Q2 2023 Novartis AG Earnings Call

July 18, 2023

Okay.

Operator: Good morning and good afternoon, and welcome to the Novartis Q2 2023 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 and one at any time during the conference. Please limit yourself to one question and return to the queue for any follow-ups. 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 of Investor Relations. Please go ahead, sir.

Good morning, and good afternoon, and welcome to the Novartis Q2, 2023 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 op.

Trinity to ask question by pressing star one on one at anytime with joined the conference. Please limit yourself to one question and return to the queue for any follow ups.

The conference call, including the Q&A session will be available on our website. Shortly after the call ends with that I would like David to Mr. Samir Shah Global head of Investor Relations. Please go ahead. So thank you very much.

Samir Shah: Thank you very much, Sharon, and good morning and good afternoon, everybody. I want to begin by thanking you for participating in our webcast and investor call again. Before we actually start, I'm gonna read the safe harbor statement. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors. These may cause actual results to be materially different from any future results, performance, or achievements expressed or implied by such statements. For a description of some of these factors, please refer to the company's Form 20-F and its most recent quarterly results on Form 6-K that respectively were filed with and furnished to the US Securities and Exchange Commission. Just a couple of housekeeping points.

And good morning, and good afternoon, everybody wanted to begin by thanking you for participating in our webcast.

Okay.

Before we actually start I'm going to read it.

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

Certain other factors.

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

A description of summer peak factors, please refer to the company's form 20-F.

Most recent quarterly report on form 6K that respectively were filed.

Furnished to the U S.

Securities and Exchange Commission.

Just a couple of housekeeping points as per usual, we have one question per analyst when we go to the Q&A session and you have time to go back again to ask a second question.

Samir Shah: As per usual, we'll have one question per analyst when we go to the Q&A session, and you'll have time to go back again and ask a second question. The other point is that we aim to finish today at quarter past the hour. It's 9:50 AM East Coast Time and 3:50 PM European Time. With that, I'll hand across to Vasant Narasimhan.

And the other point is that we aim to finish today at quarter past the hour.

950, East Coast time, and 15 15 European.

And with that I'll hand across to your run rate.

Vasant Narasimhan: Great. Thank you, Samir. And thanks everyone for joining today's call. With me today, I also have Harry Kirsch, our CFO. Let's move straight to slide four. As you saw in our release earlier today, Novartis delivered strong sales growth, excellent margin expansion, and we were able to raise our full year guidance. Getting to the numbers, our group sales grew at 9% and core op income at 17%. IM sales were up 9% and core op income up 20%, allowing us to drive our IM margin to 39%. Sandoz sales were up 8% and core op income up 6%. Harry will go through the guidance in more detail, but as you saw, we raised our full year guidance for both sales and core operating income.

Great. Thank you Samir and thanks, everyone for joining today's call with me today I also have Harry Kirsch, our CFO .

Let's move straight to slide four and as you saw in our release earlier today and Novartis delivered strong sales growth excellent margin expansion and we were able to raise our full year guidance getting into the numbers. Our group sales grew at 9% and core I think 17% sales were up 9% and core Op, Inc of 20% allow.

Owing us to drive our margin to 39%.

<unk> sales were up 8% and core Op, Inc. Up 6% Harry will go through the guidance in more detail, but as you saw we raised our full year guidance for both sales and core operating income we had a number of innovation milestones as well as other strategic milestones over the course.

Vasant Narasimhan: We had a number of innovation milestones as well as other strategic milestones over the course of the quarter. We'll go through those over the course of my slides. In addition, you saw that there was a ruling from the district court regarding one of our patents for Entresto, our combination patent. We're in the process of appealing that patent and feel our arguments are strong to ultimately prevail on appeal, though that process will take 12 to 18 months. We would note there are currently no generics that are currently approved for Entresto. Also of note, in our assessment of recent history, there hasn't been a at-risk launch on a product of Entresto size in at least 15 years.

Vasant Narasimhan: We had a number of innovation milestones as well as other strategic milestones over the course of the quarter. We'll go through those over the course of my slides. In addition, you saw that there was a ruling from the district court regarding one of our patents for Entresto, our combination patent. We're in the process of appealing that patent and feel our arguments are strong to ultimately prevail on appeal, though that process will take 12-18 months. We would note there are currently no generics that are currently approved for Entresto. Also of note, in our assessment of recent history, there hasn't been a at-risk launch on a product of Entresto size in at least 15 years.

<unk>.

And we go through those over the course of my slides. In addition, you saw that there was a ruling from the district court regarding one of our patents for Entresto a combination patent we're in the process of appealing that patent and fill our arguments are strong to ultimately prevail on appeal, though that process.

We will take 12 to 18 months. We would note. There are currently no generics that are currently approved for Entresto and also of note in our assessment of recent history. There hasnt been a at risk launch on a product of Entresto size and at least 15 years. So we will continue to fully defend our IP.

Vasant Narasimhan: We'll continue to fully defend our IP, citizens' petitions, and other elements of our strategy to enable Entresto to have as long an exclusivity period as we believe it deserves. Now moving to the next slide. Our Q2 growth was driven by strong performance across our key growth drivers. You can see that each of our key brands, Entresto, Cosentyx, Pluvicto, Kisqali, Scemblix, Leqvio, all delivered excellent performance in the quarter. I think this reflects a combination of our new strategy or refreshed strategy, a focus in five key therapeutic areas, as well as our streamlined organization from our transformation last year. That's delivering outstanding growth in market from a top line standpoint, but also delivering strong performance on the bottom line as well. We're gonna take each one of those brands in turn in the subsequent slides. Now moving to slide six.

As institutions and other elements of our strategy to enable and trusts so to have as long and exclusivity period as we believe it deserves now moving to the next slide our Q2 growth was driven by strong performance across our key growth drivers you can see each of our key brands entresto to simply to Victoza is gone.

Holly assembling celesio all delivered excellent performance in the quarter and I think this reflects a combination of our new strategy or refresh strategy focus in five key therapeutic areas as well as our streamlined the organization from our transformation last year, that's delivering outstanding growth in market from a top line.

In standpoint, but also delivered strong performance on the bottom line as well, we're going to take each one of those brands in turn in the subsequent slides.

Now moving to slide six and trusted delivered strong double digit growth in all geographies. The brand grew 37% on the quarter and you can see robust growth both ex U S and U S. On the U S side or a weekly Trs prescriptions continue to grow robustly, 38% sales.

Vasant Narasimhan: Entresto delivered strong double-digit growth in all geographies. The brand grew 37% on the quarter, and you can see robust growth both ex US and US. On the US side, our weekly TRX prescriptions continued to grow robustly, 38% sales growth, 17% NBRX growth. So really outstanding performance on the US side. Ex US, we had 36% constant currency growth, and that's driven by HFrEF, but as well our performance on hypertension in China and Japan. We remain confident in the outlook for Entresto's continued growth, both driven by guidelines, its HFrEF indication, but as well as continued use in the HFpEF indication. Importantly, our pediatric approval in the EU confirms that we have regulatory data protection through November 2026. Now moving to slide seven.

Growth, 17% <unk> growth, so really outstanding performance on the U S side ex U S. We had 36% constant currency growth and that's driven by half rep, but as well our performance on hypertension in China and Japan.

We remain confident in the outlook for entrust US continued growth both driven by guidelines, it's half rap indication, but as well as continued use and the half past indication and importantly, our pediatric approval.

The EU confirms that we have regulatory data protection through November 2026.

Now moving to slide seven.

Vasant Narasimhan: In Cosentyx, our sales stabilized in the second quarter with sales up 1%. When you dive in a little bit deeper into our Cosentyx performance, you saw US sales down 12% in constant currency. This was a situation where volume growth was offset by revenue deductions as we outlined in Q1. There's also the matter of the base impact we had in the previous year from the revenue deduction true-ups we took in the second half of the year, which weren't accounted in the first half of 2022, leading to a higher base last year. Ex-US sales were up 18% across, with growth across all of our core indications. Importantly, in China, we're seeing outperformance versus the market with double-digit growth as the China healthcare systems continue to stabilize.

<unk> our sales stabilized in Concentrix.

In the second quarter with sales up 1% when you dive in a little bit deeper into our Concentrix performance you saw U S sales down 12% in constant currency. This was a situation where volume growth was offset by revenue deductions as we outlook. In Q1. There is also the matter of the base impact we had in the previous year from.

The revenue deduction true ups, we took in the second half of the year, which weren't accounted in the first half of 2022, leading to a higher base last year.

Ex U S sales were up 18% across with growth across all of our core indications and importantly in China, we're seeing outperformance versus the market with double digit growth as the China healthcare systems continue to stabilize.

Vasant Narasimhan: Now when you outlook to H2, we expect important pipeline milestones with hidradenitis already approved in the EU. In the US, we expect to get approvals of both HS and our IV formulation, which would allow us to penetrate the Part B segment with respect to Cosentyx with rheumatologists who continue to use IV formulations of these medicines. The 300-milligram auto-injector we also received approval for. From an LCM standpoint, three important programs continue to progress on track, giant cell arteritis, PMR, and rotator cuff tendinopathy. We did terminate our lupus nephritis program based on a lack of compelling efficacy. Now moving to the next slide. Kisqali continued a strong momentum globally, and I think this is a testament to its excellent differentiated profile.

Vasant Narasimhan: Now when you outlook to H2, we expect important pipeline milestones with hidradenitis already approved in the EU. In the US, we expect to get approvals of both HS and our IV formulation, which would allow us to penetrate the Part B segment with respect to Cosentyx with rheumatologists who continue to use IV formulations of these medicines. The 300-mg auto-injector we also received approval for. From an LCM standpoint, three important programs continue to progress on track, giant cell arteritis, PMR, and rotator cuff tendinopathy. We did terminate our lupus nephritis program based on a lack of compelling efficacy. Now moving to the next slide. Kisqali continued a strong momentum globally, and I think this is a testament to its excellent differentiated profile.

Now when your outlook to the second half, we expect to important pipeline milestones with hidradenitis already approved.

In the EU.

In the U S. We expect to get approvals of both the Hs and our IV formulation, which would allow us to penetrate the part D segment with respect to Concentrix.

Rheumatologists, who continue to use the IV formulations of these medicines and the 300 milligram auto injector was also we also received approval for from an LCM standpoint, three important programs continue to progress on track giant cell arteritis, TMR and rotator cuff Tendinopathy, we did terminate our lupus nephritis.

This program based on a lack of compelling efficacy.

Now moving to the next slide because golly continued strong momentum globally and I think this is a testament to its excellent differentiated profile you had 66% growth across the globe driven both by the U S and ex U S market, our <unk> share now in the U S has climbed to 34% on the three.

Vasant Narasimhan: You had 66% growth across the globe, driven both by the US and ex-US markets. Our NBRX share now in the US has climbed to 34% on the three-month rolling, and we continue to see strong month-to-month growth on our NBRX share. This is of course driven by data you all know well, the consistent efficacy we showed in the metastatic setting across MONALEESA-2, -7, and -3, which showed that the medicine has consistent benefit regardless of patient status or combination therapy. The medicine is included in the NCCN guidelines as the only category one treatment for first-line metastatic breast cancer with an aromatase inhibitor. Now moving to the next slide.

Rolling and we continue to see strong month to month growth on our <unk> share and this is of course driven by data you all know well to consistent efficacy. We showed in the metastatic setting across motor Liza two seven and three which show that the medicine is consistent benefit regardless of patient status or combination therapy.

The medicine is included in the <unk> guidelines is the only category one treatment for first line metastatic breast cancer with neuro <unk> inhibitor there.

Vasant Narasimhan: Our NATALEE results, which we unveiled at ASCO earlier this summer, build on that differentiated dosing profile, allowing us to demonstrate the potential benefits of Kisqali in a broad population of stage 2 and stage 3 early breast cancer patients. As a reminder, we had very consistent results across IDFS, RFS, distant disease-free survival, and OS, those consistent results is what give us confidence that we'll be able to achieve a broad label in the early breast cancer setting. Importantly as well, we saw a positive OS trend already at this early interim analysis. Now in terms of safety, there were no new safety signals. The 400mg dose was well-tolerated with limited need for dose reductions. AE-related discontinuations were mostly protocol-mandated due to lab findings. The most frequent AEs were neutropenia and were liver-related.

Vasant Narasimhan: Our NATALEE results, which we unveiled at ASCO earlier this summer, build on that differentiated dosing profile, allowing us to demonstrate the potential benefits of Kisqali in a broad population of stage 2 and stage 3 early breast cancer patients. As a reminder, we had very consistent results across IDFS, RFS, distant disease-free survival, and OS, those consistent results is what give us confidence that we'll be able to achieve a broad label in the early breast cancer setting. Importantly as well, we saw a positive OS trend already at this early interim analysis. Now in terms of safety, there were no new safety signals. The 400 mg dose was well-tolerated with limited need for dose reductions. AE-related discontinuations were mostly protocol-mandated due to lab findings. The most frequent AEs were neutropenia and were liver-related.

Now moving to the next slide our Natalee results, which we unveiled at <unk> earlier this summer build on that differentiated profile, allowing us to derma.

Demonstrate the potential benefits of Cusco in a broad population of stage two stage three early breast cancer patients. As a reminder, we had very consistent results across IBM FES RFS distant disease free survival and OS.

Those consistent results is what give us confidence that we'll be able to achieve a broad label in the early breast cancer setting importantly, as well we saw a positive OS trend already at this early interim analysis now in terms of safety. There were no new safety signals to 400 milligram dose was well tolerated with limited need.

For dose reductions.

Related discontinuation were mostly protocol mandated due to lab findings. The most frequent aes were neutropenia, and where liver related and we had low rates of grade III symptomatic aes, particularly with respect to Gi related symptoms.

Vasant Narasimhan: We had low rates of grade 3 symptomatic AEs, particularly with respect to GI-related symptoms. Now moving to slide 10. The next steps for Kisqali will be continued momentum in the metastatic breast cancer setting, where you see strong performance across our key geographies. We wanna continue to drive that momentum as we believe Kisqali is becoming the standard of care in the metastatic space. NATALEE updated analysis for IDFS and OS is expected in H2 2023. We expect filings in the EU in Q3 and US in Q4, the FDA would like a greater information fraction on the OS analysis to allow us to get to the filing in Q4 this year. We're pursuing a broad label reflecting the intention to treat population studied in NATALEE.

Moving to slide 10.

The next steps for <unk> Ghali will be continued momentum in the metastatic breast cancer, setting where you see strong performance across our key geographies and we want to continue to drive that momentum as we believe kept Ali.

Is becoming the standard of care in the metastatic space.

Natalie updated analysis for <unk> and OS is expected in the second half of 2023, we expect filings in the EU in Q3 and U S. In the Q in Q4 at the FDA with like a <unk>.

Greater information fraction on the OS analysis to allow us to get to the filing in Q4 this year.

Pursuing a broad label, reflecting the intention to treat population studied in Natalie So collectively we believe that Natalee has.

Vasant Narasimhan: Collectively, we believe that NATALEE has enabled Kisqali to have the potential to more than double the number of patients who could benefit from a treatment with this CDK4/6 in the early breast cancer setting. Now moving to slide 11. Kesimpta also had an outstanding quarter and continues its strong trajectory, doubling sales versus prior year. Sales were up 105% US NBRX, you can see here trending very well on the rolling 4-week. The TRX in the US was up 80% and NBRX was up 43%. Our B-cell NBRX share is currently 54% of the market. That I think will be a key driver going forward as the B-cell therapies continue to gain a larger and larger share of the MS market.

Vasant Narasimhan: Collectively, we believe that NATALEE has enabled Kisqali to have the potential to more than double the number of patients who could benefit from a treatment with this CDK4/6 in the early breast cancer setting. Now moving to slide 11. Kesimpta also had an outstanding quarter and continues its strong trajectory, doubling sales versus prior year. Sales were up 105% US NBRX, you can see here trending very well on the rolling four-week. The TRX in the US was up 80% and NBRX was up 43%. Our B-cell NBRX share is currently 54% of the market. That I think will be a key driver going forward as the B-cell therapies continue to gain a larger and larger share of the MS market.

<unk> has enabled <unk> to have the potential to more than double the number of patients who could benefit from a treatment with CDK four six and the early breast cancer setting.

Now moving to slide 11, <unk> also had an outstanding quarter and continues its strong trajectory doubling sales versus prior year sales were up 105% U S. <unk> you can see here trending very well on the rolling four week.

The <unk> in the U S was up 80% and <unk> was up 43% are b cell <unk> <unk> is currently 54% of the market and that I think will be a key driver going forward is the b cell therapies continue to gain a larger and larger share of the Ms market.

Vasant Narasimhan: In Europe as well now we're seeing strong launch momentum with 24,000 patients treated. We're confident in the continued growth of this brand, as I mentioned, both with the expansion of B-cell therapies, but also with the compelling profile versus older therapies, as well as in competing overall in the B-cell class. Now moving to slide 12. Pluvicto continued its strong performance. Importantly, we are at a situation where our supply is no longer constraining our ability to grow this brand. In Q2, we saw Q2 sales of $240 million. Milburn and Zaragoza were approved for the US, and Zaragoza was approved for the EU as sites for commercial supply of Pluvicto. We are ramping up now additional lines in Milburn rapidly.

In Europe as well now we're seeing strong launch momentum with 24000 patients treated and we're confident in the continued growth of this brand as I mentioned, both with the expansion of B cell therapies, but also with the compelling profile versus older therapies as well as some competing overall in the b cell costs.

Now moving to slide 12 to Victor continued its strong performance and importantly, we are at a situation where supply is no longer a constraining our ability to grow this brand in quarter. Two we saw Q2 sales of 240 million Milburn Enzo was approved for the U S and <unk>.

<unk> was approved for the EU at sites for commercial supply of flue Victor and we are ramping up now additional lines in milburn rapidly. This has allowed us to start adding new patients as well as adding new centers, where we have goal to add over 100, new centers over the coming months to enable continued treatment for <unk>.

Vasant Narasimhan: This has allowed us to start adding new patients, as well as adding new centers where we have goal to add over 100 new centers over the coming months to enable continued treatment for patients with prostate cancer with Pluvicto. We have progressed as well our ex-US reimbursement discussions. Upcoming milestones for Pluvicto will include the PSMAfore pre-taxane data presentation, and we expect that filing in H2. In addition, the PSMAddition study is progressing on track as well. We also expect submission and approval of our new Indianapolis site to further increase supply of Pluvicto. We would expect a continued strong performance in this brand, and we continue to outlook Pluvicto to exceed $1 billion in sales this year.

Patients with prostate cancer with Victor.

We have progressed as well our ex U S reimbursement discussions.

Coming milestones for <unk> will include the PSM may four pre taxing data presentation, and we expect a filing in the second half.

In addition, the <unk> addition study is progressing on track as well and we also expect submission and approval of our new Indianapolis side to further increase supply of flue Victor. So we would expect continued strong performance in this brand and we continue to outlook a flu victim to exceed a $1 billion.

This year.

Vasant Narasimhan: Moving to Leqvio, the launch continues to progress steadily, as we've outlined, and we continue to gain broader and broader utilization and depth amongst cardiovascular providers in the United States. Sales reached $78 million globally. We now have 2,600 facilities that have ordered Leqvio, which is a solid increase versus Q1. We are expanding buy-and-bill as the primary mode of acquisition of Leqvio consistently now over time. One of our key areas of focus is to drive greater depth amongst early adopters of Leqvio. In general, we find that once physicians reach a certain comfort level with the medicine, along with their office staff, then we can reach a significant number or proportion of patients in a given office or clinic ultimately receiving Leqvio to lower elevated cholesterol.

And moving to <unk>. The launch continues to progress steadily as we've outlook and we continue to gain broader and broader utilization in depth amongst cardiovascular providers in the United States sales reached $78 million globally. We now have 2600 facilities that are ordered IPO.

Which is a solid increase versus quarter. One we are expanding buy and bill as the primary mode of acquisition of Latvia consistently now over time and one of our key areas of focus is to drive greater depth amongst early adopters of <unk> and in general we find that once physicians reached a certain comfort level with the medicine.

Along with their office staff than we can reach a significant number or proportion of patients in a given office or clinic, ultimately receiving like Vod lower LDL.

Vasant Narasimhan: We've demonstrated already, as you are aware, a consistent safety profile for this medicine. Importantly, in the last few weeks, we've also achieved a label expansion in the US, which expands Leqvio to patients with primary hyperlipidemia, and that in effect allows us to move into the primary prevention setting. Less restrictive language for use for statin therapy, meaning that patients do not have to be on a maximally tolerated statin to initiate Leqvio, as well as the removal of several adverse reactions from the safety section. This will give us an additional catalyst to help us continue to drive broader Leqvio adoption in the US and around the world. Now looking at Semglee sales. Semglee sales were strong in the quarter. This brand continues to outperform our internal expectations.

Cholesterol <unk>.

<unk> demonstrated already as you are aware a consistent safety profile for this medicine, but importantly in the last few weeks.

Also achieved a label label expansion in the U S, which expands let theo too.

Two patients with primary Hyperlipidemia.

That in effect allows us to move into the primary prevention setting less restrictive language for use for statin therapy, meaning that patients do not have to be on a maximally tolerated statin to initiate <unk> as well as the removal of several adverse reactions from the safety section. So this will give us additional <unk>.

Catalyst to help us continue to drive broader adoption in the U S and around the world.

Now looking at Assembly sales <unk> sales were strong.

Quarter. This brand continues to outperform our internal expectations sales reached $106 million in the quarter. This is driven by our new patient share in the third line setting where we've reached up 35% and we've had a 16% increase of monthly prescribers on the brand as well as the global rollout of the medicine.

Vasant Narasimhan: Sales reached CHF 106 million in the quarter. This is driven by our new patient share in the third-line setting, where we've reached now 35%, and we've had a 16% increase of monthly prescribers on the brand, as well as a global rollout of the medicine in Germany and Japan. I think one of the compelling things of this therapy are excellent efficacy, but also an outstanding safety profile, which clinicians and patients appreciate, and we continue to work to advance 177Lu datasets to enable it to be used in earlier lines. The PSMAfore first-line registrational study has completed enrollment, and we expect readout and filing in the early part of next year.

In Germany and Japan.

One of the compelling things of this therapy are excellent efficacy, but also an outstanding safety profile, which clinicians and patients appreciate and we continue to work to advance assembly datasets enable it to be used in earlier lines.

<unk> asked for first first line Registrational study has completed enrollment and we expect readout in filing and the early part of next year and we also continued to do additional studies to further profile somewhat in the second line setting as well as in combinations with second generation T chaos.

Vasant Narasimhan: We also continue to do additional studies to further profile Semaglutide in the second line setting, as well as in combinations with second generation TKIs. Moving to slide 15 and turning to our pipeline. A couple of notes here. Our key 2023 readouts are on track. That includes the Kisqali data, which I've already mentioned, the Pluvicto updated analyses, which I've also mentioned, as well as the iptacopan, where you're aware we filed in both PNH, in the US and the EU. We used a priority review voucher as well in the US. We also are on track to read out the APPLAUSE-IgAN Phase III study in Q4, as well as the APPEAR-C3G data readout as well in Q4 of 2023. Now turning to the next slide.

Moving to slide 15, and turning to our pipeline.

Couple of notes here, our key 2023 Readouts are on track that includes the <unk> data, which I've already mentioned <unk> updated analyses, which I've also mentioned as well as the <unk>, where you are aware we filed in both.

<unk> both in the U S and you use a priority review voucher as well in the U S.

We also are on track to read out the applause IGN phase III study in quarter, four as well as the appears <unk>.

To read as well in Q4 of 2023.

Vasant Narasimhan: When you look ahead now to the potential readouts that we have or expected readouts we have in the 2024, 2025 time frame, these also are on track. Remibrutinib will have its primary analysis in CSU, chronic spontaneous urticaria, in H2 this year, with the final 52-week readout required for regulatory submission in the US in 2024. I've already covered Semaglutide and Pluvicto. Our OAV101 gene therapy for SMA in older patients with an intrathecal administration is on track now for readout in 2024. Pelacarsen, Inalumab, and additional indications for iptacopan also all are on track, which really gives us a broad array of new medicines to enable us to drive growth in H2 this decade and into the 2030s.

Now turning to the next slide when you look ahead now to the potential Readouts do we ever expected Readouts. We have into 2020 for 2025 timeframe. These also are on track Remy brewed nib will have its primary analysis.

In CSU chronic spontaneous or to carry out in the second half of this year with the final 52 week readout required for regulatory submission in the U S. In 2024, I've already covered assemblers and flu victim.

Our.

101 gene therapy for SMA in older patients with an interest equal administration is on track now for readout in 2024, and pellet Carson <unk> and additional indications for attack. The pad also all are on track, which really gives us a broad array of new medicines.

To enable us to drive growth in the second half of this decade and into the 2030.

Vasant Narasimhan: Moving to the next slide, just to provide an update on some of our external BD&L related efforts. We've done a number of recent deals to bolster our pipeline as well as strengthen our technology platform. We have a proposed acquisition of Chinook Therapeutics, which is currently awaiting regulatory approvals. This would bring into the portfolio two late-stage assets for the treatment of renal diseases, Atrosentan and Zagzaktabar, which is an anti-APRIL antibody. Both have shown strong proteinuria reduction in Phase 2 and could provide near-term launches in our portfolio.

Moving to the next slide and just to provide an update on some of our external BD Enel related efforts. We've done a number of recent deals to bolster our pipeline as well as strength in our technology platform.

We have a proposed acquisition of <unk> therapeutics, which is currently awaiting.

Regulatory approvals this would bring into the portfolio two late stage assets for the treatment of renal diseases. After since then.

And <unk>, which is an anti April antibody, both a strong shown strong proteinuria reduction in phase III and could provide near term launches for in.

Vasant Narasimhan: We also announced earlier this week the acquisition of DTx, which is an siRNA company that has an asset that we expect to soon enter human clinical trials for Charcot-Marie-Tooth syndrome, but also has a platform, importantly, which enables the siRNAs to be directed using a lipid technology to the central nervous system, which hopefully could open up new opportunities to treat a range of diseases with siRNAs. We also made important acquisitions of a gene therapy from Avrobio for cystinosis, a really debilitating disease without great therapies currently, as well as a mid-stage radioligand therapy targeting FAPI from Clovis Oncology. We also continue to focus our portfolio consistent with our overall company strategy.

Our portfolio, we also announced earlier this week the acquisition of Gtx, which is an SA RNA company that has an asset that we expect to soon enter human clinical trials for sharp and Marie tooth syndrome, but also as a platform importantly, which enables that.

<unk> needs to be directed.

Using a lipid technology to the central nervous system, which hopefully could open up new opportunities to treat a range of diseases with ISI Rnas. We also made important acquisitions of a gene therapy from agro bio on for Cystinosis really debilitating disease, but not without great therapies currently as well as the.

Mid stage radio ligand therapy targeting copy from Clovis oncology. We also continue to focus our portfolio consistent with our overall company strategy, we announced the proposed divestment of our front of the <unk> assets to Bausch and loan for an upfront of 175 billion as well as the total consideration.

Vasant Narasimhan: We announced the proposed divestment of our front-of-the-eye assets to Bausch + Lomb for an upfront of $1.75 billion, as well as a total consideration depending on sales milestones of $2.5 billion. We also recently terminated our option agreement for Osiprimab with BeiGene. With that, let me hand it over to Harry. Harry?

Depending on sales milestones of $2 5 billion and we also recently terminated our option agreement for our <unk> map with phasing.

So with that let me hand, it over to Harry Herington.

Harry Kirsch: Yeah. Thank you very much, Vas. Good morning and good afternoon, everyone. I'm now going to walk you through some of the financials for Q2 and H1. As always, my comments refer to growth rates and constant currencies unless otherwise noted. As you will see from the numbers, it has been a very strong H1 of the year. On slide 19, we detail the strength of top and bottom-line performance during Q2 and H1. It's really a pleasure to present results like these, which are strong across the board. Overall, we have continued the robust top and bottom-line growth that we saw at the beginning of the year. In Q2, sales grew 9% with broad-based performance across our key therapeutic areas and focused geographies. Core operating income increased by 17%, driven mainly by higher sales.

Yes. Thank you very much of us good morning, and good afternoon, everyone.

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

And as always my comments refer to growth rates in constant currencies unless otherwise noted.

You'll see from the numbers it has been a very strong first half of the year.

On slide 19.

We detailed the strength of top and bottom line performance during quarter, two and half one it's really a pleasure to present results like these which are strong across the board overall, we have continued the robust top and bottom line growth that we saw at the beginning of the year.

In quarter, two sales grew 9% with broad based performance across our key therapeutic areas and focused geographies core operating income increased by 17% driven mainly by higher sales and core EPS grew 25% to $1 83, fasten cooperating income.

Harry Kirsch: Core EPS grew 25% to $1.83, faster than core operating income, also supported by our $15 billion share buyback program, which we just finished in June. Turning to H1, sales grew 8%, core operating income 16% with strong core EPS growth also of 25% to $3.54. Free cash flow grew 23% to $6 billion. In summary, a very strong H1 of the year as our efforts to focus and streamline the business continue to pay off. On the next slide 20, I want to go into a bit more detail about the performance of Innovative Medicines and Sandoz. For Q2, Innovative Medicines sales grew 9%, which drove an increase in Innovative Medicines core operating income of 20%.

<unk> also supported by our $15 billion share buyback program, which we just finished in June .

Turning to the first half sales grew 8% cooperating income, 16% with strong core EPS growth also of 25% to $3 54.

Free cash flow grew 23% to $6 billion.

In summary, a very strong first half of the year.

Our efforts to focus and streamline the business continue to pay off.

On the next slide Slide 20, I want to go into a bit more detail about the performance of innovative medicines and sandoz for quarter. Two innovative medicines sales grew 9%, which drove an increase innovative medicines core operating income of 20% core margin improved 340 <unk>.

Harry Kirsch: Core margin improved 340 basis points versus prior year for the quarter, reaching 39% in Q2 for Innovative Medicines. Sandoz net sales grew 8% for the quarter, mainly driven by Europe and by a similar business. Core operating income was up 6% with the core margin at 18% for the quarter. As we move towards the anticipation of the spin-off of Sandoz, we have also provided figures for Novartis excluding Sandoz in the bottom row here. You see Novartis excluding Sandoz grew 9% top line and 19% on the bottom line for the quarter.

Basis points versus prior year for the quarter, reaching 39% in quarter two for innovative medicines. Some those net sales grew 8% for the quarter, mainly driven by Europe .

That business cooperating income was up 6% with the core margin at 18% for the quarter.

Move cohort patients.

Patients of the spinoff of Sandoz, we have also provided figures for novartis excluding sandals.

And the bottom row here and you'll see the modest excluding sandoz grew 9% top line.

And 19% of the bottom line for the quarter of course. These numbers are very close with innovative medicines numbers and there was also a 300 basis points growth in the core margin, which reached 30.

Harry Kirsch: Of course, these numbers are very close to Innovative Medicines numbers, and there was also a 300 basis points growth in the core margin, which reached 37.7%, meaning we are well on track for a 40% midterm margin target. Next slide, please. I would like to remind everyone about our capital allocation priorities. As a company, we have, of course, substantial cash generation, which we aim to distribute across both our priorities of investing in the business and returning capital to our shareholders. In terms of investing in the business, we have one of the largest R&D budgets in the industry and have spent $43 billion on R&D from 2018 to 2022. Over the same period, we spent about $30 billion on bolt-on M&A opportunities.

Seven 7%, meaning we are well on track for a 40% midterm margin target.

Next slide please.

I would like to remind everyone about our capital allocation priorities as a company. We have of course substantial cash generation, which we aim to distribute across both our priorities of investing in the business and returning capital to our shareholders in terms of investing in the business. We are one of la.

<unk> R&D budgets in the industry.

I've spent $43 billion on R&D.

2018 to 22 over.

Over the same period, we spent about 30 billion on bolt on M&A opportunities.

Harry Kirsch: In terms of returning capital to shareholders, we have a strong and growing annual dividend in Swiss francs per share and have undertaken regular share buybacks at, I would say, a reasonable level. Please note that the annual dividend will not be rebased post the Sandoz spin, and Sandoz will also pay its own dividend, essentially providing a further uplift of dividends for our investors. With respect to share buybacks, we have today announced the continuation of our previously completed share buyback program in June with a new up to CHF 15 billion share buyback, which we expect to complete approximately by the end of 2025. Obviously, given our strong cash flows and expected top and bottom line continued growth, we continue to have the flexibility to do both share buybacks and bolt-on M&A and BD&L deals. Now to slide 22, please.

In terms of returning capital to shareholders, we have a strong and growing annual dividend in Swiss francs per share and have undertaken a regular share buybacks I would say reasonable level.

Please note that the annual dividend will not be rebased posed to sandoz spin and Sandoz will also pay its own dividend essentially providing them further uplift of dividends for our investors.

With respect to share buybacks, we have today announced the continuation of our previously completed share buyback program in June with the new up to 15 billion share buyback, which we expect to complete approximately by the end of 2025.

Obviously, given our strong cash flows.

And we expect to top and Bottomline continued growth we continue to have the flexibility to do both share buybacks and.

Bolt on M&A and BD deals.

Now to slide 22 please.

Harry Kirsch: The continued strong performance so far and confidence in our future growth allows us once again to raise both top and bottom line guidance for the full year of 2023. For Innovative Medicines and Novartis excluding Sandoz, we now expect sales to grow high single digits and core operating income to grow low double digits to mid-teens. For Novartis, including Sandoz, which is the group guidance, and assuming that Sandoz would remain within the group for the entire 2023, we now expect sales to grow high single digits and core operating income to grow low double digits. Our key assumptions are that no US Entresto generic launches happen at risk in 2023, and also that no Sandoz Dataten and AR generics enter US in 2023. On the next slide, I'm turning to Sandoz. Sandoz guidance is maintained for 2023.

The continued strong performance, so far and confident in our future growth allows us once again to raise both top and bottom line guidance for full year of 2023.

<unk> medicines and Novartis, excluding Sandoz, we now expect sales to grow high single digits and core operating income to grow low double digit to mid teen.

Photo modest, including Sandoz, which is the group guidance and assuming that Sandoz would remain within the crude for the entire 2023, we now expect sales to grow high single digits and core operating income to grow low double digits. Our key assumptions are that no U S entresto generic.

Launches happen at risk in 2023, and also that know Sandoz Dr. They are generics in the U S 23.

On the next slides I'm turning to Sandoz.

Some of those guys is maintained for 2020. This guidance, obviously very conservative given the first half delivery, but it is also ahead of the spin off and there are clearly upside potential to that guidance.

Harry Kirsch: This guidance is obviously very conservative given the H1 delivery, but it's also ahead of the spin-off and there are clearly upside potentials to that guidance. On the next slide, please. Yeah, on the assumption that Sandoz becomes an independent company, it will do so clearly from a position of strength. First and foremost, we have built a strong leadership team around Richard with decades of generic industry experience. Second, the company has a strong pipeline with small molecule generics and biosimilars. Clearly, the sales execution has improved significantly, and Novartis has increased investments to ensure Sandoz has strong future biosimilar capabilities, including a state-of-the-art new biologics manufacturing site. These strengths will allow Sandoz to execute on its six strategic levers that you see on the right side.

On the next slide.

Yeah on the assumption that Sandoz becomes an independent company.

We'll do so clearly from a position of strength first and foremost we have built a strong leadership team around Richard.

With decades of generic industry experience second the company has a strong pipeline with small molecule generics and Biosimilars clearly the sales execution has improved significantly and Novartis has increased investments to ensure sandoz has strong future biosimilar capabilities.

Including a state of YOD, new biologics manufacturing sites.

These strengths will allow us to execute on our six strategic levers that you see on the right side I won't go into all the details here, but you have seen Richard and his team having outlines in detail for you all of these priorities during the most recent capital market days.

Harry Kirsch: I won't go into all the details here, but you have seen Richard and his team having outlined in detail for you all of these priorities during the most recent Capital Markets Days and IR roadshows. On the next page, I just want to turn to the numbers for Sandoz on the next slide, and you can see that the business has performed well with respect to sales growth for the last few quarters. Looking specifically at Q2 performance, sales were strong, driven by Europe and biosimilars, and the US has stabilized quarter on quarter. As expected, standup costs mean that the growth rates for core operating income are lower than for the top line. Importantly, for the midterm, we expect solid mid-single-digit sales growth and core EBITDA margins to be in the mid-20s.

It shows.

On the next page.

I just wanted to turn to the numbers for Sandoz on the next slide you can see that the business has performed well with respect to states.

For the last few quarters looking specifically at quarter. Two performance sales were strong driven by Europe and Biosimilar in the U S has stabilized quarter on quarter as expected standup costs mean that accruals waits for core operating income are lower than for the top line.

Importantly for the midterm, we expect solid mid single digit sales growth and core EBITDAR margins to be in the mid twenties.

Harry Kirsch: As a reminder, the first dividend will already be paid in 2024 for the full year 2023 performance. Now turning to my final slide. The planned spin-off is well on track. Many of you have attended the Sandoz Capital Market Days and Shareholder Roadshows. If you have not been able to participate, there will be further opportunities to do so after the Extraordinary General Meeting. The EGM will take place on 15 September 2023, and you will receive the necessary materials, which include a shareholder brochure and listing prospectus well in advance. If you and the majority of the shareholders approve the spin-offs, we will also be doing post-EGM roadshows in the second half of September, just in time before the expected spin-off in early Q4. With that, I'll hand it back to Vasant Narasimhan.

And as a reminder, the first dividend will already be paid in 2024 for the full year of 2023 performance.

Now turning to my final slide.

The planned spinoff is well on track many of you have intended to sandoz capital market days and shareholder Roadshows.

If you have not been able to participate there will be further opportunities to do so after the extraordinary general meeting AGM.

<unk> will take place on September 15, and you will receive the necessary materials, which include a shareholder for sure and listing prospect to swell in advance if you in a majority of the shareholders approved a spinoff. We will also be doing post EGF road shows in the second half of September .

Just in time before the expected spin off in early Q4, and with that I'll hand, it back to Bob.

Vasant Narasimhan: Thank you, Harry. Moving to slide 28. You can see in the quarter that we demonstrated strong business momentum as we are really now well on our way to becoming a truly focused innovative medicines company. Very strong H1 sales growth, robust margin expansion, and that broad-based performance was across TAs and geographies. We remain very confident in our near and midterm growth profile, including our pipeline, Kisqali, Pluvicto, Tacopan, as well as the continued performance of our other launch brands such as Cosynta and Leqvio. We are raising our 2023 full year guidance. We are initiating based on our confidence in our outlook and in our company, a $15 billion share buyback, and we are on track for the Sandoz spin-off in early Q4 2023. With that, we can open the line for questions.

Thank you Harry.

Moving to slide 28, so you can see in the quarter that we demonstrated strong business momentum as we are really now.

Well on our way to becoming a truly focused innovative medicines company very strong half one sales growth robust margin expansion and that broad based performance was across Tas and geographies.

We remain very confident in our near and midterm growth profile, including our pipeline because golly for Victoza tack, Japan as well as the continued performance of our other launch brands such as <unk> and let Theo we're raising our 2023 full year guidance, we are initiating based on our confidence in our outlook and in our company at <unk>.

$15 billion share buyback that we're on track for the Sandoz spin up in early Q4 2023.

With that we can open the line for questions. One question per analyst. Please.

Vasant Narasimhan: One question per analyst, please. Sharon?

Operator: Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. Please limit yourselves to one question and return to the queue for any follow-ups. To withdraw your question, please press star one and one again. We will now go to your first question. The question comes from the line of Richard Vosser from JPMorgan. Please go ahead.

Karen Thank you.

To ask a question.

One on one on your telephone and wait fewer named P&L. Please limit yourself to one question on return to the queue for any follow up.

Your question. Please press star one on one again.

We will now go to your first question.

And the question comes from the line of Richard <unk> from Jpmorgan. Please go ahead.

Richard Vosser: Hi. Thanks for taking my question. A question on Entresto, please. Could you talk about your discussions with the FDA around the citizen petition, around the form of the product and whether any of the generics meet these requirements and when we could expect an update around those discussions with the FDA. Thanks so much.

Alright, Thanks for taking my question a question on Entresto. Please.

Could you talk about your discussions with the FDA around the citizens petition around the form of the product.

We are the generics these requirements and when we could expect an update around those discussions with the FDA. Thanks very much.

Vasant Narasimhan: Yeah, thanks, Richard. With citizens' petitions, we of course file them and then there isn't a formal process. We're really now awaiting FDA's decision, and there is no timeline necessarily for FDA's decisions around citizens' petitions. There are two relevant citizens' petitions. One is on the nature of any potential generic, and our view is that a generic must be an exact match to Entresto, which is an important consideration in the number of generics that might be able to be ultimately approved by the agency. The second is with respect to labeling and how the label needs to reflect our dosing titration as well as our overall indication statement for the medicine. We'll await that. Typically, the agency will rule on citizens' petitions prior to taking an action on any of the generics.

Yeah. Thanks, Richard So with citizens petitions, we of course file them and then there isn't a formal process that we're really now awaiting fda's decision and there is no timeline necessarily for fda's decisions around citizens petitions. There are two relevant citizens petitions one is on the.

The nature of any potential generic and our view is that the generic must be an exact match to entresto.

Which is an important consideration in the number of generics that might be able to be ultimately approved by the agency and the second is with respect to labeling and how the label needs to reflect our dosing titration as well as our overall indication statement for the medicine.

We will await that typically the agency will rule on citizens petitions prior to taking action on any of the generics and as we noted earlier that as of right now there are no.

Vasant Narasimhan: As we noted earlier that, as of right now, there are no approved or pending approvals of generics to our knowledge. Thank you, Richard.

<unk>, our pending approvals of generics to our knowledge.

Richard Vosser: Great. Thanks.

Vasant Narasimhan: Next question, operator.

Thank you Richard next question Peter.

Operator: Thank you. Your next question comes from the line of Jo Walton, Credit Suisse. Please go ahead.

Thank you.

Your next question.

Comes from the line of Jo Walton Credit Suisse. Please go ahead.

Yes.

Jo Walton: Hello? Can you hear me?

Hello can you hear me, Yes go ahead Joe.

Vasant Narasimhan: Yes. Go ahead, Jo.

Jo Walton: I wonder if you could just tell us a little bit more about Leqvio. You were very confident that there would be an inflection in H2. You do have a broader label. Could you just tell us a little bit more about, say, formulary positioning, levels of reordering? You know, how many doctors have really moved across from having tried it once to saying, "This is awesome," and kept going? A little bit more perhaps about the European rollout. Thank you.

Jo Walton: I wonder if you could just tell us a little bit more about Leqvio. You were very confident that there would be an inflection in H2. You do have a broader label. Could you just tell us a little bit more about, say, formulary positioning, levels of reordering? How many doctors have really moved across from having tried it once to saying, "This is awesome," and kept going? A little bit more perhaps about the European rollout. Thank you.

I Wonder if you could just tell us a little bit more about <unk>.

You were very confident that they would be an inflection in the second half of the year you do have a broad label could you just tell us a little bit more about say formulary positioning levels off.

Reordering, how many how many doctors.

Have really moved across from having tried it wants to say they can also link kept going a little bit more perhaps about the European rollout. Thank you.

Vasant Narasimhan: Yeah, thanks, Jo. You know, with Leqvio, what we see right now is a continued expansion in the number of facilities that are ordering and the number of physicians that are ordering. On the positive side, what we see is once a physician gets beyond a certain number of patients on the medicine, roughly four or five, that then they really expand their practice and they actually can drive quite a bit of depth. Then we have a group of physicians who are still at the one to two dose, one to two patient level.

Vasant Narasimhan: Yeah, thanks, Jo. With Leqvio, what we see right now is a continued expansion in the number of facilities that are ordering and the number of physicians that are ordering. On the positive side, what we see is once a physician gets beyond a certain number of patients on the medicine, roughly four or five, that then they really expand their practice and they actually can drive quite a bit of depth. Then we have a group of physicians who are still at the one to two dose, one to two patient level.

Yes, Thanks, Joe.

What we see right now is a continued expansion in the number of facilities that are ordering in the number of physicians that are ordering.

On the positive side, what we see is once a physician gets beyond a certain number of patients on the medicine roughly.

Four or five that then they really expand their practice and they're able to actually can drive quite a bit of depth. But then we have a group of physicians who are still at the one to two dose one to two patient level and a big part of our efforts right now are to drive greater depth amongst those prescribers because we find once there's enough scale.

Vasant Narasimhan: A big part of our efforts right now are to drive greater depth amongst those prescribers, because we find once there's enough scale and a practice of understanding how to operate in Part B, that then of course, physicians find the value proposition very compelling. In terms of coverage, we have very good coverage. We're well beyond what the PCSK9 monoclonals achieved. We're at over 75% coverage at label, and so we feel very good about the coverage. This is really more about just going step by step, practice by practice, and getting them comfortable with the buy and bill process with Part B and all of the details therein. I think we'll continue on a steady trajectory through the H2.

And our practice of understanding how to operate in part B.

Then of course, our physicians find the value proposition very compelling in terms of coverage. We have very good coverage, we were well beyond what the Tcs canine monoclonal achieved over 75% coverage at label and so we feel very good about the covers. So this is really more about just going step.

By SAP practice by practice and getting them comfortable with the buy and bill process with part D and all of the details therein.

<unk>.

I think we will continue on a steady trajectory through the second half of the year difficult to predict when exactly an inflection will occur, but we know well from our past cardiovascular launches, whether it was diovan or low trial or entresto that these things take time, but once we reach a certain level of scale that then the launch really takes off and that's what we.

Vasant Narasimhan: Difficult to predict when exactly an inflection will occur, but we know well from our past cardiovascular launches, whether it was Dyaven, Lotrel, or Entresto, that these things take time. Once we reach a certain level of scale, then the launch really takes off, and that's what we continue to expect for Leqvio. Overseas, we see good performance in the European markets where we primarily launched in the private market, so very good. Now in the UK, we are starting to see an uptick, as the UK has rolled out some additional programs for physicians to create incentives to get their patients to goal for cholesterol. I think that's really helping the rollout in the UK.

Continue to expect for <unk>.

Overseas, we see good performance in the European markets, where we primarily launched in the private market. So very good and now in the UK. We are starting to see an uptick as the UK is rolled out some additional programs for physicians to create incentives to get their patients to goal for cholesterol. So I think that's really helping that.

Vasant Narasimhan: Looking forward, we continue to work towards approvals in China and Japan, which should further help Leqvio's growth trajectory in the medium to long term. Thanks for the question, Jo. Next question, operator.

Our rollout in the U K and then looking forward, we continue to work towards approvals in China, and Japan, which should further up like this growth trajectory in the medium to long term.

Thanks for the question, Jeff next question operator.

Operator: Thank you. Your next question comes to the line of Emmanuel Papadakis from DB. Please go ahead.

Thank you.

Your next question comes from the line of.

Papadakis from DB. Please go ahead.

Emmanuel Papadakis: Thank you for taking the question. Maybe I could take one on Pluvicto. Just a few thoughts ahead of the PSMAfore details, which you obviously headlined PFS for quite some time ago in December, but you're yet to present. Ahead of seeing the details, any thoughts on whether that will directionally look similar to VISION, thoughts about how OS trends may also match and mirror that data set. Then just a word, if we could, on the supply situation, the cadence of sales for H2 and beyond. You've reiterated the over CHF 1 billion number, but how could PSMAfore inflect that addressable opportunity next year? If it's not pushing my luck, we've got a competitor readout splash also due by the end of the year. Just love to hear your latest thoughts in terms of differentiation, mechanistic or logistic. Thank you.

Thank you for taking the question, maybe I could take one to predict.

So just a few thoughts ahead of the TSMC for details, which you obviously headline PFS for.

Quite some time to kind of defend that you've yet to present.

I haven't seen the details any thoughts on whether that will actually looks similar to vision talks about how our loss trends meiocyte much merit that data set and then just if we could on the supply situation. The cadence it sounds great tune beyond if you ask Harry to D.

I have a 1 billion number how could pay us for that.

Okay Civil opportunity next year.

And if it is not pushing my luck congrats.

The readout splashing <unk> by the end of the year just your latest thoughts in terms of differentiation.

Mechanistic or logistic. Thank you yes.

Vasant Narasimhan: Yeah. Thanks, Emmanuel. On Pluvicto, we continue to see very strong demand for this medicine, and we're really now getting back out to actively promoting and generating demand as we've gotten our supply situation stabilized and beginning to expand. On the Vision population, we continue to see very robust growth, and we would expect, as I outlined, over $1 billion of sales. Now how much larger that gets is really just dependent on how fast we can bring facilities online and, you know, work through the logistics of getting these centers scaled and up and running. Now in terms of PSMAfore, we outlined that we had a clinically meaningful, statistically significant readout in our PFS. We're now awaiting the maturation of OS.

Vasant Narasimhan: Yeah. Thanks, Emmanuel. On Pluvicto, we continue to see very strong demand for this medicine, and we're really now getting back out to actively promoting and generating demand as we've gotten our supply situation stabilized and beginning to expand. On the Vision population, we continue to see very robust growth, and we would expect, as I outlined, over $1 billion of sales. Now how much larger that gets is really just dependent on how fast we can bring facilities online and, work through the logistics of getting these centers scaled and up and running. Now in terms of PSMAfore, we outlined that we had a clinically meaningful, statistically significant readout in our PFS. We're now awaiting the maturation of OS.

Yes, thanks, Emmanuel so on <unk>, we continue to see very strong demand for this medicine.

We're really now getting back out to actively promoting and generating demand as we've gotten our supply situation stabilized and beginning to expand and.

So on the vision population, we continue to see very robust growth and we would expect as I outlined to over $1 billion of sales how much larger that gets us really just dependent on how fast we can bring facilities online and work through the logistics of getting these centers scaled and up and running now.

Now in terms of PSM before we outlined that we had a clinically meaningful statistically significant readout in our PFS were now awaiting.

Vasant Narasimhan: I think as everyone knows, the FDA has is now requiring companies to have not just at no detriment on OS on these readouts, but mature enough data set as well in terms of the information fraction available. That's why it's taken us a bit more time to get to that. That will then enable us to provide the full data set later this year, both for our PFS, and OS. What I can say is we found the rPFS data to be clinically meaningful, and we think important for clinical practice. What will that mean for demand?

Maturation of OS I think as everyone knows the FDA is now requiring companies to have not just at no detriment on OS on these readouts, but mature enough data set as well in terms of the information fraction available.

Why it's taken us a bit more time to get to that but that would then enable us to top to provide the full data set later this year both for our PFS.

And OS.

And what I can say is we found the rps that data to be clinically meaningful and we think important for clinical practice.

What will that mean for demand depending on how you when you speak to physicians.

Vasant Narasimhan: You know, depending on how you speak to physicians, and at least the physicians I've spoken with personally as well as heard through others, a potential tripling, I mean, on the order of that level of the potential demand for the product in a given center. It's too early to say exactly the trajectory of that, and it'll really depend on the timing of us getting the approval, which would enable then the reimbursement. It would be a substantial, we believe, expansion of the potential for Pluvicto in the marketplace, which puts, I think, really the importance of us getting our Indianapolis site fully approved and up and running later this year. That would enable us between Millburn, our site in Italy, Ivrea, and Indianapolis to fully meet the demand.

Vasant Narasimhan: Depending on how you speak to physicians, and at least the physicians I've spoken with personally as well as heard through others, a potential tripling, I mean, on the order of that level of the potential demand for the product in a given center. It's too early to say exactly the trajectory of that, and it'll really depend on the timing of us getting the approval, which would enable then the reimbursement. It would be a substantial, we believe, expansion of the potential for Pluvicto in the marketplace, which puts, I think, really the importance of us getting our Indianapolis site fully approved and up and running later this year. That would enable us between Millburn, our site in Italy, Ivrea, and Indianapolis to fully meet the demand.

The physicians I've spoken with personally as well as her through others.

Potential tripling I mean on the order of that level of of the potential demand for the product in a given center. It's too early to say exactly the trajectory of that and really depend on the timing of us getting the approval, which would enable them to reimbursement, but it would it would be a substantial we believe expansion of the potential for <unk>.

<unk> in the marketplace, which puts I think really the importance of us getting our Indianapolis site fully approved and up and running later later this year that would enable us between milburn, our site in Italy, and <unk> in Indianapolis to fully fully meet the demand.

Vasant Narasimhan: In terms of the competitor, our understanding is that competitor readout is similar to PSMAfore, and I think really this is a market that you need outstanding supply chain logistics, commercial scale, and the ability to consistently deliver for customers, not only in the US, and around the world. Really, we believe our key differentiators will be experience with Pluvicto as well as the supply chain that we've built that enables confidence in the supply. I would note as well, we're continuing to pursue Pluvicto as well in other markets, Japan, eventually other markets in Asia, as well as continued expansion in Europe. It's very exciting. It's an exciting medicine. I would take a moment as well to say we also invest on our broader pipeline within RLT.

In terms of.

The competitor our understanding is that competitor readout.

Similar to PSM, four and I think really this is a market that you need outstanding supply chain logistics commercial scale and the ability to consistently deliver for our customers not only in the U S and around the world and really we believe our key differentiators will be experienced with flu victim as well as the supply.

The change in that we built that enables our confidence in the supply I would note as well, we're continuing to pursue <unk> as well in other markets. So Japan eventually other markets in Asia as well as continued expansion in Europe is very exciting it's an exciting medicine I would take a moment as well to say we also.

<unk> on our broader pipeline within our LTE not only do we look at expansion of flu victim into the pre metastatic setting as well as biochemical recurrence delayed castration, but as well.

Vasant Narasimhan: Not only do we look at expansion of Pluvicto into the pre-metastatic setting, as well as biochemical recurrence, delayed castration, but as well, we have our 177Lu programs looking at other types of cancers. We're advancing our FAPI program, which we recently acquired, as I mentioned, from Clovis in a range of different tumors. We have our Bombesin program, which we're looking at a number of mid-stage studies as well. So a lot of things happening in the RLT space, and we continue to believe, given the infrastructure we're building and the potential to have compelling efficacy and a very good safety profile so far, with a limited number of administrations, is very compelling to both, patients, providers, and hospital systems.

Vasant Narasimhan: Not only do we look at expansion of Pluvicto into the pre-metastatic setting, as well as biochemical recurrence, delayed castration, but as well, we have our 177Lu programs looking at other types of cancers. We're advancing our FAPI program, which we recently acquired, as I mentioned, from Clovis in a range of different tumors. We have our Bombesin program, which we're looking at a number of mid-stage studies as well. A lot of things happening in the RLT space, and we continue to believe, given the infrastructure we're building and the potential to have compelling efficacy and a very good safety profile so far, with a limited number of administrations, is very compelling to both, patients, providers, and hospital systems.

You have alluded there are programs looking at other types of cancers, we are advancing our <unk> program, which we recently acquired as I mentioned from Clovis in a range of different tumors and we have our bond basin program, which we're looking at a number of mid stage studies as well so a lot of things happening in the <unk> space and we continue to believe.

The infrastructure, we're building and the potential to have compelling efficacy and a very good safety profile so far.

With a limited number of administrations is very compelling to both patients providers and hospital systems.

Emmanuel Papadakis: Thank you.

Vasant Narasimhan: Thank you, Emmanuel. Next question, operator.

Thank you Andrew next question operator.

Operator: Thank you. Your next question comes from the line of Emily Field from Barclays. Please go ahead.

Thank you.

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

Emily Field: Hi. Thanks for taking my question. I just wanted to ask a question about MBL949. I know it's updated this quarter that that was discontinued for efficacy. Just, you know, how you're thinking about the commitment to sort of the broader cardiometabolic space inclusive of obesity, given that you have a pretty substantial cardiovascular infrastructure from the commercial side. Is that, you know, an area for potentially focused business development? Thank you.

Emily Field: Hi. Thanks for taking my question. I just wanted to ask a question about MBL949. I know it's updated this quarter that that was discontinued for efficacy. Just, you know, how you're thinking about the commitment to sort of the broader cardiometabolic space inclusive of obesity, given that you have a pretty substantial cardiovascular infrastructure from the commercial side. Is that, an area for potentially focused business development? Thank you.

Hi, Thanks for taking my question.

I just wanted to ask a question about MBR 949, I know it was updated this quarter that that was discontinued for efficacy, but just.

How youre thinking about.

Just sort of the broader cardio metabolic space inclusive of obesity, given that you have a pretty substantial cardiovascular infrastructure from the commercial side is that an area for potentially focused business development. Thank you.

Vasant Narasimhan: Yeah. Thanks, Emily. The MBL949 ultimately did not have a compelling overall profile, so we're stopping that program. We do have earlier stage efforts looking at novel mechanisms in the preclinical space in obesity and metabolism, but these are very early and I think still, you know, far away from you know, the ultimately reaching the commercial marketplace. Our focus is cardiorenal. I mean, we continue to have, of course, on top of our efforts with Entresto and Leqvio, we have Pelacarsen, we have our XXb program, which is a novel mechanism looking at hypertension and heart failure. A range of programs in the clinic now in antiarrhythmic agents as well as we're advancing a broad portfolio of siRNAs to follow up on Leqvio to address cardiovascular risk reduction.

Vasant Narasimhan: Yeah. Thanks, Emily. The MBL949 ultimately did not have a compelling overall profile, so we're stopping that program. We do have earlier stage efforts looking at novel mechanisms in the preclinical space in obesity and metabolism, but these are very early and I think still, far away from you know, the ultimately reaching the commercial marketplace. Our focus is cardiorenal. I mean, we continue to have, of course, on top of our efforts with Entresto and Leqvio, we have Pelacarsen, we have our XXb program, which is a novel mechanism looking at hypertension and heart failure. A range of programs in the clinic now in antiarrhythmic agents as well as we're advancing a broad portfolio of siRNAs to follow up on Leqvio to address cardiovascular risk reduction.

Yes, I think the only so the NBL ultimately did not have a compelling overall profile. So we're stopping that program. We do have earlier stage efforts looking at novel mechanisms in the preclinical space.

In obesity and metabolism, but these are very early in that I think is still far away from.

Ultimately, reaching the commercial marketplace. Our focus is cardio renal we continue to have of course on top of our efforts with Entresto and what we have.

Carson, we have our <unk> program, which is a novel mechanism looking at hypertension and heart failure.

A range of programs in the clinic now an antiarrhythmic agents as well as we are advancing a broad portfolio of <unk> to follow up on <unk> to address cardiovascular risk reduction, we hope with less frequent therapy and hitting multiple different drug targets at the same time on the renal side as I mentioned building an attacker Pan we haven't.

Vasant Narasimhan: We hope with less frequent therapy and hitting multiple different drug targets at the same time. On the renal side, as I mentioned, building on iptacopan, we have the proposed acquisition of Chinook, as well as our continued efforts to treat the broad range of renal diseases where we think there's a lot of unmet need, and the opportunity to bring meaningful medicines forward. That's where we'll be focusing on in the years ahead. Next question, operator.

Our proposed acquisition of <unk> as well as our continued efforts to treat a broad range of renal diseases, where we think theres a lot of unmet need.

The opportunity to bring meaningful medicines forward, so that's where we'll be focusing.

In the years ahead.

Next question operator.

Operator: Thank you. Your next question comes from the line of Graham Parry at Bank of America. Please go ahead.

Thank you.

Next question comes from the line of Graham Parry Bank of America. Please go ahead.

Graham Parry: Great. Thanks for taking my question. It's on Entresto patent litigation again. We understand the nine-three-eight Del. MDL litigation that was subject to a trial in October last year is now being settled ahead of ruling. If you could just confirm that's correct, which filers you settled with, and whether the filers that were in the six-five-nine ruling two weeks ago, so MSN, Macleods, and Hetero, are part of that settlement. Then have the nine-three-eight and one-three-four crystalline patents been asserted against those filers that were successful in the six-five-nine ruling that we saw a couple of weeks ago? Overall, I guess the broader question is there still a scenario where generic Entresto doesn't launch until November 2027 or later?

Great. Thanks for taking my question.

Interest say patent litigation again, so I understand the 93 eight Delaware AMD all litigation that was subject to a trial in October last year has now been settled ahead of ruling if you can just confirm that's correct, which file is essential to weigh them whether the.

The pilots that we're in in the $65 9 million in two weeks ago, So Amazon Mccloud.

A part of that settlement and then how does the 93 three for crystalline patents being asserted against base filers.

Sure.

Successful in the 659.

Ruling that we saw a couple of weeks ago.

Overall I guess the broader question is is that still a scenario where generic interests day doesn't launch until November 2027, or later or gene assay that is off the cards and the latest that you could protect this Spain mid 2025. Thank you.

Graham Parry: Do you now see that as off the cards and the latest that you could protect this as being mid-2025? Thank you.

Vasant Narasimhan: Yeah. Thanks, Graham. You know, the overall Entresto situation is complex in that each one of the generic filers has different scenarios in terms of the patents that we believe they've infringed, and we've asserted against them. They have different approaches which may or may not enable them to ultimately get approved, depending on how FDA rules on citizen petitions. I'm not gonna get into all the details. I can confirm that we did, as you did note, settle the '938 patents with Crystal and the relevant other generics. That matter is closed off from our perspective.

Vasant Narasimhan: Yeah. Thanks, Graham, the overall Entresto situation is complex in that each one of the generic filers has different scenarios in terms of the patents that we believe they've infringed, and we've asserted against them. They have different approaches which may or may not enable them to ultimately get approved, depending on how FDA rules on citizen petitions. I'm not gonna get into all the details. I can confirm that we did, as you did note, settle the '938 patents with Crystal and the relevant other generics. That matter is closed off from our perspective.

Yes, Thanks, Graham so the overall interests situation is complex and that each one of the generic filers has different scenarios in terms of the patents.

That they we believe they are infringed and we've asserted against them. They have different approaches, which may or may not enable them to ultimately get approved depending on how FDA rules on citizens petitions, so I'm not going to get into all the details I can confirm that we did as you did note we did settle that night.

<unk> 38.

Patents.

With crystal and the relevant other generics and so that that matter is closed off from our perspective, but in terms of the rest right now our focus is on appealing the district court ruling where we feel we have strong grounds.

Vasant Narasimhan: In terms of the rest right now, our focus is on appealing the district court ruling, where we feel like we have strong grounds to ultimately prevail on appeal to continue to assert our remaining patents through the various litigations that we have ongoing, to await the citizen petition ruling. Our forecasting guidance remains unchanged at a mid-2025 forecasting guidance. We, of course, will do everything we can to extend our overall support longer, overall exclusivity longer for Entresto. As I mentioned as well, there's no generics currently approved. In terms of the history here, nobody has launched at risk on a brand of this size in the last 15 years. All of that gives us confidence on the outlook on the brand. Thanks, Graham.

Ultimately prevail on appeal to continue to assert our remaining patents through the various litigations that we have ongoing.

Wait the citizen's petition.

<unk> are forecasting guidance remains unchanged at mid 2025 forecasting guidance. We of course, we will do everything we can to extend our overall.

Overall, our support longer overall.

<unk>.

Exclusivity longer for Entresto.

And as I mentioned as well there is no no generics currently approved and in terms of the history here Nobody has filed that launched at risk on a brand of this size in the last 15 years. So all of that gives us confidence on the outlook on the brand.

Vasant Narasimhan: Next question, operator.

Thanks, Graham next question operator.

Operator: Thank you. Your next question comes from the line of Michael Leuchten, UBS. Please go ahead. Hello, Michael. Is your line on mute?

Thank you.

Your next question comes from the line of Michael Eisen UBS. Please go ahead.

Okay.

Hello, Michael is your line on mute.

Michael Leuchten: Sorry. It's Michael Leuchten from UBS. Obligatory question for Harry Kirsch, please. The guidance implies a less of a margin gearing from the top line in H2. What OpEx lines would be heavier as we're heading into H2 that wouldn't allow you to gear the top line as much as we saw in H1?

Sorry.

This is Mike from UBS obligatory question for Harry Please the guidance implies a.

Less of a margin carrying from the topline in the second half what Opex lines would be heavy as we're heading into the second half that wouldn't allow you to care top line as much as we saw in the first half.

Harry Kirsch: Yeah. Michael, thank you for the question. Overall, maybe if we talk about Novartis ex Sandoz, right? There will be a little bit more inflation coming through on the COGS line as inventory, of course, gets used, like, through six months, if you will. Not dramatic, but, you know, a little bit there. The other one is we started to get our transformation for growth savings in Q4 last year, so there's a bit harder comp. Of course, one is a bit conservative, maybe also still. To maybe there's a bit more upside coming. Overall, I do see that the sales continues to have this very good momentum and then maybe a little bit less bottom line leverage, but still very nice bottom line leverage, right? We have 340 basis points improvement.

Harry Kirsch: Yeah. Michael, thank you for the question. Overall, maybe if we talk about Novartis ex Sandoz. There will be a little bit more inflation coming through on the COGS line as inventory, of course, gets used, like, through six months, if you will. Not dramatic, but, you know, a little bit there. The other one is we started to get our transformation for growth savings in Q4 last year, so there's a bit harder comp. Of course, one is a bit conservative, maybe also still. To maybe there's a bit more upside coming. Overall, I do see that the sales continues to have this very good momentum and then maybe a little bit less bottom line leverage, but still very nice bottom line leverage, right? We have 340 basis points improvement.

Yes, Michael Thank you for the question.

No.

Overall.

If we talk about Novartis sandoz, there will be a little bit more inflation coming through on the Cogs line.

Inventory of course gets used.

Through six months, if you will.

Not dramatic but.

A little bit there. The other one is we started to.

Get our transformation for growth savings in quarter four last year. So there is a bit harder comp.

And of course, one is a bit conservative maybe also still so towards maybe there's a bit more coming so overall I do see that sales continues to have this very good momentum and then may be a little bit less bottom line rich, but still very nice bottom line leverage tried we have 340 <unk>.

Harry Kirsch: I think one cannot assume that it happens every quarter and every year. Those are the things. Then, of course, on the group guidance, that has to do with Sandoz in the H2, expecting also a little bit higher COGS line, lower gross margins due to inflation, as well as some standup costs. That is then on the Sandoz P&L a bit more, obviously. Will it be as much as guided? We have to see that. The spin situation is a bit more volatile than normal ongoing business. But overall, I would say especially for Novartis ex Sandoz, continued fantastic top and bottom line performance expected with maybe a little bit less margin leverage than we have seen in the first two quarters.

Basis points improvement I think one cannot assume that happens every quarter and every year.

Those are the things and then of course on the Coupe guidance that has to do with Sandoz in the second half expecting also a little bit higher Cogs line lower gross margins due to inflation as well as some standup costs there.

<unk> has been on the Sandoz P&L a bit more obviously.

Will it be as much as guided let's we have to see that spin situations with more volatile than normal ongoing business.

But overall I would say, especially for Novartis Sandoz continued fantastic top.

Bottom line performance expected with maybe a little bit less margin leverage than you have seen in the first two quarters.

Vasant Narasimhan: Thanks, Michael. Thanks, Harry. Next question, operator.

Thanks, Michael Thanks, Eric next question operator.

Operator: Thank you. Your next question comes from the line of Tim Anderson from Wolfe Research. Please go ahead.

Thank you.

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

Tim Anderson: Thank you. Could I just go back to Entresto? If generics do in fact launch early and at risk, how does Novartis adapt to that reality? I'm guessing you may not have significant additional cost to pull out of the organization, for example, because you're still promoting other drugs in the category.

Thank you.

I just go back on cross, though so if generic do impact launch early in that risk.

How does novartis adapt to that reality.

I'm guessing you may not have significant additional cost to pull out of the organization.

For example, because they are still promoting other drugs in the category.

Kerry Holford: Maybe you could talk about your cost levers in that worst-case scenario, and then also, you know, what it would mean towards M&A strategy. Thank you.

Tim Anderson: Maybe you could talk about your cost levers in that worst-case scenario, and then also, what it would mean towards M&A strategy. Thank you.

So maybe you could talk about your cost levers in that worst case scenario and then also what it.

Would mean.

M&A strategy. Thank you.

Vasant Narasimhan: Yeah. Thanks, Tim. You know, as we stated, we continue to not expect generics to launch at risk, given the risk of treble damages in such a brand of this size, as well as the strength that we believe our case on appeal. That said, you know, we feel confident that in the midterm, we'll continue to hit our 4% sales and 40% margin guidance for the company ex-Sandoz, as Harry outlined. That wouldn't require us to take any additional cost out because we had already assumed Entresto would go in mid-2025 as our forecasting assumption. Our five-year CAGR outlook and 40% margin outlook already assumed that Entresto would be moving out.

Vasant Narasimhan: Yeah. Thanks, Tim. You know, as we stated, we continue to not expect generics to launch at risk, given the risk of treble damages in such a brand of this size, as well as the strength that we believe our case on appeal. That said, we feel confident that in the midterm, we'll continue to hit our 4% sales and 40% margin guidance for the company ex-Sandoz, as Harry outlined. That wouldn't require us to take any additional cost out because we had already assumed Entresto would go in mid-2025 as our forecasting assumption. Our five-year CAGR outlook and 40% margin outlook already assumed that Entresto would be moving out.

Yes, Thanks, Tim.

As stated we continue to not expect generics to launch at risk given the risk of trouble damages and such a brand of this size as well as the strength that we believe our case on appeal.

Ed.

We feel confident that in the midterm, we will continue to hit our 4% sales and 40% margin guidance for the company X Sandoz as Henry outlined and that wouldn't require us to take any additional.

Cost out because we had already assumed entresto would go in mid 2025, as our forecasting assumption. So our five year CAGR outlook and 40% margin outlook already assume entresto, we'd be moving out so all of our current.

Vasant Narasimhan: All of our current transformation programs, procurement programs, et cetera, as they continue to mature, would enable us to still achieve those midterm goals. Harry, anything you wanna add?

Transformation programs procurement programs et cetera, as they continue to mature would enable us to still achieve those midterm mid term goals Harry anything you want to add.

Harry Kirsch: I think, you know, Tim, you're right. The majority of the marketing and sales is, of course, also on the other growth drivers, and these other growth drivers have significant potential. We talked about a few of them, right? I do not see that, you know, there would be significant adjustment on the cost base because of a bit earlier Entresto LOE. On the other hand, as a scenario, we are fully on defending our IP, and that's the focus here. Of course, driving the full portfolio, including Entresto on the other great growth drivers as we go forward and not have a distraction to the organization after having done quite a significant restructuring already.

Harry Kirsch: I think, Tim, you're right. The majority of the marketing and sales is, of course, also on the other growth drivers, and these other growth drivers have significant potential. We talked about a few of them, right? I do not see that, there would be significant adjustment on the cost base because of a bit earlier Entresto LOE. On the other hand, as a scenario, we are fully on defending our IP, and that's the focus here. Of course, driving the full portfolio, including Entresto on the other great growth drivers as we go forward and not have a distraction to the organization after having done quite a significant restructuring already.

I think.

Tim.

You are right. The majority of the marketing and say is of course also on the other growth drivers in these other growth drivers.

<unk> potential we talked about a few of them right. So I do not see that there would be.

Second adjustment on the cost base because of a bit earlier.

Other hand, so now we are fully on defending our IP and Thats. The focus here and then of course driving the full portfolio, including interests on the other creative growth drivers as we go forward.

Not have a distraction to the organization after having done quite a significant.

Restructuring already.

Harry Kirsch: By the way, we are ahead of our restructuring cost savings, so all of that is going also as very well, which you also see reflected in the bottom line numbers.

And by the way we are ahead of our restructuring.

Cost savings. So all of that is going also very well, which you also see reflected at the bottom line numbers.

Vasant Narasimhan: Thanks, Harry. Thanks, Tim. Next question, operator.

Thanks, Alright, Thanks, Tim next question operator.

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

Thank you.

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

Mark Purcell: Yeah, thank you for taking my question. It's on Pluvicto. I wondered first if you could help us understand the importance of showing a strong trend on overall survival in the PSMAfore trial, given sort of recent rulings and precedent the FDA has taken a tougher stance when it comes to showing an OS benefit in prostate cancer specifically. The reason for the question is we've been asked about the relevance of the PFS benefit in patients progressing on an androgen receptor pathway inhibitor being re-randomized to an alternative ARPI, as opposed to being moved on to a taxane in the control arm. Therefore, you'd expect a high crossover rate from the control arm to Pluvicto in this study.

Mark Purcell: Yeah, thank you for taking my question. It's on Pluvicto. I wondered first if you could help us understand the importance of showing a strong trend on overall survival in the PSMAfore trial, given recent rulings and precedent the FDA has taken a tougher stance when it comes to showing an OS benefit in prostate cancer specifically. The reason for the question is we've been asked about the relevance of the PFS benefit in patients progressing on an androgen receptor pathway inhibitor being re-randomized to an alternative ARPI, as opposed to being moved on to a taxane in the control arm. Therefore, you'd expect a high crossover rate from the control arm to Pluvicto in this study.

Thank you for taking my question.

Okay.

I wanted to see if you could help us understand the importance of showing a strong trend on overall survival in the past may four trial given sort of recent.

Reading some press since the FDA has taken.

Bit of a tougher stance when it comes to Shanghai Ross benefits in prostate cancer, specifically the reason for the question as we've been asked about the relevance of the PFS benefit in patients progressing ported androgen receptor pathway inhibitor being re randomized to an alternative.

As opposed to being moved onto tax than in the control arm and therefore, you would expect to high cost fiber right.

Mark Purcell: You know, recognizing clearly they've already shown a strong PFS benefit with the trial powered for a 44% benefit, but how important is it to show this strong OS benefit to gain approval from the regulatory authorities? Thank you.

From the control arm to predict having this study so.

Mark Purcell: Recognizing clearly they've already shown a strong PFS benefit with the trial powered for a 44% benefit, but how important is it to show this strong OS benefit to gain approval from the regulatory authorities? Thank you.

Recognizing clearly they've shown already shown a strong PFS benefit with the trial powered for 44% benefit, but how important is it to show the strong.

Benefit to gain approval from the regulatory authorities.

Vasant Narasimhan: Yeah, very good question, Mark. Right now, our trial is designed in such a way, and our agreements with FDA is that we would need to show no detriment to OS and a compelling rPFS benefit. As you likely rightly know, there will be significant crossover in this study because these patients have few alternatives at that point in time. Crossing over to Pluvicto after the results that we announced earlier, of course, will happen. Our current expectation is to show no detriment to OS. On an upside case, we would show a positive OS already now, and then over time, of course, the OS will mature. With FDA, we have an agreement and understanding that there will be crossover that we'll need to account for in the study analysis.

Yes, very good question, Mark So right now our.

Trial is designed in such a way in our agreements with FDA is that we would need to show no detriment to OS and compelling our PFS benefit as you likely rightly note there will be significant crossover in this study because these patients have few alternatives at that point in time.

And so crossing over to <unk>. After the results that we announced earlier of course will happen.

So our current expectation is to show no detriment to OS on an upside case, we would show a positive OS already now and then over time of course, Pos will mature, but with FDA, we have an agreement and understanding that there will be crossover that we'll need to account for in this study analysis.

Mark Purcell: Thank you.

Vasant Narasimhan: Next question, operator.

Thank you next question operator.

Operator: Thank you. Your next question comes from the line of Kerry Holford from Berenberg. Please go ahead.

Thank you.

Your next question.

Comes from the line of Kerry Holford from Brownback. Please go ahead.

Kerry Holford: Thank you for taking my question. It's on Kesimpta. So clearly an impressive growth this quarter. But can you talk to your expectations for this product as we head into next year and beyond in light of the new subcutaneous competition that looks likely to be coming? I'm referring here to the recent positive data for Roche's subcut formulation of Ocrevus. What is the risk here that you lose share to Ocrevus as a less frequently dosed subcut, well-established option when that asset reaches the market? Thank you.

Kerry Holford: Thank you for taking my question. It's on Kesimpta. Clearly an impressive growth this quarter. But can you talk to your expectations for this product as we head into next year and beyond in light of the new subcutaneous competition that looks likely to be coming? I'm referring here to the recent positive data for Roche's subcut formulation of Ocrevus. What is the risk here that you lose share to Ocrevus as a less frequently dosed subcut, well-established option when that asset reaches the market? Thank you.

Thank you for taking my question.

Okay.

And then question for Scott.

Can you talk to your ex.

Pension.

Since that into next year and beyond.

License fee.

Subcutaneous competition looks like.

Coming on the table.

On a constant take Russia.

Russia formulations.

Okay audience and reservoir.

Sure.

Yes.

Okay.

Tablets option.

When it reaches the market.

Vasant Narasimhan: Yeah, thanks, Kerry. I think first, we'll have to see the full data set, because I think as you know, one of the challenges with IV administered CD20 is whether given in a long infusion or a subQ pump short infusion is do you need the steroid pretreat and what is the level of reactogenicity and injection site reactions you're gonna see with the medicine. Overall, our expectation is that the players who are currently are gonna compete with one another for the market for us physicians who prefer to provide IV administered medicines or subQ pump administered medicines in the Part B setting.

Yeah. Thanks, Gary I think first of all have to see the full data set because I think.

No one of the challenges with <unk>.

<unk> administered.

<unk> weather, given a long infusion or subcutaneous short infusion is do you need to steroid pretreat and what is the level of reacted Unisys <unk>.

<unk>.

Injection site reactions that youre going to see with the medicine overall, our expectation is that the players who are currently compete are going to compete with one another for the market for physicians, who prefer to provide IV administered medicines or sub Q pump administered medicines.

Vasant Narasimhan: That's, you know, where Kesimpta continues to do extremely well is amongst physicians who prefer to treat their patients with at-home administered monthly medicines, and Kesimpta has an outstanding efficacy and safety profile. We're prepared if ultimately there is a move by our competitors to try to move into the at-home subQ administered administration space. We feel confident in the Kesimpta profile. You have to remember, this is a medicine that takes a minute to give yourself, a patient to give themselves a month. 12 minutes a year. You don't have to have any pre-administration. You don't have to deal with pumps and other technologies, which I think in this patient population is greatly valued. We think that the overall proposition is clear.

In the <unk> setting and that work is simply continues to do extremely well as amongst physicians, who prefer to treat their patients with at home administered monthly medicines.

And because of the outstanding efficacy and safety profile. So we're prepared if ultimately there is a move by our competitors try to move into the at.

At home subdue administrative administration space, but we feel confident in <unk> profile you have to remember this is a medicine that takes.

A minute to give yourself a patient to give themselves a months. So 12 minutes a year you don't have to have any pre administration you don't have to deal with the pumps and other technologies, which I think in this patient population is greatly greatly values. So we think the overall proposition is clear.

Vasant Narasimhan: We have to be aware of the competition, but we feel confident in the outlook for Cosentyx. Next question, operator.

Be aware of the competition, but we feel confident in the outlook.

Okay.

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

Next question operator.

Thank you.

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

Steve Scala: Oh, thank you so much. Also on Entresto, but regarding the new $15 billion share repurchase. Based on what Novartis is saying, it sounds as though Novartis has every intention of fully completing the new $15 billion share repurchase by year-end 2025, even if, for instance, a generic Entresto were to launch tomorrow, which I guess is within the realm of possibility. Is that correct? Or is the share repurchase telling us that Novartis believes the probability of a generic Entresto launch between now and year-end 2025 is essentially zero? Thank you.

Thank you so much also on entresto, but regarding the new $15 billion share repurchase based on what Novartis is saying it sounds as though novartis.

Has every intention fully completing the new $15 billion share repurchase by year end 2025, even if for instance, a generic entresto were to launch tomorrow, which I guess is within the realm of possibility is that correct.

Or is the share repurchase telling us that novartis believes the probability of a generic can trust will launch between now and year end 2025 is essentially zero. Thank you.

Vasant Narasimhan: Steve, on your first question, it is correct. Our $15 billion share buyback is independent of various business areas, including Entresto, but other business scenarios. It's based on a long-term view that we have adequate capital to pursue our internal investments as well as our external M&A and BD&L. We're confident in the outlook for the company. It's our growth outlook and ultimately where we believe our share price will appreciate. We believe it's prudent to buy back our shares over this period of time in returning capital to shareholders, and also as we fundamentally believe we're undervalued versus our potential. Those are the reasons for the share buyback. We are also confident that while we can't exclude, as I've mentioned many times on the call today, a generic will launch at risk.

So Steve on your first question. It is correct, our $15 billion share buyback is independent of various business areas, including Entresto, but other business scenarios.

Just on a long term view that we have adequate capital to pursue our internal investments as well as our external M&A and BD Enel, we're confident in the outlook for the company our growth outlook and ultimately where we believe our share price will appreciate and believe it is prudent to buy.

Back our shares over this period of time and returning capital to shareholders and also as we fundamentally believe we're undervalued versus our potential. So those are the reasons for the share buyback.

And we are also confident that while we can't exclude as I've mentioned many times on the call today are generic will launch at risk. We believe we have a compelling case with respect to appealing the district court ruling.

Vasant Narasimhan: We believe we have a compelling case with respect to appealing the district court ruling and a compelling case across a range of other patents that go out to 2027 or, in the case of our dosing titration patent, to 2036, as well as the various citizen petitions we have with the FDA. We maintain as well our guidance for our expectation from a forecasting standpoint that there wouldn't be Entresto generics in the US before mid-2025.

Palin case across a range of other patents that go out to 2027 or in the case of our dosing titration, a patent to 2036 as well as the various citizens petitions we have with the FDA. So we maintain as well our guidance for.

Our expectation from a forecasting standpoint that there wouldn't be an trusted generics in the U S before mid 2025.

Steve Scala: Thank you.

Vasant Narasimhan: Next question, operator.

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

Thank you.

Next question operator.

Thank you.

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

Speaker 15: Oh, thanks very much. My question is a quick one just on the BTK. Can you potentially update us on if FDA has made any requests of your preliminary data or of your ongoing clinical trials just with regard to potential risk of liver injury? We know the agency is reviewing the overall class more broadly, and this, you know, has been a stated differentiating factor. Just didn't know how long the FDA is requiring or potentially requesting Novartis study the product to kind of disabuse that potential risk. Thanks so much.

Seamus Fernandez: Oh, thanks very much. My question is a quick one just on the BTK. Can you potentially update us on if FDA has made any requests of your preliminary data or of your ongoing clinical trials just with regard to potential risk of liver injury? We know the agency is reviewing the overall class more broadly, and this, has been a stated differentiating factor. Just didn't know how long the FDA is requiring or potentially requesting Novartis study the product to kind of disabuse that potential risk. Thanks so much.

Well, thanks very much. So my question is a quick one just on the PTK.

Can you update us on <unk>.

<unk> has made any request.

Of your preliminary data.

<unk> of your ongoing clinical trials, just with regard to potential risk of <unk>.

Injury.

He is reviewing.

Reviewing the overall class more broadly.

<unk> has.

It has been a stated differentiating factor just didn't know how long.

The FDA is requiring or potentially requesting novartis study the product kind of distributions.

Vasant Narasimhan: Yeah, thanks, Seamus. Consistent with, I think, they've asked other sponsors, we do have enhanced liver monitoring in our multiple sclerosis programs, and I have to double-check, but I think also in our CSU programs. To date, we have not seen any liver signals, nor have we been placed on any kind of clinical hold. We continue to believe that this is not a quote-unquote, "class specific to the BTK target," but specific to the design of individual molecules in the space. If you look at as we've noted, I think in the past, and you've seen, our chemical structure is quite different than the chemical structure of the other BTK inhibitors being pursued, either in neuroscience or in other indications, which is why we think it has the unique profile that it does from a safety standpoint.

Potential risks thanks, so much.

Yeah. Thanks, David So consistent with I think they've asked other sponsors we do have enhanced liver monitoring and our multiple sclerosis programs.

I have to double check, but I think also in our CSU programs today, we have not seen any liver signals derived in place on any kind of clinical hold we continue to believe that this is not.

What unquote class specific to the <unk> target, but specific to the design of individual molecules in this space and if you look at as we've noted I think in the past and you've seen our chemical structure is quite different than the chemical structure of the other <unk> inhibitors being pursued.

Either in neuroscience or in other indications, which is why we think it has.

Unique.

Vasant Narasimhan: We're looking forward to the initial efficacy readouts in CSU in H2 this year, which hopefully will enable us to file in CSU and get a first label in immunology for Remibrutinib, and then following that up with multiple sclerosis as well as other immunology indications over time. Next question, operator.

Unique profile than it does from a safety standpoint, so we're looking forward to the initial efficacy readouts in CSU.

The second half of this year, which hopefully will enable us to file in CSU and get our first label and immunology for Remy brewed Nib and then following that up with multiple sclerosis, as well as other immunology indications over time.

Operator: Thank you. Your next question comes from the line of Naresh Chouhan from Intron Health. Please go ahead.

Next question operator.

Thank you.

Your next question comes from the line of.

Yes.

How on from Intron Health. Please go ahead.

Speaker 16: Hi there. Thanks for taking my question. Just one on Hyrimoz, please. Just trying to get a feel for how we should think about the sales trajectory over the next kind of 18 months given the importance for Sandoz. Given it's we've got the 6 months of this year, should we expect a fast launch this year, or will you need to negotiate the formulary position for 2024 before we get a better feel for where this can go? Thank you.

Naresh Chouhan: Hi there. Thanks for taking my question. Just one on Hyrimoz, please. Just trying to get a feel for how we should think about the sales trajectory over the next kind of 18 months given the importance for Sandoz. Given it's we've got the six months of this year, should we expect a fast launch this year, or will you need to negotiate the formulary position for 2024 before we get a better feel for where this can go? Thank you.

Hi, there thanks for taking my question.

Just one on hearing loss piece.

I'm just trying to get a feel for how we should think about the sales trajectory over the next 18 months.

Given the importance sandoz.

Should we given.

The six months of this year.

Possible since here or will you need to.

Negotiate the formative position for 2024 before we get the benefit of helpful.

Vasant Narasimhan: Yeah, thanks, Naresh. You know, right now, I think it's early days on the Hyrimoz launch. As you know, there have been multiple competitors entering. Sandoz is also entering. I would expect a slow ramp for this medicine as we continue to get strong positions with payers as well as get the infrastructure up and running to launch. But over time, we do believe this will be a meaningful growth contributor to Sandoz, the US, and ultimately global growth and overall biosimilars business outlook. Let me hand it over to Harry in case he has anything to add.

Thank you.

Yeah. Thanks.

The renovation I think it's early days on the <unk> launch as you know there've been multiple competitors entering Sandoz is also entering I would expect a slow ramp for this medicine as we continue to get strong positions with payers as well as get the infrastructure up and running to launch but over time, we do believe this will be a meaningful.

Growth contributor to Sandoz U S and ultimately global growth.

And overall Biosimilars business outlook, let me hand, it over to Harry if he has anything to add.

Harry Kirsch: Thank you. It's overall too early for us to talk about our peak sales and other things, right? The launch is just starting, and as Vas said, we get on plan, formulary positions. Keren Haruvi on the US team are of course have prepared and now pulling through that launch. Over time, the Sandoz team is expecting that this becomes a good growth contributor.

Thank you notes overall too early to.

To talk about now peak sales and other things the largest just starting and as I said, we get on plan.

<unk> formulary positions.

Currently <unk> on the U S team of course have prepared are now pulling through that launch and over time. The sandoz team that he is expecting that this becomes a good growth contributor.

Vasant Narasimhan: Very good. Thanks. Our next question here, operator.

Very good thanks, Sarah So next question operator.

Operator: Thank you. Your next question comes to the line of Peter Welford from Jefferies. Please go ahead.

Operator.

Yes.

Your next question comes from the line of Peter Welford from Jefferies. Please go ahead.

Speaker 17: Hi. Thanks for taking my question. It's just a general one, returning back to capital allocation. Just when we think about the $15 billion buyback, I mean, last time you did a buyback of that magnitude was obviously following the Roche share disposal. Now you're doing another one again, based on the underlying cash flow. I wonder if you could just talk about whether we should read into this anything about further needs or further desire to slim down the portfolio like you did with ophthalmology, and whether or not, you know, there's any divestments that are sort of related to that and how far you are on sort of the process of that sort of pruning down to focus on the core therapeutic areas.

Peter Welford: Hi. Thanks for taking my question. It's just a general one, returning back to capital allocation. Just when we think about the $15 billion buyback, I mean, last time you did a buyback of that magnitude was obviously following the Roche share disposal. Now you're doing another one again, based on the underlying cash flow. I wonder if you could just talk about whether we should read into this anything about further needs or further desire to slim down the portfolio like you did with ophthalmology, and whether or not, you know, there's any divestments that are sort of related to that and how far you are on sort of the process of that sort of pruning down to focus on the core therapeutic areas.

Hi, Thanks for taking my question just in general on returning back to capital allocation just when we think about a 50 billion buyback and the last time, you did a buyback that magnitude because obviously following the loss share disposal now you're doing another one again based on the underlying cash flow. So I wonder if you could just talk about what we should read into this.

Anything about the need or the desire to slim down the portfolio, not UTP doctor homology and whether or not there's any divestments as it related to that and then how far you are on sort of the price essence of that to prudent got to focus on.

Vasant Narasimhan: Yeah. Thanks, Peter. I'll cover the focus, and I'll hand it to Harry on capital allocation. You know, we've done a lot as you know. I mean, if you go back, you know, five, six years between the exits of the consumer health business, Alcon, Roche stake, now the proposal on Sandoz. Alongside that, streamlining down to five therapeutic areas, exiting areas like liver, as well as diabetes and now front of the eye. Really, I think we're in the right place in terms of the therapeutic areas we're in. There may be one-offs that we still need to do in terms of streamlining, but nothing major that we would foresee at this point in time.

Vasant Narasimhan: Yeah. Thanks, Peter. I'll cover the focus, and I'll hand it to Harry on capital allocation. We've done a lot as you know. I mean, if you go back, you know, five, six years between the exits of the consumer health business, Alcon, Roche stake, now the proposal on Sandoz. Alongside that, streamlining down to five therapeutic areas, exiting areas like liver, as well as diabetes and now front of the eye. Really, I think we're in the right place in terms of the therapeutic areas we're in. There may be one-offs that we still need to do in terms of streamlining, but nothing major that we would foresee at this point in time.

Core therapeutic areas.

Yeah. Thanks, Peter I'll cover the focus on identity area on capital allocation. So we've done a lot as you know if you go back five six years between the exited the consumer health business Alcon Roche stake now the proposal on Sandoz alongside that streaming down to streamlining down to five therapeutic area.

Exiting areas like liver.

As well as diabetes and now from the D. I really I think we're in the right place in terms of the therapeutic areas. We're in there may be one offs that we still need to do in terms of streamlining, but nothing major that we would foresee at this point in time and really our goal is posted at the end of spend is to focus on driving the pipeline driving the strong operations.

Vasant Narasimhan: Really, our goal is post the Sandoz spin is to focus on driving the pipeline, driving the strong operational performance you're seeing, and hopefully exceeding the 4% sales growth and driving to that 40% company margin, as a new Novartis ex Sandoz by 2027. From a capital allocation standpoint, Harry?

Performance, Youre, seeing and hopefully exceeding the 4% sales growth and driving to that 40% company margin.

As a new Novartis sandoz by by 2027 from a capital allocation standpoint, Harry.

Harry Kirsch: Yeah, Peter. You know, overall, of course, we do our mid and long-term liquidity planning, right? You could say this is simply a continuation of a, let's say, a very responsible capital allocation application. On the other hand, you can be also very in a very pragmatic way, you know, from the Roche stake, we have about $6 billion left. There will be a certain debt push down to Sandoz, and that pays already for the majority of the $15 billion. On top of that, of course, we have and expect continued very good cash flows. Of course, in that planning, we always have still flexibility for executing our bolt on M&A and BD&L strategy over the years. All of that is simply normal continuation of our capital allocation strategy built on a very strong balance sheet.

Harry Kirsch: Yeah, Peter. You know, overall, of course, we do our mid and long-term liquidity planning, right? You could say this is simply a continuation of a, let's say, a very responsible capital allocation application. On the other hand, you can be also very in a very pragmatic way, from the Roche stake, we have about $6 billion left. There will be a certain debt push down to Sandoz, and that pays already for the majority of the $15 billion. On top of that, of course, we have and expect continued very good cash flows. Of course, in that planning, we always have still flexibility for executing our bolt on M&A and BD&L strategy over the years. All of that is simply normal continuation of our capital allocation strategy built on a very strong balance sheet.

Peter overall of course, we do our mid to long term liquidity planning right. So you could say this is simply a continuation of a.

Whichever brewery responsible capital allocation.

Application on the other hand, you can be also a very pragmatic way no from the Roche stake we have about 6 billion left there will be a certain depth pushed onto sandals and thats paid already for the majority of the $15 billion on top of that of course, we.

We expect continued very good.

Cash flows and of course in their planning, we always still flexibility for executing our bolt on M&A and BD strategy.

Over the years, so all of that is simply normal continuation of our capital allocation strategy.

Harry Kirsch: As you may know, we have our net debt is just 15 billion, so it's below 1x EBITDA. It's a very strong balance sheet there. We have strong cash flows and, from that standpoint, I think it's just a logical way to continue share buyback. At the same time, of course, a growing dividend in Swiss franc per share for the Novartis ex Sandoz, not rebasing after the Sandoz spin, and then Sandoz will pay another dividend on top of that. I would say it's a logical extension of our capital allocation that provides us a lot of still flexibility on M&A and BD&L, but with focus on bolt-on as always.

<unk> on a very strong <unk>.

On sheet as you may know that we have.

That is just 15 billion so its below one time EBITDA our.

So very strong balance sheet, there we have strong cash flows and.

From that standpoint thing its just the logic way to continue share buybacks at the same time of course crawling dividend in Swiss franc per share for the Novartis Sandoz not re basing our flu Sandoz spin and then Sandoz would pay another dividend on top of that so I would say it's.

Logic extension of our capital allocation that provides us a lot of still flexibility of M&A and BD, but with focus on bolt on as always.

Vasant Narasimhan: Thanks, Harry. Thanks, Peter. Next question, operator.

Thanks, Alright, Thanks, Peter next question operator.

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

Thank you.

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

Speaker 18: Thank you. Question for Vas on how you protect Leqvio from IRA-related price negotiation in the Medicare patients. Now, I'm assuming, given the duration of exposure in around 4, the magnitude of MACE reduction is gonna massively exceed that for Repatha and Praluent, and you're probably gonna get a significant fatal MI benefit as well. If those assumptions are correct, how protective you think it will be when the clock strikes after 9 years and you have price negotiation? I'm asking, partly because you just opened the VICTORION-1P trial, which is another large and expensive trial. That's the first part. The second part is just for VICTORION-1P. What percentage of that trial population in the real world do you think is outside the Medicare patient population and therefore immune from the impact of price negotiation?

Andrew Baum: Thank you. Question for Vas on how you protect Leqvio from IRA-related price negotiation in the Medicare patients. Now, I'm assuming, given the duration of exposure in around four, the magnitude of MACE reduction is gonna massively exceed that for Repatha and Praluent, and you're probably gonna get a significant fatal MI benefit as well. If those assumptions are correct, how protective you think it will be when the clock strikes after nine years and you have price negotiation? I'm asking, partly because you just opened the VICTORION-1P trial, which is another large and expensive trial. That's the first part. The second part is just for VICTORION-1P. What percentage of that trial population in the real world do you think is outside the Medicare patient population and therefore immune from the impact of price negotiation?

Thank you a question for <unk> on how you protect <unk> from IRI related price negotiation in the Medicare patients now I'm, assuming given the duration of expansion around for the magnitude of mace reduction is going to massively exceed that path on praluent, and you're probably going to get significant.

Faithful that Ma benefits as well.

If those assumptions are correct how protected if you think it will be when the clock strikes after nine years and you have price negotiation I'm asking.

Partly because you just open the Victorian one P trial, which is another large and expensive trial.

Sorry.

POS in the second part is just for Victoria <unk>, what percentage of that trial population in the real World do you think is outside the Medicare patient population and therefore immune from the impact of price negotiation.

Vasant Narasimhan: Yeah. Thanks, Andrew. All very good questions. Our overall strategy with Leqvio, and I say this with two important caveats. We don't know yet exactly how, as you know, CMS is going to be looking at data sets and how they're gonna ultimately transact the price negotiations. We'll understand more, I think, over the coming years. Second, we continue to advocate for moving the 9 to 13 as an industry and as a company. Also more specifically, until that big move happens, also advocating that siRNAs and related therapeutics were never intended to be part of the 9-year portion of this ruling. There is bipartisan legislation that's been tabled, at least in the Senate, trying to correct those issues. Two elements of our story.

Vasant Narasimhan: Yeah. Thanks, Andrew. All very good questions. Our overall strategy with Leqvio, and I say this with two important caveats. We don't know yet exactly how, as you know, CMS is going to be looking at data sets and how they're gonna ultimately transact the price negotiations. We'll understand more, I think, over the coming years. Second, we continue to advocate for moving the 9-13 as an industry and as a company. Also more specifically, until that big move happens, also advocating that siRNAs and related therapeutics were never intended to be part of the nine-year portion of this ruling. There is bipartisan legislation that's been tabled, at least in the Senate, trying to correct those issues. Two elements of our story.

Yeah. Thanks, Andrew all very good questions. So our overall strategy would let Theo and I say this with two.

Two important caveats.

We don't we don't know yet exactly how as you know CMS is going to.

Looking at data sets and how they're going to ultimately transact the price negotiations, we will understand more I think over the coming coming years.

And then second we continue to advocate for moving the 9% to 13 as an industry and as a company and also more specifically until that big move happens also advocating that.

<unk> and related therapeutics were never intended to be part of the nine year portion of this ruling and there is bipartisan.

Legislation, that's been tabled at least in the Senate trying to correct that.

Vasant Narasimhan: One, as you rightly point out, is data. We believe that V2P, given the longer follow-up that we'll have versus the PCSK9 monoclonal antibodies, so we can hopefully show a very compelling cardiovascular risk reduction. Theoretically, that risk reduction could be in the 25% to 30% when you look at the modeled outcomes, which we think would be very compelling and hopefully deserving of a price premium if and when the negotiations then happen. V1P would give us another data leg. Now it's important to note we don't need V1P anymore from labeling standpoint, because we've already received the label from FDA without any limitations on the label referring to the lack of outcomes data. We actually have a very optimized label. Nonetheless, we think generating that data will be compelling.

Vasant Narasimhan: One, as you rightly point out, is data. We believe that V2P, given the longer follow-up that we'll have versus the PCSK9 monoclonal antibodies, so we can hopefully show a very compelling cardiovascular risk reduction. Theoretically, that risk reduction could be in the 25%-30% when you look at the modeled outcomes, which we think would be very compelling and hopefully deserving of a price premium if and when the negotiations then happen. V1P would give us another data leg. Now it's important to note we don't need V1P anymore from labeling standpoint, because we've already received the label from FDA without any limitations on the label referring to the lack of outcomes data. We actually have a very optimized label. Nonetheless, we think generating that data will be compelling.

Are those issues.

So two elements of our story one as you rightly point out is the data we believe that <unk> given the longer follow up that will have versus the Pcs can make monoclonal antibodies. So we can hopefully show a very compelling.

Artiodactyla risk reduction theoretically that risk reduction could be in the 25% to 30%. When you look at the modeled outcomes, which we think will be very compelling and hopefully deserving of a price premium if and when the negotiations that happen.

<unk> would give us another data leg now it's important to note, we don't need <unk> anymore from labeling standpoint, because we've already received the label from FDA without any limitations on the end.

The label.

Referring to the lack of outcomes data. So we're actually have a very optimized label. Nonetheless, we think generating that data will be compelling I don't know the exact figures, but I would say a vast majority of those patients would be primary prevention patients would be below 65 years of age.

Vasant Narasimhan: I don't have the exact figures, but I would say a vast majority of those patients would be primary prevention patients below 65 years of age. That also is another leg. Second, we are advancing combination programs of combination siRNAs. One is a common working towards combinations with HMG-CoA reductase, but also looking at are there ways to extend as well the intervals at which Leqvio would ultimately have to be given. All strategies we're looking at as well to protect Leqvio in the long run in this situation. I think a lot will be seen in the coming years, but clearly something that's high on our minds to make sure we can protect this medicine.

And so that also is another leg second.

Second we are advancing combination programs a combination <unk>. So two one is a common working towards combinations with ACM decoy reductase, but also looking at are there ways to two.

Extend as well.

The intervals, which lets deal would ultimately have to be given all strategies, we're looking at as well to protect lethia in the long run.

In this situation. So I think a lot will be seen in the coming years, but clearly something that is high in our mind to make sure. We can protect this medicine as a reminder.

Vasant Narasimhan: As a reminder, its patents go out to between 2036 and 2038. We would have a long runway if we can navigate IRA. Next question, operator.

Its patents go out to 2000 between 2036 and 2038. So we would have a long runway if we can navigate IRI.

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

Next question operator.

Thank you.

Your next question comes from the line of Simon Baker from Redburn. Please go ahead.

Speaker 19: Thank you for taking my question. Coincidentally, it's also on going back to Joe's question and also touching on Andrew's. Given the strong progress you're making on the number of facilities, the number on board for buy and bill, I just wonder if you could give us a bit more detail on basic questions, facilities, and with prescribers. What's driving that physician inertia from getting people from putting a few people on to four or five plus?

Simon Baker: Thank you for taking my question. Coincidentally, it's also on going back to Joe's question and also touching on Andrew's. Given the strong progress you're making on the number of facilities, the number on board for buy and bill, I just wonder if you could give us a bit more detail on basic questions, facilities, and with prescribers. What's driving that physician inertia from getting people from putting a few people on to four or five plus?

Thank you for taking my question and can we extend nasal Sean.

Hey, guys question and also touching on Andrew.

Given the strong progress you're making on the number of facilities.

The number on board for client panel.

Just wondering if you could give us a bit more detail on.

Questions with synergies with prescribers.

What's driving that.

Positioning Nash from getting people from putting a few people onto four five plus.

Vasant Narasimhan: Yes.

Speaker 19: Is it related to the profile of the product? Are people waiting for more data? Is it buy and bill? Is it for me? If you just give us a little bit more color on what's-

Simon Baker: Is it related to the profile of the product? Are people waiting for more data? Is it buy and bill? Is it for me? If you just give us a little bit more color on what's-

Is it related to.

Im proud of the product how people waiting for more data is it volume is it for.

Vasant Narasimhan: Yeah.

Speaker 19: something stopping that move, or is it simply there is a lag time between people coming on board and becoming multiple prescribers? Thanks so much.

Simon Baker: something stopping that move, or is it simply there is a lag time between people coming on board and becoming multiple prescribers? Thanks so much.

For me if you could just give us a little bit more color on what's stopping that simply there is a lag time.

Time between people coming on board and becoming multiple prescribers. Thanks, so much.

Vasant Narasimhan: Yeah, thanks, Simon. I think the biggest, you know, topic is just helping physician offices, inclusive of the physician, understand how to navigate the Part B buy-and-bill system. I mean, we still have a surprising number of physicians who ultimately file for reimbursement for Leqvio on the first two doses under the pharmacy benefit. Under the pharmacy benefit, they will either get rejected or go through a lot of hassle, and then that ultimately frustrates them. We're really focused now on educating physicians as best we can, and physician offices that just you need to set up the separate pathway. Buy and bill is a different approach.

Yeah. Thanks, I mean, I think the biggest.

<unk> is just helping.

Physician offices inclusive of the physician understand how to navigate the part B buy and Bill system I mean, we still have.

A surprising number of physicians, who ultimately file for reimbursement for <unk> on the first two doses under the pharmacy benefit.

And under the pharmacy benefit they will either get rejected or go through a lot of hassle and then ultimately frustrate them. So we're really focused now on educating physicians.

We can and physician offices.

You need to set up a separate pathway buy and bill has a different approach.

Vasant Narasimhan: Once they actually get that experience of both having the patient get on the medicine, ultimately there is no copay for many of these patients, depending on the insurance that they're in. There's net cost recovery for the physician. There's so many benefits that then when they get through that journey, then they expand very quickly from two patients to eight patients to 10 patients to 12 patients. We're losing physicians because of that initial step of misunderstanding pharmacy versus medical, how to actually procure under buy and bill. I would say, frankly, we underestimated that challenge, but that doesn't change our conviction when we see how, when physician offices do convert, how large and big they grow.

And once they actually get that experience of both having the patient get on the medicine. Ultimately there is no co pay for many of these patients depending on the insurance that they are in there is net cost recovery for the physician. So many benefits. It then when they get through that journey and they expand.

Very quickly from two patients to eight patients to 10 patients 12 patients.

We're we're losing physicians because of that initial step of misunderstanding pharmacy versus medical hard actually procure under buy and bill.

I would say frankly, we underestimated that challenge, but that doesn't change our conviction when we see how when physician offices do convert how large and big they grow it gives us the conviction that if we can get through that hurdle of getting enough offices to fully understand that theres a big runway for this project product coming.

Vasant Narasimhan: It gives us the conviction that if we can get through that hurdle of getting enough offices to fully understand, that there is a big runway for this product coming out of that. That's the work we still need to work through over the coming months.

Out of that and so that's the work we still need to work through over the coming coming months.

Speaker 19: Okay. Thanks so much.

Simon Baker: Okay. Thanks so much.

Vasant Narasimhan: Next question.

Operator: Thank you. Your next question comes from the line of Eric Le Berrigaud from Stifel. Please go ahead.

Okay excellent.

Question.

Thank you.

Your next question comes from the line of Eric Le <unk> from Stifel. Please go ahead.

Speaker 20: Yes, good afternoon. Thanks for taking the question. Actually, the question is how to reconcile the second in a row raise in the full year guidance, the midterm guidance, because after the second raise in 2023, you will end up 2023 by growing probably 8% to 9%, i.e. double the expected range of growth for the 4 to 5 coming years. How should we think about this? There are basically two scenarios. One, growth is very much front-end loaded and the end part of the period will show slow growth, or you're just very conservative, you're surprised yourself by the strength in the business this year, and you might be surprised also by the strength in the business for the next 4 or 5 years. Thank you.

Eric Le Berrigaud: Yes, good afternoon. Thanks for taking the question. Actually, the question is how to reconcile the second in a row raise in the full year guidance, the midterm guidance, because after the second raise in 2023, you will end up 2023 by growing probably 8%-9%, i.e. double the expected range of growth for the 4-5 coming years. How should we think about this? There are basically two scenarios. One, growth is very much front-end loaded and the end part of the period will show slow growth, or you're just very conservative, you're surprised yourself by the strength in the business this year, and you might be surprised also by the strength in the business for the next four or five years. Thank you.

Yes. Good afternoon. Thanks for taking the question I think the question is how to reconcile the second in a row raising the full year guidance the midterm guidance because after the C. Can raise in 2023, you will end up 23 by raised by growing probably 8% to 9% I E.

Double.

Expected range of growth for the for the four to five coming years. So how should we think about this.

Basically <unk> one growth is very much front end loaded in the end parts of the world show slow growth.

Or youre, just very conservative Youre surprised yourself by the strength in the business each year and you might be surprised also by the strength in the business for the next four five years.

Vasant Narasimhan: Yeah. Thanks. Thanks for the question. I think it's a very valid point. I mean, overall right now, we want to see, obviously, the continued trajectory on these brands. Clearly if Pluvicto, Kisqali in early breast cancer, if Tacopan, Leqvio, Inflection, Scemblix, you know, and particularly if Scemblix first line comes, certainly, we have the opportunity to outperform that 4% sales growth given the outlook that we have. I mean, right now we maintain that outlook based on what we see today. I think certainly our aspiration is to do better. I think it really comes down to the outlook on those handful of brands. If they continue to perform the way they have, there's certainly an opportunity for us to do better than what we've expected last year.

Thank you.

Yes. Thanks, Thanks for the question.

I think it's a very valid point I mean overall right now we want to see obviously the continued trajectory on these brands.

Clearly if flu victim.

Golly in early breast cancer, if tackled pan let Fabio inflection assemblers.

And particularly if some looks first line comes certainly we have the opportunity to outperform that 4% sales growth given the outlook that we have I mean right now we maintain that outlook based on what we see today, but I think.

Our aspiration is to do better and I think it really comes down to the outlook on those handful of brands and if they continue to perform the way. They have there is certainly an opportunity for us to do better than what we expected.

Vasant Narasimhan: Harry, anything to add on your side?

Harry Kirsch: I think, of course, a 5-year CAGR, right, is harder to lift than a 1-year. Obviously. On the other hand, of course, from our financial planning standpoint, the Entresto contributions to the current growth would not be very much at the end of the 5 years because of our mid-2025 forecast assumption, right. The outlook was to 2027. Those are technical details that the Entresto contribution at the end of it would be lower. That's why we also outlined at the time when we gave the 4% CAGR. If we are able to hold on to Entresto in the US longer, that this 4% CAGR would get to a 5% CAGR.

Harry Kirsch: I think, of course, a five-year CAGR, right, is harder to lift than a one-year. Obviously. On the other hand, of course, from our financial planning standpoint, the Entresto contributions to the current growth would not be very much at the end of the five years because of our mid-2025 forecast assumption, right. The outlook was to 2027. Those are technical details that the Entresto contribution at the end of it would be lower. That's why we also outlined at the time when we gave the 4% CAGR. If we are able to hold on to Entresto in the US longer, that this 4% CAGR would get to a 5% CAGR.

Last year, Harry anything to add on your side.

I think of course for a five year CAGR.

It's harder to lift than the one year, but obviously on the other hand of course from our financial planning standpoint, he addressed contributions to account growth would not be very very much at the end of two five years because of our mid 'twenty forecast assumption onto the outlook.

It was 227, so the technical details that we addressed two contribution at the end of it would be lower and Thats why we also outlined at the time when we gave it to 4% CAGR. If we are able to hold onto address in the U S longer that this 4% CAGR would get to a 5% CAGR. So we are in that range at the moment in this process.

Harry Kirsch: We are in that range at the moment, and as far as Pluvicto, Kisqali, Kesimpta, Scemblix continue to outperform like this, we certainly see the potential for overperformance.

<unk> is proving took his colleagues.

<unk>.

Scan Blake's and.

Continuing to outperform like this we certainly see the potential for over performance.

Vasant Narasimhan: Next question, operator.

Operator: Thank you. Your next question comes from the line of Rajesh Kumar from HSBC. Please go ahead.

Next question operator.

Thank you.

Your next question comes from the line of <unk> Kumar from HSBC. Please go ahead.

Speaker 21: Hi, good afternoon. If I may, just looking at the acquisitions you've done, you know, you've announced today, or, you know, you've announced in the quarter. Could you run us through how your thinking on what type of or what stage of assets you would acquire have changed as we, you know, we have an uncertainty around IRA and also, you know, a lot of your peers are also looking to acquire. That part of capital allocation, if you could provide us with a bit more color, that would really help.

Rajesh Kumar: Hi, good afternoon. If I may, just looking at the acquisitions you've done, you know, you've announced today, or you've announced in the quarter. Could you run us through how your thinking on what type of or what stage of assets you would acquire have changed as we, you know, we have an uncertainty around IRA and also,, a lot of your peers are also looking to acquire. That part of capital allocation, if you could provide us with a bit more color, that would really help.

Hi, good afternoon.

If I may.

Looking just looking at the acquisitions you've done.

You've announced today.

You've announced in the quarter.

Could you run us through how you're thinking on work type of or what stage of assets you would acquire has changed.

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We have uncertainty around IRI and also.

A lot of your peers are also looking to acquire.

That part of capital allocation, if you could provide us with a bit more color that's really helpful.

Vasant Narasimhan: Yeah, absolutely. I mean, generally you see us moving to mid-stage and earlier, and as we've always guided, you know, in the bolt-on range or smaller deals. Chinook, as you saw, was in that $3 billion range. I think very much in line with what we've guided. We are carefully looking at assets in terms of potential IRA impact and ensuring that we think we have opportunities to either manage the IRA impact or avoid the IRA impact, certainly with conditions like Charcot-Marie-Tooth, cystinosis. These are areas where you wouldn't be impacted by IRA, as best as we currently see those patient populations. Certainly on Chinook in terms of those renal assets, again, we believe that given the patient profile overall, largely manageable with respect to IRA. That's certainly on our minds.

Absolutely I mean, generally you see us moving to mid stage and earlier and as we've always guided that.

OLT on range or smaller or smaller deals.

As you saw was in that $3 billion range. So I think very much in line with what we've guided we are carefully looking at assets in terms of potential.

Ara impact and ensuring that we think we have opportunities to either manage the IRA impact or avoid the IR impacts certainly with conditions like sharp and Marie <unk> Cystinosis.

These are areas, where you wouldn't be impacted by IRI asbestos. We currently see those patient populations certainly on.

Chinook in terms of those renal assets again, we believe that given the patient profile overall largely.

Vasant Narasimhan: I think the biggest thing for us is we want assets that are in our core therapeutic areas or in our core platform technologies that have an adequate risk reward where they're de-risked from the basic science. Still there's an upside that we believe we can deliver based on our capabilities. We don't wanna overpay for very large deals where assets are fully valued, and it's difficult for us to find upsides of assets contributing, and therefore difficult to create value for our shareholders. Next question, operator.

Manageable with respect to IRS, that's certainly on our minds, but I think the biggest thing for US is we want assets that are in our core therapeutic areas are in our core platform technologies that have an adequate risk reward where they are.

De risked from the basic science, but still there is an upside that we believe we can deliver based on our capabilities and we don't want to overpay for very large deals where assets are fully valued and it's difficult for us to find upsides novartis is contributing.

And therefore difficult to create value for our shareholders.

Speaker 21: Very clear. Thank you.

Rajesh Kumar: Very clear. Thank you.

Operator: Thank you. Your next question comes from the line of Richard Parkes from BNP Paribas. Please go ahead.

Next question operator.

Thank you.

Your next question comes from the line of Rich.

At parks from BNP, probably that Pease go ahead.

Harry Kirsch: Hi. Thank you for taking my question. Just one last. There's been a lot of discussion, obviously, about the Entresto LOE, but there's also a possible couple of smaller products that could face generics over the next few years. I'm thinking Promacta and Tasigna. Just wondered if you could update for us your latest thinking on expected first generic launches to those two drugs in various territories. Thank you.

Richard Parkes: Hi. Thank you for taking my question. Just one last. There's been a lot of discussion, obviously, about the Entresto LOE, but there's also a possible couple of smaller products that could face generics over the next few years. I'm thinking Promacta and Tasigna. Just wondered if you could update for us your latest thinking on expected first generic launches to those two drugs in various territories. Thank you.

Alright. Thank you for taking my question just just one left.

There's been a lot of discussion about the Entresto elevating.

Possibly a couple of smaller products that could face generics hasn't actually as I'm thinking from a return to Sigma. So just wondering if you could update for US your latest thinking on expected first generic launches to those two trucks and cars.

Vasant Narasimhan: Yeah. I mean, both with Promacta and Tasigna, there's no change to the previous expectations. We obviously are continuing to prosecute with respect to Promacta our various patents, and seeing if there's a way we can have a longer exclusivity on Promacta. Other than that, in each of geographies, there's no change from our prior guidance on Promacta or Tasigna. Next question, operator. This will be our last question.

Yeah, I mean, both with Promacta and Sigma Theres no change to the previous expectations and we obviously are continuing to.

To prosecute with respect to Promacta, our various patents.

And seeing if there's a way we can have.

Longer exclusivity on promacta, but other than that in each of the geographies. There is no change from our prior guidance on promacta or to Cigna.

Next question, operator, and this will be our last question.

Operator: Thank you. Your last question comes from the line of Graham Parry, Bank of America. Please go ahead.

Thank you.

Your last question comes from the line of Graham Parry Bank of America. Please go ahead.

Graham Parry: Well, great. Thanks. Wanted to get a follow-up in. So it's on data timing actually. So PSMAfore, do you think you can make ESMO with that data when you say Q4? That's just into Q4 or are we thinking something later? And then on NATALEE, you talked about some additional updates later in the year. Presumably, San Antonio Breast Cancer Symposium would be a good forum for that. And given that the hazard ratio on overall survival was approaching borderline statistical significance, when you look at the event rate in that trial now, is there an opportunity to see a statistically significant OS benefit this year if you continue to predict event rates in line with what you've seen to date in the trial? Thank you.

Graham Parry: Well, great. Thanks. Wanted to get a follow-up in. It's on data timing actually. PSMAfore, do you think you can make ESMO with that data when you say Q4? That's just into Q4 or are we thinking something later? Then on NATALEE, you talked about some additional updates later in the year. Presumably, San Antonio Breast Cancer Symposium would be a good forum for that. Given that the hazard ratio on overall survival was approaching borderline statistical significance, when you look at the event rate in that trial now, is there an opportunity to see a statistically significant OS benefit this year if you continue to predict event rates in line with what you've seen to date in the trial? Thank you.

Great. Thanks, so much again a follow up.

So on data timing as you say pay SMA for do you think you can make SMA with that when you say four key that sustains for key or are we thinking something later and then lastly, you talked about some additional updates later in the year, presumably San Antonio breast cancer patient would be good for them for that and given that.

The hazard ratio on overall survival was approaching both lines statistical significance and when you look at the event rates in that trial now is there an opportunity to see a statistically significant OS benefit. This year, if we sort of if you continue to predict event rates in line with what you've seen to date in the trial.

Vasant Narasimhan: Yeah. Thanks, Graham. I think on both of those congresses, those would be our aspirations. Of course, we have to get the data and ultimately, you know, get accepted to the various congresses, but that's certainly in line with our current aspirations. With respect to the OS benefit, it is certainly possible given that we were at 0.76. I think it really will, of course, depend on the event rate and ultimately what we see. I think there's at least the possibility that we get to a statistically significant OS benefit. When we look at the competitor OS benefit, we hope that we can demonstrate something that's compelling on that front to build on our broad benefit that we already saw on the IDFS in Stage two and Stage three patients.

Yes, Thanks, Tim I think on both of those Congresses, those would be our aspiration of course, we have to get the data and ultimately.

Get accepted to the various congresses, but thats certainly in line with our current aspiration.

With respect to the OS benefit it is certainly possible given that we were at <unk> 76.

I think it really will of course depend on the event rate and ultimately what we see but I think there is at least the possibility that we get to a statistically significant OS benefit and then when we look at the competitor OS benefit we hope that we can demonstrate something thats compelling on that front to build on our our broad.

Benefit that we already saw in the first in stage, two and stage III patients.

Vasant Narasimhan: Thank you all very much for joining the call. I really appreciate it. We continue to plan on delivering strong performance for H2, executing on the Sandoz spin, getting the share buyback moving, and updating you with hopefully exciting clinical trial data over the course of H2. I really appreciate your interest in the company, and we'll keep you updated as we continue to progress on our journey. Thank you again.

So thank you all very much for joining the call I really appreciate it we continue to plan on delivering strong performance for the second half of the year executing on the Sandoz has been getting the share buyback moving and updating you would hopefully exciting clinical trial data over the course of the second half I really appreciate your interest in the company and we'll keep you updated as we continue.

Progress on our on our journey. Thank you again.

Operator: Thank you. This concludes today's conference call. Thanks 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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