid performance. We remain focused on our strategy to maximize our growth drivers, deliver on our launches, and prepare for our next big bet. The organization has shown high agility in our current context. We've accelerated our journey to digital, tested new engagement models, and focused on customer solutions. This will only make us stronger in the future. Over to Susana.

So in conclusion, our growth drivers Cosentyx and Entresto have delivered solid performance, we remain focused on our strategy to maximize our growth drivers deliver on our launches and prepare for our next thing that.

The organization has showed hi, agility in our current context, we've accelerated our journey to digital tested new engagement models and focused on customer solutions. This will only make a stronger in the future over to Suzanne.

Thank you my fast moving to slide 30, So you see the oncology business remains resilient in the face of Cobot 19, delivering 6% of gross in the first half of this year.

Susanna Schaffert: Thank you, Marie-France. Moving on to slide 30. So you see the oncology business remains resilient in the face of COVID-19, delivering 6% growth in the first half of this year with sales of 7.2 billion. We have seen very good momentum across our portfolio, mainly driven by strong uptake of our recent launches, namely Kiskali, Chimraya, PICRE, Adagvio, and the most recently launched Tabrekta. But also our growth drivers, Promagta, Revolade, Tafenlar Mechanist, and Chakawee, continued strong double-digit growth. These brands could more than compensate for the continued generic erosion that we saw on Affinitur and XJ Chadenew in the US and Sanderstedt and LAR in the EU.

Sales of 7.2 billion you have seen very good momentum across our portfolio, mainly driven by strong uptake of our recent launches, namely case Cali, Kim Ryan pick Cray ADAC steel and most recently launched a breakdown, but also gross drivers promacta revolade tough and Laura.

Mechanist and Chuck heavy continued strong double digit growth these brands could more than compensated for the continued generic erosion that we saw on Afinitor and exchange eight new in the U.S. and Sandostatin and they are if you look at Sarah achieved 105 million and here.

Susanna Schaffert: Lutathera achieved 105 million, and here we saw some of the performance driven by an increased number of cancellations and delays in new patient starts due to COVID-19. Overall, the oncology business is very resilient, and we see continued strong performance of in-market brands and recent launches. Moving to slide 31, we are very pleased with Kiskali sales reaching $159 million and continued growth through the pandemic. This growth is based on very strong demand, as Kiskali is the only CDK4-6 inhibitor with two positive overall survival readouts. And just to remind you that Kiskali has a differentiated profile versus other CDK4-6 inhibitors, with preferential inhibition to CDK4 versus CDK6 and a high concentration to inhibit the target.

We saw softer performance driven by an increased number of cancellations and delays in new patient starts due to cope with 19 overall oncology business is very resilient and we see continued strong performance of in market brands and recent launches moving to slide 31.

Yes, Matt Im pleased to discuss Cali sales, reaching 159 million and continued growth through the pandemic. This growth is based on very strong demand is clearly is the only CDK for six inhibitor. This too positive overall survival readout.

Just to remind you discussed county has a differentiated profile versus others CDK for six inhibitors. This preferential inhibition to CDK for versus CDK, six and a high concentration to inhibit the ticket.

Susanna Schaffert: In Q2, we saw a very strong uptick in market share gains ex-US, especially in European markets, where both post and pre-menopausal indications were now approved for reimbursement in big markets like Germany, Italy, France, and Spain. But also in the US, Qiskali continued to grow and gain market share in Q2, despite the slowdown of the CDK4-6 class driven by delays in new patient initiation. And MBRX for the class was down 10% in Q2.

In Q2, we have seen very strong uptake in market share gains ex us, especially in European markets right now both post and pre menopausal indications, they're approved for reimbursement in big markets, like Germany, Italy, France, and Spain, but also in the U.S. Tiscali continued.

Grow and gain market share in Q2, despite the slowdown of the CDK for six class driven by delays in new patient starts and NBR eggs for the class was down 10% in Q2.

Susanna Schaffert: To further support physicians and patients, we have implemented a home monitoring program to ensure that patients can stay at home and have the required monitoring they need for Kiskali treatment. We are also rapidly enrolling in our NATALI trial in high and intermediate Ativan breast cancer and are on track to complete enrollment in 2020. NATALI has a different design than the other ongoing trials in the Ativan setting with a three-year treatment regimen. So overall, we are very pleased with the performance of Kiskali. And then moving to Kymriah on slide 32.

To further support physicians and patients, yes implemented a whole monitoring program to ensure patients can stay at home and half the required monitoring that need focus clearly treatment.

We are also rapidly in rolling in our Natalee trial in high end intermediate, adding one breast cancer and are on track to complete enrollment in twentytwenty not only has a different design on the other ongoing trials in up to one setting this a three year treatment regimen. So overall.

Very pleased just the performance of Kiss Colleen.

Moving to Kim Ryan on Slide 32.

Susanna Schaffert: Kymriah continued its very strong trajectory with Q2 sales of 118 million, and this was driven by strong continued growth in the U.S. and in Europe. Our team did an outstanding job ensuring no interruption of supply during COVID-19, and no single dose of treatment was missed during the pandemic. We continue to expand our global presence. We now have over 240 centers qualified to administer Kymriah across 25 countries where Kymriah is covered for at least one indication. But we also have made significant progress in expanding our global manufacturing capacity in the first half of 2020, with a 75% increase compared to the previous year.

Kim Ryan continued its very strong to check to see this Q2 sales of 118 million and this was driven by strong continued growth in the U.S. and in Europe. Our team has done an outstanding job by ensuring no interruption of supply to incorporate 19 and no single dose of treatment was missed.

During the pandemic, we continue to expand our global presence we have now over 240 centers qualified to administer Kim Ryan across 25 countries, where Kim Ryan is covered for at least one indication.

Also has made significant progress in expanding our global manufacturing capacity in the first half of Twentytwenty, This 75% increase compared to previous year.

Susanna Schaffert: EMA has now approved commercial manufacturing of Chimraya at our Novartis-owned facilities in Stein, Switzerland, and in Les Ely, France. We are also pleased that FDA has granted a regenerative medicines advanced therapy designation to Kymriah for relapsed refractory follicular lymphoma. And we have completed enrollment in our ELARA trial and are on track for submission in 2021. Moving to Tabrekta on slide 33. This is the first and only MET inhibitor approved by the FDA to specifically target metastatic non-small cell lung cancer patients with a MET exon 14 mutation. This is indicated for three to four percent of non-small cell lung cancer patients that have this mutation. And there is a substantial unmet need existing among these patients, as they usually have a very poor prognosis and modest benefit from existing therapies. We have launched Tabrekta simultaneously with an FDA-approved MET exon 14 CDX test. And due to the pandemic, we went with the first ever wave-based full digital launch.

Yes, now approved commercial manufacturing of Kim Ryan It our Novartis owned facilities in Stein, Switzerland, and then leisurely in France.

Also please said ft. A has granted regenerative medicines advanced therapy designation, so Kim Ryan for relapsed refractory Follicular lymphoma, and we have completed enrollment to our Lara trial and are on track for submission in 2021.

Moving to TEP rector on Slide 33. This is the first and only met inhibitor approved by the FDA, specifically target metastatic non small cell lung cancer patients. This unmet X on 14 mutation. This is indicated for 3% to 4% of non small cell lung cancer.

Basins that half this mutation and there is a substantial unmet need existing among these patients. It's usually they have on for Steve very poor prognosis and modest benefit from existing therapies.

Yes launch to brick does seem antennas leave us in Sta approved mix met X on 14, Cdx test and due to the pandemic of event. This the first ever base based digital launch we already see good market response and positive customer feedback this more than 20000 visitors.

Susanna Schaffert: We already see good market response and positive customer feedback with more than 20,000 visitors on our patient website and 9,000 visitors on the ACP website in the first month of the launch. And last week, we had our first Tabrekta live stream week, and we had an outstanding more than 1.8 million views. So the market is responding well.

Our patients upside and 9000 visitors on PCP website in the first months after launch.

And lastly, we had our SaaS type reps livestream week, and we had outstanding more than 1.8 million views. So the market is responding well more than certainly leading cancer institutions have started patients on Sept. Bretaa you have also received approval in Japan.

Susanna Schaffert: More than 30 leading cancer institutions have started patients on Tabrekta. We also received approval in Japan in June, and we are now preparing for the launch. We initiated a strong development plan to maximize the potential of Tabrekta with the opportunity to serve an additional 40,000 patients. We have started or planning several monotherapy trials, a confirmatory phase 3 trial, as well as further trials of Tabrekta in specific populations such as brain metastasis and in a tumor agnostic setting. But what is even more exciting is our plan to explore Tabrekta in combinations that will allow us to potentially expand beyond the METAXON 14 subset. So overall, an encouraging start for Tabrekta. We are now gearing up for a launch in Japan, and I believe we have very exciting plans to maximize the potential of Tabrekta. And with that, over to Vase.

And we are now preparing for launch.

In addition to also a strong development plan to maximize the potential after brecht.

I missed the opportunity to serve an additional 40000 patients.

Have started planning several monotherapy trial.

Confirmatory phase three trial as well as further trials of just subtract out in specific populations, such as brain metastasis and in a tumor agnostic setting, but what is even more exciting is our plan to explore to break into combinations that will allow us to potentially expand.

Beyond the met X on 14 subset, so overall and encouraging starts lots of Brett We're now up for a launch in Japan, and I believe very exciting plans to maximize to potential I'll stop breakdown and this debt over to us.

Vasant Narasimhan: Thank you, Susanna. So moving to slide 35, here's an updated list of the key catalysts. I've already covered, I think, or we covered most of them over the course of the presentation, but just for all of you to have them in one place. And so turning to slide 36, in conclusion, strong first half performance, demonstrating the agility and resilience, I think, of the company, confirming our full year 2020 guidance with some tightening on the specific sales and core parameters. Our growth drivers are on track, as you heard throughout the presentation, and the pipeline is delivering the full range of mid- to late-stage assets as we've outlined. With that, we'll open the line for questions. So, operator.

Thank you Susanna so moving to slide 35 years and updated lists the key catalyst of already covered I think we've covered most of them over the course of the presentation, but just for all of you to have them in one place and so turning to slide 36 in conclusion strong first half performance demonstrating the agility and resilience I think of the company.

Confirming our full year 2020 guidance with some tightening on the specific sales and core Opinc parameters are growth drivers are on track as your throughout the presentation and the pipeline is delivering with the full range of mid to late stage assets as we've outlined with that we'll open the line for questions. So operator.

Thank you, ladies and gentlemen, I'll begin the question answer session.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Reminder: if you wish to ask a question, please press star 1 on your telephone. If you wish to cancel your request, please press. I can see there are already questions coming in. The first question comes from the line of Peter Welford from Czech. Hi, yes, thanks for taking my questions. I'll just start with two, please.

As a reminder, if you wish to ask a question. Please press star one on your telephone.

If you wish to comes from your request. Please press the question.

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I can see that over these questions coming.

Question comes from the line of key two wells from Jefferies.

Hi, yes, thanks for taking my questions I just thought with two plays one just on the whole Genzyme terms, the intrathecal formulation and thanks for the update on that I guess I understand the decision to make for the one year not even primate data curious if you could also dates with regards to doug's are you still considering filing the mid.

Peter Welford: One just on Zolgensva in terms of the intrathecal formulation. Thanks for the update on that. I guess I understand the decision to make regarding the one-year non-human primate data.

Peter Welford: Curious if you can also update us with regard to the dose. Are you still considering filing the mid-dose, and is there any requirement to get any follow-up of patients on the high-dose at all for FDA? What's your latest thinking with regard to the clinical package that you would be submitting to the agency? And then, secondly, if we just move on to Cosentix, I wonder if you could just update us on two things there. Firstly, the dynamics you're seeing in Europe with regard to the recovery in the derm and room segments. And secondly, also on the dynamics you're seeing in China there with regard to, I think the launch is obviously in psoriasis and also now in AS, just with regard to what you're seeing with patient dynamics in China, please. Thank you.

Yes.

Is there any requirement to get any follow up of patients on the high dose the tool for Sta motion latest thinking with regards to the clinical package that you'd be submitting to the agency.

And then secondly, if you just move onto Cosentyx. What did you could just update us on two things that mostly the dynamics you're seeing in Europe with regards to the recovery in the room sex segments. Then secondly, also on the dynamics, you're seeing in China that with regards to I think the launches obviously in psoriasis and also now.

Hi, just regards what you're seeing with patient dynamics in China. Please thank you.

Thank you Peter so first on diligence.

Vasant Narasimhan: Thank you, Peter. So first, on Zolgensma IT, we are currently in the process of submitting the clinical data for review to FDA, and we plan a series of discussions with them over the course of the fall, leading up to a pre-BLA meeting. Our position is that our mid-dose is sufficient to support a license from a clinical package standpoint, and that's what we'll be presenting to the agency. In terms of Cosentix EU and China dynamics,

We are currently in the process of submitting the clinical data for review to add Sta planning a series of discussions with them over the course of the fall leading up to pre BLA meeting our position is that our mid dose is sufficient.

To support a licensure from a clinical package standpoint, and that's what we'll be presenting to the agency in terms of Cosentyx you in China dynamics smartphones.

So as I said, we outperformed the market in the U.S., we still don't have the Q2 data for Europe, but what I can say is that the situation was very different depending on the than countries. So those countries that were in strict lockdown.

Mary France Chudin: Yeah, so as I said, we outperformed the market in the US. We still don't have the Q2 data for Europe.

Mary France Chudin: But what I can say is that the situation was very different depending on the countries. So those countries that were in strict lockdown, we obviously saw a real impact on the new starts or switches. But we're slowly returning back to normality. So for Europe, I would say our estimate is that we probably will see flat growth over Q1. We saw significant growth in both dermatology and rheumatology, but there was probably some stocking in there that was reversed. In China, the pattern is very similar.

We obviously saw a real impact in the new starts or switches.

But we're slowly returning back to normality so for Europe, I would say.

Our estimate is that we're probably we'll see a flat growth over Q1, we saw significant growth.

In both in dermatology in rheumatology, but there was probably some stocking in there that was reversed.

China pattern is very similar so we did see in Q1 versus Q2. So Q2 was back to normal but in China, We did see and quite a significant drop in Cosentyx. We're now completely back on track.

Mary France Chudin: So we did see in Q1 versus Q2. So Q2 was back to normal. But in China, we did see quite a significant drop in cosensics. We're now completely back on track.

Thanks, Barry front. Thanks, Peter next question operator.

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

Yes.

Thank you next question comes from the line of Andrew Baum from Citi.

Andrew Baum: Thank you. The next question comes from the line of Andrew Baum from Citi. Please ask your questions now.

Two questions.

Thank you couple of questions first advance I'd be interested in your stores the extent the goodwill the industry is generating as a result exhibits work on cobot therapeutics and vaccines.

Andrew Baum: A couple of questions. First, on Vas, I'd be interested in your thoughts to the extent that the goodwill the industry is generating as a result of its work on COVID therapeutics and vaccines protects it from the uncertainties over US reimbursement reform. We've obviously all seen the unity platform proposals from Biden. I just wonder how relaxed we should or should not be and how protective you think the goodwill being generated ultimately is. Second, if John is on the call.

Our next them from the uncertainties.

Yes reinvestment before we've obviously, we'll see in the unity platform proposals from Biden I, just wonder how relax, we should or should not be and how protective we think the goodwill being generated ultimately is.

Second John is on the call.

I think historically he's answer the question to me about the preserved ejection fraction filing Suntrust, though is saying you're seeking a broad label not subgroups.

Vasant Narasimhan: I think, historically, he's answered the question to me about the Preserved Ejection for Action filing from TRESDO by saying you're seeking a broad label, not subgroups. I'm assuming that the Parallax data supports that, particularly the six-minute walk endpoint. We haven't seen that data yet. Perhaps you might like to share what that trial showed to inform our confidence about a potential FDA decision. And then, finally, on Horizon, the TQJ230 Phase III trial, could you talk about whether there are interims in the trial that may result in readout prior to 2024, or whether there are no interims because you're looking for cardiovascular mortality? Thank you.

I am assuming parallax data supports that particularly the six minute walk point.

Six minute walk endpoint.

We have seen that data, perhaps you might like to share what that tranches.

We will not confidence about potential FDA decision and then finally on horizon, the T.J.C. Sachi phase three trial.

Could you talk to whether that insurance and the trials that May result in readout project Twentytwenty school, whether that's nearly no insurance because you're looking for cardiovascular mortality. Thank you.

Thanks, Andrew on the on the first question I think is very positive to see the recognition of the important role the industry plays in global Health response pandemic response, and overall the appreciation of R&D, both in vaccines and therapeutic.

Vasant Narasimhan: Thanks Andrew. On the first question, I think it's been very positive to see the recognition of the important role the industry plays in global health response, pandemic response, and overall the appreciation of R&D both in vaccines and therapeutics. That said, I don't believe that the goodwill will carry over to a significant degree into the legislative dynamics. I think what I would expect to see is a range of different proposals as we've seen in the past, and what will ultimately come out of that remains to be seen as to whether it will be the continued incremental changes we've seen historically or something more fundamental. I think overall we are supportive, and I think many of our peers are supportive of a benefit redesign.

That said I don't believe that the goodwill will carry over to significant degree into the legislative.

Dynamics I think more what I would expect to see a range of different proposals as we've seen in the past and will ultimately come forward out of that silver remains remains to be seeing as to whether it will be the continued incremental changes we've seen historically or something more fundamental I think overall.

All we are supportive and I think many in the end of our peers are supportive of a benefit redesign that really enables patients to pay less out of pocket.

Vasant Narasimhan: David Soergel, Timothy Anderson, Graham Parry, Richard Foss, Simon Baker, Emmanuel Papadakis, John, on half-past?

In order to get there medicines, but I think in the current dynamic in the U.S. is a lot of uncertainties and we'll see how it plays out but I don't believe the goodwill insulates us from those policies dynamics.

John Tsai: Yeah, I'd like to thank Andrew for the question. Thanks for the question, Andrew, on HFPAF. As we said previously, we're looking for a broad label, and our position hasn't changed. As Marie France noted earlier, you know, the FDA accepted our filing in June, and that's the approach. You alluded to the Parallax data, which we did actually get the results late last year, and this is a 24-week study looking at the primary endpoint, which is NT Pro BNP. We did reach the NT Pro BNP endpoint. You referred to the six-minute walk test. However, we did not see a significant difference in the six-minute walk test. As you probably know, this endpoint is particularly challenging when we look at cardiovascular endpoints. But, with NT Pro BNP, we do believe that this is supportive of our overall filing for the broad population. So, with this overall endpoint, we will move forward with the filing.

John I'll have pest, yes.

Thanks, Andrew and the question.

Thanks for the question Andrew on half path as we said previously we're looking for a broad label on our position hasn't changes Refracts noted earlier. The FDA has accepted our filing in June and that's the approach you alluded to the parallax data, which we did.

Actually get the results late last year and this is at 24 week study looking at the primary endpoint, which is at and T. Pro BNP. We did reach the NT Pro BNP endpoint you refer to the six minute walk test.

We did not see a significant difference in this six minute walk test as you probably know this endpoint is particularly challenging when we look at cardiovascular endpoints, but however, with the anti per BMP. We do believe that this is supportive of our overall filing for the broad population. So.

With with this overall endpoint, we will move forward with the filing and I look forward to feedback from the FDA and then horizon is there any interim analysis LP Little yes, I'm currently we're recruiting for LP little away with PQ. Jay There is interim analysis built and I don't have the exact time points and when the interim.

John Tsai: Yeah, currently, we're recruiting for LP little a with TQJ. There is interim analysis built in. I don't have the exact time points of when the interim is built in, but we're currently in the early stages of recruitment for the TQJ study.

Built and but we're currently in the early stages recruitment for the TJ study.

John Tsai: Great. Thanks, John. Thank you, Andrew. Next question, operator.

Great. Thanks.

Thank you Andrew next question operator.

Thank you. The next question comes from the line Steve.

John Tsai: Question operator. Thank you. The next question comes from the line of Steve Scala from COA. Thank you.

Skava from Cowen.

Please ask your question. Thank you if your question it looks like a number of key timelines have been pushed out. So so so gentlemen type two three and trusted post acute my data scaly Oes data in the 177 L. you PSN may.

Steve Scala: A few questions. It looks like a number of key timelines have been pushed out. So, so, so, Gentleman, Type 2, 3, Entrusted Post-Acute MI data, Cascali OS data in the 177 LU PSMA, and Phase 3 data in the filing. I know each has an explanation, but no timeline was brought forward. Are these pushouts due to COVID-19, or is there some other systemic reason for all of these pushouts? Secondly, Anzal Janzma, is there a specific scientific reason to seek longer-term primate data for the IT formulation? For instance, is there evidence that dorsal root ganglia toxicity can appear late post-dosing?

Three data in the filing I know each has an explanation, but no timeline was brought forward are these push outs due to cobot 19 or is there some other systemic.

The reason for all of these push outs.

Secondly on nonsense.

Is there a specific scientific reason to seek longer term primate data.

For the IP formulation for instance is evidence that door. So rude ganglia toxicity can appear late post dosing and then lastly, the Novartis Kobin 19 vaccine collaboration was not mentioned in the release is this still in development. Thank you.

Steve Scala: And then lastly, the Novartis COVID-19 vaccine collaboration was not mentioned in the release. Is this still in development? Thank you.

Vasant Narasimhan: Yeah, thanks, Steve. On the first question, you know, I'll take that. First, I think it's important to note, as you rightfully point out, there's different dynamics in each and not to tell a simple story when there's obviously complex things going on. Both Kystallia OS and Lupusma are event-driven studies that are driven by our ability to accumulate events. In both studies, we're seeing events accumulate more slowly, and we're hopeful that could be because of the effect of the drug. We can't confirm that, but because these are event-driven studies, we're ultimately at the mercy of when these events happen. And as soon as they read out, they read out loud. With respect to the Paradise study, I don't believe it's a push-out, is it, John?

Thanks, Stephen on the first question.

That first I think it's important to note as you rightly pointed out there's different dynamics and each or not.

Tell a simple story when there is obviously complex things going on both polyolefin loopy, yes. The mayor event driven studies that are driven by our ability to accumulate events in both studies were seeing events accumulate more slowly we're hopeful that could be because of the effect of the drug we can't confirm that but it because these are event driven.

Studies were ultimately it at the Mercy at Wendy's events.

Happened and sort of they read out they read out with respect to have.

Respect to the Paradise study I don't believe it's a push out as the John.

Well, what we had as we were occurring events and this is another event driven trial. So I think we're looking for the next year crew and.

Vasant Narasimhan: Well, what we had was we were accruing events, and this is another event-driven trial. So I think we're looking for the events to accrue, and the timelines will be sometime next year when we get the readout.

Timelines will be sometime next year, when we get to readout and then lastly, I think zogenix about where the company decision based on a development strategy, which button. We ended the second question. When you look at non human Primate data. The only thing you see of course with a onetime therapy you see certain findings on pathological examination at the time.

Vasant Narasimhan: And then lastly, I think Zolgensma was a company decision based on a development strategy, which then leads me to the second question. When you look at non-human primate data, the only thing you see, of course, with a one-time therapy, you see certain findings on pathological examination at the time of the initial dosing.

The initial dosing overtime, you can evaluate the primates for any clinical manifestations as well as how those pathologies evolve the longer you follow the more likely that you have for further resolution and more data you have at this had no clinical impact on the.

Vasant Narasimhan: Over time, you can evaluate them.

Vasant Narasimhan: Thank you. Thank you. Thank you.

Vasant Narasimhan: So, we'll start with the questions. The first question is, you mentioned that you're going to be working with primates for any clinical manifestations as well as how those pathologies evolve. The longer you follow, the more likelihood you have for further resolution and the more data you have that this has no clinical impact on the primates. FDA initially requested one year, but we went back with the proposal for six months.

On the primates.

At the initially requested one year, we went back with the proposal for six months at da accepted the proposal, but encouraged us to consider the ramifications of six months versus one year and I think in the end we made the decision to go with one year, because we think that gives us the highest probability of success on.

Vasant Narasimhan: FDA accepted the proposal but encouraged us to consider the ramifications of six months versus one year. And I think, in the end, we made the decision to go with one year because we think that gives us the highest probability of success on this very critical medicine for these patients. So, that's the analysis for how we approach that. And we'll follow the monkeys, but we don't expect, in response to your specific question, any late insult.

This very critical medicine for these patients. So that's the analysis for how we approach that and will follow the monkeys. We don't expect to your specific question any late insult. This is actually monitoring the resolution of the initial findings over the course of the first.

Vasant Narasimhan: This is actually monitoring the resolution of the initial findings over the course of the first year. And then, the referral to the vaccine program. Overall, our goal was to support novel vaccine development using AAV technology. We are going to produce the preclinical lots, but we are not a vaccine manufacturer. Our goal in COVID is to develop therapeutics. We have two pivotal studies. We have over 20 IITs, over 30 IITs, I should say, of our existing medicines. We have a novel drug discovery program targeting two different targets to try to find a pan-coronavirus medicine, and we hope to get those, hopefully, into the clinic next year if things go according to plan. So, our focus is very much on medicines, not on vaccines, but we're very willing to use our manufacturing capacity to support the development of any candidate vaccines for COVID.

First year and then.

Referral to the vaccine program.

Overall, our goal was to support a novel vaccine development using Avi technology, we are going to produce the preclinical lots, but we're not a vaccine manufacture our goal and cove. It is focused on therapeutics.

We have two pivotal studies, we have over 20 I is over 30, I, it's either to save our existing medicine, we have a novel drug discovery program targeting two different targets to try to find a pan Corona virus.

Medicine, and we hope to get those hopefully into the clinic.

Next year, if if things go according to plan. So our focus is very much on medicines not on vaccines, but were very willing to use our manufacturing capacity to support the development.

Of of any candidate vaccines for code.

Okay.

Next question operator.

Vasant Narasimhan: Operator.

Thank you.

Operator: Thank you. The next question comes from the line of Graham Parry, Bank of America, who asked you two questions. Hi, thanks for taking my question.

Thank you. The next question comes from the line Graham Parry Bank of America.

He's asking your question.

Hi, Thanks for taking my questions. Firstly on the cannot be still I think you'd previously said the interim analysis in Q4 is twentytwenty, while investing ahead you say.

Graham Parry: So firstly, on the canopy study, I think you'd previously said the interim analysis in Q4 is 2021, but I think I heard you say there is now both PFS and OS in the fourth quarter, not just a PFS analysis. Is that a change in the statistical analysis plan? And has the hurdle therefore changed as well? Secondly, on Zolgensma intrathecal, just to be clear, is the non-human primate data needed both for a BLA filing and also to get off clinical hold at the high dose? Or is it possible for you just to file low and mid-dose and never actually get off the high dose clinical hold? And then thirdly, on ofatimumab, could you help us with the exact PDUFA date and clarify if by then you think the site inspections would have happened? Because I know they were delayed or cancelled because of COVID-19. And just thoughts on the environment you'll be launching into in the second half of the year and how you might have to tailor that launch. Thank you.

There is now at that Ken PFS and OS in fourth quarter, not just a PFS analysis is is that this change in the statistical analysis plan and as the hurdle that will change as well.

Secondly on solutions into sequel, and just to be Clay's, the non human primate data needed space for a delay filing and also to guess helps clinical hold at the high days or is it possible can you just to follow in mid day and never actually get off them high days at clinical hold and then thirdly on offer teaming.

Map and could you help us with the exact studies to date.

Clarify if spy then you think the slice inspections, what has happened and Sunday were delayed or canceled because of some kind of 19 and just thoughts on the environment, you'll be launching into in the second half. The on how you might have to tailor that launch thank Keith.

Graham Parry: Thanks, Graham, on Canopy Dawn, the PFOS OS Interim.

Thanks, Graham on cannot be done PFS OS and rooms, yes. Thanks. Thanks for the question DRAM and first I'd like to say that we haven't had any changes in terms of our statistical analysis plan for cannot be the reminder, for folks online canopy is our first line trial in non small cell lung cancer.

John Tsai: Yeah, thanks. Thanks for the question, Graham. And first, I'd like to say that we haven't had any changes in terms of our statistical analysis plan for Canopy. Just a reminder for the folks online, Canopy is our first-line trial in non-small-cell lung cancer with Kenyamab. And really, this study is designed using co-primary endpoints. It's a novel approach that we've taken, looking at both PFS and OS in the first interim analysis, which will occur in the fourth quarter of this year. And this will be our first opportunity to really take a look at the results that we'll get. I should outline that there will be a high hurdle for us to look at the PFS and OS for the stopping rules of the study. So if the PFS endpoint is met, I think we will make a decision whether we will stop the study or continue with the study in terms of going on with the OS overall results. So with that as the background, I think this is how we will approach Canopy 1.

Sure where thought can you can you map and really this study is designed using co primary endpoints as a novel approach that we've taken looking at looking at both.

Fashion, Oh, yes in the first interim analysis, which will occur in the fourth quarter of this year and this would be our first opportunity to really take a look in terms of the results that will get.

The this I should outline that there will be a high hurdle for us to look at the PFS in our last for the stopping rules. The study so if the PFS endpoint as Matt I think we will make a decision whether we will stop the study or continue with the study in terms of continuation with your west.

Overall results so with that as the background I think this is that how we will approach.

Canopy, one and just to be clear, we can win on either PFS or O S that both interim analyses this year and next year when the final read out at the end of next year.

John Tsai: And just to be clear, we can win on either PFS or OS at both interim analyses this year and next year in the final readout at the end of next year. In terms of Zolgensma IT, we do need to get off clinical hold to be able to file the BLA, our partial clinical hold. That is why our goal is to get off partial clinical hold by generating this one-year non-human primate study. But from a clinical standpoint, we are proposing to the FDA to go forward with the mid-dose strong data, which we believe has compellingly demonstrated the impact Zolgensma has on these 2- to 5-year-old children. And then lastly, I think the third question was about the PDUFA timeline, Sean?

In terms of.

The agenda I see we do need to get a clinical hold to be able to file the C.B.L.A.R. partial clinical hold.

So our that is why our goal is to get off partial clinical hold by generating this one year.

Non human Primate study, but from a clinical standpoint, we will are proposing to with the FDA had a go forward with the mid dose strong data, which we believe has a compelling we demonstrated the impact so does but has in these two to five euro children.

And then lastly.

Third question was on the.

But we do for Tomlinson, yes, so the timing for Ofer.

Vasant Narasimhan: Yeah, so the timing for OFA was based on, as you remember, the three-month extension from the FDA, and the timelines currently are in the mid-September time frame. I don't have the exact date, but it's mid-September, and so we're negotiating the aspects of the label with FDA, and we expect to reach those timelines, as Voss presented earlier.

Was based on as you remember the three month extension from the FDA and the timelines currently or in the mid September timeframe I don't have the exact date, it's mid September and so.

We are negotiating negotiating the aspects of the label with FDA and we expect to reach those timelines as fast presented earlier in the in the DRAM Theres no outstanding inspections or otherwise outstanding topics. So really in the final stages and I think I'm very fronts on the launch.

Mary France Chudin: So we are really in the final stages, and I think Marie-France on the launch.

Yes, so we really feel that theres no better time to bring a highly efficacious and save treatment that can be administered at home to to Mds patients.

Mary France Chudin: Yeah, so we really feel that there's no better time to bring a highly efficacious and safe treatment that can be administered at home to MS patients, considering the context. Our initial focus will be to really drive broad adoption with MS specialists and general neurologists. And we're using a really highly agile approach between face-to-face and virtual outreach. We've actually developed a digital affinity score for physicians to understand where they are and how much digital promotion we can do. We're also leveraging our learnings from recent launches and placing significant focus on patient services to ensure seamless and flexible onboarding. So that's really our objective is to make sure that patients can access Tumamab quickly and easily. We expect to see a ramp-up in 2021 as we see the conversion-to-page product and ex-U.S. customers towards the second half of 2021.

So during the context, our initial focus will be to really drive the broad adoption with special specialists and general neurologists and we're using a really highly agile approach.

Tween face to face and virtual outreach with actually developed developed a digital affinity score for physicians to understand where they are and how much a digital promotion. We can do we're also leveraging our learnings from recent launches in placing significant focus on patient services.

To ensure a seamless inflexible onboarding. So that's really our objective is to make sure that patients can access quickly and easily.

For tooling that we expect to see ramp up in 2021, as we see the conversion to pay product and X U.S. and towards the second half of 2021.

Mary France Chudin: Thanks very much. Thanks, Graham. Next question, operator.

Thanks, Barry Thanks, Graham next question operator.

Thank you. The next question comes from the line of Mark Poso.

Operator: The next question... Mark Purcell, from Morgan Stanley. Please ask your questions. Yeah, thank you for taking my questions. And thanks for all the detail in the slides today as well.

Stanley. Please ask your question.

Thank you said, taking my questions and thanks for the detail and the side since then as well.

Mark Purcell: Firstly, on innovation, can you help us understand, on Inquisirin, the appetite for governments outside the UK to participate in risk sharing deals with you? I'm just trying to understand what your expectations are for the uptake ahead of the outcomes data in 2024. And whether we should look at Inquisirin and the rollout of that product as being a barometer of potential success for TQJ 230. And then, secondly, on the other side of the coin, clearly growth drivers, 47% of farmer sales, but there are some drags which are difficult for us to quantify. So maybe for you, Harry, the VBP premium list was announced today, so Samara, Sandinium, Galveston, Diavan, we estimate that's roughly 20% of your China sales. But to get your view there.

First on innovation.

Can you help us understand on it puts around.

The appetite governments outside in Kay said participates in risk sharing those would do.

Trying to understand what your expectations are for the uptake or how does the outcome sites in 2024, whether we should look getting closer and the rollouts that put us as being a barometer potential success that TJ Q3, Sarah.

Then secondly on the.

On the on the other side of the twin.

Clearly credits why this 47%.

Pharma sales, but there were some drag switch difficult for us to seek to quantify maybe for you hiring.

CBP.

I mean, this was announced today say smaller sending in Galveston diet.

We estimate as roughly 20% to go China itself Thats again, you'll see there and then secondly on the other established and other ophthalmology put up there's about 4.3 billion themselves and those buckets last year could you help us with an outlet incense the run rate. So we can funny thing site, that's habits on sales in U.S., but it's more difficult.

Mark Purcell: And then secondly, on the other established and other ophthalmology products, there were about 4.3 billion in sales in those buckets last year. Could you help us with an outlook in terms of the run rate there? So we can follow things like Travertine sales in the US, but it's more difficult for us to understand the size of these products and the potential drags going forward. Those are my two questions. Thank you.

Just to understand the side, perhaps in a potential drugs.

Going forward as my two questions. Thank you.

Vasant Narasimhan: Thank you, Mark. So first on the Enclosurin commercialization, I'll let Mary Fonseca.

Thank you Mark so first on the being Clusterin.

Commercialization outlook refunds.

Mary France Chudin: Yeah, so, you know, I think everyone realizes that ASCVD is a major burden for systems. And we also know we've got about a million patient data points on LDL and the fact that it's a modifiable risk factor. So we know that.

Yes so.

I think everyone realizes that CVD as a major burden for systems and we also now we've got about a million and patient data points on on LDL and the fact that didn't say modify a little risk factors. So we know that and actually what what kind of stands in the way our the nonclinical bearing.

Mary France Chudin: And actually, what kind of stands in the way are the non-clinical barriers. So when we think about population health, what we're talking about is really trying to develop new partnerships with healthcare systems, and systems of care that address these non-clinical barriers. And we believe that if we do that, Inclusiran has a unique profile that allows us to address some of the main non-clinical barriers that are out there. One is affordability. There's access, and there's adherence. So if we do that and we model that properly, then we really have an opportunity to impact this disease at scale, but also at cost. So far, we're in discussions with different payers, with different systems, not only in the UK, and it's, of course, early days, but the conversations we're having are encouraging because I think that systems realize that if they can address this burden, it would make a major difference for them.

So when we think about population house, what we're talking about is really trying to develop new partnerships with with a healthcare systems. The systems of care that addresses nonclinical, there and we believe that if we do that and includes ran has a unique profile that allows us to address some of them.

I mean nonclinical barriers that are out there one is affordability there was access and there is appearance. So if we do that we model that properly then we really have an opportunity to impact this disease at scale, but that also the costs. So so far we're in discussion with different payers with different systems.

Not only in the UK and it's of course early days, but the conversations we're having are encouraging because I think that systems realize and if they can address this burden it would make a major difference for them.

And read through TQL.

Mary France Chudin: and read through the TQJM.

Mary France Chudin: So, absolutely. If we are able to establish these partnerships with healthcare systems and with governments, then it does open the door for us to start partnering with healthcare systems in a completely different way. So, in the same way that we would be looking at LDLC and trying to make a major difference for these patients, we could actually do the same with LP little a.

So yes, absolutely. So if we if we if we are able to establish these partnerships with healthcare systems and with and government spend than it does open the door for us to start partnering with healthcare systems and a completely different way. So in the same way that we would be looking at LDL C and trying to make a major.

Different for these patients we could actually do the same with LP literally.

Vasant Narasimhan: Now moving to China, you know, I'll take that question. We're certainly aware that, with the VVP, a number of our products will be in this next round, round three. But I think it's important to know when we set the aspiration to double our China business, our focus was on new launches. And when you look at it, with over 50 NDA submissions into China, or, sorry, NDA submissions into China between now and 2022, are really a leading number of NRDL listings. We've already talked about how Cosentix is performing, and Tresto, our oncology portfolio. We've guided our China organization to really focus on new launches and driving their uptake and accept the fact that there will be some commoditization of our legacy brands.

Now moving to China.

Ill take that question, we're certainly aware that with the VBP a number of our products will be in this next round round three but I think it's important to know when we set the aspiration to double our China business. Our focus was on new launches and when you look at it with a over 50 a indeed.

Submissions into into China, or 20, fives, or indeed submissions into China between now and in 2022.

Really a leading number of NRG l. listings, we've already talked about how cosentyx is performing and trust, though our oncology portfolio, we've guided our China, Oregon insufficient to really focus on new launches and driving their uptake and except the fact that there will be some commoditization of our legacy brands.

So when our guidance to double our China sales takes into account. The fact that we will have the impact of the around three of China's GDP.

Vasant Narasimhan: Our guidance to double our China sales takes into account the fact that we will have the impact of round three of China's EPP. And then lastly, Harry, on other ophthalmology.

And then lastly, Harry on other ophthalmology.

Yes.

Harry Kirsch: Yes, so I think your question also alluded to some of the established medicines, you know, how are they behaving, and you see that in our established medicines bucket, we usually have mid-single-digit declines. Now, Diavan and Exforgia are holding up, you know; they have seen their first half, each half a billion, and roughly flat to the prior year. When it comes to Ofta, we have highlighted that a couple of Ofta products, mainly Travartan and Travapost, have basically generic exposure. That group was roughly 400 million last year, and we are basically having a generic impact also in quarter two in the range of 40 to 50 million. So part of the mature OFTA impact, but it's not, you know, significant yet, is a generalization of the Travertine-Travapost group.

So I think your questions also alluded to that some of the established medicines.

Our behaving.

And our established medicines bucket, we usually have mid single digit declines.

So.

Dive, let's fours are holding up.

In the first half each half a billion and roughly flat to prior year when it comes to offer.

We have highlighted that couple of offshore products, maybe mainly travel time time opposed basically generic exposure that crew what was last year roughly 400 million.

We are basically having a generic impact also quarter to age of 40 to 50 million so part of to mature off.

Impacts, but it's not.

Significance yet.

Genericization of.

Travel time travel post group.

Harry Kirsch: Okay, thanks, Harry. Thanks for the questions, Mark. Next question, operator.

Hey, Thanks, Eric.

Thanks for the questions Mark makes the next question operator.

Operator: Thank you. The next question comes from the line of Laura Sutcliffe from UBS. Please ask your questions.

The next question the mine.

Laura separately from EWP yet.

Your question.

Laura Sutcliffe: Hello, thank you. I think you said on your first quarter earnings call that you still see BioBoo as being a blockbuster product. Given that you have another quarter of experience, should we assume that that's still the case? And, from some of your commentary today, should we assume that there'll be a fairly long grind up towards blockbuster status if that is still the case? And then secondly, on Solgenzma, it looks as though Biogen is losing.

Hello, Thank you.

He said on your first quarter and cold EEZE still CBS as being a blockbuster products.

Given that you have another quarter of experience should we assume that that's still the case I think.

Some some of your comments you today should we assume that there'll be a fairly long grind up towards blockbuster status. So that's still the tight.

And then secondly.

So John.

So biogen is going to do some work looking at using Spinraza in patients who have already been treaties with Celgene. That's so I was just wondering if you had any update on what you plan to do with Anaplan. Thanks.

Laura Sutcliffe: who have already been treated with Sorghensis.

Vasant Narasimhan: So I was just wondering if you had any updates on what you plan to do with Brandenplan. Thank you.

Vasant Narasimhan: Thank you.

Mary France Chudin: Yeah, thanks, Laura. So first on Bayview, Mary Franz.

Thanks, Laura suffer some baby boomer.

Mary France Chudin: So to answer your question, yes, we believe, we absolutely believe, and we're staying committed to this product. We have a safety issue, it's a rare safety issue, we're taking that seriously, we've got to understand what the root cause is, what the mitigation factors are, but we have an outstanding product, a product that is better at fluid resolution, and where there's a clear unmet medical need for many patients who abandon therapy and end up losing their vision anyway, so we're absolutely committed to finding solutions for BOVU to re We know that this product works extremely well in the vast majority of patients. We continue to focus on the benefit-risk balance, and we're not going to lose sight of the longer-term potential of BOVU.

So so to answer your question, Yes, we believe we absolutely believe and we are we're staying committed to this product.

We have a safety issue it say where safety issue, we're taking it seriously we've got to understand what the root causes what the mitigation factors are but we have an outstanding product and product that is better on fluid resolution and where there is an egg clear unmet.

Medical need for many patients who abandon therapy and end up losing their vision anyway. So we're absolutely committed to finding the solutions for Bellevue too we give confidence to physicians. We know that this product works extremely well in the vast majority of patients we continue to focus on.

The the benefit risk and we're not going to lose sight of a longer term perfect potentially be obvious.

Vasant Narasimhan: Yeah, and then on Zolgensma, we continue to evaluate a full life cycle management plan for Zolgensma to really enable us to profile the medicine's impact in a range of different patient populations. I would note that to date, we have not seen any decline in Zolgensma patients who have received this therapy. In fact, in our clinical trial data, as well as in the real world, we see patients maintaining the milestones they gained with Zolgensma. So I think that's important in thinking through any combination-based approaches. That said, we do have our potential approach with Braniflam, and we're also evaluating the use of Braniflam in other neuromuscular diseases as well. And so we'll keep the markets updated as we finalize our next question, operator.

And then on Zogenix HMA, we continue to evaluate a full lifecycle management plan for result, as much to really enable us to profiles and medicines impacts and arrange a different patient populations I wouldn't know that as today, we have not seen any decline in adult ends but patients who receive.

This this therapy in fact.

Clinical trial data as well as in the in the real World.

C patients maintaining the milestones the game with a result answers I think thats important in thinking through any combination based approaches that said, we do have are evaluating potential approach with brand of Clem and we're also evaluating the use of brand a plan in other.

Muscular diseases, as well and so well keep other markets updated as we finalize those plants.

Next question operator.

Thank you next question comes from the line of Q Parker Goldman Sachs. Please ask your question.

Operator: Thank you. The next question comes from the line of Kjur, Parke, and Goldberg. Please ask your question. Good afternoon, and thank you for taking my questions. I have three, please.

Good afternoon on tank, taking my questions.

Please.

Richard Vosser: One for Vass, one for Harry, and one for Marie-France on Zorgansema. Vass, you know, in the last 12 months, Novartis has made significant progress on a bunch of things, including, as you alluded to, the historical legacy issues of delivering on cost initiatives and some of the launches. But they've also been kind of benchmarked by some, what people are considering some execution wrinkles. What do you think the rest of the organization is able to keep up with the pace of change that you want the organization to change at? Or do you think that's not a factor in some of the issues we've seen over the last 12 months? That's question number one. Question number two for you, Harry.

For the last one for hiring one from license on consumer.

Yes, you.

Last 12 months kind of Novartis has made significant progress on a bunch of things, including comments you alluded to the historical legacy issues on delivering on kind of cost initiatives and some of the launches, but then also being kind of benchmark. Following some what people are considering some execution wrinkles.

What do you did you think the vessel the organization is able to keep up with a piece of change that you want the organization to change.

Or do you think thats not a factor in some of the issues we've seen over the last 12 months. That's question number one.

Pushing them would do for you hiring given the 19% operating core operating profit growth you've delivered in the first half of the euro.

Harry Kirsch: Given the 19% operating profit growth you delivered in the first half of the year, your guidance for the full year essentially implies a kind of zero to very little operating profit growth in the second half of the year. I'm cognizant that you guys typically guide very conservatively, but I would love to hear how much of the second half conservatism or the guidance includes an increase in spend from some of the kind of normal marketing activities becoming real. Or do you think if the current situation were to continue, that would be an upside to your targets for the year?

Your guidance for the full Youre essentially implies kind of zero to bear in nickel operating profit growth in the second half of the year.

I'm cognizant that you guys typically guide very conservatively, but would love to yours, how much of that second half conservatism or the guidance includes an increase in spend from some of the kind of normal marketing activity, becoming real or do you think is the constitution, but to continue that would be upside to your.

New York targets for the Euro.

And then lastly on so intense mom.

Richard Vosser: And then lastly, on Zolgensma, the US number at 105 million this quarter, I suspect it was a bit below what most people are expecting, and aware that a lot of it was due to the lack of switches from use from Spinraza users. So my question is whether that lack of switch is attributable to COVID-19? Or do you see some of those lack of switches also being attributable to physicians kind of warehousing their patients in front of the potential for the planned launch?

US number 105 million this quarter I suspect there was a bit below what most people don't expect thing on coffees and dot lawsuit was due to the lack of switches from use from Spinraza users. So my question is.

Lack of switch.

You discipline to cope with 19 or do you see some of those lack of switch is also being attributable to positions kind of that housing that patients in front of potential risk launch. Thank you.

Vasant Narasimhan: Thank you.

Vasant Narasimhan: Yeah, thanks, KR. So first on the first question, I get this. I've got this, I think, during a few different investor conversations. What I'd note is, on the one hand, we have had a few issues which we would have preferred to avoid, some beyond our control, like the Bayview safety issue, as well as the Ofatimumab delay because of CMC delays at the FDA. But again, those were not necessarily fully in our control. And I think it's also notable that with respect to the Zolgensma data topic, again, there was no action taken.

Yes. Thanks here. So first on the first question I get this I've got this I think during a few different investor conversations what I'd note is on the one hand, you have had a few few issues, which we would have preferred to avoid some beyond our control like the Bellevue safety issue as well as the.

Okay bitumen delayed because of CMC delays at the FDA, but again those were not necessarily fully in our in our control and I think it's also notable there with respect to the agenda.

Data topic again, there was no action taken at the same time, it's worth investors remembering that we also.

Vasant Narasimhan: At the same time, it's worth investors remembering that we also delivered the largest spin in European capital markets history with Alcon. Six new NMEs that were approved last year, which was also an industry record, have transformed the overall strategy of the company and have upgraded our ESG rating. So I would actually say the organization is executing very well. But we also accept the margin for error is small. And so we will keep working to avoid those errors.

Delivered the largest spin in European capital markets history, with ALCANZA six new enemies that were approved last year, which was also a in industry record have transformed the overall strategy of the company and have upgraded our SG.

Rating, so I would actually say the organization is executing very well, but like we I think also except the margin for small and so we will keep working too.

Avoid those areas I would say our perception as there has been an overreaction. When you look at the overall dynamics of the business, 6% sales growth, 19% core operating income growth in a pipeline has consistently ranked one of the top three in the industry in almost every measure that we can find as well as a broad range of asset.

Harry Kirsch: I would say our perception is there's been an overreaction when you look at the overall dynamics of the business, 6% sales growth, 19% core operating income growth, and a pipeline that's consistently ranked one of the top three in the industry in almost every measure that we can find, as well as the broad range of assets that you see on the slides. So that is what we feel. We feel like the organization is in a strong position. The culture change is on track. Our pivot to innovation is on track. Our margin expansion is well on track to get to the mid to high 30s, as we guided well ahead of the commitments we made. I think we're one of the leaders in the data and digital transformation. And when you look at building trust with society, it's not just us talking. Now you're seeing the rating agencies also move as well. So I would stay tuned. And we're grateful for the long-term investors who have stuck the course and see the strong potential of the company. And we hope to commence the remainder. Now, with respect to guidance, Harry?

So you see on the slides so that is our feeling we feel like the organization is in a strong position. The culture change is on track. Our pivots innovation is on track our margin expansion is well on track to get to the mid to high Thirtys as we guided well ahead of the commitments we made.

I think we're one of the leaders in the data and digital transformation and when you look with building Trust. The society, it's not just us talking now you're seeing the rating agencies also move as well so I would stay tuned and we're grateful for the long term investors is stay the course and see the strong potential as a company we hope to commence the remainder no there.

Spectra guidance here. Thank you get carrier clearly within the first half having delivered 19% guiding on the full year two low double digit.

Harry Kirsch: Thank you, Keyur. Clearly, within the first half, having delivered 19% and guiding on the full year to a low double digit, kind of takes low to mid single digits in the second half. That looks achievable. So you can assume that our guidance is prudent, but it's also volatile times. So, you know, we will update you on quarter three.

Kind of takes low to mid single digits second tough.

That looks achievable. So you could assume that our guidance is prudent but it's also volatile times. So we will update on quarter three would be great to see some upside, but it's a bit too early to upgrade.

Harry Kirsch: And last on the Zolgensma topic, I'll take that as our, Avex's unit is run by Dave Lennon, who reports to me. The dynamics in the U.S. are really one driven by COVID, and we do expect our run rates in the U.S. to come back up to a situation where we get the vast majority of patients identified in newborn screening and back to a healthy level of switch. Understandably, in the context of COVID in April, May, and June, parents were reluctant, of course, to bring their young children who are immunocompromised into the hospital for potential switch evaluation.

In Latin result, Transmode topic, I'll take that as a our Avexis unit is run by Dave Lennon.

Reports to me.

Dynamics in the in the U.S. are really one driven by by Covidien, We do expect a run rates in the U.S. to come back up.

So really a situation where we get the vast majority of patients identified a newborn screening and back to a healthy level of switch understandably in the context of Cove. It in April May and June parents were reluctant of course to bring their young children, who are immuno compromised.

Into the hospital for potential switched evaluation, we're already seeing a rebound I think most really notable as important as to understand the SDMA market. Unlike many of our other market is larger ex us than in the U.S. and as you saw in the dynamic even in Q2, we had very robust performance in.

Vasant Narasimhan: We're already seeing a rebound. I think what's really notable and important is that the SMA market, unlike many other markets, is larger outside the U.S. than in the U.S. And as you saw in the dynamics, even in Q2, we had very robust performance in the non-U.S. markets, Japan and Europe, as well as with the named patient programs and markets where we don't have approval yet. And we expect to have a broad range of approvals going forward. So the real catalyst now is going to be those ex-U.S. markets. Thank you, Karen. Next question.

The ex us markets, Japan, and Europe, as well as with the named patient programs in markets, where we don't have approval, yet and we expect to have a broad range of approvals going forward. So the real catalyst now it's going to be those ex us markets moving forward.

Thank you hear next question.

Operator: Thank you. The next question comes from the line from Simon Baker from Redburn. Please ask your question. Thank you for taking my questions. Two, please.

Thank you.

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

Thank you for taking my questions actually please firstly for currently in Q1, you Helpfully gave us.

Simon Baker: Firstly, for Harry, in Q1, you helpfully gave us the margin X, the effects of COVID. I just wanted to ask if, given you haven't done that this quarter, there were no COVID-related impacts, be they positive or negative, on the margin. And if there were, could you tell us what they were and in what direction?

The margin.

The effects coverage.

I just wanted to ask if given you haven't done that this quarter no cobiz related impact speed, a positive or negative.

In the margin I just have off could you could you tell us what they only want to action.

Harry Kirsch: And related to that, you talked about the greater use of digital within product launches. Over time, what sort of impact do you think that could have on STNA? And secondly, a Sandoz question for Richard: given that the FDA's public meeting on GDUFA reauthorization started 15 minutes ago, I thought it'd be a good time to ask you what your hopes and expectations for GDUFA 3 are. Thanks so much.

Related to that you talked about the greater use of digital within product launches.

Time, what sort of impact you think that could have on on SG nine.

And secondly, sandals question, Richard given that the FDIC public meeting on could do so we will fly sanctions don't seem to 15 minutes ago.

Maybe you could turn into asking what your hopes and expectations for cutting.

Thanks, so much.

Harry Kirsch: So Harry, on the margins?

So Harry on the margins.

Harry Kirsch: Thank you, Simon. Of course, we were thinking a lot about this, you know. What kind of details should we put in? Now, as we progress through this kind of COVID year, things get a bit blurred, if you will, right down to exactly. I mean, it's never an exact science here. So I think what's most important is to look at half one, where we see we had to forward buy or stockpile often at patient level in quarter one, then we have signs that this has mostly been depleted. And then what I call the "No" effect: we have positive COVID effects because in our chronic, let's say at home administered medicines, we see more persistence and better dynamics.

Thank you Simon of course, we were thinking a lot about what kind of determined to be put in now as we progress in this kind of coal with your things get a bit deplored if you were to exactly.

Never exact science here, so I think what's most important to look at half one where we see we had.

Forward buying stocking of the patient level in quarter. One then we have signs that mostly this has been depleted and then what I call. It affects no we have positive covert effect because in our chronic let's say at home administered.

Medicines, we see more persistence and rather dynamics in some of the hospital initiated we have less than 50 aftermarket business, where people cannot get the injection because the physician. So its gets quite mixed and all of this together therefore.

Harry Kirsch: In some of the hospital initiated, we have less. Then we have the ophthalmology business where people cannot get their injection because the physician is too busy, so it gets quite mixed and all of this together. Therefore, we look at half one. And, of course, you can make your own calculations, right? You take the 400 million in stocks in Q1 and say, Okay, I assume that now will destruct. If you do that, you know that that gives you, of course, you know, a higher percentage in Q2. But all of this gets a bit, I think, meaningless in the end.

We look at the half one.

And of course, you can make your calculation to take to 400 million of stocking in Q1 and say, okay. I assume that no destocked if you do that.

That gives you of course.

Higher percentage Q2.

But it's all of this gets a bit I think meaningless in the and so what we've seen us unwinding of that 400 million stocking of Q1 in Q2, we have seen 300 million roughly of lower ophthalmology sales, which otherwise was stable in oil sands, which will after business.

Harry Kirsch: So what we have seen is the unwinding of that 400 million stocking of Q1 and Q2, and we have seen 300 million, roughly, of lower ophthalmology sales, which otherwise was a stable in all the standards mature after business. And our growth brands have grown. But then you can speculate how much would have grown without COVID. So, therefore, I think you have the elements.

And our growth brands have.

Grown, but then you can speculate how much would grow with alcohol with so therefore, I think GFT elements important as the underlying business and the strong first half where most of the stocking effect out.

Harry Kirsch: Important is the underlying business and the strong first half, where most of the stocking effects are out. In terms of SG&A, I mean, the discretionary spend that, again, you can look at, you know, spend versus the prior year. And of course, one can assume that with the growth of sales and the launches, we had assumed in an ex-COVID world some growth of those investments, of course, below the sales line, but still there. So several, several hundred millions of these discretionary spending savings.

In terms of SGN anyway, I mean the.

The discretionary spends that and again you can look at you know spent was prior year and of course, one could assume that with the growth of sales launches we had assumed.

X covert world some growth of those investments of course below the sales side, but still there. So several several hundreds millions of this discretionary spend savings.

Harry Kirsch: And we do capture the key work stream we have. I'm sure others have, but certainly, we have a key work stream here to figure out how these new ways of working internally and externally, you know, drive more productive and efficient behaviors. But the first and ultimate goal is always to best serve our patients and customers. And, of course, to ensure that our own associates are safe, satisfied, and work very productively. But we do believe that a good portion of those savings can stick also in the years going forward and that actually, digital and virtual technologies would enable us, maybe, to save our patients and customers even better.

And we do capture the key Workstream, we have sure to others, but certainly we hear from key Workstream here figure out how these new ways of working internally and externally.

All drive more productive and efficient behaviors, but the first ultimate goal is always to best serve our patients and customers.

And of course to ensure that our oldest associates are safe satisfied and abrupt very productive, but we do believe that good portion of those savings can stick also in the us going forward.

Actually digital virtual technologies will enable us maybe to save our patients and customers even better.

Mary France Chudin: Thanks, Harry. On the digital launch... on the use of digital technologies.

Thanks, Eric on the digital launches for funds on the use of digital technologies. So so that our focus has been on three areas. The first area has been on HCP engagement and clearly the objective here is to make sure that we can become more productive and so that we can get.

Mary France Chudin: So our focus has been on three areas. The first area has been on HCP engagement, and clearly the objective here is to make sure that we can become more productive and so that we can get prescriptions faster, and we've got a number of initiatives in place to make that happen. The second initiative on the digital side is the patient journey. So what can we do to activate patients faster, to look at areas like diagnosis, transition of care, and adherence? There are a lot of digital tools that we're putting in place to just streamline that. The third area is around patient services, so looking at patient services and how can we onboard and make sure that patients get access more easily.

Prescriptions faster and we've got a number of initiatives in place to make that happen. The second initiative on the digital side is on the patient journey. So what can we do to activate patients faster to look at areas like diagnosis transition of care adherence.

A lot of digital tools that were putting in place to just streamline that the third areas around patient services. So looking outpatient services and how can we onboard and make sure that patients can access more easily.

Mary France Chudin: Good. Thanks, Maryfranca.

Good thanks, very front and lessen the PDUFA negotiations PDUFA discussions I'd say broadly.

Richard Saynor: And lastly, on the PDUFA negotiations, the PDUFA discussions, I'd say broadly the industry is looking at a couple of key areas. One is just always the continued focus on operational excellence at the agency, both in terms of the ability to hire the necessary personnel as well as meeting excellence. Second, is ensuring the agency has enough capabilities to take on cell and gene therapy and other advanced therapy platforms and really focus on that. And then continued emphasis on data and digital technologies and ensuring the agency is in a position to support data and digital technologies in the future. Of course, these are our thoughts.

Industry is looking at a couple of key areas. One is just that always the continued focus on operational excellence at the agency both in terms of the ability to higher than necessary personnel as well as meeting excellence second is.

The ensuring the agency has an up capabilities to take on cell and gene and other advanced therapy platforms, and really focus on that and the continued.

Emphasis on data and digital technologies and the history the agencies in a position to support data and digital technologies in the future of course. These these are our expert our hopes of course agency will have their hopes and will hopefully get progress in the negotiations over the coming months.

Vasant Narasimhan: [inaudible] So I think for the remainder of the time, if you could limit yourself to one question, maybe with no more than two parts, because we still have a number of questions on the line. So next question, operator.

So I think for the remainder of the time, if you could limit yourself to one question, maybe with no more than two parts because we still have a number of questions on the line. So next question operator.

Thank you next question comes from the line ups from Tim Anderson from Wolfe Research. Please ask your question.

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

Thank you.

Timothy Anderson: A question on Tiscali and Natalie. In Q1, you said that the interim analysis would happen in the first half 2021, so one quarter later, now you're saying it slips by a year to one half 2022, which is not very far from the trial completion date that you lay out, which is second half 2022. And I'm just wondering, why that big shift? Is that a change in the statistical analysis plan that led to the timing shift, perhaps based on how you're interpreting and thinking about your trial versus palace? Or is that just merely a reflection of less events coming in? It just seems that moving that interim analysis closer to the completion of the trial may have reflected the former, you know, some sort of guess on how your results may play out relative to Palos.

A question on Tiscali Natalie.

In Q1, you said that the interim analysis.

Would happen in first half 2021.

A one quarter later now you're saying had slipped by a year to one half 2022, which is not very far from.

The trial completion date, you lay out which is second half 2022.

And I'm, just wondering why that big shift that a change in the statistical analysis plan that led to the timing shift perhaps based on how you're interpreting and thinking about your trial versus palace.

Thats just merely a reflection of less events are coming in which it seems that moving that interim analysis closer to the.

Completion of the trial may have reflected the former some sort of.

Some sort of gas on higher results now play it may play out relative to power.

John Tsai: Yeah, thanks, Tim. John?

Yes. Thanks Emta, yes. Thanks. Thanks for the question time, we've not made any changes to the ask statistical analysis plan for the Natalie trial, but I can say is that the recruitment growing really while we're.

John Tsai: Thanks for the question, Tim. We've not made any changes to the statistical analysis plan for the NATALI trial. What I can say is that recruitment is going really well. Currently, we have 4,000 patients for the study. We're recruiting over 250 patients per month on the study, so things are coming along very well. On the interim, currently, we have interims planned at 50 and 70 percent, so there are no changes there. However, one thing that you did note is the MONARCH-E study, which was reported out with Abemocyclob, and those results have not been fully disclosed with the exception of the press release. So based on information that we get, we are thinking about how we would evaluate moving forward NATALI, but like we said earlier and Susanna highlighted, we're looking at both Stage 2 and Stage 3 patients for the adjuvant population of So this would give us a comprehensive evaluation of these patients.

Currently we have 4000 patients for the study for recruiting over 250 patients per month on the study so things are coming along very well on the interim currently we have in terms plan that 50 and 70%. So there are no changes there have one thing that you didn't know is the monarchy study, which was reported out with a Dennis I club and.

Those are results have not been fully disclosed with the exception of the press release. So based on information that we get we are thinking about how we would evaluate moving forward Natalie but like we said earlier and suzanna highlighted we're looking at both stage two in stage three patients for the address.

Duration advanced breast cancer. So this would give us a comprehensive evaluation of these patients.

John Tsai: So John, just to clarify, we do still have the interims at 50% and 75%, so if we saw overwhelming efficacy, the trials would obviously stop here.

So John just to clarify so we do still have the interim that 50% and 75%. So if we saw overwhelming efficacy trials with us he stops.

John Tsai: That's the current approach.

Current approach.

Operator: Next question.

Thank you.

Seamus Fernandez: Thank you. The next question comes from the line of Chamus Fernandez, Guggenheim Partners. Please ask your question. Great, thanks.

Next question. Thank you. The next question comes from the line of Seamus Fernandez Guggenheim Partners.

Please ask your question.

Great. Thanks, just two quick questions first I guess more for Harry Harry can you.

Seamus Fernandez: Just two quick questions. First, I guess this is more for Harry. Harry, can you just help us in terms of the second quarter, sand nose, prior period adjustments? And then also, from that perspective, how you're going to drive growth in the second half, as we kind of face some tougher communications in the second half of the year? And then just a quick question. Can you just update us on the Factor B data that we are likely to see towards the end of this year? What's the next data set that we're going to see on Factor B? Thanks so much.

Hello.

In terms of the second quarter Sandoz prior period adjustments.

And then also from that perspective.

You're going to drive growth in the second half.

As we kind of telecom.

In the second half the men.

Right.

Question can you just update us on the effect would be data that we are likely to see towards the end of this year. What's the next dataset that we're going to see on faculty. Thanks, So much.

Harry Kirsch: Thanks, Seamus and Harry Fernandez.

Thanks, Seamus and incentives.

Harry Kirsch: Yeah, I think you refer to a revenue deduction, basically where on one of the products there was simply a better contract outcome for one of the biosimilars in the U.S., a better contract outcome, and therefore the revenue deductions were positively impacted by an amount between 20 and 30 million, so not so significant. Maybe on the growth for the second half, it's more for Richard.

I think you refer to revenue production basically we're going after one off to products that were simply better.

What if the Biosimilars knew us better contract outcome of there for the revenue deductions.

Were positively impacted by the mild between 20 and 30 million. So not so significant maybe on accrual for the second half that more small for Richard.

Richard Saynor: Richard.

Richard.

Sorry, yes second half.

Richard Saynor: So yeah, second half, again, our guidance is low single digits, we're seeing strong growth in biosimilars, and we're assuming that most of the COVID

This is low single digit digits see strong growth in Biosimilars and we're assuming that most of that have impacted the washed out by the end of next to each one.

Richard Saynor: Staff by the end of April.

Richard Saynor: Staff by the end of H1.

Richard Saynor: Thanks Richard. And on Factor B, John, the readouts.

Thanks, Richard and in fact returns.

Yeah. Thanks, Allison on Ellen PEO, 23, which is our factor be inhibitor boss highlighted earlier that we're looking at this in multiple indications, including hematologic as was our various renal indications next set of data as you were asking about is really in the P. NH space. This is.

John Tsai: Yeah, thanks, Amoson. On LNPO23, which is our factor B inhibitor, Voss highlighted earlier that we're looking at this in multiple indications, including hematologic as well as various renal indications. The next set of data, as you were asking about, is really in the PNH space. This is what we're looking at in terms of PNH as an add-on to ecolizumab, which is the C5 inhibitor, which I'm sure you're familiar with. We're going to be presenting this data at the EBMT Congress at the end of August.

We're looking in terms of CNH as an add on to Eculizumab, which cfive inhibitor, which I'm sure you're familiar with we're gonna be presenting this data that E. B M. T Congress at the end of August and based on that information. If results are positive we would move forward with a phase three start at the end of this year.

John Tsai: And based on that information, if results are positive, we would move forward with a Phase III start at the end of this year. Now, just backing up one step in terms of the various nephropathies, most of the results will come out in the early part of next year. And based on the Phase IIs, if those are positive in both IgA nephropathy and C3 nephropathy, we would quickly pivot to Phase III. So this would be a quick transition from Phase II to Phase III studies in nephropathy.

I just backing up one step in terms of the various properties. Most of the results will read out in the early part of next year and based on the phase twos. If those are positive in both Iga nephropathy and C. Nephropathy, we would quickly pivot to phase three so these would be a quick transition from phase.

I asked you to phase three studies in the properties.

Thanks next question operator.

Thank you next question comes from the line of Snowball Mississippian.

Operator: Thank you. Thanks, John. Next question, operator?

So CHP should go ahead please.

Florent Cespedes: Thank you. Our next question comes from the line of Florent Cespedes. Societe Generale, please ask your question Good afternoon everyone, Florent Cespedes from Societe Generale. Thank you very much for taking my question. A quick one for Harry, regarding full year guidance on the top line, could you maybe share with us the main reasons why you have slightly adjusted down the road the sales growth guidance to the low end of the range? Is it mainly due to the delay of Atomumab? Is it due to the softer unexpected performance of ophthalmology in Q2, or maybe Sandoz, or a bit of everything?

Jim.

Good afternoon, everyone wants us to this on specific Hello. Thank you rational taking my question.

Quick one for Harry.

Regarding a full your guidance on the topline could you maybe share with US. The main reasons why you as such the adjusted done for the sales growth.

Cadence and to the low hand.

Of the range.

It's mainly due to lay off Ofatumumab is it.

Due to the softer than expected performance of your settlement charge in Q2 or.

Sandoz or a bit of everything so any color would that be would be great. Thank you.

Florent Cespedes: So any color on that front would be great. Thank you. Thanks, Florent.

Thanks, Laura Thanks, Phil I mean clearly.

Harry Kirsch: Thank you, Florent. I mean, clearly, the key change between quarter one and quarter two now is the impact on the ophthalmology business, you know, which we have to see patients in order to make the injection. And there we lost quite a bit, if you will. I regard this as a one-timer. Now, of course, we see the end of June, these visits coming back. It's not yet fully on pre-COVID levels, but it's coming back. Right. And, of course, we had a couple of things beforehand that didn't help us but didn't change our guidance from a range standpoint. You know, of course, biofuels and the other one is, you may recall, as we retained the business in the US, oil solids, that is taking down the growth rates of the company by a point. So all of these together. But the real news is the after part, which

The key change between quarter, one quarter to know.

On the off to monitor Gi.

Business, which we have to see patients in order to make to injection and there we lost.

Quite a bit if you will I did it got this as a one timer now of course, we see end of June this visit to come back it's not yet fully on pre covert levels, but it's coming back right and of course, we had a couple of things beforehand, but.

But didnt change our guidance from a rate standpoint.

Of course, you will fuel and the other one as you may recall as we retained the business the with oral solids that is taking down the growth rates of to complete by point. So all of these together, but the reason uses the of the apart which move more into the mid single digit range.

Harry Kirsch: Thanks, Harry, thanks, Florent. Last question, operator, or no, five more questions. All right, let's keep going. Next question.

Thanks, Harry Thanks, Laura last term.

Last question, operator, or no five more questions.

All right, let's keep going next question. Thank you. The next question comes from the line Weston from.

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

Credit Suisse. Please ask your question.

Thank you very much two very quick ones if I can.

Matthew Weston: Vas, you mentioned that you were in final labelling discussions with FDA on offer Tumamab. Given it was filed as an SPLA and Alzara has a black box warning, should we be expecting a black box warning for offer? And just quickly on Zolgensma, you're now in pricing discussions in Europe. Can you just lay out where the price point has settled in Europe to date?

You mentioned that you were in final labeling discussions with FDA on off the tumor map.

Given it was fathers and Spls and Aldeyra has a black box warning should we be expecting a black box warning of.

And just quickly on Xeljanz, Matt you've now in pricing discussions in Europe can you just lay out what the price points is settled in Europe today.

Matthew Weston: Thanks Matthew. John, do you want to cover the OFA approach?

Thanks, Matthew John you want to cover the Ofer approach, yes. So on ours, there I think the black box warning specifically refers to both piano cases, and HPV reactivation and looking at the mechanism of opportunity map. If you think about that overall approach where we add.

John Tsai: Yes, so on Arzera, I think the black box warning specifically refers to both PML cases and HBV reactivation. And, you know, looking at the mechanism of ofatumumab, if you think about the overall approach, what we've actually looked at for ofatumumab is the fastest B-cell repletion. So when patients are actually receiving sub-Q injections, they have a very low and very quick recovery of their B-cells. So in return, in the studies for Asclopias 1 and 2, we did not see any cases of PML, and we also did not see any cases of HBV reactivation. So you can, I think the FDA will accurately reflect what was in our Asclopias 1 and 2 studies, and I believe that will be the read-through in terms of how

Actually looked at for up to map is the fastest b cell depletion. So when patients are actually receiving subcu injection. They have very low and very quick recovery up there b cells go in return in the studies for the Scorpius, one and two we did not see any cases of PML.

And we also did not see any cases of HPV reactivation. So you can I think the FDA will accurately reflect what was enormous copious one and two studies and I believe that will be the read through in terms of how we will have to label. Paul you want also comment on the fact that it's a different brands.

John Tsai: Different brands. Oh, right.

John Tsai: And we expect to get a new trade name, which will actually reflect both the efficacy and safety of the label. So we will get a new brand name associated with this. So I think this would be a different overall label and brand name for Oak to Mement.

Right and we expect to get a new trade name and which will actually reflect both the efficacy and safety of the label. So we will get a new wave brand name associated with so I think this would be a different overall.

Wait label and brand name for opportunity.

John Tsai: And then on the Zoolgentma European dynamics, you know, overall, right now our focus has been on early.

And then on the unresolved Zogenix My European dynamics overall right now our focus has been on early access agreement those agreements generally allow us to have an initial payment for the use of the product and then a true up for final price.

Vasant Narasimhan: Generally, allow us to have an initial payment for the use of the product and then a true up for the final price negotiation. So we're still in the process of securing those pricing negotiations overall, though the discussions have been very, very positive. So I think we're in a good place, as I said, 90% of six funds have supported the use in Germany, early access agreements across Europe, and you already see that in the sales dynamics in the second quarter. So we remain optimistic that we'll be able to secure pricing in the range of what we had.

Negotiation. So we're still in the process of search hearing those pricing negotiations overall, though the discussions have been very very positive. So I think.

Very good place as I said, 90% of sick funds have.

Supported the use in Germany.

Early access agreements across Europe, you already see that in the sales dynamics in the second quarter. So we remain optimistic we'll be able to secure pricing in the range of.

What we had expected of course will make those transparent as soon as negotiations are complete.

Hi.

Just to mention were going over time. So we've got formal people on the question, let's say if you're very quick and we can do it within 30. Thanks.

Vasant Narasimhan: Hi, it's Samir here. Just to mention, we're going over...

Great otherwise, we have a hot stuff in five minutes. Thank you.

Operator: Thank you.

Operator: Okay, operator. Next question.

Richard Vosser: Thank you. The next question comes from the line of Richard Vosser from GB Morgan. Please ask your question. Thank you very much for taking the time to answer my question. Just to follow up on LNP-023, the data in the abstract at EMBT shows patients being able to discontinue Soleris and maintaining strong efficacy, I think at least five of those patients. So just the thought is, when can we actually see some monotherapy data, and would you progress into monotherapy in phase three?

Okay. Operator next question. Thank you. The next question comes from Milan, Richard Wassa from JP Morgan. Please ask your question.

Thanks, very much like my question, just a follow up on that L. And 83 data in the abstract to MBT shades patients being able to discontinue solaris and maintaining strong efficacy I think at least five today's patient say just the thought is books when can we actually see some monotherapy data.

And would you progress into monotherapy.

Richard Vosser: Thanks very much.

In the state rate thanks very much.

John Tsai: Yes.

John Tsai: Yeah, so we will we will disclose the monotherapy data at a future Congress. We do intend to take the medicine forward, both as an add-on to eclizumab and as monotherapy. Thanks, Richard. Next question.

Yes, we will that we will disclose a monotherapy data at a future Congress, we do intend to take the medicine forward, both as add on tech lose about and as a monotherapy. Thanks Richard next question.

Operator: Thank you. Thank you. The next question comes from the line of Emmanuel Papadakis from Barclays. Please ask your question. Thank you. A quick one on Kesempex, if I may. You've obviously weathered the storm from aisle 23 relatively successfully in terms of them producing a series of positive head-to-head data sets in dermatology. Would a positive head-to-head result from an IL-17 competitor impact your assessment of the robust work you outlined earlier? Thank you.

Thank you. Thank you in the next question comes from the line in money when somebody came from Barclays. Please.

Sure.

Okay. Thank you quickening Semtechs, if I may you've obviously weather the storm in the oil 23 sort of successfully in terms of them, which is in serious.

Okay. Thanks sets in them closing would.

Positive had test result from an idle 17 compass impact your assessment of.

The robust outlook.

Emmanuel Papadakis: Yes, I think in the interest of time, I'll quickly take the questions. You know, with respect to Cothentics, our belief is that we have a solid position in dermatology and that future competitive entrants will not dislodge our overall position, whether it's an IL-17C or F or whatever the next variants are. Our focus is to drive growth through rheumatology and our new indications, as well as, as Mary Frantz laid out, the broad range of additional indications that we have, most notably this Thank you, Emmanuel. Next question.

Thank you.

Yes, I think in interest of time I'll quickly take the questions.

With respect to Cosentyx aren't you know our belief is that we have a solid position in dermatology and that future competitive entrants will not dislodge our overall position, whether it's an Io 17 C or app or whatever the next variants are our focus is to drive growth rheumatology and our new indication.

As well as Mary front played out the broad range of additional indications that we have most notably this year the approvals nonrated graphic axiall spot I think we've shown we can whether the entry of multiple competitors overtime.

Vasant Narasimhan: Thank you. The next question comes from the line of Kerry Holford from Barnburg.

Thank you May know next question.

Thank you. The next question from the line of Kerry Holford from Bob Bob.

Please ask your question.

Operator: That's a great one, Zahid Ripley. Just interested to learn what more the regulators in Europe wanted in order to get that approved in that region, and why that prompted you to give up on Europe. And then also, essentially, what you assumed about the European opportunity within the 3.5 billion price that you paid to Takeda. And the US is clearly disrupted by COVID, but I'd be interested to understand what your next priority is to turn that brand around in that market.

Both local Quilmes night it plays okay.

Today.

Thank you later can you.

Good morning, saving on is another player in that region.

Okay.

On your debt.

So essentially what you is usually units.

Opportunity within the 3.5 billion price. Thank you pay.

Yes.

He likes is committed to it.

Okay.

Interested to understand what.

Kerry Holford: Yeah, thanks for the question, Kerry. Overall, our basis for paying Takeda, what we paid was based on the U.S. plan as well as select ex-U.S. markets. It's important to note, again, as we've tried to emphasize, we paid an upfront payment, which we thought was very reasonable. We only paid the milestones based on strong sales performance. And obviously, if we hit those blockbuster milestones, we'd be happy to pay the milestones. But we did not factor in EU approval. It was an upside. The European authorities requested additional head-to-head studies, which we don't think it would be worthwhile to pursue. So our focus is the OTC and DTC campaigns in the U.S., continuing the momentum, 50% access to date, and trying to grow that access going forward in Part D. And we continue to remain over time optimistic that we can get Zydra to the blockbuster level. Next question, last question, last question operator.

Priorities.

Okay.

Yeah. Thanks for the question Kerry So overall our basis for paying Takeda will be paid was based on the U.S. plan as well as select ex us markets. Its important to note again as we've tried to emphasize we paid an upfront payment, which we thought was very reasonable we only pay the milestones based on strong sales person.

Formats, and obviously, if we hit those blockbuster milestones, we've we'd be happy to pay the milestones we did not factoring that you approval. It was an upside the European authorities requested additional head to head studies, which we don't think it would be worthwhile to pursue so our focus is the otcs the DTC campaigns in the U.S.

Continuing the momentum 50% access to date and trying to grow that access going forward in part D. and we continue to remain overtime optimistic we can get side or to the blockbuster level. Next question last question last question operator. Thank you. The last question comes from the line of Ronnie.

Kerry Holford: Thank you. The last question comes from the line of Ronny Gallo, please ask, from Bernstein, please ask your question. Thank you very much for speaking, for fitting me in, guys. Two very quick ones.

Hello, Please ask from Bernstein. Please.

Justin.

Thank you very much more seeking fitting me guys. Two very quick ones regarding Bellevue is the thinking you will argue for this product with the existing dataset, you've created or are there specific pricing to generate specifically new clinical rig clinical data to address that physician concern and regarding caiamar.

Vasant Narasimhan: Regarding Bellevue, is the thinking you will argue for this product with the existing data set you've created, or is there perhaps a specific need to generate specifically new clinical and preclinical data to address that physician concern? And regarding Chimara, can you discuss the impact of the change in reimbursement by CMS coming in in October? Does it essentially erase the economic benefit for physicians of out-of-hospital administration versus in-hospital administration? And I know it differs between hospitals.

Can you discuss the impact of the change in reimbursement by CMS coming in in October does it essentially you're right. The economical benefits of physician about hospital administration versus in Hospital administration, and I know it differs between hospital, but overall.

Vasant Narasimhan: Yeah, so on Bay of View, as Mary France mentioned, we have a robust team looking at the clinical data, looking at manufacturing formulations, and preclinical data. But it's important to note that there's still a very limited number of cases. And then if you look at the subset of cases with vision loss, as we transparently show on our website, it is a very small subset. So this is a tricky thing to find the precise root cause.

Yes, so on and they have you as Mary Frans mentioned, we have a robust team looking at the clinical data looking at manufacturing formulation in preclinical data. It's important to note that there's still a very limited number of case. It and then if you look at the subset of cases with vision loss as Weve transparently show on our web.

So it is a very small subset. So this is a tricky thing to find the precise root cause but we do have multiple hypotheses both from preclinical work as well clinical work and as soon as we have a path forward of course on those kinds of approaches will have the let the community no I think.

Vasant Narasimhan: But we do have multiple hypotheses, both from preclinical work as well as clinical work. And as soon as we have a path forward, of course, on those kinds of approaches, we'll let the community know. I think, as the earlier question cited, Bay of View is going to be a long-term journey. But given the fact that we believe that medicine can be a very important part of patients maintaining their vision, we are in it for the long haul.

As the earlier question side at Bellevue is going to be a long term journey, but given the fact that we believe this medicine can be a very important part of patients maintaining their vision. We're in it for the long term on terms of shifts and Kim Ryan reimbursement in the U.S.

Vasant Narasimhan: Long-term. In terms of shifts in Khmer Raya reimbursement in the U.S., You know, I think I think, of course, we're very pleased by the improvement in hospital reimbursement. You know, overall, though, we don't believe this will lead to a significant shift in dynamics other than hopefully making it easier for the in-hospital use of Kymriah over time. It's important to note that Kymriah can be used in the outpatient setting. The vast majority of patients we receive are used in the outpatient setting, where it can be used under the Part B program.

Yeah, I think I think of course, the we're very pleased by the improvement of hospital reimbursement.

Overall, though we don't believe this will lead to a significant.

Shifting dynamic other than hopefully, making it easier for the in hospital use of come right over time, it's important to note that Kim Ryan can be used in the outpatient setting the vast majority of patients we receive or using the outpatient setting where it can be used to under under the part B program and we expect that dynamic to to continue.

Operator: And we expect that dynamic. Thank you all for the call. I wish everyone good health and well-being, and look forward to keeping you updated on our next quarterly conference call.

Thank you all for the call wish everyone, good health and wellbeing and look forward to keep you updated at our next quarterly conference call.

Operator: Thank you. That does conclude our conference for today. Thank you for participating. You may all disconnect.

Thank you that does conclude our conference for today. Thank you for participating you may all disconnect.

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