Q3 2022 Novartis AG Earnings Presentation
Good morning, and good afternoon, and welcome to the Novartis Q3, 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 price.
They stopped one on one at any time during the conference. Please limit yourselves to one question and return to the queue for any follow up a recording of the conference call, including the Q&A session will be available on our website. Shortly after the call ends with that I would like to hand over to Mr. Samir Shah Global head.
Investor Relations. Please go ahead Sir.
Thank you very much and good morning, and good afternoon, everybody. Thank you again for taking the time to participate in Nevada. This quarter three conference call.
Before we start just a quick reminder, for safe Harbor. The information presented today contains forward looking statements that involve known and unknown risks uncertainties and other factors, which 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 Companys form 20-F, and most recent quarterly results on form 6K that respectively were filed with and furnished to the U S Securities and Exchange Commission and with that I'll hand across to events.
Thank you Samir and thanks to everyone for joining today's conference call I'm moving to the first slide you can take a couple of slides forward.
Novartis delivered solid quarter, three performance really across all of our core value drivers from a growth standpoint group sales were up 4% in constant currency that was driven both by solid performance and I am at 4% as well as in Sandoz U S sales were up 8% consistent with our strategy to continue to improve our position in the U S.
From a productivity standpoint with core operating income was up 5% again, driven by <unk>, which was up 7%. We also had continued our margin progression with a 1% percentage point improvement or savings from our SG&A program are on track and Harry I'll cover that in a bit a bit more detail.
From an innovation standpoint, we had some important events, particularly the approval to victory over the positive opinion.
In Europe with that from the <unk> and the readout, we had announced earlier this week of the Taco pad in <unk> across two superiority endpoint versus anti bot and I'll go through that in a bit more detail lastly on an ESG front, we had an important announcement with respect to our.
Our work with the medicines patent pool as well too.
Additional important milestones for two.
Development programs, and hydraulics, with Hydroxyurea and sickle cell disease as well as in malaria.
Moving to the next slide.
The performance in the quarter was really driven by a trusted colleague and to Victor and you can see the growth year for each of these brands interested continues its strong trajectory.
Golly, performing well and for Victoza in its first full quarter in the Lodge also performing very well in its early days. We also saw good performance across some of the other brands and we will come to that brand by brand and the upcoming section.
Moving to slide six.
One important element of our story is our ability to make our six key end market growth drivers into multibillion dollars medicine, we stayed on track with respect to that to really.
Our confidence in our midterm growth outlook does fixed brands now account for 33% of <unk> sales and they were growing 23% in the quarter and as noted both tablets and two Victor now we're off to a good start and could one day be added to that list.
Fixed breath to also be potential multi billion dollar brands in the future depending on how Readouts go in the earlier lines moving.
Moving to the next slide.
That will just take a walk through each of the individual brands and I'll give you some of the key highlights from the quarter because that's ex showed steady growth in.
In the quarter, you can see 7% growth.
In quarter three we.
We were maintaining our competitive position in arthritic towards geographies, we have over 875000 patients now treated in the U S. We saw solid volume growth, but we also saw the impact of increased revenue deductions, particularly in Medicaid and 340 <unk> segment relative to our previous uplift we saw in revenue deductions in the previous year.
That's something we will continue to we expect to continue in quarter four now with respect to Europe , we maintain our leadership position amongst originator biologics in psoriasis and Spondyloarthropathy future.
<unk> future growth drivers for <unk> that takes to get to that $7 billion peak sales will be driven by our continued expansion in China, notably in China at the moment, we do face headwinds with the ongoing lockdowns, but we continue to expect China to be an important part of our story Hidradenitis Suppurativa has now filed.
<unk> filed in both FDA and EMA I'll tell you a little bit more about why we feel like we have a good opportunity with this indication we expect to submit our IV regulatory file in quarter four and we also continue to advance our lifecycle management program across additional indications, including giant cell arteritis, where we saw pretty pretty saw.
<unk> phase <unk> data and.
Now moving to slide eight.
Interest will continue.
Strongly across all geographies, 31% growth in the quarter you can see here. The weekly Crx's continue to set record after record really strong performance in the U S. But also around the world. We now have over 8 million patients on therapy accelerating momentum in the U S strong demand in Europe when.
You look at the future growth drivers of the graph its worth noting that only a third of eligible have breath patients are currently on treatment and the G. Seven and there is a strong profile, we continue to build in clinical and real world real World settings, and heart failure, we have guidelines that continue to support the use of Entresto and have rasp and also supported Houston.
And we're also seeing good demand from the hypertension indications, we were able to secure in Japan and in China.
Moving to slide nine.
Xeljanz had a little bit of a challenging quarter, we know we're predominantly seeing.
Seeing demand from the incident population, both U S and ex U S are shifted to an incident patient population.
Year to date, we still have double digit growth in incident patients treated we've exceeded 2500 patients treated worldwide.
Going forward, what will be key for us is to continue to expand into new markets Foundation as a foundational treatment as you all know for type one and newborns were approved in 45 countries and we have access negotiations ongoing now in 10 plus markets, including some important markets such as Brazil. We also continue to work to.
<unk> increased newborn screening rates to 35% above 35% in Europe , and hopefully get overtime to the rates that we see in the U S, where we're close to 98% of newborn screened.
Taken together, we expect that all Gen. Two we continue to expect <unk> to reach the one $5 billion to $2 billion sales level in the IV indication alone, but getting beyond that sales level will require expansion into the interest equal indication in the 2% to 18 year old patient segment, whereas the sphere study is continuing.
Turning to enroll and we also have the strength study looking at the IV utilization in that indication starting in Q4 of 2022.
Now moving to slide 10.
<unk> had a really strong quarter across all regions with 49% growth on the quarter.
Can see importantly in the middle panel of the slide the trend break we've had with respect to <unk> share in the U S. In the metastatic population, where we've been able to climb over the course of this year from 12% to 13% to now 26% of exiting in August that's really on the back of the strong data that we have with respect to AUM.
Across all of the metastatic lines.
The only CDK four six with overall survival benefit across three phase III studies. We also have strong data with respect to quality of life. We've launched the head to head study the harmonious study versus eyebrows to further solidify that profile and the Natalie study continues we have not had any feedback yet from the steering committee with respect.
The first interim analysis and when that feedback becomes available if it indicate.
Any action on our part we will of course inform the market.
Moving to slide 11.
<unk> had strong sales growth as well in the quarter driven by its U S launch momentum of 172% you can see here.
On its launch trajectory really all of the key metrics are trending in a favorable direction Trs, 131% and we are at 47% versus a market, notably thats declining 20%, we are up to 30% <unk> share in DSL amongst b cell therapies in Ms. In the U S with a goal to reach 50.
Sure.
Adding 100, new writers per month, our initiation programs with our patient patient hub.
Performing extremely well and we also released new four year data and recently diagnosed in treatment naive patients that support its use in earlier stages in RMS disease. So really good trajectory here an opportunity for US now to also accelerate our efforts outside of the United States to bring this medicine to more multiple stood.
Or is this patients around the world and moving to the next slide.
Now I would like to you as we've noted this as a steady build over the course of 2023 in the first half of 2024 last quarter, we highlighted that we have good.
Good data are good positioning right now with respect to market access with 70% of lives covered at or near full label. The vast majority of patients are able to access to medicine with a low co pay and now what we're doing it step by step expanding HCP adoption with now 4800 or so.
<unk> that have been able to initiate a patient on <unk>. What is critical now for US is the guide.
Physicians through the process. So that they are able to get their patients on board, they're able to see how buy and bill work and importantly, they are also able to see the impact of the medicine on lowering LDL for their patients. What we find is in physicians that have gone through that process and have ultimately seen the impact on their patients.
Over 80% of patients physicians are pleased by the process and are pleased by the clinical and safety profile of the medicine, we just need to get more physicians through that process. So you can see some of the other data on the on the right hand side, we have a free trial offer as well that's launched that seems strong uptake. So we'll continue to work through the hurdles step.
By step I think the right things are happening, but again this is going to take time and we really think it's mid year next year before you would expect to see any further acceleration beyond the linear path that we're on at the moment.
And then moving to the next slide.
So Victor as I noted in my opening comments is off to a strong start in the U S. We're seeing very rapid launch uptake for this brand in the third and fourth line castrate resistant prostate cancer metastatic prostate cancer segment $80 million and sure we're already up to 14% <unk> share in the post taxane setting we have 120.
These centers actively ordering and we're really focused on servicing those centers in an outstanding way, 75% of insured lives are covered and we have a permanent a code now in effect as of October now looking ahead as we prepare for additional data and potential expansion of the indications for this medicine, we're expanding.
The number of treatment centers, we expect to over time get to 350 to 400 centers, we're significantly increasing our manufacturing capacity, we have our Italian site of Ria online in Milburn in Indianapolis, Our plan for 2023, I mentioned already the positive <unk> opinion, and we're on track for the readout of <unk>.
<unk> four before the end of this year and P. SMA addition of Nokia SME for our current assessment is this would cover all pre taxane metastatic patients eliminating the need for one of the additional studies, we had previously expected to be running.
That setting and <unk> addition, in the hormone sensitive setting we would expect to read out in 2024, so more to come but overall, a solid launch so far with Victor and.
Moving to next slide and looking at Assembly.
Also continuing a solid launch momentum through quarter. Three you can see a $41 million in sales, 13% total overall patient share in the third line setting and 39% third line new patient share that new patient share growth has slowed a bit as we would've expected as we need patients to switch off of.
Therapies that are currently in line to be typically move to tablets. Looking ahead. We expect we've had the accelerated approval converted to a regular approval based on 96 week data. The global rollout is ongoing and importantly, our phase III study is enrolling ahead of plan right now we forecast the readout expected on this.
First.
Please continue to standby your conference.
Will resume shortly.
Thank you for your patience. Please continue to stand by your conference will begin shortly.
Hi, operator this is us we're back.
Thank you for all you alive.
I think we reach inside of our efforts.
So I think I'll just step back operator.
One side previously.
Moving to the first one.
Which would be on slide 14.
We continue to see strong launch momentum, where we have Q3 sales driven.
And part by.
Q3 sales were reported $41 million and be ahead of that 13%.
Patient share in the third line setting <unk> is at 39%.
And overall, we expect them like the critical element now will be moving forward our ability to move into the earlier lines of study is enrolling ahead of plan and we'll provide further updates but right now we forecast the second half of 2020 for outlook for Assembly now.
Now turning to some of the clinical data we had it in the corner quarter Concentrix. We had previously topline our data 16 week data in Hidradenitis Suppurativa now.
Now we have the 52 week data in house and just to remind everyone that it is a high unmet need patient population one of the more common dermatological conditions that dermatologists see 95% of eligible eligible patients are not on a biologic to date today and 50% of biologic treated patients lose the.
Our response over time, so there's definitely a need for a better therapy. They can sustain its efficacy overtime with the Sunshine and Sunrise dataset, we were able to collect data both at the 16 week and 52 week time period, we've already demonstrated data that showed a rapid relief from pain flares and lesion, but now we have data in.
This suggests that we have a unique benefit to sustain the response over 52 week, along with a favorable safety profile. So we'll look forward to sharing that data we have filed as I mentioned already with the regulators and overall we are hopeful that this can be a key growth driver for <unk> over the coming years.
And moving to the next slide.
Earlier this week, we announced the release of the <unk> phase III data in <unk> and this is a medicine. We believe can become a pipeline in a pill over time with a range of indications. We're currently developing the medicine for as a reminder, we are in as we read out the PNA phase III with an additional phase III upcoming the appointment.
<unk> study, we're in phase III studies in <unk>, and atypical hemolytic hemolytic Uremic syndrome, and we have a range of additional indications currently ongoing as a reminder, the apply PMA study.
Related to the treatment of patients who have refractory anemia after treatment with an anti C. Five and the appoint study is in treatment naive patients.
SEC <unk> antibody is also expected to read out in 2022.
But looking on the next slide slide 17 to the applied DNA study specifically this is a study.
<unk> mentioned patients were on <unk> therapy for up to eight weeks. They then switched to <unk>.
If they had refractory anemia anemia that demonstrated.
Hemoglobin levels of less than 10 grams per deciliter. They were randomized to either received if tack the pan or an anti <unk> therapy for 24 weeks and after that period of time. They would continue on <unk> for the extension period, we demonstrated superiority for both endpoints and I would say a clinically meaningful superiority.
On both endpoints in terms of proportion of patients at greater than two grams and greater than 12 grams per Dl.
Or has submitted this data or plan to submit this data to an upcoming medical Congress, where we would share not only the magnitude of the effect and the primary endpoint, but also secondary endpoints, which cover.
Secondary endpoints, including transfusion independence quality of life overall response rate as well as other measures.
So moving to the next slide.
Just as a reminder, our goal with this medicine is to be a first line therapy for all patients with <unk>.
And that is the positioning that we plan to achieve both through our labeling and through the launch process.
10 to 20 cases per $1 million is the current estimate of <unk> with a current prevalence in the United States of four to 6000.
In the population of the current study that we just read out about 40% of patients remain anemic with hemoglobin less than 10 grams per deciliter on anti <unk> therapies. It's also worth noting that a higher proportion of patients have some level of anemia, some level of fatigue or other clinical manifest.
Stations of the disease. So the unmet need is significant even in the case of anti <unk> treatment and 50% of patients are these patients received transfusions. We believe the tackle Pan presents a unique opportunity to address both intra and extra vascular hemolysis potential for lower transfusion requirements and improvements in the <unk>.
City of life, we think the oral administration in this setting makes a lot of sense.
Then we can talk more about that in the Q&A and we believe that there is a potential.
Potential for this medicine to have a broad first line label So moving to the next slide lastly, before handing it over to Harry Sanders delivered another solid quarter of growth and you can see the growth rate here, where we once again had a 4% sales growth. This was driven in part by Europe , but.
Particularly by our performance in the rest of World market, where we had double digit growth business the fourth consecutive quarter of solid topline growth for sandoz, despite having to overcome the impact of Russia, and Ukraine, and absorbing inflation and other headwind we've revised our full year guidance upwards and Harry will speak more about that.
Want to just remind again that biosimilars are the key future growth driver of the business. We have the file acceptance of adult <unk> high concentration and that map in the quarter as well as a positive phase III results for <unk> as well from the Biosimilars unit, so with that I will and we're on track I should say as well for us.
The spin plan has been.
In the second half of next year, so with that I'll hand, it over to Harry Yes. Thank you.
Good morning, good afternoon, everyone.
Now going to walk you through some most of the financials for the third quarter and the first nine months of the year and as always my comments refer to growth rates in constant currencies.
This is of course, particularly important given the significant currency fluctuations, we all see and so we believe it offers a better fuels the underlying operational performance on slide 21.
It shows the usual summary of our operational performance for the third quarter. The first nine months. We have also provided growth rates with and without the impact of the prior year income to allow a better understanding of the underlying business.
As you can see we maintained our growth momentum in the quarter with quarter, three sales growing plus 4% and cooperative income plus 5%.
With sales growth driven by our major innovative medicines plans and particularly on <unk> currently.
Higher sales were also reflected in higher core operating income growth and inflationary headwinds has been offset by productivity efforts.
Operating and net income declined in the quarter, mainly due to higher impairments of about half a billion and higher restructuring cost of a house.
<unk> 0.4 billion versus prior year, which were mainly Q2, the implementation of our previously announced treat lined organizational model.
Core EPS.
Percent. However, if you exclude the impact of the prior year Roche income core EPS would have grown 10%.
Free cash flow in the quarter was strong with $12 2 billion particular line and 6% in U S dollars versus prior year with a significant impact from currencies.
Turning to the first nine months, we delivered a stronger slightly stronger accruals year to date with sales growing 5% core operating income growing 6% core EPS in the first nine months grew 11%, excluding the Roche stake impacted.
On the next slide.
We'd like to trade down as usual into the performance by Division.
So for Q3 innovative medicines topline grew 4% in the bottom line, 7%, resulting in the improvement of the core margin of 100 basis points to 38, 1%. Some of it's also grew 4% although core operating income decreased 5% mainly due to increase.
MMS investments versus a quite low prior year base and.
A small divestment gains.
This was reflected in the core margin, which decreased to approximately 22% of sales, which is also in line with the year to date core margin for Sandoz.
For the first nine months, we saw slightly stronger sales performance for both divisions I am sorry, its grew 5% and cooperating income, 6% and for Sandoz sales grew 6% and 5% on the bottom line benefiting from a strong cough and cold season.
Towards normal business dynamics, and a low prior year base in the first half of the year.
Our year to date core margin improved by 50 basis points for I am which drove them onto the 50 basis points improvement for the accrual.
Now onto slide 23.
The next slide a reminder of the cost impacts of our simplified.
<unk> organization of the model.
Continue to expect to deliver $1 5 billion U S dollars and structural cost savings to.
To be fully embedded by 2024.
And as a reminder, we also expect onetime restructuring costs to be one to one two times this annual structured savings and for year to date this year.
Half around <unk> 8 billion in restructuring costs related to the new streamlined model and expect approximately a total of $1 billion for the full year of restructuring costs on this topic. The rest of the one time restructuring costs, we anticipate will largely fall in.
2023.
This year, we do expect to see some savings as you can see here loss treatise on the chart, but the overall impact will be minimal as this will offset higher energy costs and inflationary pressures all of these elements of course part of our 2022 guidance.
As a reminder.
Part of the $1 5 billion savings be expect to be reinvested into our pipeline and the significant part will contribute to achieve our approximately 40% plus margin targets into 2027 plus timeframe.
Now turning to page 24.
Within the divisions, we expect innovative medicines sales growing mid single digits and core operating income growing mid to high single digits ahead of sales.
<unk> innovative medicines core margin increase should be driven by the expected continued good top line momentum and the continuation of our productivity programs, including the new streamlined organization model.
Sandals.
The performance year to date allows us to upgrade sales and core operating income guidance and sales are now expected to grow low to mid single digit revised upward from low single digits and core operating income is now expected to grow low single digit revised upward from properly aligned.
For the group, we confirm our overall guidance, we continue to expect both top and bottom line to grow mid single digit in 2022.
And as you have seen from our year to date resides we are quite on track very much on track to deliver on that guidance.
The key assumptions for this guidance is that we see continuing return to normal global prescribing behaviors and health care systems and there are no sandoz generics would enter in the U S. In 2022. The guidance also takes into account the entry of <unk>.
Generics that have now launched in the U S for your information Gilenya USA, it's in quarter three were $326 million.
On slide 25.
I would like to provide an update on the other key financial elements of our expected core net income performance.
As indicated on the Q2 call, we expect core net financial expenses to be slightly lower than in 2021 around 100 to 150 million favorable versus 2021 revised probe broadly in line versus 2021, and this change is mainly due to the higher financial income from reinvesting that.
Proceeds of the Roche divestment and increased interest income for deposits.
And the 2022 core tax rate is now expected to be around 16, 5% revised from the 17% to 17, 5% range. This is mainly driven by favorable change in the geographic profit mix.
On slide 26.
I want to provide an update on expected currency impacts if currencies stay at current levels.
Obviously currency impacts as it significant this year given the strength in the U S dollar against many if not all currencies for quarter four if currencies stay as they are now we expect sales to be impacted by a negative 9% and core operating income by a negative 11% points.
For the full year, we estimate the impact on the top line to be negative seven points on the board.
Negative eight points now into 'twenty, three we would expect to say to be impacted by a negative for the bottom line negative 5% towards 2022 as a reminder, as currencies move quite dynamically we updated currency impacts every month on our web.
Syed and with that I hand back to Bob.
Thank you Harry so moving to slide 28, just as a reminder, at our recent meet the management, we articulated our new Novartis strategy high value medicines greatest disease burden through technology leadership, and R&D and novel access approaches.
A focused therapeutic area mindset across five core therapeutic areas, two plus three technology platforms, and four priority geographies and a renewed focus on high value medicines, not necessarily volume of medicines by delivering truly high value medicines, along with the other elements of our strategy on delivering rich.
<unk> and strengthening our foundation and translating that into this year's priorities onto slide 29.
We continue to maintain our growth momentum and we confirm our 2022 guidance our top 22 priorities remain on track across launches and growth momentum on our six key brands. The pipeline is progressing per plan I think the focus strategy as I mentioned has been executed against and we're on track with its been of Sandoz.
Our plan for next year, we continue our productivity plans through our new organizational model of delivering $1 5 billion of additional savings and we continue to strengthen the foundations of the company culture driving performance data science to drive value and working towards ESG leadership, So with that I will open the line for question.
I would ask that questioners. Please limit yourself to one question and then we will try to move through the queue.
As many rounds as we can and the call. Thank you.
Thank you as a reminder to ask a question you will need to press star one on one on your telephone and wait for you.
Your name to be announced once again, please press star one on one if you would like to ask a question.
We will now take our first question and your first question comes from Graham Parry from Bank of America. Please go ahead.
Great. Thanks for taking the question and say, it's also Victor So a very strong launch obviously, that's not the inventory because you can't build inventory on <unk>. So I was wondering it actually has this caused any capacity constraint is giving you any supply from the Italian facilitate the mainland.
And therefore could we expect actually sounds sequentially per quarter until you see new capacity come online. If you could just give us an update on the timing of the new Jersey in Indianapolis plants.
Next year, they still second quarter in the second half.
And you can do to bring those online foster thank you.
Yes, Thanks, Graham so with respect to <unk>, we're able to supply the U S demand across the 150 to 125 plus centers now we have currently set up and we would expect demand growth to continue in quarter. Four. So we are able to make that supply what's critical for us is as we move.
Into the period, where we hope to have a positive readout in the earlier lines with the SMA for study, we would need additional capacity to be able to service that earlier large indication right now we hope to be able to file the millburn facility back to the two Victor will file before the end of this year and hope to have that.
Online in the first part of next year and we are on track for the Indianapolis facility to come online in the middle of next year. So once the Millburn facility comes online we've invested in that facility to have additional capacity, we would be well positioned already for that new indication and the demand surge and then once the Indianapolis comes online we would be.
In a position where we can service the U S from two manufacturing plants in the U S. Dedicate our European facilities to Europe , and ex U S. And then look at adding additional capacity in Asia and other markets over time.
Thank you Graham next question operator.
Thank you.
Okay.
Your next question comes from the line of BMO Kapadia from Bernstein. Please go ahead. Your line is open.
Great. Thank you very much for taking my question can I just ask about zelle James Please so some of your commentary.
Can I suggest.
You've penetrated a large part of the bonus pool and it's really about the incident population moving forward.
Safe to say please correct me if not previously.
Previously the 2 billion peak sales guide ex the interest equal.
Estimate that you're now, saying, one $5 billion to $2 billion. So I was going to be.
Or is that a change in expectations, particularly given we're going to get close to $1 5 billion.
This year alone and then just maybe you mentioned Brazil.
With all the key countries and maybe some timing on those countries would be great. Thank you.
Yeah, absolutely so the dynamics on <unk>, but as you all well know, but just to go through them.
We add markets. We initially penetrate a bolus of patients in the under two age group and then we move back to the incident patient population and in the incident patient population. The demand is driven by expanding newborn screening, particularly outside of the United States.
Right now.
The key for US is to add those additional market those markets range from Saudi Arabia, and Brazil to Turkey, and India. So there's a number of market and other markets around the world, where we are currently in active negotiation and our hope is by adding those market online we will be able to build that overall pool not only a.
And patients, which will increase sales.
Sales for a period of time, but also build up the base of incident patients who are receiving built on an ongoing basis I think as we now look at the trajectory, we're ranging just because it's hard for us to predict exactly as we've learned more when exactly these markets will come on line. So we think it's prudent to say one five to two we certainly have.
Aspiration to get to do but it's going to depend on how many more markets, we're actually able to get onto national programs and of course. Our teams are working very hard to do that we're currently enrolling the interests equal indication for 2018 year old as I mentioned, both to generate additional data for IV, where we do have a broader label in <unk>.
Certain markets, including the EU up to five years of age. So we wanted to generate additional data for the IV and the pivotal study and two to 18 enrolled and we remain on track we hope to have that filing in 2024, and then approved in the first part of 2025 and that would give us the momentum to make the medicine or beyond.
$2 billion over time, and I think we'll have a better sense of how large it could be depending on the magnitude of the effect, we see in those indications.
Thanks for the questions next question operator.
Thank you.
Yes.
Your next question comes from the line of Richard.
Please go ahead your line is open.
Hi, Thanks for taking my question.
Question on Couponing P&I.
<unk> outlined the data for us on measures of Extravascular Hemolysis, Paul I Wonder if you could give us any indication on how data measures have been tabasco molecules, such as LDH and <unk> breakthrough hemolysis with trending.
Presenting the data, but just wondering if you've got confidence that as at least night deterioration in those messages when switching from standard of care.
Maybe you can just because you have a sense of how you think about the launch uptake in that indication given we have standard of care with long term outcome data beyond.
Troll of anemia.
Yeah. Thanks, Richard So first I think it's worth remembering that in phase <unk>.
In the phase III datasets for a pack of <unk> demonstrated strong LDH lowering and a very favorable safety profile up also with respect to breakthrough hemolysis given that we are in the midst of.
Filing this data or submitting this data for Congress as they don't want to.
Hi.
Update on the secondary endpoints will present all of that as soon as possible at an upcoming medical meeting.
Feel very confident about the overall safety profile of <unk> with respect to the various other elements that one would want to measure across Intervascular extravascular hemolysis.
Hemolysis importantly, as well what will be important as an upcoming data set is in the frontline setting in treatment naive patients to demonstrate that the profile holds up taken together based on everything that we've seen thus far we our aspiration remains to be a medicine that can be used in naive patients and patients to switch.
Patients off of antisense five onto what we believe could be a bit more beneficial therapy and then if desired can also be used as an add on therapy to really cover the full range of potential indications.
With this medicine, a twice a day oral medicine that we think can be a really attractive option not only in the U S. But would also when you consider that half of the <unk> market and is currently in ex U S market at twice a day oral could be highly highly attractive.
So all things to work through we look forward to presenting the data in more detail.
Shortly.
Thanks, Richard next question operator.
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, perhaps I could take one on lithium.
We don't seem to see much of an impact from the first of July .
J code or just your latest perspective on.
How things are turning on confidence, we won't actually drives that mid 'twenty three infection.
Something that in your view is going to capitalize a step change in the middle of next year or is it more related to illustrate.
The course of 2023 and your confidence that we'll still get the blockbuster status pre outcomes later in 'twenty six.
Many thanks.
Yeah. Thanks Emmanuel.
The key here is to get enough physicians, who have gone through the process of getting a patient on therapy.
Both then seeing the LDL reduction after the first and second dose that can doses at three months at the three month time point and having successfully been reimbursed in the part D program when those things happen, we see physicians, 80% plus of physicians at least that we have internally surveyed.
Have a positive experience both from a clinical standpoint, and from a part b reimbursement standpoint, regardless of whether they used an alternative injection center or use their own clinics. So that's all the positive.
Positive data that we have but we need to move physicians through that process. So the reason we highlight 4000 physicians now have initiated shows that we have that kind of in the early part of the funnel physicians moving through the process. They probably trial a few patients we know to get them through that entire process and if they presumably have that positive overall.
They will add additional patients onto the therapy and so this is going to be a build but as we build that base. We hope then to convert entire practices over to using Latvia over time and that would hopefully that leads to a compounding effect.
And then acceleration overall, we remain confident that we will get to the blockbuster status ahead of outcomes data that's for certain in a lot of work to do but it absolutely remains our goal.
Thanks, Daniel next question operator.
Thank you.
Your next question comes from the line of Matthew Weston of Credit Suisse. Please go ahead. Your line is open.
Thanks, very much I'm going to follow on with Emmanuel <unk> question again touching on.
Lastly, as you pointed out.
Martin collection, not until 18 months into launch.
As I recall going back to dive on in Entresto I thought I took four years to breakeven as products.
And now we have the risk of the IRI potentially limiting small molecule life to nine years.
Can you just lay out whether or not you feel that will.
We will breakeven before that full year level, we saw with large cardiovascular medicines and if so why.
And then I guess the other question is whether having invested so heavily in buy and bill.
Are there other cardiovascular assets.
Hope to bring on board or have in the pipeline that you can put through the civil law channel.
Doctors, the comfort that investing at all the practice infrastructure.
Just a single product with <unk>, but there is a stream of products that they can capitalize on.
Yes, Thanks, Matthew So first on the on the payback period I'll have Harry comment and I'll come back in the second part of your question Matthew.
I think it.
You discussed before.
These cardiovascular launches in my experience like GP primary care launches and of course all of them are different depending on the product in the category and so on but in my experience.
Periods, usually than the breakeven that happens roughly in year, four plus minus wipes of course high price specialty launches, sometimes have a breakeven year, one or at least tool. So clearly.
Nine years, whereas the 13 is not a positive for us that's why I think there will be initiatives.
To move those through closer to the 13 years, both of them, but at the moment, it's nine years.
But of course in any of these launches one wants to have the uptick to be as fast as possible just cardiovascular is slow and I would expect that.
Usually breakeven in year four.
I think Matthew in terms of having it is on our mind to build a broader portfolio of medicines. So both.
In house, we have efforts ongoing both in terms of lifelike lifecycle management of <unk> as well as other novel Therapeutics, which are still moving through the research.
Pathway, our research labs to try to accelerate now to make sure. We have a stream of Madison's I'd also say broadly in the industry. There are other medicines as well and I think would also fit in terms into the buy and bill model, but on a standalone basis for most practices that we've analyzed the.
The number of cholesterol patients in their practice it is favorable for cardiologists. Once they have this set up and have it moving to do adjustable IPO. So I think it's an important point that it's not a requirement that you have multiple medicines. Even this one medicine alone where you have also the certainty that you know the patient is on therapy.
You see the result on the cholesterol lowering is highly attractive from that point clinically and also the practice has the cost reimbursement elements as well as pretty attractive we find with most practices that have gone through the process. So we will not only focus on <unk>, but also build a pipeline behind that and as Harry mentioned I think a top priority has to be.
To ensure a small molecules and related technologies are not penalize relative to large molecules. So that of course will take time to shape public policy.
Thank you.
Thank you Mathieu next question operator, thank you.
Your next question comes from the line of Simon Baker of Redburn. Please go ahead. Your line is open.
Thanks for taking my question.
Skipping pulling all im going to follow him Matthew and Emmanuel alone.
Yes.
Yes.
Right.
Just got a hold of this.
Expectations of a linear trend to the middle of next year.
With the two drivers.
Doctors being setup.
Administer the truck and more patients.
Physician.
Okay.
That sounds a little conservative because I mean that in itself should if both the face of increasing that should drive more than linear quite so just trying to understand a little bit more about that.
And also related to that.
We're all learning a DTC campaign.
With two adverse environment in the U S.
We'll likely or do you have any sense of that.
Patient demand is exceeding.
The billing capabilities of physicians at the moment.
You don't really cases.
As unfilled scripts.
Unsatisfied patient demand.
Any indication you can give us on that thanks, so much.
Yes, I mean I think on the on the first question I think it's just we've learned over the year, that's prudent on cardiovascular launches to be.
Appropriately cautious until we see evidence that in the sales line, we see a trend break and I think at the moment are all of the inputs look positive as you say, we had a number of physicians that we have that have initiated some action on less video the feedback we get from physicians going through the process.
We're starting to see improvements that we'd like to see more improvements in depth per practice that are on.
That are using IPO already so all of the things are in the right direction reimbursement is at higher levels than <unk> achieved in year five.
We've set high levels of patients don't have to pay any co pay to access to medicines. So again all in the right direction, but I think we would feel better if we actually saw a trend break before we start promising anything bigger than a linear trend. So that's kind of our mindset at the moment and if it happens that would be terrific and of course share that with all of you soon.
As soon as it does we do have a very active <unk>.
TC campaign to activate patients on the benefits of a twice a year therapies that can deliver up to 60% of lowering on LDL cholesterol and we do see at the beginning the increased patient demand I would note that actually we don't see capacity is an issue because we are able to use the AIC networks, which.
Our continuing to expand to absorb any excess patient volumes at our practice is not able to set a buy and bill immediately we're able to educate practices about aic's, which are available in the community that are set up and we've worked very closely with that expanding network of Alt.
<unk> injection centers.
Mike, let Theo available one of the things we've learned that we need to get much smoother AD is that transition of helping a practice that then the patient to the AIC and then back to the practice, we're working on smoothing that out but that AIC creates a pretty big surge capacity, but what we do hear from practices in general is over time they would.
To set up the buy and build capacity within their own practice. It's just a matter of can they do that immediately or would they like to do that in the future.
Great. Thanks, Amit.
Next question operator, thank you.
Your next question comes from the line of Tim Anderson Wolfe Research. Please go ahead.
Hi, This is Richard Wagner on behalf of Tim with Wolfe Research. Thanks for the question.
Concentrix and could we get an update on the competitive landscape in the U S. As Abbvie works to lock in formulary positioning for its various ini products in 2023 onwards.
Mirror Biosimilars approach.
It would be the impact or it could be the impact on net pricing and formulary placement.
Thank you.
Yeah. Thanks, Richard So when you look at <unk>, we're still in the midst of the formulary negotiations at this time, but our best belief in indication given that formularies wanted to have an IL 17, a on available for patients that we'll be able to maintain our formulary position that roughly equivalent position in terms of our <unk>.
And that says we have had this year I think looking forward what will be absolutely critical for us to continue cosmetics growth dynamics and really maximize the medicine is the approval of additional indications and.
In hidradenitis, we have the IV indication as well as I mentioned, we plan to file we have a two ml syringe, which who are also in the midst of filing those would be the next big three and then beyond that indications as I mentioned giant cell arteritis tendinitis amongst others, that's going to be the next wave, we're going to need to maintain strong.
Physician on formularies, but also to enable the brand to continue to grow but for 2023 based on our negotiations to date and reviews. We've had with our managed market teams, we feel comfortable with where it will be on formulary for next year.
Next question operator.
Thank you.
Your next question comes from the line of Steven Scala from Cowen. Please go ahead.
Thank you so much first an observation than a question. So the observation is that in response to the <unk> question. It makes it sound as though Q4 sales will be appreciably above Q3, and I guess you must have some visibility since Q4 is about a third over already.
Question is vast in the past you have been cautious on the use of a beta antibodies for the treatment of Alzheimer's disease. Given recent news do you have any reason to change your view.
And if yes, then how will novartis gain a position in a beta antibodies or some other approach in Alzheimer's. Thank you so much.
Yeah, Thanks, Steve on an API.
<unk> antibodies.
Antibodies I think what's most important and particularly given the amount of investment that would need to be made by health care systems.
Our therapies and we of course are active in Alzheimer's disease research is the benefit that we're seeing not only statistically significant but clinically meaningful.
And I think with the.
The various measures that are currently use it's hard to judge what is clinically meaningful ultimately for a patient.
And I think that's going to be the question for payers advisers et cetera in the U S market.
Is this is it clinically meaningful enough a very the.
The point of 445 or whatever the number is.
On the Adas Cog scores. So I think we'll have to see that'll be for others to judge our focus is on other mechanisms of action we think.
We don't know, but certainly our labs are working on other approaches across the full range of Neurodegenerative diseases, where we have programs in the clinic as you know on Huntington's and Parkinson's and continue to also look at various targets in Alzheimer's, but I wouldn't expect us to take any action on a beta and none of the data that I've seen thus far would trigger.
To make a shift at this point in time.
Next question operator.
Thank you.
Your next question comes from the line of Kerry Holford from Diamondback. Please go ahead. Your line is open.
Hi, Thanks, good question.
I'm sorry.
Thank you.
April for termination.
Thank you Paul.
And progression.
Thank you Nicole.
Is that coming next call challenging. Thanks go ahead.
Thanks.
Thanks.
Yes, Thank you Carrie.
The majority of our impairment recorded in quarter three was <unk>.
Potentially the presbyopia drops of roughly a net impact of half a billion.
So we immediately when we still program we immediately brokered.
So that has happened in the quarter three.
Great. Thank you Carrie.
Next question operator.
Yes.
Thank you.
Okay.
Your next question comes from the line of Richard <unk> Jpmorgan. Please go ahead. Your line is open.
Alright, Thanks for taking my question, maybe we could talk about Natalie and.
Maybe you could give us.
We're not quite where we are in <unk> hands.
The interim analyses is it still the case.
70% interim.
We expected at the end of the year and then of course the final analysis of late in the second half of next year.
Just some thoughts that would be great. Thank you very much.
Yes, I think thanks, Richard So we continue to expect the first interim to read out before the end of this year, but we have not heard back from the DMC at this point in time and our approach will be that if the DMC advisors to make a change we'll let the markets know and if we don't hear from us that means the DMC told us that the study should continue as planned we expect the.
<unk>.
Second interim to happen in the first half of next year and the final study should complete.
The second half of next year.
Another study that also after another question that often comes up is related to how we will approach OS and these various settings and the FDA has confirmed to us that as long as there is no detriment to OS at any of these time points that would be sufficient for them to consider the data set as pivotal for a potential approval.
Thanks, Richard next question next question operator, Thank you.
Your next question comes from the line of Emily Field from Barclays. Please go ahead. Your line is open.
Hi, Thanks for taking my question.
Sure.
MF on Gilenya I know your prior guidance assume no launches in the U S.
<unk> got to maintain that.
The impact on core operating margin should we think of that as a pretty straight dropdown, given that's probably a pretty high margin product.
And then just.
You're sure Samsung and the class going forward.
Do you expect those to be impacted by the potential launch of a subcutaneous okay. Thank you.
So firstly on Gilenya Harry.
Some royalty on it but it's of course also small molecule high priced.
Great. Thank thank Barry and so we still have a number of questions in the queue. If we could just remind everyone to ask one question per and we'll try to get to as many questions. As we can next question operator.
Not as abundant as C III and <unk> five in an oral agent can get both the extravascular and Intravascular sources.
Factor B and inhibit those and those include.
So overall, we think factor B for these these.
Alternative complement driven diseases, including <unk> is ideal target and overall the PK PD, we see for this medicine, the preclinical and clinical safety received has been very good that's been borne out now and the apply ph study that we've already headline and we hope to continue to see that in the frontline study.
And then next year in <unk> in particular, but also and I again, and then in other alternative complement pathway driven diseases in two big including Ahus Cold Agglutinin disease empty PGN. So there's a range of diseases, where we believe the medicine is well suited and I think we're excited.
The medicine is so far in its first pivotal readout.
Born out the clinical and preclinical hypotheses that we set forward. So we'll look forward to providing the data in an upcoming medical Congress of the outline and then the second study is well, we'll read out before the end of this year.
Thank you Sir next question operator.
Keith.
Your next question comes from the line of Manav Gustaf from Morgan Stanley . Please go ahead. Your line is open.
Yes. Thank you for taking my question just with Huntington Lastly, the interim analysis is that based on all comers or do you need to see a significant benefit specifically.
The intermediate risk patients, which may be I guess as low as $25, 90% of the events. Thanks very much.
Alright.
Yes, so mark I think it's important to note that we're looking at both.
Great to grade three.
Patients in the study and the way we're powered is across the entire population.
And we've really looked at that powering many times now and we feel very comfortable based on the study the study design and what we've seen from other competitors and the fact that we powered up by a 1000 additional patients.
So the results the <unk> results will be based on the overall population and Thats. How the endpoints are designed as a separate point just to be clear the FDA Kevin at any point in time decide that they want to take cuts between stage II and stage III patients, but our focus for our primary analysis stage to a stage two.
B and stage III patients as defined in the protocol and the endpoint will be driven off of that entire patient population.
That's very clear thank you.
Next question operator.
Keith.
Your next question comes from the line of Seamus Fernandez Guggenheim Securities. Please go ahead.
Well thanks for the question so.
I guess one quick question.
<unk>.
Can you just.
Help us understand where those patients are coming from are they predominantly switch patients from existing PCF canine therapy.
Or is that.
New patient pool, and then just very quickly second question as we look towards potential business development, becoming increasingly critical.
As the years progressed, just wondering where your particular focus is given the commentary around primary care.
Cardiovascular product launches and the.
The ability to launch into those efficiently.
Yeah. Thanks, David So first on light via source of business just as a reminder.
The target patient population in the U S is 18 million patients and across all of the core markets U plus the top markets around the world is around 70 million patients. These are patients who have had a prior cardiovascular event and are not reaching 70 milligrams per deciliter on there.
Score and that is the guideline directed that as that is the goal.
So it's a big big patient population right now I think what we can say is that the primary prescribers that we see are our prescribers, who also have experience with <unk> canine monoclonal antibodies that could be low express it could be high experience harder for us to say given that.
This is a part b medicine, the source of business from a patient standpoint, but I presume then we're either getting switched patients on PCF canine monoclonal antibodies or we're at least getting a broader share of physicians that are open to the <unk> cost and <unk>.
So our focus right now is to really say, how can we get broad adoption within let's call. It PCF canine minded physicians and then over time tried to expand further and further through our work with.
Systems of care population health agreements et cetera, and to the broader patient population of 18 million patients.
Clearly, we don't need that big a share of that 80 million patients to reach our overall financial goals from a public health standpoint, we would of course whenever he said many of those patients as possible because right now the odds of a patient having a subsequent event go up quite dramatically if theyre not at that 70 goal. So that's kind of overall, how we approach it.
There is no updates with respect to M&A and BD, we continue to focus on let's call them sub $3 4 billion dollar M&A deals a broad range of licensing opportunities focused primarily on science than does the science work is it fitting in our core therapeutic areas does it fit in our two plus three technology areas as we've outlined it to meet the man.
Instrument and we continue to assess and if we find something that's attractive where we have a differentiated view that would justify the premium and generate we believe value creation for our shareholders. We will of course pursue it other than that we're also willing to be patient. We believe in our pipeline, we believe with our new leadership within R&D.
And the addition of our strategy and growth officer, we can unlock the full potential of Novartis research and development.
And then have a steady stream of medicines going forward and so we're going to remain disciplined as we as we move ahead.
Next question operator.
Thank you.
Your next question comes from the line of Sean.
Data from Society Generale. Please go ahead your line is open.
Okay.
Good afternoon. Thank you for taking my question a quick one on China. Please.
China is a key country for you could you. Please elaborate on the dynamic therefore your key products.
If there is a let's say.
The impact from low down and could you refresh our memories and please remind us the current contribution in Europe decent on this country. Thank you.
Yes with respect thanks, Laura for China, we've outlined our aspiration to become a top three player by by 2024, which would be a player that exceeds $4 billion in sales in the market. We've had really a record performance in terms of the number of approvals over recent years and then also moving forward I think we lead the industry.
As well in terms of NR deal listings.
Key drivers for us has been our oncology portfolio Entresto co Centex Lucentis.
Amongst amongst others now.
We were growing in the high teens from a sales growth standpoint, before the Lockdowns and I think there's a lot that we continue to grow but we're growing more in the high single digit.
Frame at the moment and we would expect that to continue until we would see a shift in the overall ability for patients to access medical care and more normal dynamics.
That's part of the reason why you see the slowdown in <unk> that we saw with Entresto given the strength of our overall performance globally. It doesn't really move the needle on that particular brand. So the key brand where it has an impact as <unk> and to a smaller extent in some of the other other brands. Nonetheless, we continue.
To believe given that there is over 1 billion patients 1 billion people, we can serve with our portfolio of medicines, we have to continue to find.
Find ways to continue to reach patients in the framework that is currently in place and then also be ready that if there is a further opening up to continue to expand our growth in the market and importantly, we believe let theo and some of our other medicines to Victor let Theo amongst others could be significant medicines in China.
Overtime.
Next question operator, Thank you Paul Thank you very much.
Thank you.
Your next question comes from the line of Andrew Baum from Citi. Please go ahead.
Thank you a question on <unk>.
The IRI impactful catastrophic coverage in that button on Pbms and managed care.
Positive his colleague is through the Medicare channel.
Brian .
<unk> be available at a much lower price plus Genericize Asian, so what expense.
To what extent excuse me QC deflation of the price of Kiss Connie within the Medicare segment, because that will be.
Prof amortization step edits within Medicare prior to gaining access to his Connie and do you see any risk of spillover of that assuming that thesis is correct should the commercial book of business. Many thanks.
Okay. That's a good question Andrew.
I think in general I would say, we're doing a lot of scenario planning on how the IRA.
It could impact various brands and I think certainly on our mind is how the increased exposure.
Pbms in the catastrophic how that will get transferred or translated into actions against some of our medicines.
I think the key for us to differentiate versus a generic and a class like I said in the CDK four six will be having a broader indication set of indications relative to the existing medicine.
So I think thats going to be absolutely critical for us in this in this class to hopefully have the opportunity to expand into as I mentioned earlier stage III stage <unk> III.
Patients otherwise there I think there could certainly be spillover.
From in the metastatic setting.
If there aren't broad indications.
For the for the other two players so we'll have to see how this how this plays out I would also say in general in some of these cancer classes such as the CDK four six so you do see contracting and you do see the opportunity for commercial insurers to get rebates from branded products. So that would be the I think tension there.
System that they would have to give up their commercial rebates to potentially utilize the generic so we'll have to see ultimately how all of this all of this plays out.
Thank you Andrew.
Next question operator.
Thank you.
Your next question comes from the line of Peter Welford from Jefferies. Please go ahead. Your line is open.
Oh, hi, Thank you I just wanted to attend.
I Wonder if you could give us any more color on sort of is the centers that are currently using April these gen. Many of.
Are these generally.
That all using why the radiation oncologists and nuclear medicine physicians and particularly.
Particularly with regard to see that the diagnostic.
Ring.
Largely euro local debt or are you seeing use of diagnostics before treatment and is that potentially a source of revenue for you in the feet to the diagnostic we should be thinking.
It's largely a wash the novartis as opposed to speed to therapy.
Yeah. Thanks, Peter overall, I'd say, it's a mix you have high academic centers. You also have a large scale centers, which are in the case of prostate cancer combination of urology and nuclear medicine working in conjunction with medical oncology, we see that in some very large centers.
And then we also see some nuclear radiology as well.
And we generally are focused right now on larger volume centers in this first phase of launch.
I would note that if we if we were able to open it up even further in terms of the number of centers, we would expect even higher volumes for this medicine given the overall demand that we're seeing where we're taking a stepwise, making sure. We can service the first level of centers, absolutely fully and now we're in the process of adding additional centers step by step so it's a very different.
Situation, then with Luna, where because of the lower volumes and also neuroendocrine tumors being treated by certain specialist who is a very limit relatively limited number of centers that we're interested whereas here we have more demand from centers and then within the centers were in very high demand that we're seeing at the moment so.
Those are all the dynamics, we're seeing overall I would say from a diagnostic standpoint, there is of course, a preference for gallium, though we do see other pet.
Pet ligand is also used.
Wouldn't view, our locum business as a driver for novartis or something that can materially impact that's kind of as you said kind of a wash it's much more about identifying patients one of the dynamics. However, that's very important to understand as you think about flu victim and across all lines of metastatic <unk>.
Phosphate cancer with the <unk> four study that still needs to read out is the broadening use of pet imaging for identifying patients who have an elevated psa and to determine the extent of the metastases for for their cancer.
It is a dynamic that works very much as a favorite blue victory, because if you identify.
These patients through.
The pet ligand youre more likely to use a radio ligand because you've seen the tumor and the therapy.
Therapy can target what you see and that's I think an important dynamic for the brand in the longer run.
Can you switch to the backup feeds.
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Okay.
Hello again, you are now live again.
Yes, sorry, I don't know whats going on today next question operator.
Thank you.
Okay.
Bye.
Your next question comes from the line of Limo Kapadia from Bernstein. Please go ahead. Your line is open.
Okay, great. Thank you first for the second question.
You mentioned all being quite important so you've tackled times, so I'm just curious.
You think about the issue of adherence.
It would be in the real world setting and then maybe you could talk here about the potential for breakthrough hemolysis.
As a result of potentially lower humans. Thank you.
Yes, I think thanks from all of them and I think there's a couple of topics that we'll have to we'll have to work through so there's always the risk of compliance and how we manage that.
We can certainly share as we have more data the experience we have in clinical in a controlled clinical trial setting and as I mentioned earlier, we're confident in the profile, we see with respect to breakthrough hemolysis.
For many patients having either regular infusions weekly infusions biweekly sub Q infusion all of these are quite quite burdensome and at least our experience has been in severe diseases that patients are highly compliant with their oral therapy is given that they know these are absolutely critical for their.
Health and wellbeing. So we believe that the compliance topic can be handled in a ultra rare population that is extremely well informed about their condition and of course, we will take the steps necessary and that the benefits of what we believe and hope the clinical trial data will ultimately bear out is improved.
Amicus see improve safety improved overall control.
Improved secondary endpoints to be highlighted in the upcoming.
Disclosures will motivate patients to want to get on the best therapy for the management of their disease and that's I think the case will have to make alongside that of course comes up the question on if you are competing against part B medicines.
Will that impact our assessment is that in general most of the Hematologists uses madison or very low volume with respect to given that theres only four to 6000 patients in the U S.
That can be managed given that this is likely not a large cost recovery driver for those physicians outside of the U S. We would expect our ability to use an oral therapy to reduce the burden on healthcare systems as well as hopefully reach many of the patients who can't afford the currently approved therapies would allow us to again treat the majority.
Hope the majority of patients with these complement driven diseases, including <unk> overtime.
Great. Thank you.
Thanks, Paul next question operator.
Thank you.
Your next question comes from the line of Graham Parry Bank of America. Please go ahead.
Alright, great. Thanks for the follow up.
So just following up again on the victory just yet.
<unk> are you at capacity now than in Q3 of <unk> to be higher than third quarter before you bring on the next level of supply and then in the pre Taxane setting can you help us understand.
The proportion of patients in that first line metastatic indication that goes through.
A large centers such as the one that you are targeting at the moment versus community oncology and community neurology centers and on that last group. How do you stop them from just using taxane upfront anyway, because if they refer a patient melt essentially leaves the income from that patients at least in the treatment portion of the disease.
And then just last question you've had a few times. This morning, just why the conservatism in the guidance.
<unk> medicines is growing mid to high single digits.
Sandoz also now grabbing you've upgraded sandoz twice now without upgrading the grid guidance say, just what sort of the difference to bridge between mid to high and then Greek miscellaneous made thanks.
Yes, Thanks, Graham first on supply to reiterate we have adequate supply to meet the demand.
For the post Taxane vision population for Victor we see very high levels of demand and we expect continued growth of the brand in the coming quarters and that third fourth line third fourth line setting and we allocate all capacity that is available in our network to the United States launch.
If anything we will if we needed we would prioritize launches in other markets assume that to ensure that the U S is at full demand.
I guess, what I was trying to indicators.
Even even with respect to the higher demand and higher volumes, we expect to see in quarter four of those volumes could be even higher if we were to completely unconstrained. The number of centers that would want to bring this medicine onboard.
So all on the right trajectory.
With respect to the pre Taxane setting we would roughly expect.
The new data if positive to triple to quadruple the number of patients that would be eligible for <unk>. So basically the broad range of patients in the metastatic setting.
At first second and third line, but all of the full range of metastatic prostate cancer patients, who will have the key constraint or have a pet scan. So once they have a pet scan we would expect them to be eligible for our medicine and I think it's much more of a pet scan availability that will drive a lot of their movement toward.
Radio ligand therapy, perhaps versus tax the tax gains or other other available.
<unk> therapeutics.
And I guess, what I'd say is it's really going to be in terms of referral patterns from community oncology to larger centers two dynamics. There one how fast can we move out because we believe that if we get to 400 or so centers. We can cover the full range. So then the populations that acceptability would be there.
And then and then second the quality of the data so that physicians feel compelled to refer even if there is a risk that the patient has moved to another center because I think in general oncologists want what's best for their patients in all cases, and so I think thats going to be the other part of the story for more specific data, let us come back to you we have to probably do.
Do some more work in terms of the specifics of community oncology versus large scale senators centers and where the patients are in that broad metastatic population in terms of the guidance here.
Graham.
We are expecting that question of course, but I would say, though we are guiding for the total company.
Mid single digit topline and bottom line on a core sales in Corp, Inc. We have delivered on the company for the first nine months, five and 6% and I expect without getting into a very detailed quarter four guidance that we are roughly in that range again.
In quarter four but of course, you have to take into account that U S. Gilenya now has a generic entry so maybe the top line a little bit less than the year to date, but.
Good.
Mid to high single digit on the bottom line. So overall I think youll see on the first nine months that we are very much on track for the guidance.
Little bit stronger on the bottom line so be it but I think it is roughly in line with what you have seen so far.
Thanks, Graham next question operator.
Thank you.
Your next question comes from the line of Matthew Weston of Credit Suisse. Please go ahead. Your line is open.
Thank you. It's a simple question for Harry on tax obviously, you've changed guidance for full year 'twenty, two with a reduced tax rate and you highlighted the change in geographic mix.
Alright, I wonder if that new lower tax rate is the best application for 2023 or whether or not you see any meaningful changes that mean, it's not a good indicator for the mid term.
Go ahead Eric.
Thank you Matthew so overall, there is always a bit of volatility on geographic profit mix.
And then we adjust if you will to each quarter to what we believe is our full year estimate under core and reported taxes. So basically.
Moved our food your estimate from 16, 9% as we had in the first six months of 16, 5% now I would.
Again, we give detailed guidance.
Of course for 'twenty three than when we have our full year results in January or early February actually.
But I would expect the tax rate to be in the range of 16 and a half to 17 behalf. We will update you with that in early February .
Next question operator.
Thank you.
Your next question comes from the line of Kerry Holford Diamondback. Please go ahead. Your line is open.
Thank you.
Okay.
Next slide.
Hi, Thank you.
Peter.
Okay.
Hey, Thank you concern while now meeting.
Thanks Keith.
And then it sounds from the floor.
Can you just clarify no changes.
Thank you Steve.
Yes.
Sure.
Yes.
Yes, I think thanks, Gary and then in the non metastatic setting the way our previous study was designed based on feedback from.
The various investigators and the FDA, we believe the <unk> four study covers the population that we had previously believed we needed to do an additional study.
Sure. So we've redesigned our program to generate additional data in a different part I don't have the details at hand, but a different population within the non metastatic setting I would also say, we're evaluating now plu victoza as well in earlier lines of therapy to see if we can delay progression as well as evaluating.
Combination therapies as well given the overall interest we've seen on the medicine in the clinical profile that we're seeing so that's the reason we made that switch based on the.
Understanding from the regulators and experts in the United States.
Next question operator.
Thank you.
Your next question comes from the line of Richard Foster J P. Morgan. Please go ahead. Your line is open.
Alright, Thanks for taking my question when I look at.
<unk> prescriptions for particular mechanism.
Thanks, Tim.
Gone more into a decline in Q4.
The thing that we should think about in terms of the dynamics youre seeing in the melanoma market.
The approval.
Hmm.
Brian what we said.
Thanks, Paul well strong, but we've seen thus far.
Yes.
Brian Thanks very much.
Yes. Thanks.
Thanks, Richard I mean overall I think we didn't note any significant change at least it doesn't apply to us any significant competitive issues with respect to tap Mac in the U S or in our other.
Key market, but I think it's a good question and let US do some homework and get back to you I don't think we have the answers straight at hand.
Next question operator.
Thank you Ian.
Yes.
Your next question comes from the line of Mark Purcell from Morgan Stanley . Please go ahead. Your line is open.
Yeah, Thanks, very much for taking my follow ups.
Could you help us understand the Skype for the free tunnel.
On liquidity I when it comes to patient initiation.
And how that might influence increase in ACP at auction and then secondly on the interest.
In China.
The situation there in terms of your best guess.
Yes.
So on the free trial offer Mark really the idea was to and while we already.
Provide payment terms that allow physicians to stock doses and.
Have time to get reimbursed before they would have to ultimately pay for the doses. We also noted that for some physicians there was a need to provide an alternative option to get them comfortable to start to stock. The medicine. So in July we rollout of free trial offer program that provides.
Dose first dose for a patient.
Free and then so the pace the physician can get comfortable use those doses and then hopefully then pull through to follow and keep the patient on therapy as they also get comfortable with the buy and bill process. We've had very strong uptake of that program.
So I think over 1000 physicians plus have signed up for the free trial offer program at the last look which was still a month ago.
So that's been a very positive step I think to get more physicians to stock let vito in the offices. So that ultimately they can provide to patients and then hopefully get more comfortable with an ongoing procedure to stock the medicine provide the medicine and get reimbursement now with respect to.
Entresto in China, and we currently are continuing our.
Our discussions with the with the R. R.
Where our litigations with.
In China against the various generic I mean at this point in time, we would expect the entresto to be fully on protected through 'twenty, three and 'twenty four and then impacts in 'twenty five and beyond.
Thats.
That's something we'll have to continue to look at it because of the evolving landscape with respect to data protection and the ongoing litigations that we have in the country. So we will keep you updated accordingly.
Thank you and I believe with that we've cleared the entire question queue I want to thank everyone and apologies for the two technical disruptions and we will look forward to keeping you up to date over the course of the remainder of this year.
Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
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