Q1 2022 Novartis AG Earnings Call

Okay.

Good morning, and good afternoon, and welcome to the Novartis Q1, 2022 results release conference call and live webcast. Please note that during the presentation. All participants will be in a listen only mode and the conference is being recorded after the presentation there'll be an opportunity to ask questions by pressing star one at any time.

Operator: Good morning and good afternoon and welcome to the Novartis Q1 2022 results release conference call and live webcast. Please note that during the presentation, all participants will be in a listen-only mode and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions by pressing star and one at any time during the conference. A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends.

I am joined 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 calls they may signal. The all plays it by pressing star zero with that I would like to hand over to Mr. Samir Shah Global head of Investor Relations. Please go ahead.

Operator: Should anyone need assistance during the conference call, they may signal the operator by pressing star and zero. With that, I would like to hand over to Mr Samir Shah, Global Head of Investor Relations. Please go ahead, sir.

So.

Samir Shah: Thank you very much everybody and good morning and good afternoon to all participants. Thank you for joining us today for Novartis' quarter one 2022 results. Before we start, just wanted to go through the safe carpet stage. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties, and 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.

Thank you very much everybody.

Good morning, and good afternoon to all participants. Thank you for joining us today for Novartis as quarter, one 2022 results.

Before we start just wanted to go through the Safe Harbor statements.

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

Most recent quarterly results on form 6K that respectively were filed with and furnished to the U S Securities and Exchange Commission.

With that I'll hand across to that.

Thank you Samir and thanks, everyone for joining our conference call today, if we could move forward.

Samir Shah: 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 that respectively were filed with and furnished to the U.S. Securities and Exchange. And with that, I'll hand it across to Val. Thank you, Samir, and thank you, everyone, for joining our conference call today. If we could move forward a few slides. So, with me today, I have Harry Kirsch, our Chief Financial Officer, and Karen Hale, our Chief Legal Officer.

Few slides.

So with me today I have Harry Kirsch, our Chief Financial Officer, and Karen Hill, Our Chief Legal Officer, if we go to slide four overall the quarter came up with a solid start for novartis across all of our four key pillars from a growth standpoint, good sales growth both at the I am in Sandoz and of course the overall.

Vasant Narasimhan: If we go to slide four, overall, the quarter came out with a solid start for Novartis across all of our four key pillars. From a growth standpoint, good sales, growth, both at the IM and Sandoz, and of course, the overall group level, good productivity, group core operating income up 9% on constant currency basis, as well as a solid result in both IM and Sandoz. Some important innovation milestones, and I'll go through those in a bit more detail.

Group level, good productivity group core operating income up 9% on constant currency basis as well as a solid result in both I am and Sandoz. Some important innovation milestones I'll go through those in a bit more detail and we also continue to advance our ESG agenda in EMR as well.

Vasant Narasimhan: And we also continue to advance our ESG agenda in AMR, as well as access to medicines agreements in Africa. So, I think a solid quarter that we can build on over the course of this year. Moving to the next slide.

As access to medicines agreements in Africa, So I think a solid quarter that we can build on over the course of this year moving to the next slide.

Our innovative medicines sales group across both our U S and ex U S geographies, 3% in the U S, 5% ex U S in constant currencies.

Vasant Narasimhan: Our Innovative Medicine sales group across both our U.S. and ex-U.S. geographies, 3% in the U.S., 5% ex-U.S. in constant currencies, with growth drivers now accounting for 56% of our IM sales, growth drivers up 21% quarter over quarter. So a nice demonstration that we continue to replace our sales base with newer and newer products. And moving to slide six.

With growth drivers now accounting for 56% of our I am sales growth of those growth drivers up 21% quarter over quarter. So a nice demonstration that we continue to replace our sales base with newer and newer products now moving to slide six.

We saw a strong performance on our key growth drivers the fixed brands, we've been consistently highlighting and I'll talk about them.

Vasant Narasimhan: We saw strong performance on our key growth drivers, the six brands we've been consistently highlighting, and I'll talk about them in a bit more detail. But you can see really across these key brands, growth that ranged from the high single digit to the double digit range. So again, pleased with the broad-based performance. Of course, there were pockets of weakness, and we can talk more about that.

And a bit more detail, but you can see really across these key brand growth that range from the high single digit to the double digit range. So again pleased with the broad based performance of course, there were pockets of weakness that we can talk more about that but overall, we're pleased that we're off to this solid start on the key brands, but let's go a bit deeper on the <unk>.

Vasant Narasimhan: But overall, we're pleased that we're off to this solid start on the key brands. But let's go a bit deeper on the six key brands. So moving to the next slide on slide seven, you see that on Cosentix, Intresto, Zolgensma, Cascali, Cosimta, and Lecvio, we had good growth on the major brands that we really believe will drive our midterm sales performance, and of course, continue to maintain our peak sales guidance on these brands.

Key brands, so moving to the next slide on slide seven you'll see that on Concentrix Entresto Xeljanz bucket golly to them unless we had good growth on the major brands that we really believe will drive our mid term sales performance.

And of course continue to maintain our peak sales guidance on these brands importantly, as well <unk> has now demonstrated.

Vasant Narasimhan: Importantly as well, Cosimta has now demonstrated in Q1 the potential we expect of this brand to really reach that multi-billion dollar potential with very strong growth in the quarter, and we'll talk more about that. And with Lecvio, continue to build a solid foundation base for what will be a multi-year journey to get to the multi-billion dollar sales potential, but I think the initial foundational elements are starting to come into play. So again, it will be a longer-term journey for this brand. Moving to slide eight.

<unk> in Q1, the potential we expect this brand to really reach that multibillion dollar potential with very strong growth in the quarter I will talk more about that and we'd like to continue to build a solid foundation base for what will be a multi year journey to get to the multibillion dollar sales potential, but I think the initial foundation.

All elements are starting to come into place. So again, it will be a longer term journey for this brand moving to slide eight.

And going to each one of these brands brand by brand first with respect to Concentrix double digit sales growth, 12% on the quarter really driven by our ex U S performance. When you look at the specifics on the growth momentum we saw steady volume growth in the U S and EU, we have 700000 patients now.

Vasant Narasimhan: And going to each one of these brands, brand by brand, first with respect to Cosentix, double-digit sales growth, 12% on the quarter, really driven by our SUS performance. When you look at the specifics on the growth momentum, we saw steady volume growth in the U.S. and EU. We have 700,000 patients now across our five indications treated worldwide since launch, very good performance in rheumatology across geographies. We expect double-digit growth in 2022, driven by our China market expansion. Year-to-date, our China performance has been good.

Across our five indications treated worldwide since launch very good performance in rheumatology across geographies, we expect double digit growth in 'twenty, two driven by our China market expansion year to date are ton of performance has been good. We also will in the medium term be driven by our ability to get new indications.

Vasant Narasimhan: We also will, in the medium term, be driven by our ability to get new indications online. They're on track for our hydradenitis superativa submission this year, and we do expect CHMP decision on a couple of additional indications later in quarter two. So we confirm our $7 billion plus peak sales expectations for Cosentix. Moving to the next slide, Entrusto had an outstanding first quarter, growing 42% on the quarter, driven by both U.S. and ex-U.S. performance.

Online we are on track for our Hidradenitis Suppurativa submission this year and we do expect CMC HMP decision on a couple of additional indications later in quarter. Two so we confirm our $7 billion plus of peak sales expectations for centex.

Moving to the next slide Entresto had an outstanding first quarter growing 42% on the quarter driven by both U S and ex U S performance you can see here the U S weekly <unk> showing a nice steep ramp as we come out, particularly out will come out of the pandemic period. This growth has been driven across.

Vasant Narasimhan: You can see here the U.S. weekly NBRX showing a nice, steep ramp as we come out, particularly as we come out of the pandemic period. This growth has been driven across hospitals, cardiology, and primary care, so really broad-based in the U.S., primarily driven by reduced ejection fraction, especially with the new guidelines that are now in place, but also supported by the preserved ejection fraction indication. We have strong demand growth in Europe for the brand, and in China, as well as Japan, the launch of our hypertension indications and the NRDL listing in China have helped drive this growth.

Hospital cardiology in primary care, so really broad based in the U S.

Primarily driven by reduced ejection fraction, especially with the new guidelines that are now in place, but also supported by the preserved ejection fraction indication we have strong demand growth in Europe for the brand and in China as well as Japan. The launch of our hypertension indications that the <unk> listing in China have helped drive this growth so.

Vasant Narasimhan: So, longer term, we expect the continued development of evidence-based, the continued drive of the guidelines that place ARNI as a first choice for physicians treating reduced ejection fraction heart failure, as well as for further penetration in China and Japan to drive the momentum for Entrusto. Moving to the next slide. Zolgensma grew 18% on the quarter, with increasing access outside of the United States.

A term we expect the continued development of evidence base. The continued drive of the guidelines that place R&D as a first choice for physicians treating <unk> reduced ejection fraction heart failure as well as for further penetration in China, and Japan to drive the momentum for Entresto moving to the next slide.

<unk> grew 18% on the quarter with increasing access outside of the United States.

Vasant Narasimhan: The Q1 highlights were really the ex-US, where we had sales growth 32% in constant currency, while the US remained steady as we continue to drive up the newborn screening rates. So right now we have over 2,000 patients treated worldwide, which I think demonstrates the profile of this gene therapy and the confidence providers are having in using this medicine. In the future, our growth will be driven by continuing to penetrate in the US and the under 2, really getting to a high market share. We expect to have over 90% of children who are diagnosed in newborn screening receiving Zolgensma, that's our goal, and continuing to drive up that newborn screening in the EU above 25%.

The Q1 highlights were really the ex U S, where we had sales growth 32% in constant currency, while the U S remains steady as we continue to drive up the <unk>.

New born screening rates so.

Right now we have over 2000 patients treated worldwide, which I think demonstrates the profile of this gene therapy and the confidence providers are having in using this medicine in the future our growth will be driven by continuing to penetrate in the U S. In the under two really getting to a high market share we expect to have over 90% of children who are.

Diagnosed the newborn screening receiving xeljanz, but thats, our goal and continuing to drive up that newborn screening in the EU above 25% or.

Vasant Narasimhan: Our next phase of data studies or data generation is on track to steer study with intrathecal in older children is currently enrolling the strength study to further profile in the IV setting is starting in the second half. We also rolled out some additional data at MDA, which supports the overall profile of Zolgensma IV. So this will be a steady ramp towards our goal to be a toward the $2 billion product over time, but overall the signs and signals are good. Moving to the next slide. Kaskali demonstrated 20, delivered 28% growth on the quarter, primarily driven again by ex-U.S. performance.

Next phase of data studies are data generation is on track to steer study with interest equal in older children is currently enrolling the strength study to further profile in the IV setting is starting in the second half and we also rolled out some additional data at MDA, which support the overall profile of the old Gen IV.

So this will be a steady ramp towards our goal to be towards the $2 billion product over time, but overall the signs and signals are good moving to the next slide.

Because currently demonstrated that <unk> delivered 28% growth on the quarter, primarily driven again by ex U S performance.

Vasant Narasimhan: The market trends show a recovery to pre-COVID levels for CDK4-6-TRX, but we continue to see suppression in the NVRX part of the market. And so we'll have to continue to watch to see that recovery, which will be critical for us because a lot of our growth is dependent on new to brand patients. Kaskali's growth in the U.S. is in line with market, but in Europe we continue to grow ahead of market. And I'll speak more about the Natalie Adjuvant study update that we've provided today in an upcoming slide. Moving to slide 12. Now turning to Cosimta. Cosimta really, I think, had a strong quarter.

The market trends show a recovery to pre COVID-19 levels for CDK, four and six Trs, but we continue to see a suppression in the <unk> part of the market and so we will have to continue to watch to see that recovery, which will be critical for us because a lot of our growth is dependent on new to brand patients <unk> grow.

<unk> in the U S is in line with market, but in Europe . We continue to grow ahead of market and I'll speak more about the Natalie Adjuvant study update that we've provided today in an upcoming slide.

Moving to slide 12.

Vasant Narasimhan: We have 20,000 patients treated, over 60% are naive or first switch. In the U.S., we see really strong growth dynamics. Despite a suppressed market, you can see in the upper left-hand side of the slide, the U.S. MS market growth remains below its pre-COVID levels. Nonetheless, we see Cosimta continuing to gain momentum. And now outside of the United States, we're approved in 68 countries.

Now turning to cause symptoms is center really I think it had a strong quarter. We had 20000 patients treated over 60% are nave or first switch in the U S. We see really strong growth dynamics. Despite the suppressor market you can see in the upper left hand side of the slide.

EMS market growth remains below pre COVID-19 levels. Nonetheless, we seek to FEMSA continuing to gain momentum and now outside of the United States were approved in 68 countries. So over the course of this year and really starting in 2023, we would expect the ex U S contributions to the brand to start to increase we are getting rolled out additional <unk>.

Vasant Narasimhan: So over the course of this year, and really starting in 2023, we would expect the ex-U.S. contributions to the brand to start to increase. We again rolled out additional data in the quarter, now at four years out, showing the ability to reduce disability worsening with stable IgG levels, as well as data that supports the use of Cosimta in patients who need to be treated with COVID-19 vaccination. So overall, I think a strong start to the quarter, a lot of good momentum with Cosimta, and we'll look forward to delivering that momentum or accelerating that momentum over the course of the year. And moving to the next slide, slide 13.

Data in the quarter now at four years out showing the ability to reduce disability worsening with stable <unk> levels as well as data that supports the use of <unk> in patients who need to be treated with COVID-19 vaccination. So overall I think a strong start to the quarter a lot of good momentum with <unk> and we'll look forward to <unk>.

Delivering that momentum accelerating that momentum over the course of the year now moving to the next slide slide 13, turning to Celesio again early days, particularly in the U S. But I think the leading indicators point to the foundation is being put in place to have this brand become a very significant brand for the company we've reached over 90.

Vasant Narasimhan: Turning to Lectio, again, early days, particularly in the U.S., but I think the leading indicators point to the foundations being put in place to have this brand become a very significant brand for the company. We've reached over 90 percent of HCPs. We have good unaided brand awareness.

Percent of Hcp's, we have good unaided brand awareness. Our DTC has now initiated we've also established access it over it's actually over 50 now 200 of the 200 prioritize systems is 35 on the slide but we're up to 50, you have ordered less our focus very much is in driving more depth in those accounts.

Vasant Narasimhan: Our DTC is now initiated. We've also established access in over – it's actually over 50 now of the 200 prioritized systems, so 35 on the slide, but we're up to 50, have ordered Lectio. Our focus very much is in driving more depth in those accounts. We have 55 percent of our alternative injection sites accounts now have purchased Lectio, 30 percent repeat orders, and importantly, our permanent J-code has been granted and will go into effect on July 1.

We have a 55% of our.

Alternative injection sites accounts now have purchased <unk>, 30% repeat orders and importantly, our permanent J code has been granted and we will go into effect on July one. So all of this to say that the foundations are in place for the second half in the second half of this year to begin to see some more acceleration in growth.

Vasant Narasimhan: So all of this to say that the foundations are in place for the second half – in the second half of this year to begin to see some more acceleration and growth for Lectio going into what we expect to see further acceleration in the coming years. And moving to the next slide.

<unk> four <unk> going into what we expect to see further acceleration in the coming years.

Now moving to the next slide.

Just wanted to say a word on our two recent launches in the U S Assembly or PCR able inhibitor.

Vasant Narasimhan: Just wanted to say a word on our two recent launches in the U.S. Semblix, our BCR-ABL inhibitor, stamp inhibitor, showed nice performance in the quarter in the third-line setting. Here you can see our NVRx share has reached 20% through February. Still small numbers, but I think it points to the potential of this medicine given its strong efficacy and safety profile.

Stamp inhibitor showed nice performance in the quarter in the third line setting here you can see our <unk> share has reached 20% through February still small numbers, but I think it points to the potential of this medicine, given its strong efficacy and safety profile, where up to 49% third line patient share.

Vasant Narasimhan: We're up to 49% third-line patient share, and our first-line phase three study is now enrolling ahead of plan. So we remain optimistic that we can deliver a over $500 million brand in the third-line setting, but our focus in the longer term is to hopefully, with positive data, move into the front-line setting. Moving to the next slide with Plovicto, so we, at the, towards the end of the quarter, received approval for Plovicto, and I think on the U.S. launch, we're off to a good start in getting, again, the key elements in place to really drive this launch. As a reminder, the population is metastatic CRPC patients who are post-relevant chemotherapies. Patient selection is driven by a gallium PSMA-11 agent to identify patients who would benefit from Plovicto.

And our first line Phase III study is now enrolling ahead of plan. So we remain optimistic that we can deliver a over $500 million brand in the third line setting but are just in the longer term.

Hopefully with positive data and move into the frontline setting.

Moving to the next slide with flu victim.

So we at the towards the end of the quarter I received approval for <unk> and I think on the U S launch we're off to a good start and getting again the key elements in place to really drive. This launch as a reminder, the population is metastatic <unk> patients who are post relevant chemotherapy is pace.

<unk> selection is driven by our gallium P. SMA 11 agent to identify patients who would benefit from flew back though there was a 38% reduction in the risk of death in these patients. So a lot of physician and KOL interest in the medicine in the prostate cancer space six infusions.

Vasant Narasimhan: There was a 38% reduction in the risk of death in these patients, so a lot of physician and KOL interest in the medicine in the prostate cancer space, six infusions, six, six week, over six weeks, which really gives us an opportunity for a one-time therapy over that period of time, and then patients derive the benefit. We're building on our Lutathera experience with this medicine. Our commercial field teams are in place. We see a high awareness already in the 240 treatment centers that we're targeting initially.

Six week over six weeks, which really gives us the opportunity for a one time therapy over that period of time and then patients derive the benefit we are building on our <unk> experience with this medicine, our commercial field teams are in place, we see a high awareness already and the 240 treatment centers that we're targeting.

Initially 40 RLC centers are already on boarded into the ordering system in many of these centers have experience with us and we've submitted the application for the permanent a code for this medicine now in Europe , We expect approval in the second half of 'twenty two and we also are progressing on track with our phase III studies in the <unk>.

Vasant Narasimhan: Forty RLC centers are already onboarded into the ordering system, and many of these centers have experience with us, and we've submitted the application for the permanent A code for this medicine. Now, in Europe, we expect approval in the second half of 2022, and we also are progressing on track with our phase three studies in the pre-taxing and hormone sensitive setting, and we're also, which would expand the patient population three to four X and allow us to target a patient population to enable this to be a multi-billion dollar brand over time, and we're evaluating additional phase three studies in the earlier line setting. I'm moving to the next slide. Wanted to say a word on Sandoz.

Taxane and hormone sensitive setting and were also which would expand the patient population in three to four act and allow us to target a patient populations enabled us to be a multibillion dollar brand over time, and we're evaluating additional phase III studies in the earlier line setting.

Now moving to the next slide.

Wanted to say a word on sandoz, our business dynamics and Sandoz as you saw in the quarter I really stabilized we are benefiting from a lower prior year comparison. Nonetheless, it is a positive sign to see now stabilizing standards business with good growth, 8% overall driven by performance in Europe at <unk>.

Vasant Narasimhan: Our business dynamics in Sandoz, as you saw in the quarter, have really stabilized. We are benefiting from a lower prior year comparison. Nonetheless, it is a positive sign to see now stabilizing Sandoz business with good growth, 8%. Overall, it was driven by a performance in Europe at 9% that we do see now moving towards a bottoming out of the U.S. business as we look to get that region back to growth. Very good biopharma performance and retail performance. Core operating income was up quite significantly, but again, benefiting from both prior year comps as well as certain one-timers.

9% that we do see now are moving towards a bottoming out of the U S business as we look to get that region back to growth very good biopharma outperformance in retail performance core operating income was up quite significantly, but again benefiting from both prior year comps as well as certain one timers and so overall given the geographic.

Vasant Narasimhan: And so overall, given the geographical uncertainties, price erosion and other inflationary pressure Sandoz faces, we're maintaining our guidance for Sandoz on the full year, but we'll, of course, continue to monitor to see how Sandoz performs. Just as a reminder, we continue to view Sandos as having the potential to be the leading generics company in the world, driven by its biosimilar presence and strength, as well as the key success factors which we reviewed on the previous call.

Brickell, uncertainties price erosion and other inflationary pressure sandoz spaces, we are maintaining our guidance for sandoz on the full year, but will of course continue to monitor and see how sandoz performs.

As a reminder, we continue to view Sandoz has having the potential to be the leading generic company in the world driven by its biosimilars.

Vince and strength as well as our key success factors, which we reviewed on the previous call overall, our strategic review remains on track and we would plan to provide an update on the strategic review at the latest by the end of this year.

Vasant Narasimhan: Overall, our strategic review remains on track, and we would plan to provide an update on the strategic review at the latest by the end of this year. Moving to the next slide. So our overall events are on track. It won't go through the slide in detail.

So moving to the next slide.

In terms of the pipeline some important milestones, but I'll really dive in on just a handful of Victor was our key approval.

In the quarter that we had some other approvals around the world as you can see here.

In terms of submissions, we are continuing to move forward with <unk> in the EU in our filing is on track in the U S. As well I will go through in a little bit more detail our JD Q data on the subsequent slide we continue to see good interest in the <unk> around the world as we head towards our first phase III readout.

In the second half of this year and we're on track we've already started our T charge phase II study in multiple myeloma is planned to start in phase III and <unk> in the second half of the year and I have already mentioned the phase III start absorbed Jens.

So let's move for a moment to JD Q.

At ACR.

On the next slide so we showed early signs of clinical activity with acceptable safety and Tolerability for this <unk> as a reminder, we have a unique structure to this medicine versus the other <unk> inhibitors, which we believe allows us to optimize the PK PD for the medicine. When you look at the dataset we demonstrate.

A competitive safety and efficacy profile, though again with the caveat that this is a small study 57% or are at the target dose of 200 milligrams bid no grade three or higher treatment related aes are really nice safety profile. When we look at the modeling of the overall.

The PK of this medicine high systemic exposure high target level occupancy. So we're pleased with how the medicine is performed thus far so we are moving forward rapidly and recruiting our combination study with ship to as well as another separate study with anti PD one and.

And so both of those studies are moving forward and we're also preparing to start our monotherapy phase III program.

In non small cell lung cancer versus as chemotherapy, which we plan to open shortly.

Now moving to the next slide we also wanted to provide an update on Natalie So based on our regular update of the number of events that we are accruing. We now forecast the trial to complete in 2023 as the forecast as the current event rate is lower than our originally forecasted event rate for for this.

This is a regular process, we go through and now when we look at these forecast versus our look at our actuals versus our forecast. We're currently predicting 2023 completion of the study on the left hand side you see the study design remains unchanged from our previous update 5000 patients randomized one to one to <unk> plus <unk>.

<unk> therapy versus actually isn't therapy alone patients receive.

<unk> 400 milligrams per day for 36 months, so a longer treatment duration, a lower dose in the metastatic setting to really try to ensure we keep patients on therapy and keep them on therapy longer to drive the efficacy signal. So in terms of the recruitment we completed 5000 patients in April 2021.

Our primary analysis is that 500 events, we have approximately 300 events to date.

In the quarter, we successfully completed a futility analysis, we have two interim analyses planned between now and the end of the study, but neither has occurred yet and the discontinuation rate remains low in the single digit percentages, which I think demonstrates the overall profile.

In terms of safety and Tolerability of the medicine. So all on track we will continue to keep you updated as we progress. This important study as a reminder, the opportunity here is significant we estimate in 2027 that the market for.

The adjuvant setting could be $7 billion and the ability to target both the intermediate and the severe patients is significant and that we estimate there are three times as many patients in the intermediate risk versus the high risk patient population. So this would offer us a successful a significant medicine for the company.

Moving to the next slide.

So our overall events are on track to won't go through this slide in detail. We'll continue to keep you updated as we progress on these events across our regulatory decision submission study readout and study starts move.

Vasant Narasimhan: We'll continue to keep you updated as we progress on these events across our regulatory decisions, submissions, study readouts, and study starts. Moving to the next slide. With that, I'll hand the mic over to Harry. Harry?

Moving to the next slide with that I'll hand, the mic over to Harris <unk> Harris.

Yes. Thank you Bob good morning, good afternoon, everyone.

Harry Kirsch: Yeah, thank you, Voss. Good morning. Good afternoon, everyone.

Harry Kirsch: I'm now going to walk you through some of the financials of the first quarter, and as always, my comments refer to growth rates in currencies unless otherwise noted. So, on the next slide. We present our results for the quarter. Overall, as Mark mentioned, we delivered solid sales and profit growth. I think it's also important to keep in mind that this quarter's results with prior comparison are affected by the divestment of our Roche investment and the corresponding loss of income from associated companies, which you see here in the lines below operating income.

I'm now going to walk you through some of the financials of the first quarter.

As always my comments refer to growth rates in constant currencies, unless otherwise noted so in the next slides.

We present, our results for the quarter overall as Bob mentioned, we delivered solid sales and profit growth.

It's also important to keep in mind.

This quarter's results was prior year comparisons are affected by the divestment of a loss of investment and the corresponding loss.

Income from associated companies, which you see here and the lines below operating income to eight the comparisons we have published a reconsolidation those all in 2020 one excuse me.

Harry Kirsch: To aid the comparisons, we have published a reconciliation of our 2021 results, excluding those impacts on our website. And we have also shown here to close excluding prior year Roche investment income. In quarter one, sales incorporating income grew 5% and 9% respectively.

Some of our web site and we have also showed here to close excluding prior year.

Investment income.

In quarter, one sales incorporating income two 5% and 9% respectively.

Harry Kirsch: Now with the sales benefiting from the strong performance of our in-market brands and co-operating income driven by higher sales and increased productivity. Net income grew 15 percent, may be driven by higher co-operating income. And core EPS grew 2%. However, as you can see, if we exclude the impact of the prior Euro income, net income would have grown 32% and core EPS 12%. Of course, we expect these impacts on EPS and core EPS to be offset over time by our ongoing $15 billion share buyback program, which we expect to conclude in the second half of 2023. Pre-cash flow was negatively impacted by 0.5 billion due to the loss of gross annual dividend share paid out last year in March.

Sales benefiting from the strong performance of end market brands.

Core operating income driven by higher sales and increased productivity.

Net income grew <unk>.

15%.

Mainly driven by higher core operating income and core EPS grew 2%. However, as you can see.

The impact of prior year loss income net income.

Quarter, 2% and core EPS, 12% of course, we expect.

On EPS core EPS.

Be offset over time by our ongoing $15 billion share buyback program, which we expect to conclude in the second half of 2023.

Free cash flow was negatively impacted by $5 billion Q2 local rules.

Sure Pete.

Our last year March however.

Harry Kirsch: However, important to note, underlying free cash flow is in line with expectations and operationally we are on track to reach our full year pre-cash flow objective. In summary, it has been a solid start to the year with the strength of our in-market growth drivers, last laid out already at Dresdo, Kucinta, Cosenex, Zolgensma, and Kiscali, and our new launches including RedBull and Globicto, reinforcing our confidence in our mid-term growth expectations. As you can see on the next slide. Innovative Medicine sales grew 4%, benefiting from the strong performance of the in-market brands, partly offset by generic erosion, especially in the oncology portfolio.

To note underlying free cash flow is in line with expectations and operationally we are on track to reach our full year free cash flow objectives.

In summary has been a solid start to the year with strength in market growth drivers last nite already addressed or consume tecogen Gen Smart Scotty and then new launches including <unk>.

Reinforcing our confidence in our midterm growth expectations.

As you can see on the next slide.

Innovative medicines sales grew 4% benefiting from the strong performance of key end market brands, partially offset by generic erosion, especially in the oncology portfolio.

Harry Kirsch: Innovative medicines bottom line grew 5% and core margin reached 35.9% up slightly from the prior year and constant current. Some of those numbers benefited this year due to a significantly lower prior year base, with business dynamics continuing to return to normal, with net sales up 8% and co-operating income up 20%. And the module's improving 330 basis points, to 22.8% of sales. Overall, the group core margin increased by 111 basis points to 32.6%, mainly driven by Thunder's performance for the quarter.

<unk> medicines bottom line grew 5% and core margin.

<unk> 35, 9% up slightly from the prior year in constant currencies.

Some of those numbers benefited this year.

Q2 significantly lower prior year base with business dynamics, continuing to return to normal.

Let's say, it's up 8% and core operating income up 20%.

And the margins improving 330 basis points to 22, 8%.

End of sales overall, the group core margin increased by 111 basis points to 32, 6%, mainly driven by sandals performance for the quarter.

Turning now to our guidance slide on slide 24, we are confirming our guidance for the full year.

Harry Kirsch: Turning now to our guidance slides on slide 24. We are confirming our guidance for the fourth year. And as a reminder, within the divisions, we expect another year of innovative medicine sales growing mid-single-digit and cooperating income to grow mid- to high-single-digit ahead of sales. The expected Innovative Medicines core margin increase will be driven by good drop line momentum and continuation of productivity programs, including the recently announced new organizational structure. These drivers are expected to more than offset the anticipated higher energy cost and inflation pressure, is our supply chain.

And as a reminder, within the divisions, we expect another year.

Innovative medicines sales growing mid single digits and core operating income to grow mid to high single digit.

Okay.

We expected innovative medicines core margin increase would be.

Global bond good top line momentum and continuation of productivity programs, including the recently announced new organizational structure.

These drivers are expected to more than offset anticipated higher energy cost and inflation pressures in our supply chain.

Harry Kirsch: And for Santos, it's important to note that the very low quarter one prior year base with a weak calf and cold season due to COVID and the uncertainty related to current geopolitical events. Therefore, we continue to expect the top line to be broadly in line with the prior year and cooperating in terms of decline low to mid single digit. Of course, we will be monitoring during quarter two and given the strong quarter one performance to see if we can give an update here. But for now, given that the geopolitical events are likely to hit a bit harder, Santos, if you will, we remain cautious here.

And for Sandoz. It is important to note that the very low quarter, one slide base with a weak cough and cold due to COVID-19 and the uncertainty.

Related to.

Politically.

Current geopolitical events. Therefore, we continue to expect to topline to reportedly in line with the prior year and core operating income to decline low to mid single digit.

Of course, we've been monitoring during quarter, two and given the strong quarter one performance to see.

Can you give an update here, but for now given that the geopolitical events.

Are likely to hit a bit harder in sandals, if you will.

We remain cautious here.

This will be mainly driven by the expected gross margin pressures.

Harry Kirsch: This will be mainly driven by the expected cross-margin pressures because also pricing and inflation coming in, and of course, we will have a clearer picture later in the year. For a group, we expect both the top and the bottom line to grow mid-lingual digits. The key assumption for this guidance is that we see continual return to normal global healthcare systems, including prescribing dynamics, and that no Sandoz LAR generics enter the U.S. in 2022.

It was also pricing with inflation coming in of course.

Picture.

Sure.

Group, we expect both top and bottom line to grow mid single digits.

Key assumptions for this guidance is that we see continue return to normal global healthcare systems.

<unk> prescribing dynamics and that most Sundays and the generics in U S. In 2022.

And then finally on slide 25, given the strengthen the.

Harry Kirsch: And then finally, on slide 25, given the strengthening U.S. dollar and as currencies are constantly changing, I want to bring to your attention the estimated currency impact on our results using current exchange rates. In Gwadar 1, currency had a negative 4% point impact on net sales and a negative 6% point impact on core operating, Looking forward, if late April rates prevail for the remainder of 2022, we expect the full year impact of currencies on top line to be a negative 4 percent point and on bottom line a negative 5 percent. In quarter two, the impact on sales would be negative 5 to negative 6 percent points and on bottom line negative 6 percent.

A strengthening U S dollar and as currencies are constantly changing I want to bring to your attention the estimates currency impacts.

Using current exchange rates in quarter, one currently at a negative 4% point impact on net sales and a negative 6% point impact on core operating income looking forward. If late April rates prevail for the remainder of 'twenty two we expect full year.

Impact of currencies on top line to be a negative 4% points and the bottom line and negative 5% points.

Quarter to date.

And so it will be negative five to negative 6% points and then bottom line negative 6% points and as a reminder, we update these currency impacts estimates monthly on our website.

Harry Kirsch: And as a reminder, we update these currency impact estimates monthly on our website. And with that, I hand it back to Vam. Thank you, Harry. So if we go to slide 27.

With that I'll hand, it back to Bob.

Thank you Harry So if we go to slide 27 also today, we announced the appointment of Ronny Gal as our chief strategy and growth Officer. As a reminder, we created our strategy and growth function to enable us to combine corporate strategy R&D portfolio management and external business development.

Vasant Narasimhan: Also, today, we announced the appointment of Ronnie Gall as our Chief Strategy and Growth Officer. As a reminder, we created the Strategy and Growth function to enable us to combine corporate strategy, R&D, portfolio management, and external business development into a single unit to help us drive the near, mid, and long-term growth of the company. So Ronnie will report to me and sit on the Executive Committee. He brings over 20 years of life sciences experience, both on the analytical side of things, but also a deep understanding of the science in the U.S. commercial environment, previously worked in management consulting, as well as business development. So very excited to welcome Ronnie to the team no later than August 1st of this year.

Element into a single unit to help us drive that.

Near mid and long term growth of the company.

So Rodney will report to me.

On the Executive Committee. He brings over 20 years of life Sciences experience both on the analytical side of things, but also deep understanding of the science and the U S. Commercial environment previously worked in management consulting as well as business development. So very excited to welcome Ronnie to the team no later than August 1st of this year.

So moving to the last slide six key priorities, we outlined in January and they remain on track successfully launching our key driving our key launches like puke attempt to vet, though an assemblage maintaining the growth momentum across our six key growth drivers progressing our pipeline of over 20 potential significant ASP.

Vasant Narasimhan: So moving to the last slide, six key priorities we outlined in January, and they remain on track, successfully launching our key, driving our key launches, Lefio, Cosimta, Plevecto, and Semblix, maintaining the growth momentum across our six key growth drivers, progressing our pipeline of over 20 potential significant assets that have the potential to be approved by 2026, optimizing our portfolio with our Sandoz review on track, but also remaining disciplined on M&A and business development, delivering returns, and so the recent reorganization with a potential of a billion dollars plus of productivity that we're committing to has been announced and we'll continue to work through that over the course of this year, and of course, maintaining the foundations of culture, data science, and ESG. So with that, I'll close and open the line for questions, operator.

Vasant Narasimhan: Thank you. As a reminder, to ask a question, you will need to press star- oh, sorry. Sorry, and one note I forgot to mention. Please limit yourself to one question, and we'll try to do multiple rounds if we have time.

Operator: Thank you. Thank you, sir. Again, as a reminder, if you'd like to ask a question, please press star 1 and limit yourself to one question. Once again, star 1 if you'd like to ask a question. Your first question today comes from the line of Graham Parry from Bank of America. Please go ahead.

That had the potential to be approved by 2026, optimizing our portfolio with our Sandoz review on track, but also remaining disciplined on M&A and business development delivering returns and so the recent reorganization with the potential of a billion dollars plus of productivity that we're <unk>.

Committing to.

Has been announced and will continue to say it.

Work through that over the course of this year and of course, maintaining the foundations a culture of data science and ESG.

So with that ill close and open the line for questions operator.

As a reminder to ask a question.

Sorry, I'm, sorry, and one that note I forgot to mention please limit yourself to one question and we will try to do multiple rounds. If we have time. Thank you.

Thank you Sir.

Again as a reminder, if you'd like to ask a question. Please press star one and limit yourself to one question once again star one if you'd like to ask a question.

Our first question today comes from the line of Graham Parry from Bank of America. Please go ahead. Your line is open.

Yes.

Operator: Your line is open. Great. Thanks for taking my question. So it's a follow up on Natalie.

Great. Thanks for taking my questions.

Just a follow up on nationally and the original trial design I think you had two insurance <unk> utility at 40% of events and then there was a stop standing efficacy at 70% of events titled event number you are looking for that we should stay the three hundreds.

Graham Parry: The original trial design, I think, only had two interims. So one was for utility at 40% of events, and then there was a stop for outstanding efficacy at 70% of events. And the total event number you're looking for there was just over 300.

Graham Parry: But you're highlighting now that you have two efficacy interims as well as the futility that's already passed. So can you just help us understand the trial design? So what percentage of events was that futility analysis performed at?

You're highlighting now you have two efficacy and trends as well as the futility. That's already passed so can you just help us understand the trial design. So essentially your events was that futility analysis performed at <unk>, and then what percentage event or events. So the two upcoming.

Graham Parry: And then at what percentage of events are the two upcoming efficacy analyses? And just to confirm, those have the potential with a stop for efficacy in them. Thank you. Yeah, thanks, thanks, Graham.

The casino. She is just a concern that you have.

The potential with the stop for efficacy in them. Thank you.

Yes.

Vasant Narasimhan: So as you know, we amended the study protocol to increase to 500 events along the way. And with that, we added, we updated as well the various readouts. So the, I don't have in front of me the readout for the futility endpoint, but I can say that our interim analyses for efficacy are at the 70% and 85% information fractions.

Thanks, Graham So as you know we amended the study protocol to increase to 500 events, along the way and with that.

<unk> added <unk>.

Updated as well the various readouts so.

<unk>.

I don't have in front of me the readout for the futility endpoint, but I can say that our interim analysis for efficacy are at 70% and 85% information fractions. So thats when we would expect to have those interim analyses, but of course, it's difficult to predict based on an event driven study as to why.

Vasant Narasimhan: So that's when we'd expect to have those interim analyses. But of course, it's difficult to predict based on an event driven study as to when exactly those, those would occur. And so we'll continue to keep you up to date. And as a reminder, we don't guide to specific timelines on interim analyses, and we'll only provide updates if material information is provided by the DMV. Next question, operator.

Exactly.

Those those would occur.

And so we will continue to keep you up to date and as a reminder, we don't guide to specific timelines on interim analyses and we'll only provide updates of material information as provided by the DMC.

Yeah.

Next question operator.

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

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

Thank you very much for taking my question.

Operator: Thank you very much for taking the question. It's a broader question on multiple sclerosis. It was flagged up on a call yesterday that traditionally Russia and Ukraine is disproportionately involved in MS studies since you have, I think, about 30 ongoing MS trials around the world. I just wonder if you could give us an update on the current situation and the potential exposure you have to trials in Russia and Ukraine, and any effect that could have on trial timelines. Thanks very much.

Thanks for the question on multiple sclerosis.

Vasant Narasimhan: Yeah, thanks, Simon. So overall, again, we feel like our, our trials are manageable in Russia, are in Russia and Ukraine, we are in the single digit percentages in terms of the percentage of Russian Ukrainian patients in our, in our global studies. Now, specifically, in multiple sclerosis, we're in the roughly low to mid teens on those studies in terms of the percent of the global patients for our BTK inhibitor multiple sclerosis studies, but we already have plans in place to offset those. And so at the moment, we believe we can fully mitigate the patients required from those two countries. No, no patients in our multiple sclerosis, BTK study, or our LOU studies were, have been enrolled so far.

It was flat on a call yesterday.

Traditionally, Russia, and Ukraine is disproportionately involved in MF study since you have I think about synergy ongoing trials around the world I'm just wondering if you could give us.

Hi.

On the current situation and the potential.

Exposure you have two trials in Russia, and Ukraine, and any effect that could have on trial timelines. Thanks, so much.

Yes, Thanks, Simon So overall again, we feel like our our trials are manageable in Russia or in Russia in the Ukraine. We are in the single digit percentages in terms of the percentage of Russia, and Ukraine patients in our in our global studies.

Specifically in multiple sclerosis, we are in the roughly low to mid teens on those studies in terms of the percent of the global patients for our <unk> inhibitor in multiple sclerosis.

But we already have plans in place to offset those and so at the moment, we believe we can fully mitigate.

The patients required from those two countries no no patients in our multiple sclerosis, B Teekay study.

Our aloe used studies, where have been enrolled so far and so we'll simply reallocate to other markets and we expect to remain on track well of course cubic keep you updated if anything were to change in that regard.

Next question operator.

Vasant Narasimhan: And so we'll simply reallocate to other markets. And we expect to remain on track. We'll, of course, keep you updated if anything were to change in that regard. Next question, please. Thank you. Your next question comes from the line of Matthew Weston from Credit Suisse. Please go ahead, your line is open. Thank you very much. It's another Russian question, one for Harry, please.

Your next question comes from the line of Matthew Weston from Credit Suisse. Please go ahead. Your line is open.

Thank you very much it's another Russian question one for Harry Please at the annual report for last year shows that you have just under half a billion dollars of Russian ruble receivables.

Operator: The annual report for last year shows that you have just under half a billion dollars of Russian ruble receivable. I'd be interested to understand, how is cash collection today? Are you limiting deliveries to only people who pay you up front?

Are you interested to understand how is cash collection today.

Are you limiting deliveries only people who pay you upfront and then how should we think about impairment testing on that quite sizable amounts of money and then finally, Harry if you were to have to write some down would it go to recall or would it not.

Matthew Weston: And then how should we think about impairment testing on that quite sizable amount of money? And then finally, Harry, if you were to have to write some down, would it go through CORE or would it not? Thanks, Matthew. Harry?

Thanks, Matthew Heritage.

Yes so.

Harry Kirsch: Yeah, so, Matthew, overall, our cash collections and shipments actually are very normal. Cash collections are very good, actually. You know, over the past years, and in this role, almost over nine years, we always had here or there, you know, some difficulties with the wholesaler, and then we put these wholesalers in question on a payment plan, on potentially prepayment. But that's not the case yet with any of them. Of course, we monitor on a daily basis. And the... The receivables are in ruble. You have seen also ruble returning back, if you will, to the strengths. And we have not seen difficulties to pay.

Overall, our cash collections and shipments actually very normal.

Cash collections are very good actually now over the past years.

In this role almost over nine years, we always had here or there.

Some difficulties with the wholesaler and then we put this holds.

Question on the payment plan on potentially prepay them.

But that's not the case, yet with any of them of course, we monitor on a daily basis.

And.

There was a little bit odd ruble you have seen also.

Turning back.

<unk> strengths and we have not.

Because he has to pay now.

Harry Kirsch: Now, in terms of impairments, we will have to see. But I don't expect, actually, impairments on it. We are highly assured.

Now.

In terms of.

Payments, we would have to see but I don't expect actually impairments on it to be a highly of towards.

Harry Kirsch: A significant part of these are insured, and from that standpoint, you know, we carefully monitor, we are insured, and we don't see issues yet. Again, we monitor, should that change, we would inform you, but I see a very stable product flow, and a very stable cash collection. Many thanks indeed. Thanks. Thanks, Harry. And just one update to Graham's first question. The futility analysis was done at a 40 percent information fraction.

The significant part of these are insured.

And from that standpoint.

Carefully monitor where we are.

Our insureds.

You don't see issues, yet again, the monitory should that change we would inform you.

Very stable product flow.

Stable cash collection.

Many thanks gentlemen.

Thanks, Harry and just one update to Graham's first question. The futility analysis was done at a 40% information fraction I would also note. It does take US a couple of months between a.

Vasant Narasimhan: I would also note it does take us a couple of months between a lock for one of these and to actually have the DMC read the data. So, next question, operator? Thank you. Your next question comes from the line of Bimar Kapadia from Bernstein.

Locked for one of these and to actually have the DMC read the data.

So next question operator.

Thank you. Your next question comes from the line of Marc <unk>.

From Bernstein. Please go ahead your line is open.

Operator: Please go ahead, your line is open. Oh, great. Thank you very much for taking my question. So can I please ask about Cosimta Life cycle management? I appreciate, you know, you're still early in the early stages of for the products, but, you know, one of your key competitors has started a six-month sub-Q trial earlier this year, and they also have a high-dose trial ongoing. So do you have any plans to extend the dosing frequency and or change the dose for Cosimta in an attempt to really ensure durable share gains?

Great. Thanks, very much for taking my question. So it sounds like a hawk.

About <unk> life cycle management, so I appreciate it.

Youre still early early stages.

For the products, but one of your key competitors has talked to the six months some key trial. This.

This year, we also have a high dose trial ongoing. So do you have any plans to extend the dosing frequency and will change the dose for <unk>.

In an attempt to really ensure durable share gains I appreciate it.

Further down the line, but just curious to hear your thoughts.

Operator: I appreciate it's a bit further down the line, but just curious to hear your thoughts. So first I think the key benefit of KSIMTA is that the patient doesn't have to go into the center and have to deal with pretreatment with steroids and additional observation.

Yeah. Thanks, Thanks, well I'm also so firstly I think the key benefit of <unk> that the patient doesn't have to go into the center and have to deal with pre treatment with steroids and additional observation. So.

Vasant Narasimhan: So our understanding of competitive life cycle management activities would still involve the patient ultimately coming in to the center and of course then going into the various elements involved with that. So our focus remains on providing that flexibility for patients. We find it to be a key value driver, both the outstanding safety, excellent efficacy, but also monthly at-home administration in terms of total time in the patient's lives is significantly lower. We are evaluating various life cycle management activities, but at this point in time we haven't actually instigated, I guess, any new studies.

Our understanding of competitor lifecycle management activities would still involve the patient ultimately coming in to the center and of course, then going into the various elements involved with that so our focus remains on providing that flexibility for patients we find it to be a key value driver both the outstanding safety.

Excellent efficacy, but also monthly at home administration in terms of total time in the patient slides, it's significantly <unk>.

Significantly lower we are evaluating various lifecycle management activities, but at this point in time.

We havent, we havent actually.

Instigated I guess any new studies, we will continue to evaluate and we will keep you posted.

Posted.

Vasant Narasimhan: So we'll continue to evaluate and we'll keep you posted. Thank you, next operator, 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. Unusually, across the industry, Novartis is building a large cardiovascular presence. I'm just curious whether you see any role for a Factor XI inhibitor within that space. There's at least a couple of partnered agents, Anthos, Abel, Lestimab, which I can barely pronounce, but you're familiar with, given it came from your own portfolio, and then second, potentially partnering with Bayer on their Factor XI. I wonder if you had any comments.

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

Andrew Baum: Yeah, thanks, Andrew. So, on some of the Factor XI, we developed a very attractive Factor XI agent that we ultimately determined at the end of Phase II that it would be better to move forward in other people's hands, so we struck a partnership with Blackstone Life Sciences. They have taken the medicine forward and continue to develop it, so we continue to monitor the progress of the medicine. At the moment, our view is that the focus we have on heart failure and on the various contributors to ASCVD between, of course, PCSK9, LP little a, as well as other factors, is enough at the moment to take on, but we certainly are monitoring the space with a keen eye to what is the size of studies and the amount of investment that will be required to differentiate on safety, given that NOACs will ultimately go generic in the coming years, and that will be the standard that we'd have to go up against. But we'll keep you posted, if anything were to change. Thank you. Thank you. Next question operator.

Thank you Anita.

Unusually across the industry in the offices.

I will take a large cardiovascular presence I'm just curious whether you see any role perfect 11 inhibits out within that space.

As at least a couple of <unk> partners.

I am far less map, which I can barely perhaps that youre familiar with given it came from your own portfolio and then second potentially partnering with buyer on that factoring lesson I Wonder if you have any comments.

Yes, thanks, Andrew So in terms of the factor 11, we developed a very attractive factor level.

Agent that we ultimately determined at the end of phase two that it would be better to move forward in other people's hands. So we struck a partnership with Blackstone life Sciences. They have taken the medicine forward and continue to develop it. So we continue to monitor the progress of the medicine at the moment.

Our view is that the focus we have on heart failure and on the various contributors CVD between.

Of course, PCF canine LP little a as well as other factors.

At the moment to take on but we certainly are monitoring the space with a keen eye to what is the size of studies and the amount of investment will be required to differentiate on safety given that no axe will ultimately go generic in the coming years and that will be the standard that we would have to go up against but we will keep you.

Posted if anything were to change thank you.

Yes.

Thanks next question operator.

Your next question comes from the line of Richard <unk> from JP Morgan. Please go ahead. Your line is open.

Vasant Narasimhan: Thank you. Your next question comes from the line of Richard Vosser from J.P. Morgan. Please go ahead, your line is open.

Hi, Thanks for taking my question.

Operator: Hi, thanks for taking my question. Just looking at the oncology franchise in general, there seems to be a number of destockings in Q1. So should we anticipate this to reverse in Q2? And also, should we think for the rest of the year about an acceleration as diagnosis improves as we come out of the pandemic? Just thoughts on the overall franchise there.

Looking at the oncology franchise in general it seems to be a number of destocking in Q1.

Should we anticipate this tour back in Q2, and and all say should we think for the rest of the about an acceleration as diagnoses improves as we come out of.

The pandemic just just thoughts on the nasal franchise that thank you very much.

Yes, thanks, Richard in quarter, one we saw a few dynamics one we continue to see in certain cancers that we are have a focus in such as breast cancer lower diagnosis rates than pre COVID-19 levels and lower <unk> as I mentioned with with <unk> Ghali.

Richard Vosser: Thanks very much. Yeah, thanks, Richard. In quarter one, we saw a few dynamics. One, we continue to see in certain cancers that we have a focus in, such as breast cancer, lower diagnosis rates than pre-COVID levels and lower NBRX, as I mentioned with Kisgali. You know, that combined is we also did see destocking and impacts on some of our, let's call it more mature brands, mature promoted brands, as well as off-patent brands.

That combined as we also did see destocking and impacts on some of our let's call. It more mature brands mature promoted brands as well as off patent brands at the moment, we do expect the trend to stabilize and we expect in the remainder of the year the performance in oncology to be driven by our newer medicines of course, <unk> ghali as well.

Richard Vosser: At the moment, we do expect the trend to stabilize and we expect in the remainder of the year, the performance in oncology to be driven by our newer medicines, of course, Kisgali, as well as Plavicto, Semblix, et cetera, but of course, continued performance from Promacta, Revolade, and Jacobi. And so I think we'll have to monitor it closely, but we're optimistic that things will start to get back to normal over the course of Q2. Next question operator.

<unk> <unk> <unk> et.

Et cetera, but of course continued performance from <unk> and Jack can be.

So I think well got to monitor it closely but we're optimistic that things will start to get back to normal over the course of Q2.

Next question operator, Thanks Richard.

Vasant Narasimhan: Thanks, Richard. Thank you. Your next question comes from the line of Emmanuel Papadakis from Deutsche Bank. Please go ahead, your line is open. Thank you for taking the question. That's one on JD2.

Thank you. Your next question comes from the line of Amanda wanted Papadakis from Deutsche Bank. Please go ahead. Your line is open.

Thank you for taking my question just one on J D. K congratulations on the Pennsylvania ICR update.

Operator: Congratulations on the impressive AACR update. Just curious in your strategy to differentiate a catch-up, they're giving you a little late behind the, and the two leaders in that space and particularly interested on the latest perspectives as regards the Ship Two combination. I see you started an internal combination program.

Just curious in your stress strategic differentiator catch up by giving you a little light on the <unk>.

Two leaders in that space, and particularly interested in one night.

As you call. It two combination I've seen started.

Internal combination program does that signal the prioritization of the months of collaboration and when indeed might be seen to date.

Emmanuel Papadakis: Does that signal the prioritization of the Meraki collaboration and when indeed might we see an update? of the Clinical Update of the Combination Stage from either the Marks Study or indeed your own internal efforts. Thank you. Okay, thanks, Emmanuel. You know, one of the things we've observed thus far in very early clinical data is, in order to have a good combination agent, we need a pretty clean profile from the G12C agent.

Clinical update of the combination.

The study or indeed your own internal levels. Thank you.

Yeah. Thanks Emmanuel.

The things we've observed thus far and very early clinical data is in order to have a good combination agent, we need a pretty clean profile from the <unk> C. H.

Emmanuel Papadakis: So one of the advantages we hope we will have is, given the absence of grade 3-4 AEs in our studies, that it is a kind of combination agent of choice, so that, despite us being late, we would have the opportunity to combine the medicine with other attractive agents. With our SHP2, I think that's part of the story. We do have studies ongoing with Meradi and Amgen, but we believe our JDQ molecule is optimized for combination with our SHP2 to really allow us to get the optimal dosing with, you know, limited AEs and hopefully maximize the benefit for patients in our studies.

<unk> agents. So one of the advantages we hope we will have is given the absence of grade three four aes in our studies.

As a kind of combination agent of choice so that despite us being late we would have the opportunity to combine the medicine with other attractive agents with our ship to I think thats part of the story, we do have studies ongoing with variety and Amgen, but we believe.

R. J D. Two molecule is optimized for combination with our ship to to really allow us to get the optimal dosing with limited aes and hopefully maximize the benefit for patients in our studies.

Vasant Narasimhan: So the key to our strategy is having a medicine that can be the combination agent of choice from a G12C standpoint and then hopefully demonstrate, despite us being late in mono, that we'll be able to win the battle in the long run with combinations, PD1, SHP2, and perhaps others. It's important to note, we still need to do larger studies. I don't want us to overextend our interpretation of a relatively small clinical study, but at least the early signals are promising. Thank you, Manuel.

The key to our strategy is having a medicine that can be the combination agent of choice from a <unk> standpoint, and then hopefully demonstrate despite us being late and mono that we'll be able to win the battle in the long run with combinations PD, one ship to and perhaps others.

To note, we still need to do larger studies I don't want to overextend, our interpretation of a relatively small clinical study, but at least the early signals are promising.

Thank you next question operator.

Vasant Narasimhan: Next question, operator. Thank you. Your next question comes from the line of Emily Field from Barclays. Please go ahead, your line is open.

Your next question comes from the line of Emily Field from Barclays. Please go ahead. Your line is open.

Hi, Thanks for taking the question I just wanted to ask on the business in China I know you had.

Operator: Hi, thanks for taking the question. I just wanted to ask on the business in China, I know you had a, you know, Innovative Medicines had a very strong quarter in first quarter. But just, you know, if you are seeing any impact as we get into second quarter from lockdowns in some of the major cities or, or just any impact on the broader business? Thank you. And maybe I'll give the China question to Harry. Harry on China.

<unk> had a very strong quarter and first quarter, but just.

If you are seeing any impact as we get into second quarter from Lockdowns and some of the major cities are alright, just any impact.

On that broader business. Thank you.

And maybe I'll give the China question to hurry hurry on China.

Thank you Emily.

Harry Kirsch: Yeah, thank you, Emily. So, overall, we have seen very limited impact in China, as you say, in quarter one, not at all. And in quarter two, of course, we are daily monitoring, you know, when there is a city or an area with a risk of lockdown, usually then wholesalers should be a bit earlier to ensure that pharmacies and hospitals on the ground have product. And so we don't see really impact, very marginal only.

No.

Overall, we have seen very limited impact in China, as you say quarter, one bottle. It all and then quarter two of course, we are daily monitory.

When there is.

Okay.

With the risk of Lockdown, usually do that wholesalers should bid earlier to ensure that pharmacies and hospitals on the <unk> product.

So we don't see really.

Harry Kirsch: And of course, we continue to monitor that. I mean, it's one of the reasons why we also kept our forecast assumptions, you know, should this spread bigger, you know, there would be likely some impact. But we have kept the forecast assumption that we need to see continuation to return to normal prescribing behaviors.

Really impacts very marginal only and of course, we continue to monitor where that I mean, it's one of the reasons why we also kept our forecast assumptions should spread bigger.

It would be likely some impact, but we have kept the forecast assumption that we need to see continuation to return to normal.

Prescribing behaviors.

China certainly is one of the focus areas pulled that.

Forecast assumption, but again so far.

Harry Kirsch: And China certainly is one of the focus areas for that forecast assumption. But again, so far, we don't see or very limited impact of this. And we will continue to monitor and provide you an update at quarter two. Thank you. Thanks, Harry.

<unk> or very limited impact of this.

Continue to monitor and provide you an update a quarter or two.

Thank you.

Vasant Narasimhan: Next question, operator. Thank you. Your next question comes from the line of Tim Anderson from Wolf Research. Please go ahead.

Thanks, Eric next question operator.

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

Thank you a couple of questions on Centex.

Operator: Your line is open. Thank you. A couple of questions on Cosentyx.

Timothy Anderson: Q1 in the U.S. was a little bit weaker versus what we were expecting, and I'm wondering why. And then also, just wondering how to think about that product in 2023 as Humira faces biosimilars and as Advi tries to lock in formulary placement, for that product for Humira and then Skyrizzy. Their goal is to preserve volume with Humira. They'll do that through stepped up rebating. And I'm imagining that puts a fair amount of new pressure on products like Cosentyx and other brands in the category. Is that a fair assessment?

Q1 in the U S.

A little bit weaker versus what we were expecting and Im wondering why and then also just wondering how to think about that product in 2023.

Humira Biosimilars and as Abbvie tries to lock in formulary placement.

For that product for Humira, and then it's kind of <unk>.

Their goal is to preserve volume with Humira.

Do that through stepped up rebating and I'm imagining that puts a fair amount of new pressure on products like Concentrix and other brands in the category is that a fair assessment and does that kick in only in 2023 and beyond and does that at all pose a risk to the 7 billion.

Timothy Anderson: And does that kick in only in 2023 and beyond? And does that at all pose a risk to the $7 billion peak? Yeah, thanks, Tim. I mean, we remain confident in the $7 billion plus peak sales guidance. When you look at the dynamics in quarter one, and this is pretty standard for us when we look at re-verifications, as well as the other elements in the US to get patients, you know, confirmed for the remainder of the year. This is within the, I would say, dynamics we've historically seen for the brand. We saw good volume growth overall with Cosentix, particularly in rheumatology.

Peak sales guidance.

Yeah. Thanks, Tim I mean, we remain confident and confident in the $7 billion plus peak sales guidance. When you look at the dynamics in quarter, one and this is pretty standard for us when we look at re verifications as well as the other elements in the U S to get patients.

Confirmed for the remainder of the year. This is within the I would say dynamics, we've historically seen for the brand. We saw good volume growth overall with Lucentis, particularly in rheumatology.

Vasant Narasimhan: That's said, in the US, we would expect to be growing in the single digit range in the next two years, until we get our new indications and new formulations online, which we then think will give us the next wave of acceleration. Cosentix additional growth will be driven by our strength in Europe, as well as the China NRDL listing, and launches elsewhere around the world. So it's a combination of those factors that will drive the growth in the next two years, and then the new indications, new formulations, etc.

That said in the U S. We would expect to be growing in the single digit range in the next two years until we get our new indications new formulations online, which we then think will give us the next wave of acceleration.

Additional growth will be driven by our <unk>.

Strength in Europe , as well as the China, <unk> listing and launches elsewhere around the world. So it's a combination of those factors that will drive the growth in the next two years and then the new indications new formulations et cetera will give us the next boost which we believe to get us over that $7 billion Mark.

Vasant Narasimhan: will give us the next boost, which we believe to get us over that $7 billion mark. And in terms of the specifics on the Humira dynamics, et cetera, and again, I think that's all built into the forecast, the numbers that I gave you right there. We feel confident in our overall contracting position, given the volumes we currently have with Cosentix and the positions we have with the relevant formula. Next question, operator. Thanks, Tim.

And in terms of the specifics on the Humira Humira dynamics et cetera, and again I think that's all built into the forecast the numbers that I gave you right. There we feel confident in our overall contracting position given the volumes. We currently have with cosmetics and the positions we have with the relevant formularies.

Next question operator, Thanks, Tim.

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

Operator: Thank you. Your next question comes from the line of Peter Welford from Jeffreys. Please go ahead, your line is open.

Oh, hi, Thanks, I wanted to come by Sunbelt and you flagged one.

Operator: Oh, hi. Thanks. I wanted to come back to Sandoz.

One time as in the quarter.

<unk> I Wonder if you could just talk a little bit about those and what the impact was.

Peter Welford: And you flagged that there were certain one-timers in the quarter that boosted 1Q. I wonder if you could just talk a little bit about those and what the impact of them was. And also, if you look at the margin of Sandoz, obviously, a lot of that was boosted by some of these one-time effects, presumably, in the EZ Comp. But can you give us any sort of idea of that sort of significant year-on-year gross, sorry, core operating home income margin improvement?

So if you look at the margin the Sandoz, obviously a lot of thought.

<unk> bye.

Of these one time effects, presumably an easy comp, but could you give us any sort of idea of the significant year on year growth.

Our core operating income margin improvement how much of that do you think is actually sustainable and <unk> some of the efficiency measures.

Peter Welford: How much of that do you think is actually sustainable and due to some of the efficiency measures? And how much of it, on the other hand, is just something we should assume is a 1Q, one-time effect to help us guide, think about the quarters coming forward? Thank you. Yeah, thanks, Peter. I'll give that one to Harry. Harry?

How much of it will do that is just something we should just see <unk>. One time effect helps guide I think about the quarters coming forward. Thank you.

Yes, Thanks, Peter I'll give that one to aerie Harry.

Yeah, Peter Thank you as you have seen sandals tests.

Harry Kirsch: Yeah, Peter, thank you. As you have seen, you know, Sundance has improved the margin with low base prior year by basically 330 basis points, call it three margin points, to close to 22.8%. Now, roughly two points of those come from cost of goods, a little under 1% from SG&A, and then 0.6% from OIE, where we would have these little divestment gains. As you know, everything above 25 million divestment gains, we would always co-adjust.

<unk> tomorrow.

The margin was low base price.

Bye Bye baby 330 basis points.

<unk> three margin points.

Closer to 1%.

4%.

No.

Less than two points of those come from cost of goods little under 1% SG&A and then 6%, Hawaii, where we will test these little divestment gains.

Harry Kirsch: Sometimes, not too often, we have little divestment gains that are below 25, and then they would stay within OIE. But the overall OIE bucket, you know, went from, if I recall correctly, from a minus 11 million OIE effect, total OIE, prior year quarter one, to a plus 7 million OIE number in 22. So the absolute numbers are small.

Everything above $25 million divestment gains you would always core just.

Sometimes not too often we have a little bit.

Divestment gains.

25 of them.

But the overall or E buckets.

Went from.

Paul.

Correctly from a minus $11 million.

Total prior.

Prior year quarter, one two plus seven.

Harry Kirsch: It's 18 million total OIE impact, which is that 0.6% of margin, or four points of the 26% improvement. So the core margin, if you take that little OIE effect out, is like 22% So overall, not significant, but of course we mention it when the OIE contributes to the overall improvement. So if you take that out, that is not a bad representation, also a very good representation of the underlying profitability.

Okay.

Number in 'twenty two so the absolute numbers are small to 18 million total year impact, which is the 0.6% of margin or four four points to 26% improvement. So the core margin. If you take that literally affect out just like 22%.

So overall not significant but of course, we mentioned that.

Contributes to the overall improvement so if you take that out that is not a bad.

Also very good representation of the underlying.

Profitability and then they have to see over the next quarters.

Harry Kirsch: And then we have to see over the next quarter... How pricing will do and, of course, how much, you know, the cough and cold season will be back to fully normal. And the other thing is, of course, given the larger cost of goods, percent of sales, the energy cost and some of the supply price inflation, you know, how much we offset from productivity overall for the company, we're confident we do that. In funders, we have to watch that, given the bigger part of the P&L. Terrific.

How pricing will do and of course, how much do cough and cold season.

We'll be back to fully normal.

The other thing is of course, given the larger cost of goods.

Energy cost.

Some of them.

Supply price inflation.

Much offsets productivity overall for the company.

Once we do that within Sandoz, we have to watch that given the bigger part of the P&L.

This medicine.

Perfect. Thanks, Larry next question operator.

Vasant Narasimhan: Thanks, Terry. Next question, operator. Thank you. Your next question comes to the line of Keyur Parekh from Goldman Sachs. Please go ahead, your line is open.

Your next question comes from the line of <unk> Parekh from.

From Goldman Sachs. Please go ahead your line is open.

Thank you very much for taking my questions.

Operator: Thank you very much for taking my questions. Vas, if I look at the last six months since you reported the third quarter on October 27th or 26th, you've announced the strategic review for Sandoz, you've done the Roche steak sale, you've reorganized the innovative medicines business, and today announced this new kind of initiative on on kind of the growth, kind of a new seat on the ECN, just wondering kind of, Is there a common theme across these four initiatives? It seems that you're doing a lot on a very short period of time.

If I look at the last six months since you reported the third quarter on October 27, 26, you've announced.

The strategic review for Sandoz, you've done the raw steak seen you've reorganized the innovative medicines business and today announced this new kind of initiative on on kind of the growth.

A new seat on the ECM.

Just wondering kind of.

Is there a common theme across these four initiatives it seems that youre doing a lot on a very short period of time. So I'm just trying to get a sense for what's driving this measures.

Keyur Parekh: So just trying to get a sense for what's driving this measure. Yeah, thanks, KR. Look, our goal is to drive outstanding company performance for the benefit of our shareholders and benefit of patients and society, and I think all of these moves on the first order are creating value for our shareholders. Clearly, evaluating a Sandoz fits within the group or is better as a standalone company, and we've demonstrated with Alcon we do that in a thoughtful way. In the case of Alcon, we created an outstanding standalone company.

Yes. Thanks care look our goal is to drive outstanding company performance for the benefit of our shareholders and benefit of patients and society and I think all of these moves on the first order are creating value for our shareholders clearly evaluating our standards fits within the group or is better is it.

Sand alone company and we've demonstrated with Alcon, we do that in a thoughtful way in case of Alcon, We created an outstanding Standalone company, we will evaluate the same with sandoz.

Vasant Narasimhan: We'll evaluate the same with Sandoz. The sale of the roadstake and buying back our own shares in a place where we view our shares are undervalued relative to the potential of the company and the growth that we have confidence in and that our board has confidence in, again, a value-creating move. Reorganizing so that we become much more agile, efficient, take out costs out of the system, improve our overall operating performance, and both on the top and bottom line, generate differential growth.

Dale.

Roche stake in buying back our own shares at a place where we view our shares are undervalued relative to the potential of the company and the growth that we have confidence in them that our board has confidence in again a value creating move.

Reorganizing so that we become much more agile efficient take out costs out of the system improve our overall operating performance both on the top and bottom line generate differential growth again, I think very logical thing to do to increase shareholder returns and value and improve the performance of the company and then loss.

Vasant Narasimhan: Again, I think a very logical thing to do to increase shareholder returns and value and improve the performance of the company. And then lastly, you referenced it was kind of part of the reorganization, but the creation of the strategy and growth function is to create a consistent top-level view of what is the right things we need, actions we need to take on our internal pipeline, versus the external opportunities that we have before us in order to keep a consistent growth as we've guided of the mid-single four to four to five percent range in the coming years and then above peer median in the back half of the decade. So it's about it's about performance, it's about creating shareholder returns, and it's about driving more impact of the company on MetaStreet. Thank you, Kerr.

So you referenced it was kind of part of the reorganization, but the creation of the strategy and growth function is to create a consistent.

Top level view of do what is the right things, we need actions, we need to take on our internal pipeline versus the external opportunities that we have before us in order to keep it consistent growth as we guided mid single afford a 4% to 5% range in the coming years, and then above peer median in the back half.

The decade, so it's about it's about performance, it's about creating shareholder returns and it's about driving more impact of the company on medicine.

Yeah.

Thank you care next question operator.

Operator: Next question, operator. Thank you. Your next question comes from the line of Florent Cespedes from Societe Generale. Please go ahead, your line is open. Good afternoon, thank you very much for taking my question. A quick follow-up on Sandoz, please.

Your next question comes from the line of <unk> <unk> from Societe Generale. Please go ahead. Your line is open.

Good afternoon. Thank you very much for taking my question a quick follow up on some of those please.

Operator: Could you elaborate on the performance of the different businesses, if you see any inflection point, especially in the U.S., where you used to be under pressure? pricing pressure there. So if you start to see any.

Could you elaborate on that.

Estimates of the difference.

Businesses.

Flexion point, especially.

In the U S, where it used to be under pressure from some pricing pressure there.

<unk> started seeing anything pinpoint could be very helpful.

Thank you.

Yes, thanks, Laura so overall sandoz.

Florent Cespedes: Yeah, thanks, Laurent. So, overall, Sandoz is now getting back to growth globally, but particularly, I would say, Europe has had, you know, strong underlying performance, driven both by biosimilars and small molecules, also good performance in our international, as we call it, emerging markets, plus Japan. The US still declined in the single-digit range, but we currently have an outlook that we expect, over the course of 2022 and the first part of 2023, to really bottom out on the US oral solids business, which will then allow us to build on biosimilars and new launches to get back to growth.

Now getting back to growth globally, but particularly I would say Europe has had strong underlying performance driven both by Biosimilars and small molecules also good performance in our.

International as we call it emerging markets plus Japan, the U S still decline in the single digit range, but we currently have an outlook that we expect in over the course of 'twenty two and the first part of 'twenty three it's really bottom out on the U S. Oral solids business, which will then allow us to build on biosimilars and new launches to get <unk>.

Florent Cespedes: And we expect, coming out of 2023 and then into the mid-2020s, 24, 25, et cetera, for the US business to really grow on the back of biosimilar launches, as well as more first-of-files and the overall injectable and small-molecule pipeline. So that's the dynamic we see, but certainly still some ways to go, a little bit more to go in the US to get to the bottom, but that should be coming, and then we get back to growth. Europe is on very solid footing, and in international markets, we generally tend to, Thanks Laurent. Next question operator.

<unk> to growth and we expect coming out of 'twenty, three and then into the mid mid 'twenty 'twenty 'twenty four 'twenty five et cetera for the U S business to really grow on the back of Biosimilar launches as well as more first to files and the overall injectable in small molecule pipeline. So that's the dynamic we see but certainly still.

Some some ways to go a little bit more to go in the U S to get to the bottom, but that should be coming and then we get back to growth Europe is on very solid footing and then international markets. We generally tend to tend to do well.

Thanks, Bob.

Next question operator.

Thank you.

Question comes from so we took a pillar from Morgan Stanley . Please go ahead. Your line is open.

Vasant Narasimhan: Thank you. Your next question comes from Sarita Kapila from Morgan Stanley. Please go ahead, your line is open.

Operator: Hello, thanks for taking my question. How should we think about the new PSMA opportunity, particularly given there's been a restriction to a gallium imaging agent versus gallium and F-18? So could this limit the number of accessible patients in the overall commercial opportunity? Thank you. Yeah, thanks. For lupi-SMA, we have currently worked very hard on Locometo, our gallium agent, where we are, we've already secured agreements to have this agent distributed widely amongst diagnostic centers.

Hi, Thanks for taking my question how.

How should we think about the news yesterday opportunity.

Can you given that sina restrictions that gallium imaging agent.

Julien.

Okay.

<unk> expenses per patient.

Okay. Thank you.

Yes, thanks for Loopy SMA.

Emily Field: So we expect over the coming months to be able to relieve any constraint on imaging these patients to enable uptake of the medicine. And as I mentioned, we're leveraging the Lutathera footprint, but also beginning to work already in bringing additional centers online. In order to fully capture the earlier line opportunities, we're going to need to move from roughly 250 centers, where we currently service our LTs, to get to over 500 centers, roughly 550 centers. So that's part of a multi-year effort.

We are currently worked very hard on local Matto, our gallium agent, where we are we've already secured agreements to have this agent distributed widely amongst diagnostic centers. So we expect over the coming months to be able to relieve any constraint on imaging. These patients to enable uptake of the medicine.

And as I mentioned, we're leveraging dilutive thera footprint, but also beginning to work already and bringing additional centers online in order to fully capture the AD. The earlier line opportunities, we're going to need to move from two roughly 250 centers, where we currently service royalties to get to over 500 centers.

Roughly 550 centers. So that's part of a multi multi year effort. As a reminder, we expect to Victoza. In this later line third fourth line prostate metastatic prostate cancer setting to be around a half a billion dollars to $750 million opportunity and really the more significant opportunity would come from the very low.

Vasant Narasimhan: As a reminder, we expect Pluvicto in this later line, third, fourth line, metastatic prostate cancer setting, to be around a half a billion to $750 million opportunity. And really, the more significant opportunity would come from the very large patient populations in the earlier line settings, where we have a readout in the second half of this year, as well as a readout next year, with then current evaluation ongoing to expand into additional lines of therapy to see if the medicine can be more broadly used.

Large patient populations in the earlier line settings, where we have a readout in the second half of this year as well as the readout next year within current evaluation ongoing to expand into additional lines of therapy to see if with the medicine can be more broadly used.

Next question operator.

Vasant Narasimhan: Next question, operator. Thank you. Your next question comes to the line of Steve Scala from Cohen. Please go ahead, your line is open. Thank you very much. My recollection is that Natalie readout initially was 2023, but that was moved up to 2022.

Your next question comes from the line of Steve Scala from Cowen. Please go ahead. Your line is open.

Operator: That may have been announced as early as 2019 due to confidence in an interim look. So what changed since 2019 when things were apparently progressing very quickly? And if the current slow event accumulation is due to delayed visits and therefore delayed event detection as a result of the pandemic, how would that impact the final analysis?

Thank you very much my recollection is that Natalie readout. Initially was 2023, but that was moved up to 2022.

It may have been announced as early as 2019 due to confidence in an interim look so what changed since 2019, when things were apparently progressing very quickly and if the current.

So of that accumulation is due to delayed visits and therefore delayed event detection as a result of the pandemic.

Would that impact the final analysis. Thank you.

Steve Scala: Thank you. Yeah, thanks, Steve. So since 2019, we increased the sample, if my recollection is correct, we increased the sample size of the study up, which certainly increased our overall timeline. I don't recall exactly, but I'll look into the point you raised around what we said previously on interim, certainly a very fair challenge.

Yes. Thank you. So since 2019, we increased the sample if my recollection is great. We increased the sample size of the study up which certainly increased our overall overall timeline I don't recall exactly but I'll look into the point you raised around.

What we said previously on interim certainly a very fair challenge, but with the revised 5000 patients in the study and 500 events. We've been forecasting on an ongoing basis. One thing that is important to note is we did a very detailed look over quarter one to ensure that we have collected all events into our best.

Vasant Narasimhan: But with the revised, you know, 5,000 patients in the study and 500 events, we've been forecasting on an ongoing basis. One thing that is important to note is we did a very detailed look over quarter one to ensure that we've collected all events. And to our best assessment, we don't believe this is our current event rate is due to delayed reporting of events or over COVID impacts. We believe now we have a clean look at the study and that the event rate is below our projected event rate, unrelated to operational concerns, but just related to the events accrual rate in the study.

Estimate and we don't believe this is our current event rate is due to.

Delayed reporting of events are over Covid impacts we believe now we have a clean look at the study.

And that the event rate is below our projected event rate unrelated to operational concerns, but just related to the event accrual rate in this study.

Vasant Narasimhan: And of course, we'll keep you updated. But I think our team did a pretty rigorous job over the recent months to really ensure we have all of the best data on hand to provide you this update. Thanks, Steve.

And of course, we will keep you we'll keep you updated but I think our team did a pretty rigorous job over the recent months really ensure we have all of the best data on hand to provide you this update.

Thanks, Steve next question operator.

Vasant Narasimhan: Next question, operator. Thank you. Your next question calls from the line of Laura Sutcliffe, UBS. Please go ahead, your line is open.

Your next question comes from the line of Louis Classic.

Classic UBS. Please go ahead your line is open.

Operator: Hello, thanks for taking my question. Just perhaps in the light of your Chief Strategy and Growth Officer appointment, Maybe you could touch on some comments you made on your recent call when you announced your business reorg on the idea that you're good at getting your pipeline to market but maybe need to get better at getting very big drugs to market. That was not too many steps removed from saying that you might want to think about reprioritizing your innovative medicines pipeline.

Hello, Thanks for taking my question.

And the license deal Chief strategy and grateful for your appointment.

Maybe you could touch on some comments you made on your recent call when you announced your business wheel on the idea that you will.

Getting your pipeline to market, but maybe need.

Getting very big chunks of the market.

Not too many.

So, let's say that you might want to think about re prioritizing our innovative pipeline. So could you maybe just talk about your process for deciding when to pursue project.

Operator: So could you maybe just talk about your process for deciding when not to pursue projects and whether you think that such a thing is too big of a pipeline? And specifically, maybe you could talk about how your colleagues are incentivized to shut projects down rather than keeping them alive.

Whether you think there's such a thing is too big of a pipeline.

Can you maybe talk about how your colleagues or incentivize project, rather than keeping them alive right.

Yes, Thanks, Laura Big question there are.

Laura Sutcliffe: Thanks. Yeah, thanks, Laura. Big question there.

A few points viewpoints that raise kind of going step step by step first we do have I think a rigorous approach to prioritizing our pipeline, particularly after proof of concept readout through through submission, we not only look at scientific factors scientific tracked ability, but also look at.

Of course, NPV NPV peak sales return on capital employed probably return on capital employed but I think it's important that we have very good analytics to backup those assessments of those molecules and then make sure that also versus the competitive set we've looked at them with so Brian . So I think that's one thing we want to.

Vasant Narasimhan: So a few points, few points I'd raise kind of going step by step. You know, first, we do have, I think, a rigorous approach to prioritizing our pipeline, particularly after proof of concept readout through submission, we not only look at scientific factor, scientific tractability, but also look at, of course, NPV, ENPV, peak sales, return on capital employed, probabilized return on capital employed. But I think it's important that we have very good analytics to back up those assessments of those molecules, and then make sure that also versus the competitive set, we've looked at them with sober eyes.

Skill in the organization that really outstanding information with which to make those decisions and also evaluate against other external external opportunities then on top of that I. Previously stated that we've increased the threshold that we're putting in place at an asset level not necessarily an indication level, but we want assets.

Vasant Narasimhan: So I think that's one thing we want to upskill in the organization, that really outstanding information with which to make those decisions, and also evaluate against other external, external opportunities. Then on top of that, I previously stated that we've increased the thresholds that we're putting in place at an asset level, not necessarily at an indication level. But we want assets that have the potential to be multi-billion dollar assets. That won't mean that by exception, we might go after some others when they are strategically have a good strategic fit.

I have the potential to be multibillion dollar assets that won't mean that by exception we might go after some others. When they are strategically have a good strategic fit but it's certainly our goal is to find multibillion dollar assets and then to have the discipline to say no and assets don't meet those those thresholds. We are also endeavored over.

Vasant Narasimhan: But it's certainly our goal to find multi-billion dollar assets, and then to have the discipline to say no, when assets don't meet those, those thresholds. We've also endeavored over the recent years to focus down on therapeutic areas that we really believe we can build scale in for the long term. Clearly, as Andrew mentioned earlier on the call, cardiovascular is a top priority. Immunology, given all of the various medicines we have in the pipeline, on top of Cosentix, of course, we have our BTK inhibitor.

The recent years' to focus down on therapeutic areas that we really believe we can build scale and for the long term clearly as Andrew mentioned earlier on the call cardiovascular is a top priority immunology given all of the various medicines, we have in the pipeline on top of <unk> of course, we have our PTK inhibitor.

Yes.

Why as well as other assets now progressing through.

Also a priority neuroscience, given our present presence in multiple sclerosis, but also emerging assets, we have in neuroscience and of course solid tumors in hematology. So five kind of pillar <unk> of course, we have some medicines in areas like ophthalmology and respiratory, but we want to have our focus would be to build scale in those five.

Vasant Narasimhan: We have VAY, as well as other assets now progressing through, also a priority. Neuroscience, given our presence in multiple sclerosis, but also emerging assets we have in neuroscience, and of course, solid tumors and hematology. So five kind of pillar TAs.

<unk> and again have the discipline not always to chase anything else that might be it might be around in other therapeutic areas. So I think with those factors in place we can over time really ensure we have.

Vasant Narasimhan: Of course, we have some medicines in areas like ophthalmology and respiratory, but we want to have our focus be to build scale in those five priority TAs, and again, have the discipline, not always to chase anything else that might be around in other therapeutic areas. So I think with those factors in place, we can over time really ensure we have the right pipeline to drive growth for our company. As I mentioned, over 20 plus multi-billion dollar assets to our current assessment, but certainly we'll ask Ronnie to reassess that and give us an honest look and to honestly tell us where we're at and what do we need to do and where does the external environment give us opportunity and where maybe there's doubling down on other internal assets give us an opportunity as well. So a lot of, of course, ongoing work, but I think we're on the right track and we're hopeful and optimistic that with Ronnie coming on board, we can even accelerate on that. Next question, operator.

The right pipeline to drive growth for the for our company as I mentioned over 20, plus multibillion dollar assets to our current assessment, but it certainly will ask Ronnie to reassess that and give us an honest look into honestly tell us where we're at and what do we need to do and where does the external environment give us opportunity and where maybe there is doubling down on other internal assets give us.

An opportunity.

As well so a lot of course ongoing work, but I think we're on the right track.

We are hopeful and optimistic that with <unk> coming onboard we can even accelerate on that journey.

Next question operator.

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

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

Seamus Fernandez: Great, thanks for the question. So, Voss, maybe first question is just, you know, how you see the PCSK9 environment evolving in the context of Merck's oral PCSK9, where we're seeing some pretty robust data? Love to just kind of get your thoughts there.

Great. Thanks for the question so.

Maybe first question is just how you see the <unk> environment evolving.

In the context of Merck's oral Pts canine.

Where we're seeing some pretty robust data.

Love to just kind of get your thoughts there and then the Apple.

The market.

As we see it.

For an injectable therapy, and then second just.

Wanted to get.

The impact of inflation and how what levers novartis has the capability to coal.

Seamus Fernandez: And then, you know, the evolution of the market, as we see it, for an injectable therapy. And then second, just wanted to get a sense of the impact of inflation and how, you know, what levers Novartis has the capability to pull to keep up with inflation? You know, do you see a pricing environment in the United States that can actually facilitate price increases? Because it appears that that won't necessarily be available in international markets.

To keep.

Keep up with relation do you see a pricing environment in the United States that can actually facilitate.

Price increases because it appears that that wont necessarily be available in international markets, but maybe you can just correct us where we're where we're.

Vasant Narasimhan: But maybe you can just correct us where our thinking might be wrong as it relates to the ability for Novartis and the rest of the pharmaceutical industry to keep up with inflation. Thank you. Yeah, thanks, Seamus. I think on the PCSK9, first, it's important to take a step back and look at the global unmet need. I mean, there's an estimated 60 million-plus patients around the world who have ASCVD that are not adequately controlled with current agents. So, big, big opportunity. In the U.S. alone, 18 to 20 million patients.

Our thinking might be wrong.

As it relates to the ability for.

Novartis and the rest of the pharmaceutical industry to keep up with inflation.

Yeah. Thanks, Seamus I think on the PCF <unk> first it's important to take a step back and look at the global unmet need and there's an estimated 60 million plus patients around the world who have CBD that are not adequately controlled with current current agents a big big opportunity in the U S alone 18th.

20 million patients. So there is plenty of space here for many agents.

Vasant Narasimhan: So, there is plenty of space here for many agents, and even if we capture a fraction of that with Lecvia, we have very sizable medicine. So, that, I think, first, is important as context. It's also important to note, with Lecvia, our goal is to access that broader market. I mean, if you look at current PCSK9 monoclonal antibodies, they're accessing a fraction of this market. So, our goal is to grow the market, and with bringing forward a twice-a-year Part B medicine, and then setting up the infrastructure and cardiovascular care with Part B clinics, but then also with population health agreements around the world, we think it's a pretty unique value proposition for an asymptomatic disease to have a twice-a-year therapeutic versus having chronic therapies, where we know that patients generally don't comply with their statins or ezetimibe or, you know, related therapies.

Even if we capture a fraction of that with <unk>, we have a very sizable sizable medicine. I think first is important as context. It is also important to note with <unk>. Our goal is to access that broader market. I mean, if you look at current PCF canine monoclonal antibodies. They are accessing a fraction of this market. So our goal is to grow the market and.

With bringing forward a twice a year part B medicine and in setting up the infrastructure in cardiovascular care with part B clinics, but then also with population health agreements around the world. We think it's a pretty unique value proposition for an asymptomatic disease.

Have a twice a year therapeutic versus having chronic therapies, where we know that patients generally don't comply with their status or is it a <unk> or.

Related related therapies.

Vasant Narasimhan: So, you know, that's the broad strategy. So, when I think about orals or monthly injectables, I don't think it changes our strategy and our belief that, in the long run, the ability to provide twice-a-year medicine through the physician buy-in bill and Part B model in the U.S. and population health around the world is a long-term opportunity to address this relatively vast market opportunity. And, I mean, let's see what happens.

So that's the broad strategy. So when I think about oral or monthly Injectables I don't think it changes our strategy and our belief that in the long run the ability to provide twice a year medicine through through the physician buy and bill and a part B model in the U S and population health around the world as a long term opportunity to address this.

Relatively vast market opportunity and let's see what happens of course as you know in cardiovascular disease. It's a long journey to get from early clinical data ultimately to the patients at the other other side of the long journey.

Vasant Narasimhan: Of course, as you know, in cardiovascular disease, it's a long journey to get from early clinical data, ultimately, to the patients at the other side of the long journey. Now, in terms of inflation, Harry? Yeah, thank you. And thank you, Seamus, for the question. Very important, of course, in the geopolitical environment we all live in.

Now in terms of inflation Harry.

Yes. Thank you and thank you assume a sort of question very important of course.

Harry Kirsch: I think I would start with that. Usually also my experience, you know, and given our cost structures, inflationary pressures can be usually well balanced with productivity measures. And so, you know, we are not very energy intensive.

Geopolitical environment, we all live in.

I think I would start with that.

Usually also my experience given our cost structure us deflationary pressures can be usually well balance with productivity measures.

So we are not very energy intensive.

Harry Kirsch: On the other hand, of course, if inflationary measures get into the personal cost side, which over time will happen here or there, I think we have very good productivity programs in place to offset that. And of course, also our move transformation for growth, which combined, for example, our shared service together with our manufacturing supply chain. There, our leader, Stefan Lange and his team, you know, will further strengthen the impact of our procurement organization across our complete external spend. So that's one element.

On the other hand of course, if inflationary measures personnel cost sides, which overtime will have to deal with the euro.

Thank you guys very good productivity programs in place to offset that.

And of course also our move transformation for growth, which combines for example, our ships together with our manufacturing supply chain.

Our either stressing lung and his team will further strengthen the impact of whole procurement organization across our complete.

<unk> spent.

So that's one element and overall I think we are very well.

Harry Kirsch: And overall, I think we are very, very positioned to fight any potential bottom line effects off with increased productivity measures. In terms of pricing power, I mean, as you described, it's mainly in the U.S., given our portfolio and business. We have been within our pricing policies on key brands, increasing the mid-single to mid- to high-single-digit range to list prices. We decided, depending on the rebates, we have to give a plus or minus low-single-digit environment.

Their transitions to.

<unk> any potential bottom line effect off with increased productivity measures.

In terms of pricing power I mean as you described.

Given our portfolio of business we have been.

Within our pricing policies.

On.

<unk> increasing in the mid single to mid to high single digit raged surprise us.

Depending on the rebates, we have to do.

Plus or minus low single digit environment of course, we look at that also from a competitive standpoint, but of course, we would always price.

Harry Kirsch: Of course, we look at that also from a competitive standpoint, but of course, we would always price without our commitment. And XUS, there's a limited price increases, but potential, but much less and usually more for Sandoz.

Our commitments and ex U S.

Limited price increases but.

But much less usually more sandals.

Harry Kirsch: We have also some OTC elements in the Sandoz business. But I think key is for us that we do not. You know, only try to offset human pricing, but with significant productivity measures as well as via procurement, ensuring that our suppliers do the same in their productivity efforts and offset inflation as much as possible. Thanks, Harry. Thanks, Seamus. Next question, operator. Thank you. Your next question comes from the line of Kerry Holford from Barenburg. Please go ahead.

System OTC elements, the Sandoz business.

Business, but I think key is for us that we do not.

Good.

<unk> only.

To offset pricing, but with significant productivity measures as well as procurement ensuring that all our suppliers to the say the productivity efforts offset inflation as much as possible.

Thanks, Terry Thanks, Seamus next question operator.

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

Operator: Your line is open. Oh, thank you. Question on M&A. Given the recent fallback in valuations and seemingly tough, I wonder, Vas, if you could give us your latest... Perspectives on the environment, In the context of the broader market moves, are you noting more external interest, greater willingness to discuss, Dental Collaborations and M&A Opportunities. Yeah, thanks, Kerry. You know, when you look at, of course, the pullback in the in the XBI, and I think I've heard various data points, but many companies trading below there, even the cash they have on hand. I think it certainly points to doing the disciplined look.

Thank you.

Question on intermodal.

Given the recent pullback in valuations and seemingly tough.

Mark I'm, sorry, one last question from Kenosha lasers.

On the environment.

And in that context, and Protium ops 1919, Mike Scanlon Quaker way Mr. Scott.

Plantations and M&A opportunities.

Okay.

Yes, Thanks, Gary when you look at of course, the pullback in the in the <unk> and <unk>.

Kerry Holford: But I think first and foremost, you have to be science driven and really ask is there science behind and good data to support an acquisition. I think there, as we're seeing in the broader biotech market, it's been challenging. And then I think a lot of data readouts have pointed to the fact that it is hard to find novel drugs, you know, effectively.

I've heard various data points, but many companies trading below there even the cash they have on hand, I think it certainly points to doing the disciplined look but I think first and foremost has to be science, driven and really ask us their science.

And good data to support an acquisition I think there as we're seeing in the broader biotech market, it's been challenging and I think a lot of data readouts have pointed to the fact that it is hard to find novel drug.

Vasant Narasimhan: So we continue to look. Our focus remains, as I've guided in recent quarters, into the sub $2 billion space to see if there are attractive methods. And when there are good deals out there, we're, of course, looking to do them. I do think over the course of this year as well, expectations amongst sellers, so to speak, will adjust.

Effectively.

So we continue to look our focus remains as I've guided in recent in recent quarters into the sub $2 billion space to see if there are attractive assets and when there are good deals out there we're of course looking.

Looking to do them I do think over the course of this year as well expectations amongst sellers. So to speak we will adjust and then may be more openness to think about how how partnerships and M&A and business development could be could be conducted so there could be more activity certainly in the sector of second half of the year.

Vasant Narasimhan: And there may be more openness to think about how, you know, partnerships and M&A and business development could be conducted. So there could be more activity, you know, certainly in the sector second half of the year. And we'll, of course, be doing our part to diligently keep screening and see what's out there that could be attractive. Thanks, Jerry.

And we will of course be doing our part to diligently keep screening and see what's out there that could be could be attractive.

Thanks, Eric next question operator.

Thank you. Your next question comes from the line of <unk> <unk>.

Vasant Narasimhan: Next question, operator. Thank you. Your next question comes from the line of Naresh Chauhan from Intron Health. Please go ahead, your line is open.

In Schonhaus. Please go ahead your line is open.

Alright, Thanks for taking my question.

Operator: Hi there, thanks for taking my question. Just one on the impact... Inflation on Cosby is falling off the trends. Just a question on the phasing of the impact of inflation on the cost lines because I'm guessing you have a bunch of contracts that are longer term and some suppliers may yet have to raise prices.

Just one on the impact.

<unk> cost base coming on from Sam's question.

Just a question on the <unk>.

Phasing of the impact of inflation on the cost lines, because I'm guessing you have a bunch of contracts that are longer term and some suppliers may yet have to raise prices. So should we be thinking about inflationary impacts on costs A&H too will that be pushed into next year and then linked to that when you formulated your guidance early on in the year do you feel that the.

Naresh Chauhan: So should we be thinking about inflationary impacts on costs in H2 or will that be pushed into next year? And then linked to that, when you formulated your guidance earlier on in the year, do you feel that the inflationary pressures you're seeing now have been fully accounted for? Thank you. Thanks very much, Harry. Yeah, thank you, Naresh. Yeah, we have seen some quarter one on energy, right, like probably most others. And but again, we are not so energy intensive.

Facing pressures Youre seeing now fully.

Fully accounted tool. Thank you.

Thanks Terry.

Yes, Thank you Iris.

Harry Kirsch: And when we basically forecast out the energy part, as well as some, as well as the, The supplier base, as you say, contract is a bit thrown out. We see roughly one point of cropping as the risk around that. But we have offsetting measures to offset that and be well within our guidance. And then, of course, the other question is, of course, will this stay here, you know, this situation for a long time? Of course, at the moment, we assume from a forecasting standpoint, it will remain for the rest of the year.

We have seen several quarter one energy.

Most others.

But again, we are not so energy intensive.

And when we basically forecast out.

The energy part as well as subtle as well as <unk>.

The supplier base.

<unk> I'll, just say contractor bids prologue you roughly one point of co Op, Inc.

The risk that but we are offsetting measures too.

To offset that.

Within our guidance.

And then of course, the other questions of course will this stay here.

Situations for a long time of course at the moment, we assumed from a forecasting standpoint.

Harry Kirsch: And then beyond this year, I would say, again, we have many levers of productivity to offset that, so that we are also very confident in our mid- to long-term upped margin guidance, which we did together with the announcement of transforming growth initiatives. So overall, I would say, given our cost structures, manageable, but of course, we'll ask for some increased efforts to do so, but we are well prepared. Thanks, Harry.

Will remain for the rest of the year and then beyond this year I would say again, we have many levers on productivity to offset that so that would be also very confident.

Our mid to long term.

Ups margin guidance, which we did together with the announcement of transformative growth initiatives.

All I would say given our cost structures manageable, but of course, we will ask for some increased efforts to do so but we are we're prepared.

Thanks.

Thanks, Eric Thanks Raj next question operator.

Harry Kirsch: Thanks, Rajesh. Next question, operator. Thank you. Your next question comes from the line of Richard Parkes from BNP Paribas. Please go ahead.

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

Hi, Thanks for taking my question.

Operator: Your line is open. Hi, thanks for taking my question. It's from your innovative medicines 40% plus margin target. I'm trying to square that with some of your peers that don't seem to feel that's a sustainable level of profitability.

Innovative medicines, 40% plus margin target I'm trying to square that with some of your peers seem to care about the sustainable level of profitability and given that your therapeutically diversified business over the phone.

Richard Parkes: And given that you're a therapeutically diversified business, I would have thought that that would lead to structurally slightly lower overall margins. I wondered if you could just highlight to us what we're missing or what's unique about Novartis that we're overlooking. And just following on from that, Keir mentioned you've been, demonstrated willingness to grapple challenges within the business in recent times. And I just wonder if you could update us on your thoughts have a presence in some of your more subscale therapeutic categories like respiratory and ophthalmology. Just wondering whether that might be baked into achievement of that margin target, exiting those areas.

That would lead to structurally slightly lower.

Margins I wondered if you could.

Just highlight to us what we're missing what's unique about novartis.

Looking just following on from that I mentioned.

Demonstrated willingness to graphical challenges within the business in recent times and I just wonder if you could update us on your type.

Type of presence in some of your more subscale therapeutic categories like respiratory ophthalmology, just wondering about that might be baked into achievement is that margin target exiting those areas. Thank you.

Yes, Thanks Richard.

Vasant Narasimhan: Thank you. Yeah, thanks, Richard. You know, when we when we look at our approach longer term, and we want to maintain R&D in the 20% range, as we've guided, though, we're always willing to 20% of IM sales, though, of course, we're always willing to go up based on opportunities that they're highly attractive. And I think you see our peer set moving around some well below that target, some well above that target.

We look at our approach longer term and we want to maintain R&D in the 20% range as we've guided we're always willing and 20% of <unk> sales. There of course, we're always willing to go up based on opportunities that they are highly attractive.

And I think you see our peer set moving around some well below that target something well above that target, but I still think in the long run being in that 20% range is a solid investment level given the size of the company. When you think about our SG&A, we want to be at the median or better in the sector over time, and we certainly see peers who are far.

Vasant Narasimhan: But I still think in the in the long run, being in that 20% range, is a solid investment level, given the size of the company. When you think about our SG&A, we want to be at the median or better in the sector over time. And we certainly see peers who are far more efficient than us in the SG&A areas.

More efficient than us in the SG&A areas. So when we take take our current <unk> margin, which is in that 36% to 37% range and we see the opportunities do become with technology with rationalizing our footprint with the opportunity to hopefully leverage capabilities in market. We think we can get those.

Four to five points out of SG&A to get us into that 40% range on a sustainable sustainable basis I can't speak to how our peers look at it of course. It does require you to rethink your business model and I think what we're working on right now and I am as part of this new setup is to rethink our country footprint and our approach to go to.

Vasant Narasimhan: So when we take take our current IM margin, which is in that 36 to 37% range, and we see the opportunities to even come with technology with rationalizing our footprint, with the the opportunity to hopefully leverage capabilities in market, we think we can get those four to five points out of SG&A to get us into that 40% range on a sustainable, sustainable basis. I can't speak to how our our peers look at it.

A market in country to make it much more flexible is much more technology driven.

And in the long run we hope more sustainable to enable us to launch products highly efficiently and Thats, where the opportunity comes from its certainly not from cutting R&D and our innovation engine is coming from that other other part of our P&L and Thats, how we how we think about it on the portfolio optimization nothing new.

Vasant Narasimhan: Of course, it does require you to rethink your business model. And I think what we're working on right now in IM as part of this new setup is to rethink our country's footprint and our approach to go to market in country to make it much more flexibilized, much more technology driven. And in the long run, we hope more sustainable to enable us to launch products highly efficiently. And that's where the opportunity comes from. It's certainly not from cutting R&D.

Vasant Narasimhan: And our innovation engine is coming from that that other other part of our, That's how we think about it. On the portfolio optimization, nothing new to announce other than I think it's certainly, we are looking at, as well as part of this transformation, how to optimize our commercial footprint as well as our development footprint based on the new model of a single IM unit. As part of that, of course, we're looking at relevant TAs.

To announce other than I think it's certainly we're looking at as well as part of this transformation how to optimize our commercial footprint as well as our development footprint based on the new model of a single unit as part of that of course, we're looking at at relevant Tas and of course in respiratory we're largely limited.

Vasant Narasimhan: Now, of course, in respiratory, we're largely limited to Xolair with a small presence in QVM and inhaled therapeutic, and in ophthalmology, really, we sent this in Bayview. So it's naturally part of our thinking how to optimize these two areas.

It to Xolair with a small presence in <unk> and inhaled.

It held therapeutic and in ophthalmology really lucentis in Bellevue. So it's naturally part of our thinking how to optimize these two areas. That's certainly something we'll be we'll be working on over the course of this year.

Next question operator.

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

Vasant Narasimhan: That's certainly something we'll be working on over the course of this year. Next question, 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 follow-up. So, just a question on the VICTO.

Great. Thanks for taking my follow up and.

Operator: So, you talked about the fact that your own gallium-based diagnostic is helping, or you hope to help with the uptake, but there is some feedback that the 18F diagnostics are easier to use, easier to manufacture, and I noticed that you had done a collaboration deal with an 18F diagnostic manufacturer. So, can that be back-applied to the label for the vision indication, and or can you add it to the PSMA-4 and PSMA addition trials, or would this just be for a frontline?

So just a question on <unk>.

Okay.

You talked about the fact that you can.

Thanks, Mike not sticky.

Helping we hope to help with the uptake.

There is some feedback.

Diagnostics.

Yes.

And ACC content collaboration do within 18 months.

Can that be applied to the labor for the vision and the closing.

Andrew.

It's in a pool and Pete.

Charles what would this just be for a frontline.

Operator: Yeah, thanks, Graham. So for the current launch, we are limited to the diagnostic on label, but certainly for the follow-up indications, we're working hard to put together the relevant data package with FDA to hopefully broaden the range of diagnostic agents that can be used. You can imagine that as part of our discussions with the FDA, we put together our best arguments to be as broad as possible on diagnostic options for physicians, but at least for now on this first indication, but we'll be limited to the gallium agents. But over time, we hope to expand that, especially as we go into the larger market segments in the coming years. Next question, operator.

Yes, Thanks Graham so at the current launch we're limited to the diagnostic on on label, but certainly for the followup indications, we're working hard to put together the relevant data package with FDA to hopefully broaden the range of diagnostic agents that can be they can.

You can imagine that as part of our discussions with the FDA, we put together our best arguments to be.

As broad as possible on diagnostic.

The options for physicians, but at least for now on this first first indication, but will be limited to the gallium agents, but over time, we hope to expand that especially as we go into the larger market segments in the coming years.

Next question operator.

Graham Parry: Thank you. Your next question comes from the line of Matthew Weston, Credit Suisse. Please go ahead, your line is open.

Your next question comes from the line of Matthew Weston Credit Suisse. Please go ahead. Your line is open.

Thank you very much.

Matthew Weston: Thank you very much. Vas, it's a question about buy and bill. So since you acquired the medicines company, you've educated us all on the advantages of buy and bill and how you hope in the US it's going to help with the commercialization of Alexio. I'm curious how we should think about buy and bill when you're up against it yourself in a competitive environment. And in particular, I'm thinking of Iptekapan versus Saliris Ultimeris and other high value infused drugs, but also Cosimta, versus Akrivas.

It's a question about buy and Bill So since you acquired the medicines company you've educated us all on the advantages of buy and Bill and how you hope in the U S. It's going to help with the commercialization of Alexia Im.

I'm curious, how we should think about buy and bill when youre up against it yourself in a competitive environment and in particular I'm thinking of a tech upon versus Soliris, all familiar with some of the high value of infused drugs, but also to versus accretive does that put a meaningful barrier in the commercialization potential.

Those molecules.

Vasant Narasimhan: Does that put a meaningful barrier in the commercialization potential of those molecules? Yeah, absolutely. Thanks, Matthew. So, for one, I think it's very situation-specific, so let's take each one of those in turn. I think in the cardiovascular segment, when you're trying to displace orals which have low compliance, certainly a twice-a-year injectable that can be used in a sub-Q setting very rapidly for patients who had previous heart attacks is very attractive to cardiologists, and we think will lead to meaningful clinical benefits.

Yes, absolutely think thanks, Matthew so for one I think it's very situation specific so let's take each one of those.

<unk> I think in the cardiovascular segment. When you were trying to displace orally, which have low compliance certainly it twice a year.

<unk> that can be used in the sub Q setting very rapidly for patients who had previous heart attacks is very attractive to cardiologists, and we think will lead to meaningful clinical clinical benefit.

Vasant Narasimhan: Our expectation is in the rare disease setting that while there is certainly, it is certainly a barrier, to be clear, it is certainly a barrier that we have to overcome that the current agents are used as infused medicines in the buy-and-build setting, that in this population, it's not a big enough driver of the economics that providing patients an oral option to avoid having to go in and out of the hospital could be highly appreciated, particularly given the opportunity to be frontline and be used on top of the infused agents. So, our expectation is, again, a lot of this does come to economics, and I think in that setting, the oral medicine has a very attractive profile.

Our expectation is in the rare rare disease setting that while there is certainly it is certainly a barrier and to be clear. It is certainly a barrier that we have to overcome that the current agents are used as infused medicines in the buy and bill setting that in this population, it's not a big enough driver of the economics.

That <unk>.

Providing patients an oral option to avoid having to go in and out of the hospital could be highly appreciated, particularly given the opportunity to be frontline and be used on top of the infused agents. So our expectation is again a lot of this does some of the economics and I think in that setting the oral medicine has a very attractive.

<unk> profile, and then I think in neuroscience.

Vasant Narasimhan: And then I think in neuroscience, it is very clinic and situation-specific. We certainly see the highest uptake in cosympta in segments of the market that are not highly penetrated by buy-and-build, and I think in those segments of the market that have high utilization of buy-and-build, there's less interest in using cosympta. Luckily, in MS, the penetration of B-cell therapies is still relatively low given the efficacy of these B-cell therapies, so there is a vast market opportunity to displace the older agents, the braces, so to speak.

Is very clinic and situation specific we certainly see the highest uptake in <unk>.

And segments of the market that are not highly penetrated by buy and bill and I think that those segments of the market.

That have high utilization of buy and build there's less interest in using because.

Luckily in MFS the penetration of B cell therapies is still relatively low given the efficacy of these b cell therapy. So there is a vast market opportunity to displace the older agents.

The braces so to speak.

Vasant Narasimhan: And that is a big opportunity, and that's 60% of our source of business, and so we have ample opportunity there to get into the market and be successful. So, you've got to look at the dynamics in each one, but certainly in certain instances, buy-and-build can be a formidable obstacle in our market environment.

And that is a big opportunity of that 60% of our source of business and so we have ample opportunity there to get into the market and be successful. So you've got to look at the dynamics in each one but certainly in certain instances buy and bill can be a formidable obstacle.

Our market environment.

Sure.

Thank you.

Vasant Narasimhan: Thank you. 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. Just following up from the last question, but staying within the cardiovascular domain, Amgen has a mRNA-based technology, which is once every six months, it will be buy-and-bill.

Next question operator.

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

Thank you just following up from that last question, but staying within the cardiovascular domain.

Amgen has a mrna based technology, which is 176 months it will be buy and bill.

Thinking about how you are building out the buy and bill.

Andrew Baum: Thinking about how you are building out the buy-and-bill infrastructure, I'm just thinking about with, I'm thinking about how that's going to fit in within that environment. You mean for LP little A, Andrew? For LP little A, yes, sorry, if I said, yep, sorry, I misspelled. Yeah, absolutely. So, of course, we're watching, you know, the LP little a evolution as well, competitive, competitive environment, certainly, if an si RNA, which I understood as quarterly, I'll have to double check with my team, if it's quarterly or by by month, but certainly, that will be able to be used through the system.

Infrastructure I'm just thinking about.

I'm thinking about how thats going to consume within that environment.

You mean for LP Little a Andrew Lee.

Yes, sorry, yes.

Sorry, I missed that.

Yeah, absolutely so of course, we're watching the.

Andrew Baum: And as we think about lifecycle managing, like vo, our goal will be to, of course, also think about ways to continue to leverage the infrastructure that we're building, to be clear, and I think that's your point, Andrew, I think our current LP little a pallicarsen medicine would not be able to leverage buy and bill. But again, the size of these markets are so large, we still think there'd be a substantial market opportunity as the first to market sub q medicine for these patients.

LP little a evolution as well as competitive competitive environment, certainly if an assai RNA, which I understood. His quarterly I'll have to double check with my team if its quarterly or buy by month, but certainly that will be able to be used through the system and as we think about lifecycle managing let vito.

Our goal will be to of course also think about ways to continue to leverage the infrastructure that we're building to be clearer and I think Thats. Your point, Andrew I think our current LP Little a pellet Carson medicine would not be able to leverage buy and bill but again the size of these markets are so large we still think there'll be a substantial market opportunity.

Andrew Baum: And then, of course, we will, we are looking, of course, to get to less frequent dosing, we do think to be successful in cardiovascular buy and bill, you have to be relatively infrequent, even quarterly, we'll have to see. But certainly twice a year is a winner, we think, in this market segment.

As the first to market sub Q medicine for these patients and then of course, we will we are looking of course to get to.

Less frequent dosing, we do think to be successful in cardiovascular buy and bill you have to be.

Relatively infrequent even quarterly we will have to see but certainly twice a year is a winter we think in this market segment.

Next question operator, Thanks, Andrew.

Vasant Narasimhan: Next question, operator, thanks. Thank you. Your next question comes from the line of Simon Baker from Redburn. Please go ahead, your line is open.

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

Yes.

Thank you for taking my second question it sounds cell therapy.

Operator: Thank you for taking my second question. It's on cell therapy. I wonder, first of all, if you could elaborate on the statement in the press release about lower demand for Kimriah. Is that simply the nature of cell therapies in general, in this environment, whether there was anything specific to Kimriah? And related to that, I see last week, you pushed back the timelines for your genome edited stem cell therapy for sickle cell from late 23 to August 25. I just wonder if you could give us any colour on why that was.

I wanted to ask you guys. If you could elaborate on the statement in the press release about lower demand for <unk> is that simply the nature of cell therapies in general.

Whether there was anything specific to <unk>.

And related to that.

Last week, you pushed back the timeline for your genome edited stem cell therapy for sickle cell.

From late 'twenty Suite August 25, I'm, just wondering if you could give us any color on why that was thanks so much.

Yes, so on the second part of your question that has to get back to you Simon I don't know offhand on the on the genome editing starts will come back to you on that look I think on <unk> just to provide a very realistic perspective.

Simon Baker: Thanks so much. Yeah, so on the second part of your question, I'd have to get back to you, Simon. I don't know offhand on the genome editing starts.

Vasant Narasimhan: We'll come back to you on that. Look, I think on Kymriah, just to provide a very realistic perspective, the DLVCL second line, the failure of Kymriah in the second line DLVCL is beginning to hit demand. And I think we will see Kymriah to have less growth over the coming quarters and year and potentially even declines as our two competitors build out their second line DLVCL program. So realistically for us in cell therapies, of course, Kymriah is the only medicine indicated in pediatric ALL, has a broad label in later lines across DLVCL and FL, but in the longer term, it really comes down to our next generation T-charge platform, which we provided data on at the end of last year at ASH, where we demonstrated pretty attractive data in both DLVCL and multiple myeloma, and I think in the intervening years, it's really just managing Kymriah to provide it to patients, really focus on that next wave technology, which we expect to have materially lower COGS, hopefully much higher throughput times, better efficacy and safety, and enable the overall business to be significantly more attractive and more in line with other oncology agencies. Next question, operator.

The deal Bcl second line the failure to Bryan the second line yield ECL is beginning to hit demand and I think we will see Kim Ryan.

Vasant Narasimhan: Great. Thanks so much. Thank you. Your next question comes from the line of Steve Scala from Cohen. Please go ahead. Your line is open.

To have less growth over the coming quarters and year and potentially even declines as our two competitors build out there their second line <unk> program. So realistically for us in cell therapies of course, Kim Ryan.

Only medicine indicated in pediatric ALLL has a broad label in later lines across the <unk> and FL.

Longer term it really comes down to our next generation T charge platform, which we provided data on at the end of last year at Ash, where we demonstrated pretty attractive data in both <unk> and multiple myeloma and I think in the intervening years, it's really just managing Kim Ryan to provided to patients.

We focus on that next wave technology, which we expect to have materially lower Cogs, hopefully much higher throughput times, better efficacy and safety and enable the overall business to be significantly more attractive and more in line with other oncology agents in the company.

Next question operator.

Sure.

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

Steve Scala: Thank you very much. Cascali had its first appreciably down quarter, quarter over quarter since launch five years ago. You noted the weakness in new prescriptions, but even during the pandemic, Cascali was at worst flat.

Thank you very much cause calling had its first appreciably down quarter quarter over quarter since launch five years ago.

You noted the weakness in new prescriptions, but even during the pandemic as Scully was at worst flat.

Steve Scala: I am wondering what other reasons there could be for the current weakness. It seems it could be deeper than simply new prescription trend. Thank you. Yeah, so we did have some stocking movements in the U.S. Harry, you want to say a word on Kisgali U.S.?

Im wondering what other reasons there could be for the current weakness it seems it could be deeper than simply new prescription trend. Thank you.

Yes, we did have some stocking movements in the U S. How do you want to say a word on <unk> Ghali U S. Maybe that would help explain Steve's question.

Yes, Thank you Russell.

Harry Kirsch: Maybe that would help explain these questions. Yes, thank you, Voss. So in the US, Steve, there was a slightly higher year end, Dawking effect, in the U.S. at the end of December. That has been worked through in quarter one. Totally for the company, there was nothing significant. But there was an effect on that. And that was basically impacting the U.S. growth in the high single-digit percent point. So that made it a bit worse than what one would expect.

Yes, Steve.

Slightly higher.

Yes.

Stocking effect.

In the U S. At the end of December that has to be worked through quarter. One totally for the company that went from nothing nothing significant.

But.

Awesome.

Thanks on that.

That was basically.

Impacting the U S growth in the high single digit percentage point.

So that maybe a little bit worse than what one would expect.

Harry Kirsch: But overall, of course, we need to see more NBRX growth. There we are just flat, if you will. But that was on a single-brand basis, not a small amount, if you will, that impacted, of course, quarter one, this was quarter one last year in comparison. And we would expect in quarter two, at least from where we sit today, to see a return to the historical profiles, Kisgali Kisgali. I think we have a few more questions, operator. Next question.

So, but overall of course, we would need to see.

See more <unk>, we have just flat if you will but that was obviously a good plant based model smaller bonds.

Sure.

That impacted of course quarter, one quarter, one last year comparison.

Thank you.

And we would expect quarter to stay at least from where we sit today to see a return to the historical profiles, because scully because call it growth.

I think we have a few more questions. Operator next question. Please. Thank you. Your next question comes from the line of Matthew Weston Credit Suisse. Please go ahead. Your line is open.

Operator: Thank you. Your next question comes from the line of Matthew Weston, Credit Suisse. Please go ahead, your line is open. Vas, I promise it's my last. It's on and sovipep, and...

Vas I promise that's my last.

Salford Pat and if you could just give us an update where obviously COVID-19 is waning hopefully and certainly everyone's hopes, but we're still seeing governments, making very significant purchases.

Matthew Weston: If you could just give us an update, where obviously COVID is waning, hopefully or certainly in everyone's hopes. But we're still seeing governments making very significant purchases, to stockpile various treatment agents. So can you tell us where you are in terms of your expectations for the molecule, but specifically your plans for the sub-Q trial and whether or not we should expect that to start in the near future? Thanks, Matthew. As we note, actually, in one of the slides, we filed the EUA, and the EUA remains open with the FDA.

To stockpile various treatment agents. So can you tell us where you are in terms of your expectations for the molecule, but specifically your plans for the sub Q trial, and whether or not we should expect that to start in the near future.

Yeah, Thanks, Matthew as we not actually in one of the slides we filed the EUA in the EUA remains open with the FDA. However at this point given the latest feedback that in our discussions with the agency. We would expect the agency to require a phase III study before granting an EUA approval or general.

Matthew Weston: However, at this point, given the latest feedback in our discussions with the agency, we would expect the agency to require a Phase 3 study before granting an EUA approval or a general approval. We're in discussions now to understand the final study design and what the agency would expect, and then we need to make a kind of sober evaluation as to is it a doable study in light of the waning rates of COVID around the world, and then we can make an appropriate decision.

Approval, we're in discussions now to understand the final study design and what the agency would expect and then we need to make a kind of silver evaluation as to.

Is it a doable study in light of the waning rates of Covid around the World and then we can make an appropriate decision certainly we believe in the profile of the molecule and certainly our discussions with the U S government as Eric excited about the concept of a one time sub Q.

Matthew Weston: Certainly, we believe in the profile of the molecule, and certainly our discussions with the U.S. government is very excited about the concept of a one-time sub-Q therapy. Alongside that, we do have a once-a-day oral agent that is currently completing the various preclinical talks and early studies. We should have a read on whether it's developable over the summer, and then we'd have to have a similar conversation. It's an Mpro inhibitor, and we'd have to have a similar conversation with FDA as to what would be the clinical development requirements, and, again, in the context, is it developable, and how long would it take to just accrue the events required?

Therapy alongside that we do have a once a day oral agent that is currently completing the various preclinical tox and early studies, we should have a read on whether its developable over the summer and then we'd have to have a similar.

Conversation, it's a <unk> inhibitor.

And we have to have a single a similar conversation with FDA as to what would be the clinical development requirements and again in the context is a developable and how long would it take to just accrue the events required.

Thanks, Matt. Thank you very much I think.

Vasant Narasimhan: Thanks Matthew. Thank you very much. Last question, operator. I think it's Graham. Graham?

Last question, operator, I think it's Graham Graham.

Thank you very much.

Operator: Thank you very much. Graham Parry, Bank of America, your line is open. Great, thanks for that. I'll go for round three.

Graham Parry Bank of America. Your line is open.

Alright, thanks, Tim Thanks around three.

Graham Parry: So, actually, first of all, just a quick follow-up to the first question asked on Natalie. I just wondered, as you're slipping into 2023, is it just slipping into 2023 or on the event rate that you're looking at at the moment, is it a first half or second half 2023 read? And then on Cosentics, which is my actual follow-up, you've got the election planners phase two data, I think, this year. Large indication, lots of patience.

Just a quick follow up to the first question is from Nestle I'm just wondering as you are.

Slipping into 2022.

In 2022 on the event rate that Youre looking at that the navy needs. It.

First half or second half 'twenty three and then on Zen takes six months follow up and you've got lean it's implanted phase II data I think this year large indication lots of patients just wondered if he.

Graham Parry: I just wondered if you are thinking about this as a longer term opportunity, because on your IP slide, it says Cosentix passes 2029+. So I'm wondering, are you looking at additional IP protection strategies for Cosentix beyond 2029? Thank you. Yeah, thanks, Graham. On Natalie, nothing more I can really say at this point.

Thinking about this as a longer term opportunity is on your slide It says <unk> patents in 2029, plus I'm wondering are you looking at additional IP protection strategy pays antiques beyond 2029. Thank you.

Yes, Thanks Ram.

Really nothing more I can I can really say at this point I think it will continue to update the event rates and provide more.

Vasant Narasimhan: I think we'll continue to update the event rates and provide, you know, more granularity on when we would expect a final readout over the course of this year. But I think we give you the best forecast we have now that it's now pushed into 2023. On Cosentix, we do have the Lycan Planets readout upcoming. And we are looking at, of course, the standard patent extension strategies beyond 2029. Also, continuing to progress in NIBR efforts to develop an oral IL-17A inhibitor, as well as other lifecycle management strategies, biologic strategies for Cosentix.

Granularity on when we would expect a final readout over the course over the course of this year, but I think we give you the best forecast we have now that it's now pushed into into 2023.

<unk>, we do have the like in planet.

Readout upcoming and we are looking at of course, the standard patent extension strategies beyond 2029 also currently to continuing to progress and neighbor efforts to develop an oral IL 17, a and.

Inhibitor as well as well as other lifecycle management strategies biologic strategies for cosmetic nothing concrete as of yet, but certainly high on our mind to get <unk> to move into the 2030 alongside continuing to defend the full patent of state of Entresto. We have 10 Orange book patents now issued and our goal continues to be to defend that.

Vasant Narasimhan: Nothing concrete as of yet, but certainly high on our mind to get Cosentix to move into the 2030s, alongside continuing to defend the full patent estate of Entrusto. We have 10 Orange Book patents now issued, and our goal continues to be to defend that, to try to keep Entrusto protected for as long as possible as well.

To see how to try to keep interests are protected for as long as possible as well so.

So thank you everyone for the call I really appreciate the great questions from everyone will look forward to speaking to everybody. Soon thank you again for your interest in Novartis.

Operator: So thank you, everyone, for the call. I really appreciate it. Great questions from everyone. We'll look forward to speaking to everybody soon. Thank you again for your interest in Novartis. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

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

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