Q2 2021 Novartis AG Earnings Call

[music].

Good morning on good afternoon, and welcome to the Novartis Q2, 'twenty 'twenty 1 results release conference call on live webcast. Please note that during the presentation. All participants will be in a listen only mode. On the conference is being recorded after the presentation, there will be an opportunity to ask questions by pricing.

Operator: Good morning and good afternoon, and welcome to the Novartis Q2 2021 Resorts Release Conference Call and Live Webcast. Please note that during the presentation, all participants will be in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions by pressing 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.

Start on 1 at any time, joining the conference a recording of the conference call, including the Q&A session will be available on our website. Shortly after the call ends should anyone need assistance during the conference call. They may signal the operator by pressing star on Z wave with that I would like to hand over to Mr. Samir Shah Global head of Investor Relations.

Operator: Should anyone need assistance during the conference call, they may signal the operator by pressing star and 0. With that, I would like to hand over to Mr. Samir Shah, Global Head of Investor Relations. Please go ahead, sir. Thank you very much and good morning and good afternoon, everybody. A big thank you to all of you again.

<unk>. Please go ahead Sir.

Thank you very much and good morning, and good afternoon, everybody Big Thank you to all of you again for participating in this call and spending the time to listen to our quarterly results.

Samir Shah: Thank you for participating in this call and spending the time to listen to our quarterly results.

Samir Shah: Quarterly Resolved The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors, which 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.

The information presented today contains forward looking statements that involve known and unknown risks.

2 other factors. These may cause the 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 6K that respectively were filed with and furnished to the U S Securities and Exchange Commission. So thank you again on your thought on hand across to Vas Narasimhan.

Unknown Executive: Thank you, Samir. And thanks, everyone, for joining today's conference call. Today, with me, I have members of our executive team, and I also would like to introduce Karen Hale, our new Chief Legal Officer. Karen joins us from the biopharmaceutical industry with over 20 years of experience in a broad range of medical devices and pharmaceuticals. So, welcome, Karen.

Thank you Samir and thanks, everyone for joining today's conference call today with me I have members of our executive team and I also would like to introduce Karen Hale, our new Chief Legal officer, Karen joins us from the.

On the biopharmaceutical industry with over 20 Years' experience in a broad range of medical devices and pharmaceuticals. So welcome Karen.

So if we could move to slide on slide 5.

Vas Narasimhan: So, if we can move to slide five, I wanted to start by reflecting on the journey we've been on as a company as we focus the company, rolled out our strategy, and delivered consistent performance over the recent period. Going back to the first half of 2018, when you look at our financial performance over the first half of the next four years, our sales have grown at 6% CAGR, and our core operating income at 13% CAGR.

I wanted to start by reflecting on the journey, we've been on as a company as we focus the company rolled out our strategy and delivered consistent performance over the recent period going back to the first half of 2018, when you look at our financial performance over the first half of the subsequent 4 years, our sales have grown at 6.

Percentage CAGR on core operating income at a 13% CAGR and we've grown our innovative medicines margin from 31.8 to 36, 8% in the first half of 'twenty 2021, demonstrating that our operational execution has been strong and when you look ahead, we remain confident in our group.

Vas Narasimhan: And we've grown our innovative medicines margin from 31.8% to 36.8% in the first half of 2021. We continued our innovation agenda, which will be critical to driving growth to 2025 and, importantly, beyond. And we also continued on our journey to be a leader in ESG with some important milestones. And I'll talk about each of these areas in turn.

The outlook as we outlined and meet the May meet the management last year, where we highlighted a 4% CAGR off of our 2019 actuals to 2025 sales goal of $60 billion or more and a consensus I on margin.

Currently at 37, 6% that we remain confident that we can achieve so strong performance track record and a strong growth outlook remains the story for Novartis now going to slide 6 when you look at our strong performance in Q2. It was strong across all of the key elements that we believe will drive long term.

Vas Narasimhan: Moving to the next slide, when you look at our key growth drivers and launches over the period, we demonstrated, I think, strong performance across our key brands. Mary Frantz will talk a bit more about the strong performance of Entresta, Cosmetics, and Zolgensma, as well as Cosimta, which is off to a good and strong start. And then Susanna will also cover the various oncology growth drivers. Now, taken together, our key growth drivers and launches now account for 51% of our IM sales.

Value for our patients as well as for shareholders. Our sales growth was strong and Harry will go through that in a bit more detail. We had strong productivity with good core operating income growth and good margin expansion. We continued our innovation agenda, which will be critical to driving the growth to 2025, and importantly beyond and we also.

On our journey to be a leader in ESG with some important milestones and I'll talk about each of these areas in turn.

Moving to the next slide when you look at our key growth drivers and launches over the period, we demonstrated I think strong performance across our key brands very fast will talk a bit more about the strong performance of entresto consensus and Xeljanz as well as symptom, which is off to a strong start and then.

I will also cover the various oncology growth drivers so taken together.

Our key growth drivers and launches now account for 51% of our sales and these products are growing at a rate of 29% in quarter, 2 which I think basically demonstrates our transition from on older portfolio of medicines to our next wave of portfolios, which we believe will enable us to drive.

Vas Narasimhan: And these products are growing at a rate of 29% in quarter two, which I think nicely demonstrates our transition from an older portfolio of medicines to the next wave of portfolios, which we believe will enable us to drive our growth over the next decade. Now, moving to slide eight, I also wanted to say a word on Sandoz.

Our growth over the next decade now moving to slide 8.

Also wanted to say a word on sandoz, we saw the business stabilized in quarter..2 we saw sales at 5% in the quarter Biopharma sales were also up 5% on core operating income was also up now when you look at the story for the rest of the year for Sandoz, we continue to expect disruptions related to Covid, but we do.

Vas Narasimhan: We saw the business stabilize in quarter two. We saw sales of 5% in the quarter, biopharma sales were also up 5%, and core operating income was also up. Now, when you look at the story for the rest of the year for Sandoz, we continue to expect disruptions related to COVID, but we do expect, assuming health care systems continue on their current trend, a return, hopefully, back to a more stable situation.

Also assuming healthcare systems continue on their current trend a return hopefully back to a more stable situation. We haven't had a historically weak cough and cold season and decreased anti infectives used but we will see how this fall unfolds and again were hopeful that we can get back to a more stable situation overall.

Vas Narasimhan: We haven't had a also invested in our core generics capabilities; we strengthened our antibiotics manufacturing setup, as well as brought in a new portfolio of assets, including our recent acquisition of GSK's anti-infectives portfolio. And we continue to make investments in complex generics, including oncology, oncology, injectables, and respiratory medicine. So, over time, we remain committed to delivering a Sandoz outlook of mid-single-digit sales and mid- to high-20 core operating income margin.

In the generic sector now that said we are confident in the longer term outlook in Sandoz. We've made the we believe the right investments in Biosimilars, we doubled the size of the Biosimilar pipeline with a focus on key therapeutic areas, such as oncology and immunology and we continue to also invest in our core generic.

Capabilities strengthened our antibiotics manufacturing set up as well as brought in a new portfolio of assets, including our recent acquisition of Gsk's anti Infectives portfolio, and we continue to make investments in complex generics, including oncology oncology Injectables and respiratory medicine. So over time, we run.

<unk> is committed to delivering a sandoz outlook of mid single digit sales and mid to high 20 of core operating income margin. So moving to the next slide and turning to innovation Q2 continued our progress on the innovation front, we had approvals of <unk> in the U S and pediatric psoriasis as well as Entresto and essential hyper.

Vas Narasimhan: Moving to the next slide and turning to innovation, Q2 continued our progress on the innovation front. We had approvals of Cothentix in the U.S. for pediatric psoriasis, as well as Entresto, an essential hypertension drug in China, which can be another growth driver for Entresto, building on its already strong performance. I'll say a bit more on some of these other milestones and subsequent slides, but I did want to note that Asiminib, or ABL-001, has been filed in the U.S. in the third-line setting.

Tension in China, which can be another growth driver for Entresto building on its already strong performance on.

Say a bit more on some of these other milestones and subsequent sides. When it did want to note that submitted our ABL 001 has been filed in the U S. In the third line setting and we do believe this medicine has blockbuster potential in the third line setting alone not to mention our efforts to moving into earlier lines, which I'll say more about and we also had.

Vas Narasimhan: We do believe this medicine has blockbuster potential in the third-line setting alone, not to mention our efforts to move it into earlier lines, which I'll say more about. And we also have important advances on Tymriah and Apelicid as well, which I think will enable us to broaden the indications for both of these medicines. So, moving to slide 10 and taking a little bit of a deeper dive on our portfolio, starting with our lifecycle management.

An important advances on <unk>, and our palisade as well, which.

We will enable us to broaden the indications for both of these medicines so.

So moving to slide 10, and taking a little bit of a deeper dive on our portfolio starting with our lifecycle management I already mentioned, the China approval in essential hypertension, but in total for Concentrix, we remain on track for the Hydro Adenitis Super Achiever Readouts in the second half.

Vas Narasimhan: I already mentioned the China approval and essential hypertension, but for Cosentyx, we remain on track for the hydroadenitis superativa readouts in the second half. There is strong open-label data that supports the use of Cosentyx in this indication. And then we also have a range of other indications we're developing, as we've noted, to enable Cosentyx to continue its strong trajectory. We're on track for Qiskali's Mona Lisa 2 OS readout in the second half, which would be the third OS readout to have already been favorable for Qiskali, really building on the unique profile we believe Qiskali has. We are also on track for the adjuvant readout in 2022. We'll speak more about Lectio in a moment.

His strong open label data that supports the use of percentage in this indication and then we also have a range of other indications we are developing as we've noted to enable <unk> to continue its strong trajectory. We're on track for Kiss Gali's Mona Lisa to OS readout in the second half, which would be the third OS readout 2 have already are in favor.

<unk> got we really building on the unique profile. We believe because golly has we also are on track for the adjuvant read out in 2022.

We'll speak more about <unk> in a moment now turning to pharmaceuticals will go through a tackler patent data in a bit more detail, but I wanted to highlight as well as the legalism maps.

Vas Narasimhan: Now turning to pharmaceuticals, we'll go through Paclopam's data in a bit more detail, but I wanted to highlight as well that legalizumab, CSU studies are on track for phase three readouts in the second half. We have also initiated and are progressing chronic inducible urticaria studies as well as food allergy studies. And we have continued to progress Graniflam, with an agreement now with the regulators for a start in the second half. Of a phase 2B study in Huntington's disease.

<unk> CSU studies are on track for phase III Readouts in the second half. We have also initiated and are progressing chronic inducible urticaria studies as well as food allergy studies and we have continued to progress brand on plan with an agreement now with the regulators for a start in the second half of the phase II.

<unk> study in Huntington's disease, moving to oncology Arcana Kitimat Readouts are also on track for Loopy SMA, we have submissions planned for the second half and we've started the phase III studies in the earlier line settings, I'll say a bit more about that and I also wanted to highlight that with <unk> 5 are shipped to.

Vas Narasimhan: Moving to oncology, Arcanekinemab readouts are also on track. For Leu PSMA, we have submissions planned for the second half, and we've started phase three studies in the earlier line settings. I'll say a bit more about that.

<unk> inhibitor, we've already advanced both in combination with other K Ras agents, but are also now moving into the clinic with our ship 2 in combination with our own K Ras agent J D Q as well as other ship 2 combinations that we're currently exploring lastly, I wanted to note that <unk> now has entered our wildcat.

Vas Narasimhan: It's worth noting that across the wildcards you see in that box, while these programs are still early, each one of them has the potential to be a multi-billion dollar medicine if we're ultimately able to deliver on the clinical value of these assets. Moving to slide 11, saying a bit more about Inquisitorin, you likely saw that our PDUFA action date is now January 1, 2022. We have files, the refiles from our Shaftanet site, which is the manufacturing location where we currently do secondary manufacturing for products such as Cosensics, as well as other biologic sites that are well known to the regulators.

Hard a box on the bottom here in first line setting.

<unk> is going against investigator choice of Teekay on our hope is if we were able to deliver this result, we would be able to once again transform the care of CML patients with a multi blockbuster potential indications for assuming that it's worth noting that across the wildcard as you see in that box. While these programs are still early each 1 on.

Has the potential to be a multibillion dollars medicine, if were ultimately able to deliver on the clinical value of these assets.

Moving to slide 11, saying a bit more on in closer and you likely saw that are Purdue faction date is now January 1 'twenty 'twenty 2 we have filed that.

Vas Narasimhan: We also have, I believe we've addressed the concerns that FDA has raised, and it's notable that the FDA has not raised any concerns related to the efficacy or safety of Inclisirin in any of the interactions that we've had. So this is a Class II resubmission, a six-month timeline. We, of course, will continue to work with FDA to see if there are opportunities to move this up earlier in the time period, but hopefully, now, this will get us to a place where we can bring this very important medicine with a very substantial potential for the company to market it in the United States.

Re filed from our shaft <unk> site, which is the manufacturing location, where we currently do secondary manufacturing for products, such as <unk> as well as other biologic those sites, it's well known to the regulators.

We also have.

Believe we've addressed the concerns that FDA has raised and.

It's notable that yet not raise any concerns related to the efficacy or safety or in closer on in any of the interactions that we've had so this is a class II resubmission of 6 months.

Timeline, we of course will continue to work with FDA to see if there's opportunities to move this up.

Earlier in the time period, but hopefully now this will get us to a place where we can bring this very important medicine with a very substantial potential for other company to market in the United States. The moving to the next slide turning to loop. He SMA you likely saw in the ask a preliminary plenary session. The medicine has really remarkable results.

Vas Narasimhan: Now moving to the next slide, turning to loop PSMA. As you likely saw in the ASCO plenary session, the medicine had really remarkable results of a 38% reduced risk of death and a 60% improvement in RPFS. Regulatory submissions are on track for the second half.

38% reduced risk of death, and a 60% improvement in our PFS regulatory submissions are on track for the second half day movement into earlier lines studies with the PSM 4 and a P. SMA addition studies are already underway and we're also evaluating whether to move the Madison even into earlier line settings.

Vas Narasimhan: The movement into earlier-aligned studies with the PSMA-4 and the PSMA-addition studies is already underway, and we're also evaluating whether to move the medicine even into earlier-aligned settings. We're working very hard to also expand the relevant capabilities to administer the medicine, and Susanna will speak more about that in a moment. Moving to the next slide.

We're working very hard to also expand the relevant capabilities to administer the medicine is Suzanne and I will speak more about that in a moment moving to the next slide.

Vas Narasimhan: Eptaclopan continues to show its utility across a broad range of indications, as you saw in the quarter. For IgA nephropathy, we presented the primary endpoint at ERA, EDTA, a 23% reduction in protein year at three months. And it's important to note that this was a three-month time point.

If taco patent continues to show its utility across a broad range of indications as you saw in the quarter with Iga nephropathy, we presented the primary endpoint at era EDTA, a 23% reduction in proteinuria at 3 months and it's important to note that this was a 3 month time point, we expect that proteinuria.

Vas Narasimhan: We expect that protein area to continue to improve over time, as we typically see in studies like this, so we look forward to looking at the six-month and beyond endpoints. Also importantly, there was a stabilization of renal function, which will be very important from a regulatory as well as clinical utility standpoint. The APPLAUSE IgA nephropathy study is now ongoing to support the filings worldwide in this indication. We also continue to progress our C3G indication for this medicine, with EU prime designation already achieved. We had a 49% reduction in protein year with this medicine at three months. Again, we would expect that trend to hopefully continue in subsequent months.

Over time to continue to improve as we typically see in studies like this so we look forward to looking at the 6 month and beyond endpoints. Also importantly, there was a stabilization of renal function, which will be a very important from a regulatory as well as a clinical utility standpoint, the applause IGN Ajay and nephropathy study is now.

Now ongoing to support the filings worldwide in this indication. We also continue to progress our <unk> indication for this medicine with EU Prime designation already achieved we had a 49% reduction in from Europe with this medicine that 3 months again, we would expect that trend to hopefully continue in subsequent months are stable.

Vas Narasimhan: A stabilization of renal function was also well tolerated, and this phase three study is now enrolling to support filings worldwide. And moving to the next slide, when you look at Eptaclopan and PNH, we also presented data here in the frontline setting to complement the data we already have as an add-on therapy. These new data, which we presented at EHA, showed clinically important benefits of monotherapy of taclopan.

<unk> on renal function also well tolerated in this phase III study now is enrolling to support filings worldwide and moving to the next slide when you look at the patent in Pn H.

We also presented data here on the frontline setting to complement the data we already have as an add on therapy. This new data, which we presented net EHS showed clinically important benefit of monotherapy tack lappin and this novel agent with its ability to inhibit factor b with a both the impact of <unk>.

Vas Narasimhan: And this novel agent, with its ability to inhibit factor B with both the impact of intravascular and extravascular hemolysis, gives us hope that it can be ultimately indicated for frontline usage as well as add-on to ecolizumab. Worth noting, it's unique as an oral agent with a great safety profile, so we look forward to completing the applied PNH studies with the superiority endpoints, and then again to support filings worldwide. As you likely saw as well at a recent investor day on this medicine, we have a broad range of indications also now advancing.

Dealer and extravascular hemolysis.

Give us hope that we can be.

Ultimately Inc.

Indicated for frontline usage as well as add on tactical as a map worth noting its unique as an oral agent with a great safety profile. So we look forward to completing the apply PMA studies with the superiority endpoints and then again to support filings worldwide as you likely saw as well as on.

Our recent Investor day on this medicine, we have a broad range of indications also now advancing we believe this medicine as a substantial potential to treat a range of immunological renal and hematological diseases and moving to the next slide 1 piece of data that came out in the quarter debt didn't attract as much attention.

Vas Narasimhan: We believe this medicine has the substantial potential to treat a range of immunological, renal, and hematological diseases. Moving to the next slide, one piece of data that came out in the quarter that didn't attract as much attention as one might have expected is our Zolgensma sprint data. This was remarkable data showing the impact that gene therapy can have on children with SMA. In this study, 100% of the patients met the primary endpoint of sitting independently when treated in the pre-symptomatic setting, so these are patients who are identified through newborn screening and treated with Zolgensma.

As 1 might have expected as a result Jensen on sprint data. This was remarkable data showing the impact of the gene therapy can have on children with SMA. In this study 100% of the patients met the primary endpoint of sitting independently when treated and the pre symptomatic aesthetics. Because these are patients who are.

<unk> identified through newborn screening and treated with Xeljanz bought 100% of patients met the secondary endpoint.

Also with respect to walking and standing we saw remarkable gains for these patients, which we hope will continue to improve over time. This day to reinforces that youll Gen. Some other foundational therapy for pre symptomatic and symptomatic children with SMA. It also continues to give us confidence that over time.

Vas Narasimhan: 100% of patients met the secondary endpoint. Also, with respect to walking and standing, we saw remarkable gains for these patients, which we hope will continue to improve over time. As gene therapies as a sector matures, our capabilities in gene therapy, having learned so much with the introduction of Zoltanism around the world, building outstanding manufacturing and technical capabilities will allow us, in the long term, to be a leader in gene therapies for the decade to come.

As gene therapies as a sector mature.

<unk> our capabilities in gene therapy, having learned so much with the introduction of bolting on some around the world building outstanding manufacturing and technical capabilities will allow us in the long term to be a leader in gene therapies for the decades to come.

Now moving to the next slide I also wanted to say.

As a last note on the pipeline on update on the sabotage him a stimulus program, which is progressing in Mds and AML as a reminder, in phase 1 studies, we showed that sabotaged them out at 50% or 58% or are in myelodysplastic syndromes and given its unique mechanism of action. It's the first Io.

Agent in the Hematological setting it gave us confidence to move forward in Mds and AML with the stimulus programs.

Vas Narasimhan: So we remain very excited about the program. We think scientifically, mechanistically, and as a first-in-class asset, it can be an important addition to AML and MDS treatment, an area that we've been a leader in for many years. So we'll look forward to keeping you updated on this program. Now moving to ESG, we have made strong progress on ESG, I think some notable milestones in our effort to be a leader in this space.

Our pivotal studies that tackle both of these indications now the parallel execution of these trials offers us a range of filing options. We did have the CR readout and the DMC recommended that we continue the study blinded to the PFS readout and then of course, the OS readout as well will come over time.

Also worth noting in the Mds program, we have a third study and the stimulus array of studies, but also looks at the triplet combination, including Vanadic box. So we believe we have a program that can adequately cover the range of potential options that would be needed for patients to be treated effectively with the met medicine.

Vas Narasimhan: We reached 1 billion courses of antimalarial treatment delivered since 1999. It's 1 billion patients we've been able to treat with our CoRTEM, a pioneering agent to treat malaria. We are very proud of that achievement. We also recently announced a 10 year commitment to empower 1200 African American students working with historically black colleges and universities to really address the inequities in medical education and inequities in health care in the United States. And you can see other important milestones that we hit over the course of the quarter.

Such as NPG. So we remain very excited about the program, we think scientifically mechanistically and is a first in class asset. It can be an important addition to AML and Mds treatment an area that we've been a leader in for many years. So we will look forward to keeping you updated on this program.

Now moving to ESG, we had strong progress on ESG I think some notable milestones in our effort to be a leader in this space. We reached $1 billion courses of antimalarial treatment delivered since 1999, its 1 billion patients we've been able to treat with Arco, our Tam our pioneering agent to treat malaria.

Very proud of that achievement. We also recently announced a 10 year commitment to empower 1200 African American students working with historically black colleges and universities to really address the inequities in medical education and broadly in equities and health care in the United States and you can see other important.

And so we had over the course of the quarter. So we'll look forward to continue our progress on this front and being a leader in ESG for the long term ultimately embedding this into our business to drive long term performance, so with that I'll hand, it over to Marie France.

Vas Narasimhan: So we'll look forward to continuing our progress on this front and being a leader in ESG for the long term, ultimately embedding this into our business to drive long-term performance. So with that, I'll hand it over to Mary Frances.

Unknown Executive: Thank you, Vas, good morning, and good afternoon to all. I'm pleased to update you on our Q2 pharma performance. If we move to slide 19, we delivered 12% growth versus the prior year and an additional $1 billion in revenues. As you can also see, we also continue to make progress in our portfolio shift. Our growth drivers and launches are showing excellent momentum with 35% growth, and these now contribute to more than 50% of our top line, thanks to our strong focus on execution. You can expect this shift to continue as we invest behind our growth drivers and launches and also actively manage the mature portfolio. Now, if we move to slide 20.

Thank you that's good morning, good afternoon to all and pleased to update you on on Q2 final performance.

Moving to slide 19.

We delivered 12% growth versus prior year, and an additional $1 billion in revenues.

You can also see we also continue to make progress on our portfolio shift.

Our growth drivers and launches are showing excellent momentum with 35% growth and these now contribute to more than 50% of our top line.

Thanks to our strong focus on execution.

You can expect this shift to continue as we invest behind our growth drivers and launches and also actively manage the mature portfolio.

If we move to slide 20.

Unknown Executive: Cosentyx delivered 21% growth. U.S. volume growth in Q2 is now back in line with the market, and sales were up 11% quarter-over-quarter. Our field force activity is above pre-COVID levels, and as we see the market regaining momentum, we also intend to capture more volume. XUS, we had really strong growth in Europe.

Cause context delivered 21% growth.

U S volume growth in Q2 is now back in line with the market and sales were up 11% quarter over quarter. Our field force activity is above pre COVID-19 levels.

And as we see the market regaining momentum we also intend to capture more volume ex.

Thanks, you asked we had really strong growth in Europe and in China, We quadrupled sales versus Q1, following the <unk> listing in March.

Unknown Executive: And in China, we quadrupled sales versus Q1 following the NRDL listing in March. So for the full year, we're on track to deliver double-digit growth based on our broad access, our ongoing geographic expansion, and our continued investment. We can now proudly say that 500,000 patients have been treated with Cosentix, and with our ambition to expand to 10 indications, we know that many more can benefit. We'll continue to invest with additional approvals in the short term and with our hydridenitis superativa readout towards the end of the year. If we move to the next slide, Interesto saw another very strong quarter with 46% growth.

So full year, we're on track to deliver double digit growth based on our broad access our ongoing geographic expansion and the continued investment. We can now proudly say that 500000 patients have been treated with <unk> and with our ambition to expand to 10 indications. We know that many more can benefit will continue to.

With additional approvals in the short term and with our hydride in either superlative I read out towards the end of the year.

If we move to the next slide.

Entresto saw another very strong quarter with 46% growth in the U S. You can see from the MD Rx growth that were really capitalizing on the ACC consensus recommendations and also on the expanded label.

Unknown Executive: In the US, you can see from the NBRX growth that we're really capitalizing on the ACC consensus recommendations and also on the expanded label. In Europe, the ESC guidelines now recommend Entresto as first line, and that is further reinforcing our position as first. In China, we tripled sales compared to the previous year on the back of strategic account expansion.

In Europe, the ESC guidelines now recommend entresto as first line and that is further reinforcing our position as first choice.

China, we tripled sales compared to previous year on the back of strategic account expansion. In fact, China is now on track the second biggest market.

So this team is strongly focused on execution and educating prescribers on guidelines activating patients and ensuring the guidelines become protocol at hospital level.

Unknown Executive: In fact, China is now Trusto's second biggest market, so this team is strongly focused on execution and educating prescribers on guidelines, activating patients, and ensuring the guidelines become protocol at hospital level. You can expect to see the usual summer slowdown.

You can expect to see the usual summer slowdown however, full year, we will stay strong as we address the remaining 70% of patients who do not yet benefit from Entresto.

If I move to slide 22 is on James Webb, continuing its growth trajectory as we open up reimbursement in new markets and you heard us say earlier, we've got compelling data in pre symptomatic patients and that's what's really important for us to continue the work to implement new born screening as we know.

Earlier, we treat the more transformation on the outcomes are for these babies.

Unknown Executive: However, full year, we will stay strong as we address the remaining 70% of patients who do not yet benefit from Entrust. If I move to slide 22, the Zolgensmos is continuing its growth trajectory as we open up reimbursement in new markets. As you heard Vas say earlier, we've got compelling data in pre-symptomatic patients, and thus, it's really important for us to continue the work to implement newborn screening. As we know, the earlier we treat these children, the more transformational the outcomes are for these babies.

In the U S..80% of newborns are being screened and this is allowing treatment within a few weeks of birth.

Ex U S. We expect to see Italy, and the U K and additional reimburse markets to drive the growth in the second half and even though you can continue to expect some volatility in the quarterly pattern. We're on track to exceed blockbuster status. This year.

Our preclinical studies for <unk> are progressing well and we're actually ready to start our phase III as soon as the FDA gives us the green light overtime. The ITU formulation can more than double the number of patients who could benefit from xeljanz.

If we move to the next slide.

With cause some time, our focus is on broad adoption in early lines of therapy. We've added 500, new prescribers and we've doubled the number of patients on <unk> versus Q1, we.

Unknown Executive: In the US, 80% of newborns are being screened, and this is allowing treatment within a few weeks of birth. XUS, we expect Italy and the UK and additional reimbursed markets to drive growth in the second half. And even though you can continue to expect some volatility in the quarterly pattern, we're on track to exceed blockbuster status this year.

We also see that half the person to usage is a naive or first switch and this is exactly where we want to be.

The visa class is currently leading the recovery of a dynamic market and <unk> got the second highest <unk> share in the on the space. So this positions us well as the market opens up further.

Yeah.

As we move to the second half of the year, we know what we need to do to double demand and we're doing what is needed for a strong Q4, we're maintaining our leading share of voice to really increase the awareness of <unk>. We also believe that our PURA in our IGD data provide important clinical differentiation.

Unknown Executive: Our preclinical studies for IT are progressing well, and we're actually ready to start our phase three as soon as the FDA gives us the green light. Over time, the IT formulation could more than double the number of patients who could benefit from Zolgens' method. Now, we move to the next slide.

We're fully focused on what we need to do we're also fully focused on delivering a positive customer experience. In fact, 80% of patients are receiving their first dose within 5 days and our patient support services are enabling fast and easy initiation.

If I move on to slide 24.

And move on to Alexia.

We all know that CBD is the leading cause of death and unfortunately mortality is on the rise.

Unknown Executive: With COSIMTA, our focus is on broad adoption in early lines of therapy. We've added 500 new prescribers, and we've doubled the number of patients on COSIMTA versus Q1. We also see that half of Cosimta usage is a naive or first switch.

There are effective treatments, we know that too but patients are non accrual due to access adherence and affordability challenges and this is why we're taking a different approach on how we bring <unk> to market in the U S. We've got a new action date for January and we're preparing for launch.

Unknown Executive: And this is exactly where we want to be. The BESO class is currently leading the recovery of the dynamic market, and Cosimta's got the second highest NBRX share in the MS space, so this positions us well as the market opens up further. As we move to the second half of the year, we know what we need to do to double demand, and we're doing what is needed for a strong Q4. We're maintaining our leading share of voice to really increase the awareness of casemta. We also believe that our Pura and our IgG data provide important clinical differentiation.

Our access strategy could actually enable 2 thirds of patients at launch to access like the O with a zero dollar copay.

So we're working with health care systems on broad adoption, we're using our existing infrastructure to identify patients and also to set up by buying <unk> administration.

In the U K, we're partnering with NHS to bring <unk> to more than 300000 patients at risk of a second CV event over the next 3 years and we're on track for that launch in Q3.

We understand this approach will take time and further evidence generation, but this level of ambition is absolutely necessary, if we want to drive better outcomes for our CBD patients.

So in summary, an excellent quarter, we're fully focused on our strategy to maximize our growth drivers deliver our launches and also prepare for the next wave of innovative medicines.

As we further accelerate our portfolio shifts we're also transforming our business we want to be much more customer centric and also pursue innovative approaches to launch our products in partnership with health care systems around the world.

Unknown Executive: So we're fully focused on what we need to do, and we're also fully focused on delivering a positive customer experience. In fact, 80% of patients are receiving their first dose within five days, and our patient support services are enabling fast and easy initiation. If I move on to slide 24, and then move on to Alexio.

So coming out of Q2, we had good momentum across the globe, which we expect will continue in the second half I wanted to take a moment to recognize the fantastic teams around the work for their hard work and for delivering these results over to uses on thank you Marie France, and moving to slide 26, I'm very pleased to give an update on the oncology.

Unknown Executive: We all know that ASCVD is the leading cause of death, and unfortunately, mortality is on the rise. There are effective treatments, we know that too, but patients are not at goal due to access, adherence, and affordability challenges. And this is why we're taking a different approach to how we bring Lectio to market. In the U.S., we've got a new action date for January, and we're preparing for launch. Our access strategy could actually enable two-thirds of patients at launch to access Lectvio with a $0 copay.

So I think our oncology business showed very solid performance in the second quarter, delivering 7% of growth with sales, reaching $3.9 billion our growth drivers and recent launches are showing good momentum with 19% growth versus prior year driven by his colleague Chuck Covey.

Mark down regulate and Kim Ryan and together these products now contribute to half of the overall oncology sales, allowing us to more than offset losses from continued generic erosion of cleavage afinitor and <unk> in the U S Inc.

Due to the oncology market continued to be affected by COVID-19, oncologists are reporting debt desk caseload, depending on geography is there.

Unknown Executive: So we're working with healthcare systems on broad adoption. We're using our existing infrastructure to identify patients and also to set up buy and bill administration. In the UK, we're partnering with the NHS to bring Lecvio to more than 300,000 patients at risk of a second CV event over the next three years, and we're on track for that launch in Q3. We understand this approach will take time and further evidence generation, but this level of ambition is absolutely necessary if we want to drive better outcomes for ASCVD patients.

25% to 50% below pre COVID-19 levels and most affected areas are our breast cancer portfolio recent launches and hospital initiated therapies like Kim Ryan and load out there.

Looking at <unk>.

This group globally, 19% and it was driven by strong ex U S growth and geographic expansion in the U S. We remain very competitive however, overall demand in the Clos has slowed down and Luke I'll say and I'll say, it's not growing 10% in Q2 a.

The ex U S growth was double digit and we also saw positive Sigma in the U S. As it is emerging from Covid and referral started to increase so overall, we remain confident that patient visits to hospitals will increase and treatment patterns will further improve in the second half of the year.

Unknown Executive: So, in summary, an excellent quarter. We're fully focused on our strategy to maximize our growth drivers, deliver our launches, and also prepare for the next wave of innovative medicine. As we further accelerate our portfolio shift, we're also transforming our business. We want to be much more customer-centric and also pursue innovative approaches to launch our products in partnership with healthcare systems around the world. So coming out of Q2, we had good momentum across the globe, which we expect will continue in the second half. I want to take a moment to recognize the fantastic teams around the world for their hard work and for delivering these results. Over to you, Susana. Thank you, Mari Fran.

Leading to acceleration of growth in this segment moving to slide 27, I wanted to share a bit on our performance in the U S. U S remains our biggest market globally and is contributing to over 40% of our overall oncology sales our gross brand.

And launches contribute to 49% of sales.

Market is slowly recovering from the pandemic, Mr. Oncology caseload, now, reaching 75% of pre COVID-19 level. However testing rates for the most common tumor types remain suppressed in Q1, delaying diagnosis and new prescriptions in Q T Q2, we have.

Susanna: Thank you, Marie-France. And moving to slide 26, I'm very pleased to give an update on the oncology business. The oncology business showed very solid performance in the second quarter, delivering 7% of growth with sales reaching $3.9 billion. Our growth drivers and recent launches are showing good momentum with 19% growth versus the prior year, driven by Kiskali, Chakkavi, Promacta, Revolade, and Kymriah. And together, these products now contribute to half of overall oncology sales, allowing us to more than offset losses from continued generic erosion of CLEVEC, Affinitur, and X-Shade, Shade New in the U.S.

Partial recovery of our growth drivers on recent launches together growing 10% versus previous year and also accelerating versus previous quarter. So this was mainly driven by pro Mach DUC is Kali and tough make overall with continued recovery of the market, we expect acceleration of sales in the U.

In the second half of the year.

Moving to cash currently on Slide 28 is currently delivered strong performance in second quarter growing 36%, Let me say, it's off $225 million. The uptake was mainly driven by continued momentum in patient share gains ex U S and particularly in Europe gives Kelly is the market leader.

In pre menopausal setting in France, Italy, and Spain and in the U S. We have also seen gift card sales getting traction delivering 17% versus previous quarter, driven by increased demand and new patient starts we see increased field for suites in those accounts where access with strict.

Susanna: In Q2, the oncology market continued to be affected by COVID-19. Oncologists are reporting that their caseload, depending on trichography, is still 25 to 50 percent below pre-COVID levels. And the most affected areas are our breast cancer portfolio, recent launches, and hospital-initiated therapies like Kymriah and Lutathera. Looking at Kymriah, this grew globally by 19 percent, and it was driven by strong ex-U.S. growth and geographic expansion. In the U.S., we remain very competitive. However, overall demand for the class has slowed down.

Since were lifted and we also continue to leverage digital engagement based on dynamic of targeting.

As koby presented updated OS data from our Mona Lisa 3 trial that showed consistent OS benefit with a median OS of 4.5 years and with this data clearly demonstrated the longest OS in post menopausal patients and is the only CDK 4.6 inhibitor.

Susanna: And Lutathera sales were growing 10 percent in Q2. The ex-U.S. growth was double-digit, and we also saw positive signals in the U.S. as it emerged from COVID, and referrals started to increase. So overall, we remain confident that patient visits to hospitals will increase and treatment patterns will further improve in the second half of the year, leading to acceleration of growth in these segments. Moving to slide 27, I wanted to share a bit on our performance in the U.S. The U.S. remains our biggest market globally and is contributing to over 40 percent of our overall oncology sales.

This data in first line. This flow restaurant, we believe that these excellent results maybe attribute it to the unique profile of cash Cali Rosa versus other CDK 4.6 inhibitors, there's a preferential inhibition to CDK 4 over CDK 6.

High concentration to inhibit the target.

In addition, we are going into the adjuvant setting with our Napoli study exploring <unk> county in both intermediate and high risk population and just to remind you. This population represents around 70% of the other 1 early breast cancer population and there's a clear unmet medical need.

I am very pleased to report that the enrollment of the Napoli study is completed and we are on track for readout in 2022.

Susanna: Our growth brands and launches contribute to 49 percent of sales. The U.S. market is slowly recovering from the pandemic, with oncology's caseload now reaching 75 percent of its pre-COVID level. However, testing rates for the most common tumor types remain suppressed in Q1, delaying diagnosis and new prescriptions. In Q2, we have seen partial recovery of our growth drivers and recent launches, together growing 10% versus the previous year and also accelerating versus the previous quarter. So this was mainly driven by Promagda, Kishkali, and ToughMeg.

Moving to slide 29, as you heard from Bob We are very excited about the data from the vision trial debt positions lutetium PSA matters relative to potentially address the unmet needs of more than 80% of men with late stage advanced prostate cancer, who express PSM receptors.

And just to remind you that prostate cancer is the second most diagnosed cancer globally and in the majority of cases patients. Unfortunately developed metastases by the time of castration resistant prostate cancer diagnosis earlier on to the got a breakthrough therapy.

Granted by the FDA and filing to the FDA is on track for the second half of 'twenty..1 we are fully in launch preparation with focus on the top 200 treatment centers and are also working on raising awareness on the clinical relevance of PSM aim very pleased to see growth in the P. S. M. A.

Susanna: Overall, with continued recovery of the market, we expect acceleration of sales in the US in the second half of the year. Moving to Kiskali, on slide 28. Kiskali delivered strong performance in the second quarter, growing 36% with sales of 225 million. The uptake was mainly driven by continued momentum and patient share gains ex-US and particularly in Europe. Kiskali is the market leader in the pre-menopausal setting in France, Italy, and Spain. And in the US, we have also seen Kiskali sales getting traction, delivering 17% versus the previous quarter, driven by increased demand and new patient starts. We see increased field force reach in those accounts where access restrictions were lifted.

Furnace has doubled among our target physicians over the last months and tough to reassure you that we have adequate capacity to meet the demand for the current launch so our focus will be on driving referrals from community centers, where 70% of prostate cancer patients are treated.

New model the lutetium PMA launch keep in mind that hospitals need to set up processes on licenses and patients need to be selected through P. S. At my pet scanning and these factors are likely to drive a more gradual uptake at launch versus what you saw with the bolus effect on looked up there.

Moving to the next slide Slide 30, I would like to talk about our launch preparation for assuming if the first damp inhibitor that has the potential to transform CML treatment standards again in the phase III assembler study assuming it nearly doubled the major molecular response at.

For 24 weeks compared to pursuit in it.

We have completed filings for FDA and EMA early in June and the FDA has granted 2 breakthrough therapy designation and fast track designations for a few minutes and Israel reviewing the file on the real time oncology array of U S. We are preparing for the launch our focus is on res.

Susanna: And we also continue to leverage digital engagement based on dynamic targeting. At ASCO, we presented updated OS data from our Mona Lisa 3 trial that showed consistent OS benefit with a median OS of 4.5 years. And with this data, Kiskali demonstrated the longest OS in post menopausal patients and is the only CDK4-6 inhibitor with data in first line with full restraint. We believe that these excellent results may be attributed to the unique profile of Kiskali versus other CDK4-6 inhibitors with preferential inhibition of CDK4 over CDK6 and a high concentration to inhibit the target.

Awareness on the importance of stamp inhibition to overcome resistance and minimizing off target events typical 4 take he is aided awareness has already reached 75% and just to remind you. The third line indication for us M&A pass already blockbuster potential.

But we are also very excited by the potential benefit that I assume and it may provide to see them other patients in first line setting.

Spot the advancement in treatment of CMS over the last 20 years that are still around 50% of patients who relapse or intolerant to imatinib in first line and more than 30% of patients suffer from Turkey, I related non Hematological Ai's group.

We believe that in earlier lines, you'll see them on treatment I'm, assuming it may prevent resistance to currently available to take your eyes and therefore, we are initiating a phase III study of assuming they persist investigators selected take your eyes. This enrollment plan to start in the second half of 'twenty 1.

Susanna: In addition, we are going into the adjuvant setting with our Natalie study, exploring Kiskali in both intermediate and high-risk populations. And just to remind you, this population represents around 70% of the adjuvant early breast cancer population, and there's a clear unmet medical need. I am very pleased to report that the enrollment in the Natalie study is completed, and we are on track for readout in 2022. Moving to slide 29, as you heard from Voss, we are very excited about data from the VISION trial that positions lutetium PSMA well to potentially address the unmet needs of more than 80% of men with late-stage advanced prostate cancer who express PSMA receptors. And just to remind you that prostate cancer is the second most diagnosed cancer globally, and in the majority of cases, patients unfortunately develop metastasis by the time of castration-resistant prostate cancer diagnosis.

So moving to slide 31 day.

We've made great progress on our innovation agenda and a 21 is a very important year in terms of Readouts in submission. In addition to the vision data we had multiple readouts like positive data from a topical.

At Taco PON in P N H a palace.

In prose, Kim Ryan Follicular lymphoma, and Oss data flow, a little tough area connecting them up readout in second line non small cell lung cancer. Unfortunately, not show positive data, but it is very important to mention that we have 2 more studies ongoing in first line and Abdul on non small cell lung cancer.

It's the first line trial on track to read out in second half of 'twenty..1 later in the year. We are also expecting Kim Ryan to read out in second line non Hodgkin's lymphoma, and Kiss calculus data from 1 of the Liza tool in terms of submission we have completed submission for gvhd for <unk>.

<unk> in Europe, and Japan to breakdown in Europe in a seminar in certain non U S. In Europe and 4 H..2 we are on track for filing of Lutetium P. S. It may Kim Ryan Follicular lymphoma, and second line on Hot non Hodgkin's lymphoma, and tusa live them up in non small cell lung cancer.

In second line Osaka to a cancer cell.

Susanna: Earlier in June, we got breakthrough therapy granted by the FDA, and filing for FDA approval is on track for the second half of 21. We are fully in launch preparation. We focus on the top 200 treatment centers and are also working on raising awareness of the clinical relevance of PSMA. We are very pleased to see growth in the PSMA market. Awareness has doubled among the target physicians over the last month. And just to reassure you that we have adequate capacity to meet the demand for the current launch.

Exciting times ahead for oncology Big Thank you to all the teams and with debt I hand over to Harry.

Yes. Thank you good morning, and good afternoon, everybody. So I'm now going to walk you through some of the financials for the second quarter and the first half of the year and as always my comments refer to growth rates in constant currencies unless otherwise noted.

So on slide 33.

Youll see the summary of our operational performance for the second quarter on the first half we had a strong quarter tool, resulting in a solid first half performance. Despite the impact of Covid during the period quarter to let's say, it's grew 9% to $13 billion driven by on.

Susanna: So our focus will be on driving referrals from community centers where 70% of prostate cancer patients are treated. When you model the Lutium PSMA launch, keep in mind that hospitals need to set up processes and licenses, and patients need to be selected through PSMA PET scanning.

Key growth drivers and core operating income grew 13% to 4.3 billion, mainly driven by the higher sales and favorable gross margin, partly offset by higher investments.

<unk> growth was also up 16% to $1.66 on free cash flow grew 17% in U S dollars to $4.2 billion.

Susanna: And these factors are likely to drive a more gradual uptick at launch versus what you saw with the bolus effect on lutafera. Moving to the next slide, slide 30, I would like to talk about launch preparation for asiminib, the first stamp inhibitor that has the potential to transform CML treatment standards again. In the phase 3 assembled study, asiminib nearly doubled the major molecular response at 24 weeks compared to bosutinib. We have completed filings for FDA and EMA earlier in June, and the FDA has granted two breakthrough therapy designations and fast-track designations for asiminib and is reviewing the file under real-time oncology review. As we are preparing for the launch, our focus is on raising awareness of the importance of stamp inhibition to overcome resistance and minimizing off-target events typical of TKIs.

Of course, we appreciate the benefit on comparison from the low base in quarter, 2.2022 to the Covid destocking in the prior year. However, even when excluded we still returned to healthy growth with sales up 5% on core operating income growing 4%.

Quarter, 2 or 'twenty or 'twenty 1 underlying.

Our half 1 performance was solid with 3% growth on the top line and 2% on the bottom line core EPS grew 5% to $3.17 on free cash flow was $6 billion of course for half 1 to quarter 2 quarter, 1 destocking stocking from the price is.

Washed out so these values represent underlying growth of half 1.2021.

Next slide please.

So on slide 34, I want to dive into our performance during the quarter by Division.

Latest medicines delivered a strong quarter with plus 10% top line and plus 14% bottom line growth and the margin of 37%.

Susanna: Aided awareness has already reached 75%, and just to remind you, the third-line indication for asiminib has already blockbuster potential. But we are also very excited by the potential benefit that asiminib may provide to CML patients in the first-line setting. Despite the advancements in the treatment of CML over the last 20 years, there are still around 50% of patients who relapse or are intolerant to imatinib in first line, and more than 30% of patients suffer from TKI-related non-hematological AIs.

Even if we adjust for last year's lower base, we still saw strong growth with innovative medicines sales increased 7%.

Core operating income up 6%.

The innovative medicines performance was driven by continued strong double digit growth of our key growth drivers, including Coosa index Entresto, So janssen oncology launch brands and as Lars mentioned earlier, the presentation, our growth drivers and launches.

<unk> portfolio rejuvenation.

Now account for over half of our innovative novartis innovative.

Weighted for medicine sales.

Of course, depending on its still impacts our business, particularly sandoz retail.

The segment however.

Susanna: We believe that in earlier lines of CML treatment, Asiminib may prevent resistance to currently available TKIs, and therefore, we are initiating a phase three study of Asiminib versus investigator-selected TKIs with enrollment planned to start in the second half of 2021. Now moving to slide 31. We have made great progress on our innovation agenda, and 21 is a very important year in terms of readouts and submissions. In addition to the vision data, we had multiple readouts like positive data from Ibtakopan in PNH, Apelizip in PROS, Kymriah in follicular lymphoma, and OS data for Lutathera.

On those businesses now beginning to stabilize with sales up plus 5%.

And quarter to Bottomline cooling, 3%, although growth debt also benefits from prior year Destocking.

Now turning to our full year guidance on slide 35.

We confirm our full year guidance for both the Coupe.

Operating income for sales, we continue to expect low to mid single digit growth in 2020.1 and.

And for the bottom line, we expect mid single digit growth ahead of sales.

For innovative medicines and Sandoz, we're also not making any changes we continue.

To expect innovative medicines division sales to grow mid single digit on core operating income to grow mid to high single digit add on sales and for Sandoz. We continue to expect sales to decline on the low to mid single digit range and core operating income through client low to mid teens.

The key assumptions for the guidance that we see a continuation of the return to normal global health care systems and prescribing dynamics in the second half of this year and in addition, we continue to assume that no drug then yeah no sudden those thoughts on LDR generics would enter in 2021 in the U S.

Susanna: Kanakinema readout in second line non-small cell lung cancer did unfortunately not show positive data, but it is very important to mention that we have two more studies ongoing in first line and adjuvant non-small cell lung cancer with the first line trial on track to readout in the second half of 21.

On the next slide.

We provide some detail on our expectations for the second half of the year, we expect top line growth through accelerated from 3% in half 1 to mid single digit bringing us to the low to mid single digit range for the full year. Our assumption is that this will be driven by growth acceleration as we continue.

Susanna: Later in the year, we are also expecting Kymriah to readout in second line non-Hodgkin's lymphoma and Kiskali OS data from Mona Lisa 2. In terms of submissions, we have completed submissions for GVHD for Chaka V in Europe and Japan, Tabrector in Europe, and Asiminib in third line US and Europe. And for H2, we are on track for the filing of Lutetium PSMA, Kymriah in follicular lymphoma and second line non-Hodgkin's lymphoma, and Tizolizumab in non-small cell lung cancer and second line esophageal cancer.

To return to normal prescribing behaviors as well as further sandal stabilization, we expect core operating income growth to be high single digit and path to reaching our mid single digit expectation for the full year.

Core operating income growth will be driven by higher sales and ongoing productivity programs, partially offset by increased investments in our growth drivers on the pipeline. It is possible that we could reach the higher end of the ranges. We have provided but as you know the COVID-19 situation still remains fluid.

Finally on slide 37.

As currencies are constantly changing I want to bring to your attention the estimated currency impact on our results using the current exchange rates. So if mid July rates prevail for the remainder of 2021, the full year impact of currencies on sales would be positive 2%.

Susanna: So exciting times ahead for oncology. A big thank you to all the teams. And with that, I hand over to Hari.

Hari: Yeah, thank you, Susanna. Good morning and good afternoon, everybody. So, I'm now going to walk you through some of the financials for the second quarter and the first half of the year. And, as always, my comments refer to growth rates and constant currencies unless otherwise noted. So, on slide 33.

And on core operating income positive 2 to 3 percentage points for quarter 3 it will be positive 1% point on sales and positive 1 to 2 points on core operating income.

And as a reminder, we always update this estimate as the currency impact on our website on a monthly basis and with that I hand back to loss.

Thank you Harry so moving to the next slide when you look at 2021, we have a broad range of catalysts still to go but also had good pipeline delivery over the course of the year. So we look forward to keeping you updated as we continue to advance these assets and programs I'd also note.

Hari: You see, the summary of our operational performance for the second quarter and the first half. We had a strong quarter two, resulting in a solid first half performance, despite the impact of COVID during the period. Quarter two net sales grew 9% to $13 billion, driven by our key growth drivers, and co-operating income grew 13% to $4.3 billion, mainly driven by the higher sales favorable growth margin, partly offset by higher investment. CorePS growth was also up 16% to $1.66, and free cash flow grew 17% in US dollars to $4.2 billion.

Our mid stage pipeline continues to generate I think exciting new innovations, which we hope will emerge and be able to add to our pipeline over the course of the second half and moving to the last slide is just to close.

As I noted at the beginning our consistent long term performance over the recent years is driving our confidence for the future on the continued growth outlook for the company. We've had strong performance in Q2, driven by the key growth drivers as you've seen throughout the presentation. We are also continuing to advance our pipeline of novel medicines and you've seen the positive read.

So across the attack of bad Loopy, SMA and others and we're re.

Hari: Of course, we appreciate the benefit on comparison from the low base in Q2 2020 due to the Covid de-stocking in the prior year. However, even when excluded, we still return to healthy growth with sales up 5% and co-operating income growing 4%. Quarter to 2021 underlying. Our half-one performance was solid, with 3% growth on the top line and 2% on the bottom line. Core EPS grew 5% to $3.17, and free cash flow was $6 billion. Of course, for half one, the quarter two, quarter one de-stocking, and stocking from the prior year has washed out, so these values represent underlying growth for half one 2021. Next slide, please.

Confirming our full year, 2020, 1 guidance, our commitment to drive long term accretive growth and again. Thank you for your commitment to the company and so with that I'll ask the operator to open the line for questions.

Thank you as a reminder to ask a question you will need to press star 1 on your telephone to withdraw your question press the pound Husky Youll South greater if I could just say 1 thing if it's a question theres could limit themselves to 2 questions. We'd appreciate it. Thank you.

Thank you.

First question today comes from the line of thermal capacity Awesome benzene. Please go ahead. Your line is open.

Oh, great. Thanks, very much for taking my questions that will not commodity Betsy.

So I'm just curious on Novartis I'm thinking about the potential impact of the <unk>.

Interest debt following the recent positive data in debt for Deb injection fraction population until these drug quite a robust profile in California.

Recently, well price and have demonstrated efficacy on top and in interest of naive patients. So do you expect to see.

Hari: So on slide 34, I want to dive into our performance during the quarter by division. Innovative Medicines delivered a strong quarter with plus 10% top line and plus 14% bottom line growth and a margin of 37%. Even if we adjust for last year's lower base, we still saw strong growth, with innovative medicine sales increasing 7% and core operating income up 6%. The innovative medicine performance was driven by continued strong double-digit growth of our key growth drivers, including Cosantix and Tresto, Zolgensma, and the oncology launch brands.

Any impact on <unk>.

Just curious on your level of confidence that these products will not be used other entresto. My second question is just on it's a co pack.

Lots of interesting data recently for the drug across multiple indications, but I'm just curious how novartis thinking about it from a commercial perspective.

This will come down to timelines on which indications to demonstrate efficacy in phase III.

But given the quite a different size of markets on competitive dynamics are quite quite different. So ultimately you know how on novartis on to prioritize.

Should we see success across multiple indications.

Particularly given the acceptable price points by independent indications could be quite different and competition from the likes of wood pellets to limit the potential. Thank you.

Yeah. Thanks for both the first on the CLC twos marathons.

Hari: And as Voss mentioned earlier in the presentation, our growth drivers and launches are driving portfolio rejuvenation and now account for over half of our innovative medicine sales. Of course, the pandemic still impacts our business, particularly sandal retail and the anti-infective segment.

So thanks for the question.

As you rightly said the S. G on tier twos are add ons and so we expect them to continue to be used predominantly in diabetes patients. Even if we think about the the new read out of past, we've really only seen the press release and we'd have to look at the full data because the trials.

Hari: However, the sandals business is now beginning to stabilize with sales up plus 5% in quarter two and the bottom line growing 3%, although growth did also benefit from prior year de-stock. Now turning to our four-year guidance on slide 35, we confirmed full year guidance for both group sales and co-operating income.

We're really quite different.

The bottom line is actually Entresto is a unique position and it's got it's got a broad label on the U S. That's covering 5 out of 6 patients with chronic heart failure were very strong with a cardiologist and we're going to focus on making sure that 70% of the half breath patients who are on previous standard of care or switch to entresto. So.

I think between the compiling data the strong guidelines support that we have the commercial infrastructure. The excellent team that we have in place we have what it takes to continue the momentum with Entresto and it's if patients need on add on then and that's J on T to US is the right thing to do.

Hari: For sales, we continue to expect low to mid-single-digit growth in 2021, and for the bottom line, we expect mid-single-digit growth ahead of revenue. For Innovative Medicines and Sundance, we are also not making any changes.

And then thanks Mary.

Taco pattern, you know I think our overall strategy as you can see is to fully leverage the unique mechanism and profile of this medicine across the range of indications. We've outlined now of course, it'll be data driven and the sequencing will be determined by the data, but our goal is on the 1 hand to disrupt existing markets with the.

Hari: We continue to expect Innovative Medicines Division sales to grow mid-single-digit and co-operating income to grow mid- to high-single-digit ahead of sales. And for Sandoz, we continue to expect sales to decline in the low- to mid-single-digit range and co-operating income to decline low- to mid-single-digit. The key assumption for the guidance is that we see a continuation of the return to normal global healthcare systems and prescribing dynamics in the second half of this year. And, in addition, we continue to assume that no Jelenia and no sudden or sudden LAR generics will enter the market in 2021. On the next slide.

We have a safe oral that can be given broadly to patients who at the moment are taking at least at the moment are taking ivs on an ongoing basis and so we think there is a very attractive profile there and then to enter into a completely new market segments in renal disease Hematological illnesses that currently don't have.

Have a very strong standard of care.

And so that's how you're going to see US approached you on fully maximize the asset across the full range of numerous indications we're pursuing.

Thanks <unk> next question. Thank you.

Thank you. Your next question comes from the line of Graham Parry Bank of America. Please go ahead. Your line is open.

Hari: We provide some detail on our expectations for the second half of the year. We expect top-line growth to accelerate from 3.5% to mid-single-digit, bringing us to the low-to-mid-single-digit range for the full year. Our assumption is that this will be driven by growth acceleration as we continue to return to normal prescribing behaviors, as well as further Sandoz stabilization. We expect co-operating income growth to be high single-digit and half-true, reaching our mid-single-digit expectation for the full year.

Great. Thanks for taking my questions. So first 1 is on because I was just wondering what percentage of drug dispenses free drug in first half on how you expect that to be in second half and you said you expect demand to double to H and I think if you take the first half sales and add on twice that you get to around consensus of 350, but if youre getting less free drug.

Could you actually beat the consensus number.

Then secondly on the Napoli trial now that recruitment is complete can you narrow the window down when in 2020, we might see the data.

Hari: Co-operating income growth will be driven by higher sales and ongoing productivity programs, partly offset by increased investments in our growth drivers and pipeline. It is possible that we could reach the higher end of the ranges we have provided, but as you know, the COVID situation still remains fluid. Finally, on slide 37.

Just is that do you think it's a first half on a second half event. Thank you.

Thanks, Graham on cause symptoms Marie France.

Yeah. So I have to center are our key focus is really on broad adoption in early lines of therapy, and I say that because I think it's really important for our strategy that that everyone understand that we want to ensure that the value of high efficacy b cell therapy early.

Hari: As currencies are constantly changing, I want to bring to your attention the estimated currency impact on our results using the current exchange rates. So if mid-July rates prevail for the remainder of 2021, the full impact of currencies on sales would be positive 2% and on co-operating income positive 2 to 3 percent points. For quarter three, it would be positive 1 percent point on sales and positive 1 to 2 points on co-operating income. And as a reminder, we always update this estimated currency impact on our website on a monthly basis.

As I said in my opening comments, we have about 500, new prescribers and we've also got about twice as many patients on consensus Q1, all patients are starting on free drug and even though our free to paid conversion is happening really quickly there is always a bit of a lag.

So in the in the second half of of of the year. We know what we have the fundamentals in place.

We still have some scaling to do around familiarity of the brands given that cause sometimes is new in market.

And we're going to focus we're going to continue our focus on leading share of voice on the differentiation and really on consistently enabling fast and easy initiation. So for the full year, we're comfortable with external expectations. We know what we need to do to double demand in Q2, and really deliver a strong Q4 medium term we.

Vas Narasimhan: And with that, I hand it back to Voss.

Vas Narasimhan: Thank you, Harry. So moving to the next slide, when you look at 2021, we have a broad range of catalysts still to go. We've also had good pipeline delivery over the course of the year. So we look forward to keeping you updated as we continue to advance these assets and programs.

We expect the center to be a major growth driver for the company.

Thanks for the funds and then on Natalie timing John.

Yeah. Thanks for the question Graham on Natalee, which is our adjuvant study for <unk> Ghali as we disclosed earlier last year that we've increased the recruitment from 4000 to 5000 patients and this includes both the intermediate and high risk patients who have had advanced breast cancer.

Vas Narasimhan: But also note, our mid-stage pipeline continues to generate exciting new innovations, which we hope will emerge and be able to add to our pipeline over the course of the second half. Then moving to the last slide, just to close, as I noted at the beginning, our consistent long-term performance over the last years is driving our confidence for the future and the continued growth outlook for the company. We had strong performance in Q2, driven by the key growth drivers, as you've seen throughout this presentation.

Our final.

The result that we expect to read out is going to be at the end of next year and that's how it's currently powered as we said previously we're not disclosing interim. So we're currently powered for the end of the year and next year for our final readout.

Thanks, Sean so thanks, a lot for the questions Graham next question operator.

Thank you. Your next question comes from Jo Walton from Credit Suisse. Please go ahead. Your line is open.

Vas Narasimhan: We've also continued to advance our pipeline of novel medicines. You've seen the positive readouts across taclopan, loop, PSMA, and others. And we're reconfirming our full year 2021 guidance, our commitment to drive long-term creative growth. And again, thank you for your commitment to the company.

Thank you My first question is about our marketing spend.

We saw in the second quarter of last year clearly.

Very little on the sales side on a dramatic constriction of everybody's marketing spend and then can you give some idea of how you've opened that up.

The level of your marketing capacity you know in the in the second quarter into the third quarter and how you think marketing spend might be able to be sustained at perhaps a lower level going forwards.

Operator: Thank you. As a reminder, to ask a question, you will need to press star 1 on your telephone. To withdraw your question, press the pound hash key. Operator, I could just say one thing. If questioners could limit themselves to two questions, we'd appreciate it.

On a more use of digital or whatever but if we can get a sense of whether you feel how confident you are in a reduction in your long term marketing spend because of all the things that you've learned with Covid on my second question would be to ask for a bit more detail on China, you've talked about drugs, where you triple sales quadrupled.

Operator: Thank you. Thank you. Your first question today comes from the line of Vinil Kapadia from Bernstein. Please go ahead. Your line is open.

Sales can you just give us a little bit of an idea of your level of investment on the level of ambition in China. Please.

Yeah. Thanks, Joe So first on marketing spend trends I'll hand, it to Harry Harry.

Vinil Kapadia: Oh, great. Thank you very much for taking my question, Vinil Kapadia from Bernstein. First, I'm just curious how Novartis is thinking about the potential impact of the SGLP2s on interest following the recent positive data in the preserved ejection fraction population. Clearly, these drugs have quite a robust profile in heart failure, are reasonably well-priced, and have demonstrated efficacy on top and in the interest of naive patients. So, you know, do you expect to see any impact? I'm just curious about your level of confidence that these drugs will not be used ahead of interest, though. My second question is just on Iptocopan.

Yes, hi, Joe so on the marketing spend.

Actually playing out as we guided to earlier in the year, which is as you pointed out quarter to spend it's quite higher.

Then last year quarter, 2 were basically all major markets. We're in lockdown, maybe other than China, but also the U S. So that's why we guided also that in the first half we wouldn't see margin improvement and I think with day sales of 3%.

Core operating income of 2% we saw that also playing out.

So I would expect continued especially quarter, 3 where auto last year spend levels below the commodity and say its growth is.

Vinil Kapadia: Clearly, lots of interesting data recently for the drug across multiple indications, but I'm just curious how Novartis is thinking about it from a commercial perspective. I appreciate this will come down to, you know, timelines and which indications demonstrate efficacy in phase three, but, you know, they're quite different sizes of markets, and competitive dynamics are quite different. So, ultimately, you know, how is Novartis going to prioritize should we see success across multiple indications, particularly given the acceptable price points, but indications could be quite different, and competition from the likes of Appellis could limit the potential. Thank you.

No other certain healthy level, given the investment needs, but that of course within our guidance be it on our productivity programs on manufacturing and overall the expected sales growth than in the second half also as we had more normal I would say spend levels in quarter 4.

As to your debt this plays out I laid out debt.

<unk> will have some very nice margin improvement that leads to the full year guidance of margin improvement.

Now in the mid term I do expect that SG&A will be together with manufacturing productivity on cost of goods will be the major driver of our margin increases, especially in innovative medicines to the high thirties, and certainly a change in mix.

Mary Fran: Thanks you all. The first on the SGLT-2 is Mary Fran.

Somewhat a bit more to virtual digital but still face to face and most markets being important especially for launch initiation.

Mary Fran: So thanks for the question. As you rightly said, the SGLT2s are add-ons.

Mary Fran: And so we expect them to continue to be used predominantly in diabetes patients. Even if we think about the new readout of PEPF, we've really only seen the press release, and we'd have to look at the full data because the trials were really quite different. The bottom line is actually Entresto is a unique position, and it's got, you know, a broad label in the U.S. that covers five out of six patients with chronic heart failure.

But I would expect that SG&A is 1 of the major drivers to continue to improve in the midterm over margin.

Thanks, Terry and on on China, Joe first to take a take a step back a few years ago. We began an investment effort in China are really putting in the necessary infrastructure, both in pharma and oncology building out sales forces to really enable us to drive longer term growth.

And then second we adopted a development strategy to bring our full portfolio of medicines to China, as well as including China in our phase III programs are.

Mary Fran: We're very strong with the cardiologists, and we're going to focus on making sure that 70% of the HFREF patients who are in the previous standard of care switch to Entresto. So I think between the compelling data, the strong guideline support that we have, the commercial infrastructure, and the excellent team that we have in place, we have what it takes to continue the momentum with Entresto, and if patients need an add-on, then an SGLT2 is the right thing to do.

At the start so that given the changes in the regulatory framework, there that would enable us and really at all on stuff fast forward today, we are growing in the high teens percentages in China overall from a business. We're on track on our stated goal to double the size of our China business from the 'twenty 'twenty baseline, we expect to be.

Current trends prevail on 1 of the top 3 players amongst multinationals if not more.

In China by 'twenty 'twenty 4.2025, that's driven primarily by new medicines, so overcoming any of the medicines that ultimately get tendered driving our newer portfolio driving the growth we have 50 potential approvals in debt in that timeframe.

Vas Narasimhan: And then, thanks, Mary France. And with respect to Eptoclopan, I think our overall strategy, as you can see, is to fully leverage the unique mechanism and profile of this medicine across the range of indications we've outlined. Now, of course, it'll be data-driven, and the sequencing will be determined by the data. But our goal is, on the one hand, to disrupt existing markets with the fact that we have a safe oral that can be given broadly to patients who, at the moment, are taking at least IVs on an ongoing basis. And so we think there's a very attractive profile there, and then to enter into completely new market segments in renal disease and hematological illnesses that currently don't have a very strong standard of care.

<unk> strong success on the entered Yale as things as you saw with <unk> Suisse.

But trying to become the second largest market for novartis in the world, we see profitable accretive growth being driven from there and we'll continue to look to invest prudently in China over the years to come.

Yes.

So thanks for the questions next question operator.

Thank you. Your next question comes from the line of Andrew Baum from Citi. Please go ahead. Your line is open.

Thank you a couple of questions. Please first on probably on the natural neutral.

Operator: And so that's how you're going to see us approach the launch, fully maximize the asset across the full range of numerous indications for pursuit. Thank you all. Next question. Thank you.

Given the outcome of the Penelope B trial with I brands. How comfortable are you that you want disease free survival data you'll have at the end of next year had significant sufficient duration on it to satisfy the FDA without wanting to see further follow up.

Operator: Thank you. Your next question comes from the line of Graham Parry, Bank of America. Please go ahead, your line is open. Great, thanks for taking my questions. So, first one's on Kazimta. I was just wondering what percentage of drug dispensers, free drugs,

And then second question on business development.

On the Russia.

Competitors didn't go into that.

Generative deals you've obviously had the surprising approval of out of kind of how is that influencing your interest in the new with degenerative space and then if you could also comment on your chairman's recent comments of net box of interests and mrna as a platform.

Graham Parry: first half and how you expect that to be in the second half because you said you expected demand to double to H and I think if you take the first half sales and add on twice that, you get to around the consensus number of 350, but if you're getting less free drug, could you actually beat the consensus number? And then, on the Natalie trial, now that recruitment is complete, can you narrow the window down to when in 2022 you might see the data, I'm Kasim Simarafan.

Thanks.

Yeah. Thanks, Andrew on on the <unk> Ghali, Jason John do you want to take that.

Sure. Thanks for the question, Andrew and as we've taken a look as I said earlier we've increased.

Number of patients in our Natalee trial from 4005 thousand, including both intermediate and high risk patients as we look at these this patient population. There is a couple of things that we focus on 1 is we have a longer treatment duration looking at a duration of 3 years for the overall treatment so that should give us confidence in the.

The approach we've also looked at.

Graham Parry: Yeah, so on Kesimpta, our key focus is really on broad adoption and early lines of therapy. And I say that because I think it's really important for our strategy that everyone understands that we want to ensure the value of high-efficacy B-cell therapy early. As I said in my opening comments, we have about 500 new prescribers, and we've also got about twice as many patients on Consensus Q1. All patients are starting on a free drug, and even though our free to paid conversion is happening really quickly, there's always a bit of a lag.

The adherence of patients, particularly in the first year as we look at these patients as you know in the early treatment of these patients micro metastatic disease is important and what we've seen at least across both arms is that the patients are adhering and staying on drug at the 400 milligram dose so.

With those 2 specific components, we feel comfortable with the readout at the end of next year.

Thanks, John.

And so on on business development group of course on watching the changes in the approach to use of the accelerated approval pathway.

As we've already noted in neuro degenerative diseases, we have the ongoing program in Huntington's disease entering phase 2 b and we'll certainly consider how best to potentially bring that forward if theres a way to accelerate our regulatory submission assuming positive clinical trials and then also internally we've had narrowed.

Unknown Executive: So in the second half of the year, we know what we have the fundamentals in place. We know we still have some scaling to do around familiarity of the brand, given that Cosimta is new to the market. And we're gonna focus, we're gonna continue our focus on leading share of voice, on differentiation, and really on consistently enabling fast and easy initiation. So for the full year, we're comfortable with external expectations. We know what we need to do to double demand in Q2 and really deliver a strong Q4. In the medium term, we expect Cosimta to be a major growth driver for the company.

Degeneration efforts within the country for many decades as you know and we continue to have programs targeting alzheimers disease, Huntington's as well as other neurodegenerative diseases, both using biologics RNA.

RNA interference.

<unk> and Dsos as well.

Gene therapies, so that will continue.

Specific comments on on E D, though in the neuro degenerative space and of course, we are looking as always for attractive assets to bring in given our broad based efforts in neuroscience on mrna.

Unknown Executive: Thanks very much. And then on Natalie's timing, John.

John: Yeah, thanks for the question, Graham. On NADLI, which is our adjuvant study for Kaskali, as we disclosed earlier last year, we've increased the recruitment from 4,000 to 5,000 patients.

Not much more to add I think we've watched how mrna continues to have value in the COVID-19 space and are curious to see could mrna have applicability more broadly within the vaccine space.

We have on road and going ongoing efforts internally, obviously within closer in manufacturing for S. Irna's Wood pellet Carson with antisense oligonucleotide, where substantial menu factor of those technologies and also the internal efforts on RNA interference. So that work will continue and will continue to.

John: And this includes both intermediate and high risk patients who have had advanced breast cancer.

John: advanced breast cancer. Our final result that we expect to read out is going to be at the end of next year, and that's how it's currently powered. As we said previously, we're not disclosing interims, so we're currently powered for the end of the year next year for our final readout.

Evaluate if there is any sensible approaches and mrna more broadly, but nothing imminent at the moment.

John: Thanks, John. So thanks a lot for the questions, Graham. Next question, operator.

So thanks, Andrew for the questions.

Next question operator thank.

Operator: Your next question comes from Joe Walton from Credit Suisse. Please go ahead; your line is open. Thank you.

Thank you. Your next question comes from the line of Mark Purcell from Morgan Stanley. Please go ahead. Your line is open.

Operator: My first question is about marketing spend. So we saw in the second quarter of last year clearly very little on the sales side and a dramatic constriction of everybody's marketing spend. And then could you give some idea of how you've opened that up?

Okay. Thank you very much firstly on cars.

Im wondering if you could give us the share in the U S. Currently and then in terms of thinking about those 13 launches anticipated by the end of 2021, how we should think about the advantages and disadvantages of a sub Q formulation for a b cell therapy in those in those launch markets outside the U S. And then secondly on Christian.

Joe Walton: What sort of level of your marketing capacity are you at now in the second quarter as you enter the third quarter? And how do you think marketing spend might be able to be sustained at perhaps a lower level going forward? I don't know, more use of digital or whatever, but if we can get a sense of whether you feel or how confident you are in a reduction in your long-term marketing spend because of all the things that you've learned with COVID.

2 parts first part.

What are your latest thoughts surround FTA site inspection on how should we think about the future supply split between yourselves and a third party and then you sort of mentioned these new initiatives the initiating the inception, which are kicking off now ahead of outcome starts in 2026 could you elaborate a little bit more on those initiatives and on others, who are looking to increase evidence based but.

Joe Walton: And my second question would be to ask for a bit more detail on China. You've talked about drugs where you've tripled sales, quadrupled sales. Can you just give us a little bit of an idea of your level of investment and your level of ambition in China, please?

And Chris Ryan before we wait for those outcomes data. Thank you.

Thanks, Mark So first on cause symptoms, a subcutaneous outside the U S Marie France.

Yeah.

Yeah, So cause center because it is an important launch for us outside of the U S and if I just if I look at Europe alone. We've got 420000 patients living with MFS and in many of these patients are on low efficacy therapies actually many more patients are on lower efficacy therapies versus the U S. So what we also know.

Joe Walton: Yeah, thanks, Joe. So first on marketing spend trends, I'll hand it to Harry. Harry?

Harry: Yeah, hi Joe. So on the marketing spend, you know, it's actually playing out as we guided to early in the year, which is, as you pointed out, quarter two spend is quite higher than last year. Quarter two basically all major markets were in lockdown, maybe other than China, but also the US. So that's why we guided also that for the first half, we saw margin improvement. And I think with the sales of three percent and cooperating income of two percent, we saw that also playing out.

We're currently working through reimbursement and to accelerate access, but what we also know is that a lot of these patients don't have access to infusion centers. So our research tells us that physicians and patients.

Well appreciate is self administered high efficacy therapy that can be used in the in the comfort of on patients' homes. So right now we're working with each country through their own reimbursement system, and we know what we need to do to bring our consent as quickly as possible to patients around the globe on your N V. Rx question currently.

<unk> sure on the U S is 11%.

Harry: So I would expect continued, especially in quarter three, where last year's spending levels were low, that marketing and sales growth is No, at a certain healthy level, given the investment needs, but that, of course, within our guidance, be it on our productivity programs, on manufacturing, and overall, the expected sales growth that then in the second half, also as we had more normal, I would say, spend levels in quarter four last year, that displays how they are laid Now, in the midterm, I do expect that SG&A will, together with manufacturing productivity on cost of goods, be the major driver of our margin increases, especially in innovative medicines, to the high 30s.

Yeah.

And I would also note on the if you look at 1 case study in the U K, our ability to get rapid access their I think demonstrates the value of an ex U S markets.

Yes.

Emulation, where the overall cost effectiveness of a therapy is high on on the systems mind.

On <unk> just on the manufacturing side of things in the U S. Our intention at the moment is to focus production out of our chapter now Novartis on shop to now.

Jody, we can't predict on whether or not the FDA will inspect as noted notable that this site is regularly inspect it has been recently, it's very line has been recently inspected by.

FDA using a remote inspection and approved for use in.

Given indication and so.

We'll have to see what the FDA ultimately determined but I think it's notable that this is a line that is regularly used and inspected by the FDA.

And then in terms of the data initiatives, maybe married fronts on the on the efforts to build out data on and clustering.

Harry: And certainly, a change in mix, somewhat a bit more to virtual and digital, but still face-to-face in most markets being important, especially for launch initiation. But I would expect that SG&A is one of the major drivers to continue to improve in the midterm for our margin.

Yeah. So I mean, you saw some of that on the slide and obviously you know learning from Entresto, we know that we need to build evidence generation you know about our efforts on the outcomes data. So Orion 4 we're also looking at primary prevention studies, but we're on.

Also looking to complement with the V. Initiate trial for example on them you know the different.

Vas Narasimhan: Thanks, Harry. And on China, Joe, first to take a step back a few years ago, we began an investment effort in China, really putting in the necessary infrastructure, both in pharma and oncology, building out sales forces to really enable us to drive longer-term growth. And second, we adopted a development strategy to bring our full portfolio of medicines to China, as well as to include China in our phase three programs at the start so that, given the changes in the regulatory framework there, that would enable us to launch early.

Ways of accessing.

Inquisitor on when it comes to acute coronary syndrome or use or no use of any of those out of mind. So that's the level of evidence and generation that we want to build around the products. So that we can ensure fast uptake.

Thank you.

Yeah, and I just wanted to add that debt you know we continue to work with various important party. So we hope we hope to have updates over the second half of the year on our partnership with the NHS on in closer and that's something we've highlighted in the past that'll be a very important proof point that in closer and can be used at a large scale.

Vas Narasimhan: Now, fast forward to today, we are growing in the high teens percentages in China overall. We're on track on our stated goal to double the size of our China business from the 2020 baseline. We expect to be, based on current trends, one of the top three players amongst multinationals, if not more, in China by 2024 or 2025. That's driven primarily by new medicines. So overcoming any of the medicines that ultimately get tendered, driving our newer portfolio driving the growth; we have 50 potential approvals in that timeframe, and continued strong success on the NRDL listings, as you saw with Cosentix.

And health care systems, we're also partnering with major organizations in the United States, such as the American Heart Association, and we hope to announce others, which I think will also demonstrate that we can generate evidence, but also generate large scale utilization volume demand for medicine. So we'll keep you updated on those.

What's happening next question operator.

Thank you. Your next question comes from the line of Emmanuelle Papa Doc from Deutsche Bank. Please go ahead. Your line is open.

Thanks for taking the question on from Deutsche Bank.

To your question on status on that.

The NDS, 1 deferral effect on deferral for PFS freedom.

No tenant on pending.

Guidance is being for a filing on the <unk> readout in the second half this year. So what can we interpret.

Vas Narasimhan: So we expect China to become the second largest market for Novartis in the world, we see profitable accretive growth being driven from there, and we'll continue to look to invest prudently in China over the years to come. So thanks, Joe, for the questions. Next question, operator.

On efficacy from that based on monitoring decision on recommendation to.

Continue until the PFS readout on unless I'm mistaken, that's a couple of years away.

So does that impact your guidance around my favorite potential blockbuster.

<unk> indication.

And then a question on old Gen.

Operator: Your next question comes from the line of Andrew Baum from City. Please go ahead, your line is open. First, on Kizkali and the NATAL-E trial, given the outcome of the Penelope B trial with Eyebrance, how comfortable are you that your disease-free survival data that you'll have at the end of next year has sufficient duration on it to

You've given guidance.

It's around 20% newborn screening like in Europe does that inflect next year or is it going to be a relatively slow incremental build how you're progressing in terms of non.

On a level discussions about particularly on large sometimes he said pre symptomatic data.

And then if I may just a quick 1 on the interest cycle. It sounds like non much has changed since Q1 of these had been you had agreement on the Charles on your weighted clinical hold to be lifted so as it is.

Operator: [inaudible]

Andrew Baum: And then, second question on business development. We've seen a rash of your competitors doing neuro-developed, neurodegenerative fields. We've obviously had the surprising approval of Adacanumab. How's that influencing your interest in the neurodegenerative space? And then, could you also comment on your chairman's recent comments about Novartis' interest in mRNA as a platform?

Discussions on day goes into new interesting happening in those few months. Thank you.

Yeah. Thanks, Emmanuel So first on the Sabbath told them up.

CRE, though John.

Yeah for the Sabin told them average SAR 10, 3 compound our first in class Io therapy for.

Myelodysplastic syndrome and AML.

We designed the study we always had 2 primary endpoints. The first primary endpoint being complete remission and the second endpoint being progression free survival and as we read out the complete remission. We reached the number of endpoints and the early earlier part of this year at that point the DMC day.

Vas Narasimhan: Yeah, thanks, Andrew. On the Kisgali situation, John, do you want to take that?

On monitoring committee came back and told US to continue the study as originally planned so you've seen this slide that was shared earlier by boss in terms of the number of Readouts as you've seen we actually look at not only Mds, but also AML. So as we look at this we do think that this is a differentiated asset for not only for.

John: Sure. Thanks for the question, Andrew.

John: And as we've taken a look, as I said earlier, we've increased the number of patients in our NATALY trial from 4,000 to 5,000, including both intermediate and high-risk patients. As we look at this patient population, there are a couple of things that we focus on. One is that we have a longer treatment duration, looking at a duration of three years for the overall treatment.

US to think about high risk Mds, but also on AML based on the fact that it has a good safety profile and potentially a.

Pending results of the efficacy.

In terms of durability of response, so we await the results in 2022 and 'twenty 3.

And I think as we have highlighted there's multiple different filing options depending on how the other results play out and it doesn't change our belief that the medicine, given it's a first in class asset.

John: We've also looked at the adherence of patients, particularly in the first year. As we look at these patients, as you know, in the early treatment of these patients, micrometastatic disease is important. And what we've seen, at least across both arms, is that the patients are adhering and staying on the drug at the 400 milligram dose. So with those two specific components, we feel comfortable with the readout at the end.

A different mechanism than any existing therapy or a late stage therapy that can be a significant $1 billion plus medicine on.

On Xeljanz.

On the incremental.

In BFS and how we're doing on newborn screening marathons as soon as they are worried about that.

John: Thanks, John. And so on business development, we are, of course, watching the changes in the approach to the use of the accelerator approval pathway. As we've already noted, in neurodegenerative diseases, we have the ongoing program in Huntington's disease entering phase 2b, and we'll certainly consider how best to potentially bring that forward if there's a way to accelerate regulatory submission, assuming positive clinical trials. And then also internally, we've had new neurodegeneration efforts within the country for many decades, as you know, and we continue to have programs targeting Alzheimer's disease, Huntington So that will continue.

Yeah, I would just say that so you know that in the U S debt. The newborn screening is high outside the U S. I mean, it really is a market by market. So it's gradual I mean I can give you some information on Germany will be implemented by from October well see parts of Belgium screening them you know.

From the beginning of this year, we know that Poland is implementing gradually we've got other countries across Europe that are doing this so I you know it's a.

It's a mixed picture, we're very committed to it we know that it's really important to start Xeljanz. My early we saw that from the sprint data and how amazing. The results are when babies are treated early so so it is it is a priority for US and then of course medium term our goal is to bring us on transmitter older children.

Once we get the I T formulation.

And just another word on that things very fronts on on the interest equal there's no updates Emmanuel we continue to work through resolving the fda's concerns, but we do have the protocol finalized agreement with FDA on the phase III design of preparing operationally for the studies execution.

Vas Narasimhan: No specific comments on BDNL in the neurodegenerative space. Of course, we are looking, as always, for attractive assets to bring in given our broad-based efforts in neuroscience. On mRNA, again, not much more to add. I think we've watched how mRNA continues to have value in the COVID space and are curious to see whether mRNA could have applicability more broadly within the vaccine space. We have our own ongoing efforts internally, obviously, within clostrin and manufacturing siRNAs with pallicarsin and antisense nucleotides.

The debt that indication can continue to be a multibillion dollar indication for the company and as soon as we have any updates on on the preclinical topic on resolution with the FDA will of course provide it.

Thank you.

Question operator.

Thank you. Your next question comes from the line of Richard Parkes from Exxon BNP. Please go ahead. Your line is open.

Hi, Thanks, very much for taking my questions just 2 questions firstly on.

Sales and margins.

Your expectations for <unk> that you set out with a warning to results in this debt.

Vas Narasimhan: We're a substantial manufacturer of those technologies and also have internal efforts on RNA interference. So that work will continue, and we'll continue to evaluate if there are any sensible approaches to mRNA more broadly, but nothing imminent at the moment. So thanks, Andrew, for the question. Next question, operator.

You could discuss what surprised you positively on comp.

So those trends will continue given that you haven't updated guidance. So just wondering if you could add.

Your thoughts on impact to the Delta variance than maybe what you've adjusted your planning assumptions for health care systems opening up on the basis of that and then secondly, just a question on some of your legacy oncology assets in the U S. Specifically promacta to Sigma on to Findlaw.

Operator: Thank you. Your next question comes from the line of Mark Purcell from Morgan Stanley. Please go ahead; your line is open. Thank you very much. First of all, Kasimtha, I wanted you to give us the NBRX share in the US currently and then, in terms of thinking about those 13 launches anticipated by the end of 2021, how we should think about the advantages and disadvantages of a subcut formulation for a B-cell therapy in those in those launch markets outside the US.

I look at sales per script.

Last on.

A few quarters based on the first half it looks like sales per script, it's been growing in double digits, which seems to imply quite significant price increases I, just wonder whether you could discuss that trend and whether there are any other factors such as channel mix that might be impacting that thank you.

Operator: and then secondly on inclitorin, two parts. First part, what are your latest thoughts around FDA?

Thanks, Richard So first on the sales and margins outlook Terry.

Yeah, Doug the line was a bit hard to understand Richard could you briefly on <unk>. Barry I think the question was was there anything that surprised us versus the Q2 guidance. We gave up through Q1 on how Q2 would play out and how do we.

Mark Purcell: [inaudible]

Mark Purcell: Initiate and The Inception, which are kicking off now ahead of outcomes data in 2026. Could you elaborate a little bit more on those initiatives and others you're looking to increase the evidence base behind InclisRen before we wait for those outcomes data? Thank you.

So you have the delta variance impacting our guidance for the rest of the year. Yeah. So okay. Thank you [laughter]. So Richard obviously, we delivered a bit more than what we thought right. So we saw in the U S with faster reopening I would say on most of our brands.

Unknown Executive: Thanks, Mark. So first on KSYMPTA subcutaneous outside the U.S. from your response.

Unknown Executive: Yeah, so, Cosenta is an important launch for us outside of the US. And if I just, you know, if I look at Europe alone, we've got 420,000 patients living with MS. And many of these patients are on low efficacy therapies; actually, many more patients are on low efficacy therapies compared to the US. So what we also know, you know, we're currently working through reimbursement and to accelerate access. But what we also know is that a lot of these patients don't have access to an infusion center.

Sandoz pretty much in line with expectations, but on innovative medicines, some better some better momentum overall and then also very good work from our manufacturing colleagues on productivity. In addition to always perfect supply levels, but overall I would say slightly ahead of our internal expectations in quarter 2.

Yeah. Thanks, Richard I think on the Delta Varian, we continue to monitor the situation and what we are expecting is that given that health care systems have been the impact when they how do they shut.

Cut down to non patients with non communicable diseases in the substantial impact that has.

Unknown Executive: So our research tells us that physicians and patients will appreciate a self-administered high-efficiency therapy that can be used in the comfort of a patient's home. So right now, we're working with each country through its own reimbursement system. And we know what we need to do to bring Cosenta as quickly as possible to patients around the globe. On your NBRX question, currently, our NBRX share in the US is 11%.

We remain optimistic that health care systems will ensure that patients get the care they need while dealing with any surges that may or may not happen with respect to COVID-19.

Now on Promacta on top of ex U S.

Performance Sistema.

Yeah, Thanks, a lot and Richard on.

Promacta actually we are very very pleased with the performance as you rightly note, 18% growth and it's really across all geographies.

And it is volume driven and it's really still our main indications I T P and S. A a to.

To give you a little bit more granularity on the U S. We had <unk>.

11% growth and maybe just to remind you that was a label update earlier this year that makes our products to even more competitive we are seeing share gains increasing N b Eric's and of course it is the efficacy driving debt. It's also the <unk>.

Vas Narasimhan: And I would also note on Sysympta, if you look at one case study in the UK, our ability to get rapid access there, I think, demonstrates the value in ex-US markets of a subcutaneous formulation where the overall cost-effectiveness of a therapy is high on the system's mind. On Inquisirin, just on the manufacturing side of things, in the US, our intention at the moment is to focus production out of our Shaptonal, Novartis-owned Shaptonal facility.

The convenience and ease the non immuno suppressive benefit over our competitors.

And therefore, a very strong performance ex U S. We saw 26% grocers previous year, its very strong underlying performance in our major markets like the EU and also test you mentioned very strong performance in China, where we got and lifting and Av.

Vas Narasimhan: We can't predict whether or not the FDA will inspect it. It's notable that this site is regularly inspected, and has been recently inspected recently by FDA using remote inspection and approved for use in a given indication. And so, you know, we'll have to see what the FDA ultimately determines. But I think it's notable that this is a line that's regularly used and inspected by the FDA. And then in terms of the data initiatives, maybe Mary France on the efforts to build out data on enclosure.

Last year, so very pleased with Promacta.

On top breakdown, we could oh, sorry on making this tougher law they could really stabilize our market share and are very competitive for us as new entries very pleased with the growth also across geographies and also to mention for China. We are very pleased we got a tough make included.

Into the NRT analyst, so really strong growth on volume base across geographies.

Thanks, Thanks, Susanna Thanks, Richard next question operator.

Thank you. Your next question comes from the line of Seamus Fernandez from Guggenheim. Please go ahead. Your line is open.

Unknown Executive: Yeah, so I mean, you saw some of that on the slide. And, obviously, learning from Entrusto, we know that we need to build evidence generation, you know, you know, about our efforts with outcomes data. So Orion IV, we're also looking at primary prevention studies, but we're also looking to complement with the V-INITIATE trial, for example, on, you know, the different ways of accessing Inquisiron when it comes to acute coronary syndrome or the use or no use of azetamide. So that's the level of evidence and generation that we want to build around the product so that we can ensure fast uptake.

Oh, great. Thanks for the question so.

Just 2.

2 quick ones.

As we think about the.

Opportunity on an M b a.

And for the Tim 3 asset I was just hoping you could give us a little bit more color on the evolution I just wanted to follow up on the previous question.

And specifically as it relates to the CR.

Response, there is is that your conclusion there that.

On the.

Proceeding to the PFS benefit.

Is a clear positive.

Moving on to the.

Subsequent events or.

Is this just a continuation of the trial, which could be viewed as somewhat disappointing on on that side of it for.

The high risk Mds patient population the second question.

Obviously, you guys are talking quite strongly about the opportunity for somebody to.

Just in the third line setting blockbuster potential.

Vas Narasimhan: Yeah, and I just want to add that we continue to work with various important parties. So we hope to have updates on our partnership with the NHS on Inclisirin in the second half of the year. That's something we've highlighted in the past; that will be a very important proof point that Inclisirin can be used at a large scale in healthcare systems. We're also partnering with major organizations in the United States, such as the American Heart Association, and we hope to announce others, which I think will also demonstrate that we can generate evidence, but also generate large-scale utilization volume demand for medicine. So we'll keep you updated as things happen. Next question, operator.

Can you just talk about that relative is that predominantly relative to NAV.

You know as sort of the primary opportunity and kind of replacing that asset.

On your replacing net product sales or.

Is it really speaking to a.

A broader opportunity in the third line setting because of potential for duration of use expanding upon how that products used so far.

Yes, so just the and the answer is time on on on the Mds I think with the CR V. Though I would say, it's neutral to positive I mean neutral thing.

Because you were blinded so we don't know what the DNC saw but I think the fact that the study will continue now to the next set of endpoints and the.

Positive mechanism that we see in the previous data that we've seen in the on the products. We remain optimistic that both in Mds and AML. We can we can get to positive results in bringing meaningful innovation for patients as John noted the studies have a range of different designs, including a third study that also takes into account, but net o'clock.

Operator: Thank you. Your next question comes from the line of Emmanuel Papadakis from Deutsche Bank. Please go ahead; your line is open.

Doublet and triplet design.

We have the basis covered and we look forward to getting the additional readouts over the coming year on a half on the sales potential of the simonette Susana do you want to say a word about this.

Operator: Thanks for taking the question, Emmanuel from Deutsche Bank. Maybe a question on Sava Zolomav, the MDS-1 deferral, and the effective deferral for a PFS readout. I think the original fairly long-standing guidance has been for a filing on the CR readout in the second half of this year. So what can we interpret?

Yeah happy to take that and maybe just on the opportunity on on Sop I told him up just in my view a very excited is because it's a completely novel mechanism. It's a tim 3 so a hefty potential to be the first immuno oncology therapy.

Emmanuel Papadakis: on efficacy from that data monitoring decision or recommendation to... um, continue until the PFS readout, unless I'm mistaken, that's a couple of years away. So does that impact your guidance around that being a potential blockbuster billion-dollar-plus indication?

Hematology in Mds and AML and why we believe that is important is because obviously that is now has been made progress on having more efficacious treatments, but what we all know durability and also safety profile is still remaining challenging and therefore.

Excited that's up I told them. It would have these attributes too to add really huge value to this medical need and on assuming there to maybe leave you a little bit through just to remind you a little bit on the dynamics and CMO. So.

Emmanuel Papadakis: And then a question on Zoltan's map. You've given helpful guidance around 20% newborn screening rates in Europe. Does that inflect next year, or is it going to be a relatively slow incremental build? How are you progressing in terms of?

There are still 10% to 15% of patients that progress to third line.

Emmanuel Papadakis: National level discussions about, you know, particularly in light of, as you said, pre-symptomatic data. And then, if I may, just a quick one on the intrasequel. It sounds like not much has changed.

But what you also have to know there is a significant number of patients that remain in second line just because of lack of options for these patients are moving to third line. What we still see is a 75% failure rate, which of course is devastating and that's why there is still a pretty big.

Emmanuel Papadakis: Q1 I think you said, Ben, you and I have agreed on the trial design. You're waiting for the clinical hold to be listed, so

Our centers of patients sitting in second line, even if treatment is not optimized. So therefore youll see that as the poorly on targeting and we also have is mm mm assay minute expect longer duration of the current treatment. So that is where potential comes from and.

Emmanuel Papadakis: Are those discussions ongoing, or is anything new actually happening?

Vas Narasimhan: Thank you.

John: Yeah, thanks Emmanuel. So, first on the Sabatola MAB CR readout, John.

John: Yeah, for the Sabatol Mav. As you know, this is our 10-3.

I think he's still underestimate the earlier lines potential of course, we have changed completely the outcome of CMO, but as I said in first line usually patients are started on a non imatinib and that's 50% of patients that relapse or do you also have to note that sorry.

John: compound our first-in-class IO therapy for myelodysplastic syndrome.

John: As we designed the study, we always had two priorities.

John: primary endpoints, the first primary endpoint being complete remission, and the second endpoint being progression-free survival. And as we read out the complete remission, we reached the number of endpoints in the earlier part of this year. At that point, the DMC Data Monitoring Committee came back.

2% of firstly on patients are having issues with.

Adverse events and and really are struggling a bit.

John: [inaudible]

John: This is a slide that was shared earlier by Voss in terms of the number of readouts. As you've seen, we actually look at not only MDS but also AML. So as we look at this, we do think that this is a differentiated asset for us to think not only about high-risk MDS.

For such a long term treatment and that's the Vista profile on <unk>, we expect to also add value there and that's why we are also entering into first line.

Great. Thanks, Dana next question on Thanksgiving next question operator.

Your next question comes from the line of Kerry Holford from Diamondback. Please go ahead. Your line is open.

John: but also AML, based on the fact that it has a good safety profile and potentially pending results.

Oh come on for me.

Hum.

Just on the on the second half.

John: the efficacy in terms of durability of response. So we await the results in 2022 and 23. And I think it may just be a highlight.

Obviously weighs on placing public place.

Thank you Nick.

Guidance for the group.

John: And I think, Emmanuel, as we highlighted, there are multiple different filing options depending on how the results pay out, and it doesn't change our belief that the medicine, given it's a first-in-class asset that has a different mechanism than any existing therapy or late-stage therapy, can be a significant billion-dollar-plus medicine. On Zolgensva, on the incremental NBS, and how we're doing on newborn screening, Mary Frantz, do you want to say a word about that?

Inc.

Change the outlook.

In the second.

What is it within this division.

Caution.

On outlook to spud net savings okay.

Hmm.

And then when it comes to an end.

I think a question with Alex.

Just to clarify when he opines on the manufacturing and that's on the machine shop. Your line is flat.

Unknown Executive: Yeah, I would just say that so you know that in the US, newborn screening is high outside the US. I mean, it really is a market by market.

Supplies manufactured.

Shouldn't be understand global manufacturing sites.

Now the upstream side.

We anticipate significant index complaint.

Unknown Executive: So it's gradual. I mean, I can give you some information. Germany will implement it by October; we'll see parts of Belgium screening. You know, from the beginning of this year, we know that Poland is implementing it gradually. We've got other countries across Europe that are doing this. So, you know, it's a mixed picture.

In the U S.

Yeah. Thanks, Thanks, Gary So first on the Sandoz outlook on the second half here.

Yeah. Thank you carry so we definitely remember.

Quarter, 1 and quarter 2 have developed here. So clearly you saw a brewery.

Steep decline of quarter, 1 and then you saw that.

Unknown Executive: But we're very committed to it. We know that it's really important to start Zolgensma early, and we saw that from the sprint data and how amazing the results are when babies are treated early. So, it is it is a priority for us. And then, of course, in the medium term, our goal is to bring Zolgensma to older children once we get the IT formulation.

5% accruals of Sandoz in the second quarter, but underlying if you take the prior year. This cooking at -1 so we saw as expected stabilization, but we have a first half with a 5% decline so in order to be at.

On the low to mid single digit decline full year, we continue to expect stabilization around broadly in line for the second half for Sandoz and I think that at this moment, a very reasonable assumption.

Unknown Executive: And just another word on that. Thanks, Marie-France.

Vas Narasimhan: On the intrathecal, there's no update, Emmanuel. We continue to work through resolving the FDA's concerns, but we do have the protocol finalized agreement with the FDA on the phase three design or are preparing operationally for the study's execution with a belief that that indication can continue to be a multibillion-dollar indication for the company. And as soon as we have any updates on the preclinical topic and resolution with the FDA, we'll, of course, let you know. Thank you. Next slide. Next question, operator.

Of course.

Can all make scenario is around cough, and cold and flu season in quarter, 4 and and the market dynamics for that we have taken the midpoint scenario on this so overall I would say.

Of course volatility given the COVID-19 situation and how the cough and cold.

The season would be but overall I would say on what guidance, it's quite starting from a -5% decline in half 1.

Quite reasonable that Sandoz would stabilize there are a few first 5 launches in the second half so that hurts.

Operator: Thank you. Your next question comes from the line of Richard Parkes from Exam BMP. Please go ahead; your line is open.

She also on how the pricing in the U S continues to develop so I would say not overly cautious but realistic.

Operator: Hi, thanks very much for taking my questions.

Thanks, Harry and then carry on manufacturing or its important to note. When you take a step back. Our overall goal is to have Novartis b. The primary manufacturing of both the upstream and downstream parts of this assay RNA for.

Richard Parkes: Two questions. Firstly, sales and margins both beat your expectations for 2Q that you set out of the 1Q results. I just wondered if you could discuss what surprised you positively and how confident you are that those trends will continue, given that you haven't updated guidance. And I just wondered if you could add your thoughts on the impact of the Delta variant and maybe whether you've adjusted your planning assumptions for healthcare systems opening up on the basis of that. And then secondly, just a question about some of your legacy oncology assets.

Closer and we've made the necessary investments to do that we have substantial manufacturing capacity to synthesize DSI RNA and then as we've noted in the U S will move to using our shop facility and overtime globally. The primary manufacturing will be done out of novartis facilities being supplemented by Cmos.

As needed.

The primary reason to do this is 1 we believe the medicine will be as we've noted 1 of our most significant medicines and then second from a Cogs standpoint, our goal is to drive significantly down the cost of goods to enable large scale use of the medicine in the secondary prevention study and eventually perhaps in the primary prevention study.

Richard Parkes: in the U.S., specifically Promacta, Tersigna, and Perfinlar. If I look at sales...

Richard Parkes: Sales per script over the last few quarters, at least in the first half, it looks like sales per script have been growing in double digits, which seems to imply quite significant price increases. I just wondered whether you could discuss that trend and whether there are any other factors, such as channel mix, that might be impacting it. Thank you.

Right now ex U S. We do use third parties for both the primary and secondary but again over time, the evolution will be the novartis owned facilities and those investments have already been either started or completed.

Thanks Kerry next question operator.

Thank you. Your next question comes from Peter Welford from Jefferies. Please go ahead. Your line is open.

Richard Parkes: Thanks Richard. So first on sales and margins, and Outlook.

Harry: Yeah, the line was a bit hard to understand. Richard, could you briefly repeat that? Yeah, so I think the question was, were there any surprises versus the guidance we gave after Q1 on how Q2 would play out? And how do we potentially see the Delta variant impacting our guidance for the rest of the year? Yeah, okay, thank you.

Hi, Thanks for taking my questions. Just 2 please firstly on oncology just looking on some of the hospital administrators in particular and also on some of those that require.

Biomarker diagnostic companion diagnostics to use it actually looks as though the second quarter system of those drug sort of relatively weak compared to the first quarter of a sudden it wasn't sort of an uptake I'm thinking the light itself can rise due to Sarah for instance.

Also as well I think it was on Eden to Frankfurt other drug I Wonder if you could just comment on what you say that with regards to why I guess, we're not saying Q on Q improvements in oncology and how we should think about that perhaps in the second half of the year, indicating factors.

Harry: So Richard, obviously, we delivered a bit more than we thought, right? So we saw in the U.S. a bit faster reopening, I would say, in most of our brands. Sandoz pretty much in line with the expectation, but on innovative medicines, some better momentum overall. And then also very good work from our manufacturing colleagues on productivity, in addition to always perfect supply levels. But overall, I would say slightly ahead of our internal expectations in Q2.

And then secondly, just 1 thing about the Harry's comment that we could reach the higher end of the outlook range as the Covid situation remains fluid should we take that to mean that it COVID-19 situation on that as we currently see the higher end of the ranges.

We should be thinking or should we take that as thinking debt.

You just don't know and you still see uncertainty I guess curious to know sort of where youre thinking with regards to the current COVID-19 situation, but the situation has to deteriorate significantly. So that's been on Bobby Thank you.

Thanks, Peter So just briefly then on the hospital administered oncology.

Vas Narasimhan: Yeah, thanks, Richard. I think on the Delta variant. We will continue to monitor the situation. What we are expecting is that given that healthcare systems have seen the impact when they have a shutdown of patients with non-communicable diseases and the substantial impact that has, we remain optimistic that healthcare systems will ensure that patients get the care they need while dealing with any surges that may or may not happen with respect to COVID-19. Now, on Promacta, Tapmec, U.S. performance, Suzemma?

Yeah. Thank you Ross and thank you Peter for the question. So as I mentioned in my presentation. These areas that you mentioned hospital is a hospital initiated areas, but also of course, where you have new launches. This is still impacted.

By Covid, especially when you look at the U S debt only 75% of patients are back versus pre COVID-19 levels. So we still like a F F for us off on a quarter of patients.

Volume that we usually saw and that is impacting for example, diagnostics, it's impacting screening and that's of course, the breakdown would be such a brand or you see lower biopsies you are see it lower testing reached all our rates overall.

Susanna: Yeah, thanks a lot. And Richard, on Promagta, actually, we are very, very pleased with the performance, as you rightly note, 18% growth. And it's really across all geographies, and it is volume driven. And it's really still our main indications, ITP and SAA, to give you a little bit more granularity.

To say when you look visit and the ones that are tested to a breakdown and testing for C met is increasing but it's just a suppressed patient volumes and this is the same what we see for hospital initiated a products just to give you some figures on camera II as I said, 19% versus previous year.

But we saw that especially in the U S. The whole class saw a reduced demand and vial, we stay very competitive as can rise and that is really linked to a reason or some manufacturing success rate that the customers are.

Susanna: In the US, we had 11% growth, and maybe just to remind you, there was a label update earlier this year that makes Promagta even more competitive. We are seeing share gains in NBRX. And, of course, it is the efficacy driving that. It's also the oral convenience, and it's the non-immunosuppressive benefit over competitors, and therefore, very strong performance.

Very pleased about it's really the demand that you saw in the whole class going down and on loot us era debt is some early positive signs in the U S. We have seen.

Rose versus previous year.

Some now it refers are started but it's still very very suppressed.

And we remain confident debt is now the market opening up centers, taking more patients in this should improve and accelerate.

Susanna: Ex-US, we saw 26% growth for this previous year. It's very strong underlying performance in major markets like the EU. And also, just to mention, very strong performance in China, where we got the URL listing at the end of last year. So, very pleased with Promagta.

Yeah. Thanks for that and then Peter on the on the outlook.

Terry noted.

Multiple dynamics of course, we're monitoring but you know if if the business dynamics continue as we currently see them if oncology can continue its recovery and Sandoz remains.

Susanna: Similar on Tafelar, we could really stabilize market share and are very competitive versus new entries. Very pleased with the growth also across geographies. And also to mention for China, we are very pleased we got TafMek included in the NRDL list. So really strong growth on the volume base across geographies.

On a stable situation given the strong growth we're seeing in our growth drivers are there's certainly the potential for us to be at the higher end of the guidance and we will of course keep you updated in quarter 3.

Next question operator.

Thank you. Your next question comes from the line of Louis took place from UBS. Please go ahead. Your line is open.

Susanna: Thanks, Susanna. Thanks for your next question, operator.

Well I think first question is on let Theo plays have you dosed any patients in the U K on the old programs that yet so I think he said it depends on the starting this quarter and what setting will lose early days just be given any of these patients being seen in the hospital or have you managed to get it in.

Operator: Thank you. Your next question comes from the line of Seamus Fernandez from Guggenheim. Please go ahead; your line is open.

Operator: Oh, great. Thanks for the question. So, just two quick ones.

Seamus Fernandez: As we think about the opportunity in MDS and for the TENC-3 asset, I was just hoping you could give us a little bit more color on the evolution. I just wanted to follow up on the previous question. Proceeding with the PFS benefit is a clear positive moving into the subsequent events.

The primary cash from the word go and then second question is just on Entresto could you maybe talk a little bit about the uptake in the past population. Thanks.

I think Florida. So first on like the agreement we are still working through the final stages with the NHS, we have not yet dosed patients in the U K. The agreement, though has the aspiration that this would be rolled out in primary care from day, 1 at scale trying to address the S. D V D population and get the U K.

Seamus Fernandez: Or is this just a continuation of the trial, which could be viewed as somewhat disappointing on that side of it for the high-risk MDS patient population? The second question, obviously, you guys are talking quite strongly about the opportunity for Siminib just in the third-line setting, its blockbuster potential. Can you just talk about that relative? Is that predominantly relative to Bazutinib as sort of the primary opportunity and kind of replacing that asset or replacing that product sales? Or is it really speaking to a broader opportunity in the third-line setting because of the potential for duration of use to expand upon how that product's been used so far? Thanks.

Towards its long term goal and cardiovascular health. So hopefully we'll have updates in the coming months on that pioneering initiative, which we hope will catalyze I think lucky on global impact over over the coming years on.

Entresto have Beth and I will just start taking the questions given the time on Entresto.

We do see I think the uptake already and you can see that in the India and Brs, but it's still early days and I think as we continue the rollout in the education as well as the awareness on the guideline we would expect to see continued growth for entresto.

A strong outlook for the brand we are confident we will be in that $4 billion to $5 billion range and as we continue to see the trajectory will provide further updates on the long term outlook for entresto in the coming months.

Vas Narasimhan: So just in the interest of time, on the MDS, I think with the CR readout, I would say neutrals are positive. I mean, neutrals are saying because we're blinded, so we don't know what the DMC saw.

Next question operator.

Thank you. Your next question comes from Tim Anderson from Wolfe Research. Please go ahead. Your line is open.

Susanna: But I think the fact that the study will continue now to the next set of endpoints and the positive mechanism that we see in the previous data that we've seen on the product, we remain optimistic that both in MDS and AML, we can get some positive results and bring meaningful innovation to patients. As John noted, the studies have a range of different designs, including a third study that also takes into account the metaclax, the doublet, and the triplet design.

Thank you on Covid.

Centex thinking about kids, a mab they've got some good exposure recently with publication of their data on the New England Journal.

So your products on the efficacy has the 1 side effects of oral candidiasis, how much do you think this product will impact that day.

And do you think that 1 side effect is a material impairment to their products in your view and then on.

On system Wise I Mab, you partnered PD, 1 how realistically compete in a setting like long in western markets.

Can you on your partner sure she won't be disruptive on price I asked because U S merchandise for price erosion over time in the category I'm wondering who is going to be driving that.

Yeah. Thanks, <unk>. So first on <unk> when you look at the dynamics.

<unk> been able to take on competition consistently over the recent years continue to grow the brand double digit as Mary noted, 20% plus that's driven both in dermatology and rheumatology, where we note the additional competitors coming in I can't comment specifically on on them. It gives them out, but we do think that percentage is.

Susanna: So I think we have the basis covered, and we look forward to getting the additional readouts over the coming year and a half. On the sales potential of the stimulant, Susanna, do you want to say a word about that?

Susanna: Yeah, I'm happy to take that, Voss. And maybe just on the opportunity for sabatolimep, why we are very excited is because it's a completely novel mechanism. It's TIM-3, so it has the potential to be the first immuno-oncology therapy in hematology, in MDS and AML. And why we believe that is important is because, obviously, progress has been made on having more efficacious treatments. But as we all know, durability and also safety profile are still remaining challenging.

Very clean safety profile. The fact that its use in such a broad range of dermatology offices and consistently across patient types. Its ability to address skull Palmer plants are psoriasis as well as the joint manifestations and the fact that we have additional indications we're not concerned by additional IL 17 entrants and really.

Our focus now given that we've been able to effectively hold price in the U S market. Despite some disruptive attempts we are confident now that our focus has to be on the next wave of indications to drive this brand well beyond the $5 billion benchmark, we've already put out there on <unk>.

Susanna: And therefore, we are very excited that sabatolimep would have this attribute to add really huge value to this medical need. And on asiminib, to maybe lead you a little bit through, just to remind you a little bit of the dynamics in CML. So there are still 10% to 15% of patients that progress to the third line. But what you also have to know is that there is a significant number of patients that remain on the second line just because of the lack of options for these patients.

So this is a map you've seen the esophageal cancer filing we're moving towards first first and second line non small cell lung cancer. We do believe that the we have been able to market. This medicine from a competitive standpoint, given our long presence, particularly outside the U S. But also in the U S.

We will we'll be prudent in how we think about the pricing, but we do think we can make a compelling value proposition longer term the real opportunity for US is in combination will be taking forward to so there's a mab in combination with our ship 2 inhibitor in combination with some of our RLC agents amongst other opportunities.

Susanna: Moving to third line, what we still see is a 75% failure rate, which, of course, is devastating. And that's why there is still a large percentage of patients sitting in second line, even if treatment is not optimal. So therefore, you see, that is the pool we are targeting, and we also, with asiminib, expect a longer duration of the current treatment. So that is where potential comes from, and I think we still underestimate the earlier lines' potential. Of course, we have completely changed the outcome of CML.

<unk> and <unk>.

So we're going to work to both maximize on the combination side as well as take as much as we can have a very large PD 1 market given the broad range of indications we expect to agents.

Thanks, Tim next question operator.

Thank you. Your next question comes from the line of Simon Baker from Redburn. Please go ahead. Your line is open.

Thanks for taking my questions..2 please if I may just coming back to lexi.

Susanna: But as I said, in first line, usually patients are started on imatinib, and there are 50% of patients that relapse. What you also have to note is that 30% of first line patients have issues with adverse events and really are struggling for such a long-term treatment. And that's where, with the profile of asiminib, we expect to also add value there. And that's why we're also entering first line.

I Wonder if you could give us some way to the.

Just 300000 patients given the unusual situations.

Having not any agreed reimbursement, but also utilization and then secondly, moving on to Sandoz kind of you guys.

Principal drivers for expansion of the on margin.

China I Wonder if you could do the same for the Sandoz margin. Thanks, so much.

Yes, Thanks, Simon so for Lucky on the UK is gonna be driven by our ability to work with the U K to get primary care physicians to diagnose these patients out of the NHS data systems, and then rapidly getting them on to let you know I think it'll be a slow initial ramp and then we hope to see a rapid ramp up in the U S. We've done a very good job of targeting the realm.

Vas Narasimhan: Great. Thanks, Susanna. Next question. Thanks, James. Next question, operator. Thank you. Your next question comes from the line of Kerry Holford from Barenburg. Please go ahead; your line is open. Thank you. Yes, a couple for me, please. Harry, just on the second half outlook, you obviously raised a farmer operating profit growth guidance slide today, but you've not updated the growth guidance for the group, and although you've not changed the outlet for Sundial.

Other than.

Our integrated health systems to hopefully be a be prepared to have it.

Reasonable uptake initially, but again it will take time to get those centers on board in parallel we will also have a traditional launch with our traditional sales and marketing approach leveraging the Entresto field force.

And reach so on approval in the U S will go very obviously out very strongly.

Operator: Thank you. Your next question comes from the line of Kerry Holford from Barenburg. Please go ahead; your line is open.

We'll take time to get the brand up but then once we think we get momentum we expect the brand as we've guided to be a very significant multibillion dollar medicine for the company midterm Sandoz margins will be driven by portfolio shifts with the biosimilars portfolio large number of biosimilars in the mid Twenty's, we expect to get forward I get it.

Operator: Yeah, thanks. Thanks, Kerry. So first on the Sandoz outlook on the second map, Kerry.

Kerry Holford: Yeah, thank you, Kerry. So, we have to remember how quarter one and quarter two have developed here. So, clearly, you saw a very steep decline in quarter one, and then you saw that 5% growth in sandals in the second quarter, but underlying, if you take the prior year, this is talking about minus one. So, we saw, as expected, a stabilization, but we had a first half with a 5% decline. So, in order to be at a low to mid-single-digit decline for the full year, we continue to expect stabilization around broadly in line for the second half for sandals.

The market on some of them first and cloud first hopefully the market such as not to lose the mab.

Others, and then on top of that debt.

Ability to launch additional injectables and the oral solids, while continuing to drive down cost of goods. So you'll have a mix shift to higher margin products as well as the continued efficiency gains in cost of goods and then lastly, Richard and team are working hard to optimize the manufacturing and sales set of leveraging digital technologies.

I think that would be the other element that will help us get to those mid to high twenty's margins in Sandoz.

Kerry Holford: And I think that is, at this moment, a very reasonable assumption. Of course, you know, we can all make scenarios around cough and cold and flu season in quarter four and, and the market dynamics for that. We have taken a midpoint scenario on this. So overall, I would say, Of course, volatility, given the COVID situation and how the cough and cold season would be, but overall, I would say our guidance is quite, starting from a minus 5% decline in half one, quite reasonable that Zandos would stabilize.

Thanks, Simon next question operator.

Thank you. Your next question comes from Steve Scala from Cowen. Please go ahead. Your line is open.

Thank you I've 2 questions first on AVX ask 1 other 1 Ken can any findings from the preclinical interest equal safety studies be shared with US today. So that's the first question and then on the second question relates to the cause Scully adjuvant interim look and Natalie I'm curious if this look is over.

Already occurred if it has then it would seem to be immaterial update and you would have announced it so I assume that it has not yet occurred but please confirm thank you.

Yeah, Thanks, Steve on AVX as 1 on 1 I see the preclinical data we've seen to date does not indicate any concerns. However, we need to complete the relevant assessment and of course ultimately agree with FDA on the lifting of a clinical hold and so we'll keep you updated as that.

Kerry Holford: They have a few first five launches in the second half, so that helps. We also have to see how the pricing in the U.S. continues to develop. So I would say not overly cautious but realistic. Thanks.

Harry: Thanks, Harry. And then, Kerry, on manufacturing, it's important to note when you take a step back, our overall goal is to have Novartis be the primary manufacturer of both the upstream and downstream parts of this siRNA for inclisirin. But we've made the necessary investments to do that. We have substantial manufacturing capacity to synthesize the siRNA. And then, as we've noted, we in the U.S. will move to using our Shafts & Elf facility.

As that progresses to Natalie interim has not has not occurred but as we've guided to were not no longer guidance of interim analysis timings and we're focusing on to final outcomes. John you mentioned earlier on the call we expect that to be in the back half of.

Next year.

Of course, as we learn more on that study, we'll keep you updated thanks, Steve next question operator.

Thank you. Your next question comes from the line of no risk Chow on from Intron Health. Please go ahead. Your line is open.

Hi, there thanks for taking my questions just 2 please.

Hum.

We recently seen.

Hospitals.

Clinton group cause it and partly because it is a bit on Saturday I told the conflicts.

Harry: And over time, globally, the primary manufacturing will be done out of Novartis facilities, being supplemented by CMOs as needed. The primary reason to do this is, one, we believe that this medicine will be, as we've noted, one of our most significant medicines. And second, from a cost standpoint, our goal is to drive significantly down the cost of goods to enable large-scale use of the medicine in the secondary prevention study and, eventually, perhaps, in the primary prevention study.

We've seen the lake is an oncology appointments be delayed as a result, you see.

And I think some of that.

This oh jeez, a few states warehouse, where they should arise it pretty quickly just wondering whether or not that's.

Have you seen any signs of that debt.

And then secondly on Afinitor.

You'd expect.

On April 2.

Other studies.

Do you expect that to them.

Especially when.

Generic prices.

Oh, he doesn't mind.

Thank you.

Yeah, Thanks to us on the on.

On the U S. We currently don't see any shifts in utilization on better notable other than what you already stated on the call oncology is below pre COVID-19 levels. Cardiovascular is also below pre COVID-19 levels don't trust will continue to have very strong.

Harry: Right now, at QS, we do use third parties for both the primary and the secondary. But again, over time, the evolution will be to Novartis-owned facilities, and those investments have already been either started or completed. Thanks, Kerry. Next question, operator.

Performance in patients with heart failure, who seem to be getting the day medicine as expected. So nothing that we can flag at this point and also new clinical trials are enrolling on time. So we have learned a lot about managing I think the health care systems have learned a lot about managing COVID-19, we've learned a lot about managing our trials and the uptake of our medicines during COVID-19.

Vas Narasimhan: Thank you. Your next question comes from Peter Welford of Jeffreys.

Operator: Please go ahead; your line is open. Hi, thanks for taking my questions. Just two, please.

Hopefully we can navigate this this next period successfully but certainly something we're watching very very closely I think it's too soon to comment on specifics on its de minimus label I would note that the safety profile was remarkably clean when you look at the it was a head to head study versus Sutent nib across all relevant.

Operator: Firstly, oncology, just looking at some of the hospital-administered drugs in particular, and also some of those that require either biomarker diagnostics, or companion diagnostics to use, it actually looks as though the second quarter for some of those drugs was sort of relatively weak compared to the first quarter, or there certainly wasn't any sort of an uptick. I'm thinking the likes of Kimriah, Lut Also, as well, I think things like even Tubrextra and other drugs.

Safety safety markers. It was a very clean profile based on stayed on drug. So we're optimistic that overall the assuming the profile will be attractive which is a part of the reason as well as Adam mentioned, we're quite confident that it if it ultimately prove superior can be a very effective first line therapy.

Operator: I wonder if you could just comment on what you're seeing there, with regard to why I guess we're not seeing queue-on-queue improvements in oncology and how we should think about that, perhaps in the second half of the year in the gating factor. And then, secondly, I just want to come back to Harry's comment that we could reach the higher end of the Outlook ranges if the COVID situation remains fluid Should we take that to mean that if the COVID situation pans out as we currently see, the higher end of the ranges is where we should be thinking?

Next question operator.

Thank you.

Your next question comes from Marshall did couture from <unk> BHF. Please go ahead. Your line is open.

Good afternoon. Thank you for taking my question.

I'd like to come back on this on those business on thank you for your previous answer on the edge to it.

We understand the next debt, we the topline improvement driven by debt.

Pipeline with Biosimilars on debt.

Okay.

Could you share with us your vision on the improvement on what they want the ability to meet.

Do you see any concrete operational leverage on the cost due to.

Operator: Or should we take that as thinking that you just don't know and you still see your uncertainties? I'm curious where you're thinking with regard to the current COVID situation and whether the situation has to deteriorate significantly for that to be not valid. Thank you.

The improvement of the top line accelerated.

On the coast.

Price erosion should we can see the stabilization of activity for the next year.

If you could give us more code on maybe to help us to manage it.

And in the next quarter on the on Gil. Thank you very much.

Is that more so I don't think I fully picked up the question, but I'll give my best answer. So when you look at Sandoz is sandoz evolution over time from a margin standpoint.

Peter Welford: Thanks, Peter. So just briefly, Suzanna, on hospital-administered oncology.

Vas Narasimhan: Yeah, thank you, Voss. And thank you, Peter, for the question.

First right now our goal is to invest and create a very strong pipeline performance are in the spirit of time, both biosimilars and oral solids in the in the coming years Youre not going to see a big shifts in the in the margin or the operating leverage but our belief is given Richard is driving very strong efficiency gains across all the relevant.

Susanna: So, as I mentioned in my presentation, these areas that you mentioned, hospital-initiated areas, but also, of course, where you have new launches, this is still impacted by COVID, especially when you look at the U.S., where only 75% of patients are back versus pre-COVID levels. And on Lutathera, there are some early positive signs in the U.S. We have seen growth versus the previous year, as some new referrals are starting, but it's still very, very suppressed. And we remain confident that with the market now opening up, centers taking more patients in, this should improve and accelerate. Yeah, thanks, Suzanne.

All items and we continue to expect our important pipeline delivery in biosimilars in respiratory in oral solid when that pipeline delivery happens then we expect the margin in the midterm to.

Be accretive and move up into that mid to high 20. So the shape is going to be stable for the period of next few years and then we expect acceleration in margin improvement for Sandoz as that portfolio. Ultimately comes through so I think that's the best way to think about it and I think that was the.

Susanna: Yeah, thanks, Suzanne. And then, Peter, on the outlook, you know, as Harry noted, it's multiple dynamics, of course, which we're monitoring. But, you know, if the business dynamics continue as we currently see them, if oncology can continue its recovery, if Sandoz remains in a stable situation, given the strong growth we're seeing in our growth drivers, there's certainly the potential for us to be at the higher end of the guidance. And we'll, of course, keep you updated in quarter three. Next question, operator.

We have 1 more question on the operator can we go to the last question. Thank you.

Thank you. Your last question today comes from <unk> Parekh from Goldman Sachs. Please go ahead. Your line is open.

Thank you and thank you for taking my questions. If I may your introductory comment on Sandoz I'm talking about the strategic vision on the long term almost like setting Dinaric day for our 2022 decision on the longer term outlook for Sandoz.

Vas Narasimhan: Thank you. Your next question comes from the line of Laura Sutcliffe from UBS. Please go ahead, your line is open.

Am I over interpreting your comments or is that the timeframe in which we should expect a broad decision on Nevada Sandoz is a part of novartis on not longer term.

Operator: Hello, thanks. The first question is on Lectio, please. Have you dosed any patients in the UK under your program there yet? I think you said the program was starting this quarter. And in what setting will those early doses be given? Are these patients being seen in the hospital, or have you managed to get it into primary care from the word go? And then the second question is just on Entresto. Could you maybe talk a little bit about the uptake in the pest population? Thanks. Okay, thanks, Laura. So first on life...

That's question number 1.

And then question number 2 we are getting very close to on an annualized basis kind of the peak sales numbers, you provided for percentage and kind of entresto.

I'm wondering kind of why we haven't seen updated kind of peak sales estimates for those 2 products is there anything from a competitive on a market perspective debt. What is you or was this just not the right opportunity.

For you to address the longer term peak opportunity for those products. Thank you.

Thank you Aaron good to hear from you on on on.

On Sandoz, there's no updates or changes in there our goal right now is to put sandoz in a strong position to invest in the business. So that it can be on track to be the leading generics company in the world and we think it can be from a financial as well as impact.

Operator: Thanks, Laura. So first on Lectio, the agreement: we're still working through the final stages with the NHS, so we have not yet dosed patients in the UK. The agreement, though, has the aspiration that this would be rolled out in primary care from day one at scale, trying to address the ASCVD population and get the UK towards its long-term goal in cardiovascular health. So we hopefully will have updates in the coming months on that pioneering initiative, which we hope will catalyze, I think, Lectio's global impact over the coming years.

Pinpoint if and when we take any.

Decisions or.

Startup process, we'll of course, let you know, but right now our focus is on the operational performance of Sandoz and reported supporting Richard and his team to driving that mid single digit growth in margin expansion that we've outlined I think on your second question. I think we are very pleased with the trajectory of Entresto.

<unk> and <unk> you are correct that we are approaching that.

The sales outlook of 4 to 5 billion guidance soon address so on 5 billion plus some percentage. Our current plan is that meet the management will provide an updated outlook on both of those brands, especially as we understand better the dynamic certainly would want to highlight we are confident in both of those brands to be very strong pillars of novartis and.

Operator: On Entresto HFAP, and I'll just start taking the questions given the time, Entresto HFAP, we do see, I think, the uptake already, and you can see that in the NBRX, but it's still early days, and I think as we continue the rollout and the education as well as the awareness on the guidelines, we would expect to see continued growth for Entresto. We see a strong outlook for the We're confident we'll be in that $4-5 billion range, and as we continue to see the trajectory, we'll provide further updates on the long-term outlook for Entresto in the coming months. Thanks, Laura. Next question, operator?

The year to come.

So thanks, everyone for joining today's conference call apologies, we ran a bit over we'll keep you updated thank you for the interest in the company and please stay safe and healthy and we'll look toward speaking soon thank you.

Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

Yeah.

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Laura Sutcliffe: Thank you. Your next question comes from Tim Anderson from Wolfe Research. Please go ahead, your line is open.

Vas Narasimhan: Thank you. On Cosentix, thinking about Femikizumab, they've gotten some good exposure recently with the publication of their data in the New England Journal. Beats your product on efficacy, but it has the one-side effect of oral candidiasis. How much do you think this product will impact Cosentix, and do you think that one-side effect is a material impairment to their product, in your view? And then on Tislelizumab, your partnered PD-1, how realistic will you compete in a setting like lung and Western markets? Can you and your partner assure us you won't be disruptive on price? I ask because U.S. Merck guides for price erosion over time in the category. I'm wondering who's going to be driving. Yeah.

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Vas Narasimhan: Yeah, thanks. So first on Cosentix, when you look at the dynamics, we've been able to take on competitions consistently over the recent years, continue to grow the brand, double-digit is very constant at 20% plus, that's driven both in dermatology and in rheumatology. We know the additional competitors coming in, I can't comment specifically on Bimacizumab, but we do think that Cosentix, very clean safety profile, the fact that it's used in such a broad range of dermatology, offices and consistently across patient types, its ability to address scalp, palmar, plantar psoriasis, as well as the joint manifestations, and the fact that we have additional indications, we're not concerned by additional IL-17 entrants.

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Vas Narasimhan: And really, our focus now, given that we've been able to effectively hold price in the US market, despite some disruptive attempts, we are confident now that our focus has to be on the next wave of indications to drive this brand well beyond the $5 billion benchmark we've already put out. On Titholizumab, you've seen the esophageal cancer filing; we're moving towards first and second line non-small cell lung We do believe that we'll be able to market this medicine from a competitive standpoint, given our long presence, particularly outside the US, but also in the US.

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Vas Narasimhan: We'll be prudent in how we think about the pricing, but we do think we can make a compelling value proposition. Longer term, the real opportunity for us is in combination; we'll be taking forward Titholizumab in combination with our SHP2 inhibitor, in combination with some of our RLT agents, amongst other opportunities. And so we're going to work to maximize on the combination side, as well as take as much as we can of a very large PD-1 market, given the broad range of indications we expect the agent to have. Thanks, Tim. Next question, operator.

Okay.

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Operator: Thank you. Your next question comes from the line of Simon Baker from Redburn. Please go ahead; your line is open. Thanks for taking my questions, too.

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Operator: Just going back to LECVEO, I wonder if you could give us some idea of the RAMP to 360?

Simon Baker: [inaudible] Good evening.

Okay.

Vas Narasimhan: Yeah, thanks, Simon. So for Lectio in the UK, it's going to be driven by our ability to work with the UK to get primary care physicians to diagnose these patients from the NHS data systems and then rapidly get them on Lectio. I think it'll be a slow initial ramp, and then we hope to see a rapid ramp up. In the US, we've done a very good job of targeting the relevant, you know, integrated health systems to hopefully be prepared to have a reasonable uptake initially. But again, it will take time to get those centers on board.

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Vas Narasimhan: In parallel, we'll also have a traditional launch with our traditional sales and marketing approach, leveraging the interest of the field force and reach. So on approval in the US, we'll go very obviously out very strongly. It will take time to get the brand up, but then once we think we get momentum, we expect the brand, as we've guided it to, to be a very significant multi-billion dollar medicine for the company. Midterm standoff margins will be driven by a portfolio shift with the biosimilars portfolio, a large number of biosimilars in the mid-20s we expect to get forward, get into the market, and some of them first in class, first, hopefully, to market, such as Natalizumab, amongst others.

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Vas Narasimhan: And then on top of that, the ability to launch additional injectables and oral solids while continuing to drive down the cost of goods. So you'll have a mixed shift to higher-margin products as well as continued efficiency gains and cost of goods. And then lastly, Richard and his team are working hard to optimize the manufacturing and sales set by leveraging digital technologies. And I think that will be the other element that will help us get to those mid to high 20s margins in Sandoz. Thanks, Simon. Next question, operator?

Okay.

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Vas Narasimhan: Thank you. Your next question comes from Steve Scala from Cohen. Please go ahead; your line is open. Thank you.

Operator: I have two questions. First, on AVXS 101, can any findings from the preclinical intrathecal safety studies be shared with us today? So that's the first question. And then, the second question relates to the Cascali adjuvant interim look in Natalie. I'm curious if this look has already occurred. If it has, then it would seem to be immaterial.

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Operator: A material update, and you would have announced it, so I assume that it has not yet occurred, but please confirm. Thank you.

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Steve Scala: Yeah, thanks, Steve. On AVXS101IT, the preclinical data we've seen to date do not indicate any concerns. However, we need to complete the relevant assessments and, of course, ultimately agree with FDA on the lifting of clinical holds. And so we'll keep you updated as that progresses. The Natalie interim has not occurred, but as we've guided to, we're no longer guiding to interim analysis timings and focusing on the final outcomes.

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Vas Narasimhan: Thank you. Your next question comes from the line of Naresh Chauhan from Intron Health. Please go ahead, your line is open. Hi there, thanks, and all the UK. We've recently seen...

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Operator: Partly because of COVID and partly because it's a very obviously aerobic patrol that we're trying to work through. We've seen electives and oncology appointments.

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Operator: Delays as a result. Are you seeing any signs or anything similar in the U.S. at the end? Obviously, there are a few states where hospitalizations are rising pretty quickly. I'm just wondering whether or not that's been...

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Unknown Executive: has been heard in the U.S.

Unknown Executive: and Stephanie on the simulator. Do you expect to be interacting?

Unknown Executive: We can fly by the label, given what we saw in the earlier studies and how you spread that to...

Yes.

Vas Narasimhan: Yeah, thanks, Suresh. In the US, we currently don't see any shifts in utilization that are notable, other than what we already stated in the call; oncology is below pre-COVID levels. Cardiovascular is also below pre-COVID levels, though Entresto continues to have very strong performance, and patients with heart failure seem to be getting the medicine as expected. So there is nothing that we can flag at this point, and also no clinical trials are enrolling on time.

Yes.

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Vas Narasimhan: So we have learned a lot about managing COVID, I think the healthcare systems have learned a lot about managing COVID, and we've learned a lot about managing our trials and the uptake of our medicines during COVID. So hopefully, we can navigate this next period successfully, but certainly something we're watching very, very closely. I think it's too soon to comment on specifics about Asiminib's label, but I would note that the safety profile was remarkably clean.

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Vas Narasimhan: When you look at the, it was a head-to-head study versus Basutinib across all relevant safety markers, it was a very clean profile; patients stayed on the drug. So we're optimistic that overall, the Asiminib profile will be attractive, which is part of the reason, as Susanna mentioned, we're quite confident that if it ultimately proves superior, it can be a very effective first-line Next question, operator. Thanks, Narasimhan.

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Operator: Thank you. Your next question comes from Marcial de Couture from Odo BHS. Please go ahead, your line is open. Good afternoon.

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Operator: Thank you for taking my question. I would like to come back to the Sandoz business, and thank you for your previous answer on the H2. We understand the next step with the top-line improvement driven by the pipeline for biosimilars and the selection of complex generics, but could you share with us your vision for the improvement in rentability in the mid-term? Do you see any concrete operational leverage on the cost or due to the improvement of the top-line expected and the affiliated cost plus the price erosion? Should we consider stabilizing this activity for the next year? If you could give us more color, maybe to help us to manage the COVID margin in the next quarter and beyond. Thank you very much.

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Marcial de Couture: Marshal, I don't think I fully understood the question, but I'll give my best answer. So you look at Sandoz's evolution over time from a margin standpoint. First, right now, our goal is to invest and create a very strong pipeline performance in this period of time, both biosimilars and oral solids. So in the coming years, you're not going to see big shifts in the margin or the operating leverage. But our belief is given Richard is driving very strong efficiency gains across all the relevant P&L items, and we continue to expect important pipeline delivery in biosimilars, in respiratory, and oral solids.

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Marcial de Couture: When that pipeline delivery happens, then we expect the margin in the midterm to be accretive and move up into that mid to high 20s. So the shape is going to be stable for the next few years. And then we expect acceleration and margin improvement for Sandoz as that portfolio ultimately comes through.

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Vas Narasimhan: So I think that's the best way to think about it. And I think that was the thought that we have one more question. Operator, could we go to the last question?

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Operator: Thank you. Your last question today comes from Kaya Parekh from Goldman Sachs. Please go ahead; your line is open.

Okay.

Okay.

Operator: Thank you, and thank you for taking my questions.

Kaya Parekh: Vas, if I may, your introductory comments on Sandoz, talking about the strategic vision for the long term, seemed almost like setting the narrative for a 2022 decision on the longer-term outlook for Sandoz. Am I over-interpreting your comments, or is that the time frame in which we should expect a broad decision on whether Sandoz is a part of Novartis for the long term or not? That's question number one.

Okay.

Okay.

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Yes.

Kaya Parekh: And then question number two, we are getting very close to, on an annualized basis, the kind of peak sales numbers you provided for Cosentyx and for Entresto. So I'm wondering kind of why we haven't seen an updated estimate of peak sales for those two products. Is there anything from a competitive or a market perspective that worries you, or was this just not the right opportunity for you to address the longer-term peak opportunity for those products? Thank you.

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Vas Narasimhan: Thanks Garen, good to hear from you. On Sandoz, there are no updates or changes.

Vas Narasimhan: I mean, our goal right now is to put Sandoz in a strong position, and invest in the business so that it can be on a track to be the leading generics company in the world, which we think it can be from a financial as well as an impact standpoint. So, thanks everyone for joining today's conference call. Apologies, we ran a bit late. We'll keep you updated. Thank you for your interest in the company, and please stay safe and healthy, and we'll look forward to speaking with you soon. Thank you. Thank you. This concludes.

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Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. Thank you for watching!

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