Q1 2024 Novartis AG Earnings Call

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Operator: Good morning and good afternoon, and welcome to the Novartis Q1 2024 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 will be an opportunity to ask questions by pressing stars 1 and 1 at any time during the conference. Please limit yourself to one question and return to the queue for any follow-up.

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

Install one one at any time during the conference. Please limit yourself to one question I'll return to the queue for any follow up a recording of the conference call, including the Q&A session will be available on our website. Shortly after the call ends with that I would like to hand over to Mr. Sloan Simpson head of Investor Relations. Please go.

Operator: 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 Miss Sloane Simpson, Head of Investor Relations. Please go ahead, madam.

Unknown Executive: Thank you so much, Operator. Good morning and good afternoon, everyone.

Unknown Executive: Go ahead Madam.

Sloan Simpson: Thank you so much operator, good morning, and good afternoon, everyone.

Unknown Executive: Thank you for joining our first quarter 2024 earnings call. 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 achievement. For a description of some of these factors, please refer to the company's Form 20-F and its most recent quarterly results on Form 6-K, which were filed with and furnished to the U.S. Securities and Exchange Commission.

Unknown Executive: You for joining our first quarter 2024 earnings call the.

The information presented today contains forward looking statements that involve known and unknown risks uncertainties and other factors. These may cause.

Unknown Executive: Cause actual results to be materially different from any future results performance or achievements expressed or implied by such statements.

Unknown Executive: For a description of some of these factors. Please refer to the Companys form 20-F, and its most recent quarterly results on form 6K that respectively were filed with and furnished to the U S Securities and Exchange Commission and with that I'll hand across to buy.

Unknown Executive: And with that, I will hand it over to Beth.

Beth: Thank you, Sloan. I'd like to open today's call by first thanking Samir Shah for his incredible tenure as our Head of Investor Relations for over a decade. We're grateful for all of his contributions. We look forward to his continued contributions and a new role at Novartis. And I want to welcome Sloan Simpson.

Speaker Change: I'd like to open today's call by first thanking the mirror Shaw for his incredible tenure as our head of Investor relations for over a decade and we're grateful for all of his contribution and we look forward to his continued contributions in the new role at Novartis and I want to welcome Sloan Simpson. Thanks, Sloan will do an absolutely outstanding job serving all of us.

Beth: I think Sloan will do an absolutely outstanding job serving all of you as our Head of Investor Relations. I've worked with her for many, many years. I think we're really pleased and grateful to have her on board. So let's turn to the quarter. Novartis delivered a really strong start to the year with double-digit sales growth and core margin expansion, which enabled us to upgrade our guidance. And Harry will go through the guidance in more detail.

Speaker Change: Our head of Investor Relations I've worked with her for many many years I think we're really pleased.

Speaker Change: Grateful to have her on board, so, let's turn to the quarter Novartis delivered a really strong start to the year with double digit sales growth core margin expansion, which enabled us to upgrade our guidance and Harry will go through the guidance in more detail sales were up 11% in constant currency core operating income was up 22.

Beth: Sales were up 11% in constant currencies, and core operating income was up 22%. Our core margin reached 38.4% as we steadily marched to our goal of 40% plus by 2027. In addition, we had a number of important innovation milestones in the quarter, which I'll go through over the course of the call, but a few I'd want to particularly highlight. The positive Fabhalta opinion enabled us to launch Fabhalta in Europe. Semblix's first line readout, we think, will be very important for a major medicine for the company. And we also had the updated PSMA 4 OS results, which will enable us now to move forward with the filing of Pluvicto in the United States. They're moving to slide five.

Speaker Change: <unk>, our core margin reached 38, 4% as we steadily March to our goal of 40% plus by 2027. In addition, we had a number of important innovation milestones in the quarter, which I'll go through over the course of the call, but a few I'd want to particularly highlight the fab halt the positive opinion.

Speaker Change: Enables us to launch <unk> in.

Speaker Change: In Europe, Our Assembly first line readout, we think will be very important for a major medicine for the company and we also had the updated PSM for OS results, which will enable us now to move forward with the filing up to Victoza in the United States.

Speaker Change: Now moving to slide five.

Beth: Now, our growth in the quarter was broad-based, and we had strong contributions from many of our key growth drivers, including Entresto, Cosimta, Cosentix, which had a very strong quarter, as well as Kisgali. I would also say geographically, our performance was broad-based, with strong growth across the US, Europe, China, which had very strong growth, and Japan. Now, as you can see on the chart, the strong growth was indicated by 41% constant currency growth, and we expect this growth to continue over the course of the year, which is what gives us confidence to give the upgraded guidance that we've outlined this morning. Now moving to slide six, and we'll walk through the brands one by one, as we always do.

Speaker Change: Now our growth in the quarter was broad based and we had strong contributions from many of our key growth drivers, including Entresto condemned co.

Speaker Change: <unk>, which had a very strong quarter as well.

Speaker Change: Golly I would also say geographically our performance was broad based with strong growth across U S Europe, China, but very strong growth in Japan as you can see on the chart, but strong growth with indicated by 41% constant currency growth and we expect this growth to continue over the course of the year, which is.

Speaker Change: What is what gives us confidence to do the upgraded guidance that we've outlined this morning.

Speaker Change: Moving to slide six and we'll walk through the brands one by one as we always do first with Entresto, we had double digit growth up 36% in quarter. One that was again geographically broad based U S and ex U S and the U S. Our weekly T. Rx continue to reach new highs, we had 38% constant.

Beth: First, within Tresto, we had double-digit growth of 36% in quarter one. That was, again, geographically broad-based, US and ex-US. In the US, our weekly TRX continued to reach new highs. We had 38% constant currency growth outside of the US. And we continue to see momentum for this brand. We're in a strong guideline position, both in the US and in Europe. We have further penetration opportunities in heart failure globally and specifically in hypertension in China and in Japan.

Speaker Change: Currency growth outside of the U S and we continue to see momentum for this brand and a strong guideline position both in the U S and in Europe, we have further penetration opportunities in heart failure globally and in specifically in hypertension, and China, and Japan and in Japan, We have protection into the.

Beth: And in Japan, we have protection into the early 2030s with this medicine. For forecasting purposes, no change in our Tresto LOE outlook, continue to guide to a mid-2025 LOE, while continuing to aggressively defend our various patents. And then, in terms of the EU, we continue to guide to RDP in November 2026, benefiting from our pediatric extension. And moving to slide seven, Cosensics grew 25% in the quarter and I think it really got back to the dynamic growth we expect for this medicine. This was fueled both by our core indications and some strong launches. I'll go through that in a bit more detail.

Speaker Change: Early 2000, <unk> with this medicine.

Speaker Change: For forecasting purposes, no change in our Entresto <unk> outlook.

Speaker Change: The guidance for a mid 2025, low while continuing to aggressively defend our various patents and then in terms of the EU. We continue to guide to RDP in November 2026, benefiting from our pediatric extension.

Speaker Change: Now moving to slide seven <unk> hundred 25% in the quarter and I think really got back to the dynamic growth. We expect for this medicine. This is fueled both by our core indications, but also some strong launches and I'll go through that in a bit more detail.

Beth: US was up 25% in constant currencies, ex-US 24%. We were highly competitive in our core indications, and so we saw a return to market share improvement in psoriasis and in rheumatology indications both in the US and in Europe. We're now the leading originator of the IL-17 class in the EU and China. Now, in terms of our new launches, we saw very strong performance in HS, hydroadenitis super ativa, where we now have over 50% of NBRX share versus adalimumab in the US and Germany.

Speaker Change: <unk> was up 25% in constant currencies X U S 24%.

At Haile, we are highly competitive in our core indications and so we saw a return to market share improvement in psoriasis and in the rheumatoid rheumatology indications both in the U S and in Europe. We're now the leading originator biologic in the IL 17 class in the EU and China.

Speaker Change: Now in terms of our new launches, we saw very strong performance in Asia.

Speaker Change: Hidradenitis, Suppurativa, where we have over 50% now <unk> a share versus AD aluminum mab in U S and Germany, when we compare our launch on a comparable basis to be out of aluminum App launched in this indication. We currently see ourselves at nearly three times the performance of that previous launch I think really are.

Beth: When we compare our launch on a comparable basis to the adalimumab launch in this indication, we currently see ourselves at nearly three times the performance of that previous launch, I think really highlighting how strong the uptake for Cosensics has been in this new indication. We also had very strong performance in the intravenous indication ahead of the J code, which we expect in July. I think, again, that indicates there is strong interest in having an IV option for patients with cosensics in rheumatology indications. So we'll look forward to further acceleration in the back half of the year once we have that J code in place.

Speaker Change: Highlighting how strong the uptake for Concentrix has been in this new indication. We also had very strong performance.

Speaker Change: The intravenous indication ahead of the J code, which we expect in July I think again that indicate there is strong interest in having an IV option for patients with <unk> and the rheumatology indications. So we'll look forward to further acceleration in the back half of the year. Once we have that J code in place.

Beth: Now moving to slide 8, Cosimta delivered 66% growth in the quarter, and this was again global US and ex-US driven. We have over 100,000 patients treated worldwide for the medicine, and the majority of these patients are either nave or first switch, which reflects the strategy we have for this brand. In the US, we saw very strong demand-driven growth with NBRX volume at plus 26% versus the prior quarter. One of our key priorities now in the US is to increase our B-cell market share over the coming quarters.

Speaker Change: Now moving to slide eight to simply delivered 66% growth on the quarter and this was again global U S and ex U S. Driven we have over 100000 patients treated worldwide on the medicine and the majority of these patients are either naive or switch, which reflects the strategy. We have for this brand.

Speaker Change: <unk> in the U S. We throw us a very strong demand driven growth with MB Rx volume at plus 26% versus prior quarter and one of our key priorities now in the U S is to increase our b cell market share over the coming quarters outside of the U S. We have leadership now in seven out of 10 major market and we look forward to continuing to.

Beth: Outside of the US, we now have leadership in 7 out of 10 major markets, and we look forward to continuing to drive the convenience and high efficacy story that Cosimta presents in these markets. In the quarter, as well, we announced the Aletheo six-year long-term data, which demonstrated sustained efficacy and the consistent safety profile for KSIMTA. In this study, nine out of 10 patients were free on the NETA-3 score of disease activity.

Speaker Change: <unk>, the convenience and high efficacy story that gets them to present in these markets in.

In the quarter as well, we announced the Alithia a six year long term data, which demonstrated sustained efficacy and the consistent safety profile for <unk>.

Speaker Change: In this study nine out of 10 patients were free on net of three score of disease activity and.

Beth: And we also saw treatment-naive patients derive substantial benefits across multiple markers of disease activity. So even in the face of some competitor launches, we feel very confident about the one-minute-a-month self-administered dosing, high efficacy, and strong safety profile of KSIMTA. Now, moving to slide nine.

Speaker Change: And we also saw a treatment naive patients derive substantial benefits across multiple markers of disease activity. So even in the face of some competitor launches we feel very confident about the one minute a month self administered dosing high efficacy strong safety profile.

Speaker Change: Now moving to slide nine.

Beth: Kaskali grew 54% in metastatic breast cancer with now a continued leading share in new patient starts. US was up 72%, and I think there's increasing recognition of the unique profile that Kaskali offers given its broad data set of OS across three different studies in metastatic breast cancer. We have a leading NBRX share at 45%, and we see a steady growth in riders.

Because golly grew 54% in metastatic breast cancer with now continued leading share in new patient starts.

Speaker Change: <unk> was up 72% and I think there's increasing recognition of the unique profile that <unk> offers given its broad data set of AUM across three different studies in metastatic breast cancer, we are a leading <unk> share at 45% and we see a steady growth and riders. We're also working to increase depth as well as improve.

Beth: We're also working to increase depth, as well as improve our market access position across key accounts ahead of the early breast cancer launch. Now, outside of the United States, with 39% growth, we're the fastest growing CDK4-6 in Europe and a market leader in the pre-menopausal indication. We also successfully entered the NRDL list in China in quarter one. In its early days in China, but given the strength of our Chinese operations, we're hopeful we can drive dynamic growth for Kaskali in China over time.

Speaker Change: Our market access position across key accounts ahead of the early breast cancer launch now outside of the United States, 39% growth were the fastest growing CDK four six in Europe, and a market leader in the pre menopausal indication. We also successfully entered the NRT list in China.

Speaker Change: One in its early days in China, but given the strength of our China operations were hopeful we can drive dynamic growth valley in China over time, the regulatory review in early breast cancer is ongoing were filed in the U S and EU.

Beth: The regulatory review for early breast cancer is ongoing. We are filed in the US and EU and currently expect regulatory review to proceed as planned. Our manufacturing adjustments, which we disclosed a few weeks ago, are on track to assure an alignment with the latest regulatory standards for early breast cancer by the end of Q2. And we continue to expect to be able to launch this medicine in the second half of this year.

Speaker Change: And currently expect regulatory review to proceed as planned our manufacturing adjustments, which we disclosed a few weeks ago are on track to external alignment with the latest regulatory standards in early breast cancer by the end of Q2, and we continue to expect to be able to launch this medicine in the second half of this year now moving to <unk>.

Beth: Then moving to slide 10, PluVicto had strong growth of 47% in the quarter driven by new patient starts and very early beginnings of growth as well outside of the U.S. QN. We have 400 treatment sites now up and running in the U.S., on steady progress to our goal to get well over 500 sites fully certified for the use of PluVicto. Also, our supply performance is now consistently at a very high level, with over 99.5% of injections administered on the planned day. So ample supply, the Indianapolis facility up and running, and continued expansion of our manufacturing network.

Speaker Change: <unk> 10.

Speaker Change: Victor <unk> had strong growth of 47% in the quarter driven by new patient starts and very early beginnings of growth as well outside of the U S.

Speaker Change: Q.

Speaker Change: 400 treatment sites now up and running in the U S. On a steady progress to our goal to get well over 500 sites fully certified for the use of <unk>.

So our supply performance is now consistently at a very high level with over 99, 5% of injections administered on the planned days, so ample supply Indianapolis facility up and running continued expansion of our manufacturing network. So we really feel like we're now are in a position to fully supply the market.

Beth: So we really feel like we're now in a position to fully supply the market consistently globally for this medicine. Now, over the course of 2024, we're going to focus on share expansion within existing sites and particularly expanding the referral network of medical oncologists who can refer patients to a PluVicto treating center. We feel like this will be the key now in the post-vaccination setting. We also want to build our business outside of the United States with some important launches in Europe, as we also build towards planned launches in Japan and China, both countries where we have planned new manufacturing facilities to support the PluVicto and Lutathera business.

Speaker Change: Consistently globally.

Speaker Change: This for this medicine.

Speaker Change: Of course of 2024, we're going to focus on share expansion within existing sites and particularly expanding the referral network of medical oncologists, who can refer into absolute Victor treating center, we feel like this will be the key now in the post taxane setting.

Speaker Change: Also want to build our business outside of the United States with some important launches in Europe. As we also build towards launches planned launches in Japan, and China, both countries, where we have planned new manufacturing facilities to support that victim and loot at there.

Beth: Our existing indications are also on track. We announced earlier this quarter that the PSMA-4 submission enabling OS readout was achieved, and this will put us in a position to file PluVicto early in the second half.

Speaker Change: Business our existing indications are also on track, we announced earlier this quarter that the PSA for submission to enabling OS readout was achieved and this will put us in a position to file pubic, though early in the second half so mid year filing for this medicine and then <unk> addition, also on.

Beth: So a midyear filing for this medicine, and in the PSMA edition, also on track as well as the PSMA delayed castration localized oligometastatic program as well. Now, a little more detail on the PSMA-4 submission enabling OS readout. We had a primary endpoint that we read out last year where we met the primary endpoints, as well as really strong data across all of the secondary and exploratory endpoints. A very impressive relative risk reduction for RPFS, and a strong profile across the patient reported outcomes, as well as the various response ORR, DCR, and DOR.

Speaker Change: On track as well as the VP SMA delayed castration localized Aldo metastatic our program as well.

Speaker Change: Now a little more detail on the <unk> four submission, enabling OS readout.

We had a primary endpoint that we read out last year, where we met the primary endpoint as well as <unk>.

Speaker Change: Really strong data across all of the secondary and exploratory endpoints are very impressive relative risk reduction for our PFS strong profile across the patient reported outcomes as.

Speaker Change: As well as the various response or R&D ECR.

Beth: What we announced earlier in the quarter was the updated third interim, which gave us a higher proportion of OS events. The OS hazard ratio was less than one, which puts us in a position to file midyear.

Speaker Change: What we announced earlier in the quarter was the updated third interim which gave us a higher proportion of OS events. The OS hazard ratio was less than one which puts us in a position to file mid year and other secondary endpoints were consistent with the previous results as was the <unk> and what we feel and see is with the.

Beth: And other secondary endpoints were consistent with the previous results, as was the RPFS. And what we feel and see is that with the additional eight months of follow-up, we have high confidence in the safety profile of PluVicto. And so these results will be presented at an upcoming medical congress, and, of course, we're working as quickly as we can to get this file in. And moving to slide 12, Lectio also had a really strong quarter.

Speaker Change: <unk> eight months of follow up we have a high confidence in the safety profile of <unk>.

Speaker Change: And so these results will be presented at an upcoming medical Congress and of course, we're working as quickly as we can to get this file and we're.

Speaker Change: Now moving to slide 12, let me also had a really strong quarter adoption expand expanded steadily in the U S. But also outside of the United States. As you can see here on the left hand chart very strong performance both in the U S and outside the U S. Taking the U S. First we had growth outpacing the advanced lipid lowering market we have now.

Beth: Adoption expanded steadily in the U.S., but also outside of the United States. As you can see here on the left-hand chart, very strong performance both in the U.S. and outside of the U.S. Taking the U.S. first, we had growth outpacing the advanced lipid-lowering market. We now have nearly 3,900 facilities that are ordering Lectio, and increased breadth and depth across our key accounts. We continue to see buy-and-build as the key driver overall of the business, but we do see the use of other channels as well.

Speaker Change: <unk> nearly 3900 facilities that are ordering less dio increased breadth and depth across our key accounts, we continue to see buy and bill as the key driver overall of the business, but we do see also the use of other channels as well outside of the U S. We have a consistent rollout.

Beth: Outside of the U.S., we have a consistent rollout now. We have 29 countries where Lectio is publicly reimbursed, and an additional 39 with private commercial coverage. This puts us in a strong position, with our top three European markets contributing 50 percent of international sales, but really strong growth across the international region.

Speaker Change: We have 29 countries, where leftfield publicly reimburse and an additional 39 with private commercial coverage. This puts us in a strong position.

Speaker Change: So our top three European markets contributing 50% of international sales, but really strong growth across the international region and strong early uptake in China in the self paced setting with over 200, new patients. A day ahead of our plan to enter our Dl listing in the first half first part of next year Lastly, we had new data at <unk>.

Beth: And strong early uptake in China in the self-pay setting, with over 200 new patients a day ahead of our planned NRDL listing in the first part of next year. Lastly, we had new data at ACC and a publication as well, which supported the early initiation of Lectio, demonstrating that starting Lectio early in patients requiring secondary prevention for cardiovascular events helped many of these patients to achieve their LDL-C goals Now moving to the next slide, slide 14. Semblix grew 83% in the quarter.

Speaker Change: <unk> in a publication as well, which supported the early initiation of IPO demonstrating that starting what's your early and patients.

Speaker Change: Requiring secondary prevention for a cardiovascular event a lot of these patients to achieve their LDL C goals earlier and moving to the next slide Slide 14 Assembly grew.

Speaker Change: <unk> grew 83% in the quarter again, primarily driven by the third line indication with our first line submission on track to be completed in the coming months we.

Beth: Again, primarily driven by the third line indication, with our first line submission on track to be completed in the coming months. We had continued momentum in the core third line indication at 40% NBRX share. Outside of the US, we're at a 32% total market share driven by key markets such as Japan, France, and Germany.

Speaker Change: We had continued momentum in the core third line indication over 40% <unk> share outside of the U S rate of 32% total market share driven by our key markets, Japan, France, and Germany and here in the third line setting we primarily focus on early identification of patients who could benefit from a switch to something like a post two.

Beth: And here in the third line setting, we primarily focus on early identification of patients who could benefit from a switch to Semblix post two TKIs. As a reminder, our Ask for First study enabled first in line submission, first line submission in half one. Primary endpoints were met versus all standard of care TKIs and versus Gleevec as well, with favorable safety and tolerability profile. And we can confirm that the full data will be presented at ASCO in 2024.

T K.

Speaker Change: As a reminder, our ask for first study enabled first in line submission first line submission and have one primary endpoints were met versus.

Speaker Change: All standard of care <unk> and.

Speaker Change: And versus Gleevec, as well favorable safety and Tolerability profile and we can confirm that the full data will be presented at <unk> in 2024.

Speaker Change: Now turning to Fab also we're at the early stages of the PMA to launch. So we didn't expect to see significant sales at this very early stage given the complexity of these of the thought but we are very pleased with the early launch indicators. We've had a rapid increase in the number of Hcp's, who are certified under the Rems program.

Beth: Now, turning to Fabhalta, we're at the early stages of the PNH launch, and we didn't expect to see significant sales at this very early stage, given the complexity of this launch. But we are very pleased with the early launch indicators. We've had a rapid increase in the number of HCPs who are certified under the REMS program, an increase in new riders, and patient starts, which are exceeding our internal expectations.

Speaker Change: An increase in new riders and patient starts which are exceeding our internal expectations, we see uptake across naive and switch patients for this medicine and we also are really happy to see HCP is willing to work through the medical exception process to get patients on this medicine.

Speaker Change: Also have the positive <unk> opinion for PMA should we expect that full approval to happen in the coming few months and we will consistently work to launch this medicine across the globe as well as drive rapid uptake in the United States.

Beth: We see uptake across naive and switch patients for this medicine, and we are also really happy to see HCPs willing to work through the medical exception process to get patients on this medicine. So we've also had a positive CHMP opinion for PNH, and we expect that full approval to happen in the coming few months. And we'll consistently work to launch this medicine across the globe, as well as drive rapid uptake in the United States.

Speaker Change: Now turning to slide 15, we also announced our phase III applause IGN study full.

Speaker Change: Full results earlier in the quarter, where we demonstrated 38% proteinuria reduction relative to placebo in this study we randomized patients to <unk> versus placebo. The results. We read out was the nine months interim proteinuria analysis. These patients will be continued to be followed out to month.

Beth: Turning to slide 15, we also announced our phase 3 APLOS IGAN study, full results earlier in the quarter, where we demonstrated 38% proteinuria reduction relative to placebo. In this study, we randomized patients to heptaclopan versus placebo.

Speaker Change: 24 for the full Egfr analysis, you can see on the right hand panel very impressive proteinuria reduction of 43, 8% versus placebo at 9% clinically meaningful and statistically significant.

Beth: The results we read out were the nine-month interim proteinuria analysis. These patients will continue to be followed out to month 24 for the full EGFR analysis. You can see in the right-hand panel, a very impressive proteinuria reduction of 43.8% versus placebo at 9%, clinically meaningful and statistically significant. We know that complement activation is a key driver of inflammation in IGAN, and importantly, the overall safety profile was consistent with the data we previously reported.

Speaker Change: We know the complement activation is a key driver of inflammation and IGN and importantly, the overall safety profile was consistent with data we previously reported.

Speaker Change: We've submitted this data to FDA and just one clarification, we did not use a priority review voucher for this medicine. The FDA had granted US priority review based on the data set to be.

Speaker Change: We provided so the study continues as well for Egfr readout in 2025, and we look forward to.

Speaker Change: It's really getting a full approval very shortly we're getting the initial approval in.

Beth: We've submitted this data to FDA, and just one clarification, we did not use a priority review voucher for this medicine. The FDA granted us priority review based on the data set that we provided. So this study continues as well for EGFR readout in 2025, and we look forward to really getting a full approval very shortly or getting the initial approval in the coming period. Moving to slide 16.

Speaker Change: In the coming period moving to slide 16.

Speaker Change: Now Remy Bruton they've demonstrated it.

Speaker Change: <unk> already demonstrated in an earlier study at 12 weeks robust efficacy and safety, but we needed to wait for the 52 week data to be in a position to file in chronic spontaneous or to carry out. This data came out positive enabling us now to move forward towards this important filing as a reminder, there is about 400000 PSU patients in.

Speaker Change: The U S not control.

Or or refractory to anti histamines and only less than 20% of these patients are currently on a biologic so theirs.

Beth: Now, Remy Brutnib demonstrated, had already demonstrated in an earlier study at 12 weeks, robust efficacy and safety, but we needed to wait for the 52-week data to be in a position to file for chronic spontaneous urticaria. And this data came out positive, enabling us now to move forward towards this important filing. As a reminder, there are about 400,000 CSU patients in the US not controlled or refractory to antihistamines, and only less than 20% of these patients are currently on biologics.

Speaker Change: A large opportunity for our high efficacy of oral medicine. The previous primary endpoint data by week 12 as shown here, where we very consistently showed improvements versus placebo at week 12 on the <unk>.

Speaker Change: Seven score and so we'll look forward to presenting the full data set in the second quarter for this medicine.

Speaker Change: 52 weeks.

Speaker Change: And with the consistent favorable safety profile, we've demonstrated with overall rates to be comparable to placebo and balance liver function tests as well as the clear efficacy data, we will look forward to global submissions in the second half of revenue boot nib.

Beth: So there's a large opportunity for a high-efficiency oral medicine. The previous primary endpoint data at week 12 is shown here, where we very consistently showed improvements versus placebo at week 12 on the UAS7 score. And so we'll look forward to presenting the full data set in the second quarter for this medicine out to 52 weeks. And with the consistent favorable safety profile we've demonstrated with overall rates of AE comparable to placebo and balanced liver function tests, as well as the clear efficacy data, we'll look forward to global submissions in the second half of Remy Brutnib.

Speaker Change: So all taken together, we're on track across our innovation.

<unk> for the year I did want to highlight that we have shifted our at <unk> U S submission to the second half.

Speaker Change: Is no great correlate for efficacy in <unk> given the.

Ultra rare nature of this disease, we provided the FDA are six month data while it certainly we believe that six month data was very compelling the FDA wanted to see the additional six month follow up for these patients. After all patients had rolled over onto active first six month period was randomize second six month period.

Beth: So, all taken together, we're on track across our innovation goals for the year. I did want to highlight that we have shifted our Ataclipan C3G US submission to the second half because there is no great correlate for efficacy in C3G, given the ultra-rare nature of this disease.

Patients are on active so we will complete that six months follow up and then file in the second half and we remain very excited about the opportunity to bring up also as well as the patients with <unk>.

Beth: We provided the FDA with our six month data. Well, certainly, we believe that the six month data was very compelling. The FDA wanted to see the additional six months of follow-up for these patients. After all patients had rolled over on to active, the first six months of the period was randomized. Second six month period, all patients are on active treatment. So we will complete that six month follow-up and then file in the second half. And we remain very excited about the opportunity to bring Pap halta as well to patients with C3G.

Speaker Change: So moving to the next slide we also are on track for our range of submissions $24 25, and 26% to 28. So we'll continue to keep you abreast of how datasets unfold as well as potential readout timelines.

Speaker Change: As we understand those readouts timelines better and really excited about the catalyst rich profile that we have out.

Speaker Change: Through the coming years, so moving to slide 19 ill hand, it over to Harry Yes. Thank you very much good morning, good afternoon, everyone.

Harry: We're going to walk you through some of the financials for the first quarter and as always my comments refer to growth rates in constant currencies.

Beth: Moving to the next slide, we also are on track for our range of submissions, 24, 25, and 26 to 28. So we'll continue to keep you abreast of how data sets unfold, as well as potential readout timelines, as we understand those readout timelines better. And we are really excited about the catalyst-rich profile that we have out through the coming years. So moving to slide 19, I'll hand it over to Harry. Yeah, thank you very much.

Harry: Otherwise noted also throughout the presentation I refer to continuing operations unless you see from the numbers. It has been a very strong start to the year. So on slide 20, you will see a summary of our financial performance with net sales up 11% and core operating income up <unk>.

Harry: <unk>, 2%, our core margin to 340 basis points through each 38, 4% showing that we are very well on track to achieve our midterm margin guidance of 40% plus by 2027.

Harry: Yeah, thank you very much, Voss. Good morning, good afternoon, everyone, and I'm going to walk you through some of the financials for the first quarter. And, as always, my comments refer to growth rates and current currencies, unless otherwise noted. Also, throughout the presentation, I refer to continuing operations.

Harry: Core EPS.

Harry: $1 80 for the first quarter growing 23% a bit ahead of Corp. In Q2, the share buyback program free cash flow was 2 billion declining, whereas this quarter one of 2023, but that was due to a prior year, one timer and the timing of some tax payments.

Harry: This year, however, and importantly for the full year 2020 for free cash flow is expected to grow approximately in line with core operating income.

Harry: And as you can see from the numbers, it has been a very strong start to the year. So on slide 20, you'll see a summary of our financial performance, with net sales up 11% and co-operating income up 22%. Our core margin grew 340 basis points to reach 38.4%, showing that we are very well on track to achieve our mid-term margin guidance of 40% plus by 2022. Core EPS was $1.80 for the first quarter, growing 23% a bit ahead of co-oping due to the share buyback program. Free cash flow was $2 billion, declining versus Q1 of 2023, but that was due to a prior year one-timer and the timing of some tax payments this year.

Harry: So in summary, very strong start to the year.

Harry: Efforts to focus and streamline the business continue to pay off.

Harry: This brings us already to our full year guidance on slide 21.

Harry: Strong momentum in our business across our end markets growth brands and launches both in the U S and international markets gives us the confidence to upgrade both top and bottom line guidance.

Harry: We are also favorable update on generic entry assumption U S. But that's actually a smaller element of the analysis driving our 2024 guidance upgrades.

Harry: We now expect net sales to grow in a range of high single digit to low double digit.

Harry: And core operating income to grow in the range of low double digit to mid teen.

Underpinning our guidance are two key assumptions that know entresto and no proactive generics.

Harry: However, and importantly, for the full year 2024, free cash flow is expected to grow approximately in line with core operating income. So, in summary, a very strong start to the year as our efforts to focus and streamline the business continue to pay off. This brings us already to our full-year guidance on slide 21. So the strong momentum in our business across our in-market growth brands and launches, both in the US and international markets, gives us the confidence to upgrade both top and bottom line guidance.

Harry: We'll launch in 2024 and U S.

Harry: And to complete our 24 full year guidance. Please note that we continue to expect core net financial expenses to be in the range of 0.6 to 0.7 billion and our core tax rate to be around 16, 5%.

Harry: Now moving to slide 22.

Harry: I'm very pleased with the quality of our quarter, one sales growth driven by our key in market brand, which grew its vast showed also the prior slide 41% in the quarter.

Harry: We also have a favorable update on generic entry assumption US, but that's actually a smaller element of the analysis driving our 2024 guidance upgrade. We now expect net sales to grow in a range of high single-digit to low double-digit, and Core Operating Income to grow in the range of low double-digit to mid-teen. Underpinning our guidance are two key assumptions that no Entresto and no Promarkter generics will launch in 2024 in the US.

Harry: The vast majority of these brands still have many years of patent protection ahead of them. So the continued momentum strongly supports our midterm growth outlook of 5% CAGR through 2028.

Harry: Slide 23 please.

Harry: Just to highlight that we continue our shareholder friendly capital allocation strategy in quarter, one of course investing in the business alongside returning capital to shareholders, notably in Q1, we announced two way, creating bolt ons in our core therapeutic areas. The proposed acquisition of <unk> and the licensing.

Harry: And to complete our 24 full-year guidance, please know that we continue to expect core net financial expenses to be in the range of 0.6 to 0.7 billion and our core tax rate to be around 16.5. Now moving to slide 22. I'm very pleased with the quality of our quarter one sales growth, driven by our key in-market brands, which grew, as Voss showed us on a prior slide, 41% in the quarter, and the vast majority of these brands still have many years of patent protection ahead of them. So their continued momentum strongly supports our midterm growth outlook of 5% CAGR through 2020. Slide 23, please.

Deal of our lineup both of which align with our strategic focus on oncology.

Harry: In terms of returning capital to our shareholders, we paid $7 6 billion or growing dividend.

Harry: In quarter, one and we also continue our up to $15 billion share buyback program and we still have 11 7 billion remaining to be executed by the end of 2025.

Harry: Our into my final slide.

Harry: 24, we have outlined some of the details.

Harry: Guarding the FX impacts and as you see in quarter, one FX at a 1% negative impact on sales.

Harry: Six points negative on corporate income.

Harry: The latter driven by the strong Swiss francs, and if late April rates prevail, including the most recent strengthening of the U S. Dollar we expect a full year impact of currency is still to be less than it was 23, our top line negative 2% bottom line and negative 4%.

Harry: Just to highlight that we continue our shareholder-friendly capital allocation strategy in quarter one, investing in the business alongside returning capital to shareholders. Notably, in Q1, we announced two well-creating bolt-ons in our core therapeutic areas, the proposed acquisition of Morphosis and the licensing deal for Avinas, both of which align with our strategic focus on oncology. In terms of returning capital to our shareholders, we paid $7.6 billion of our accruing dividends in quarter one, and we also continue our up to $15 billion share buyback program. And we still have 11.7 billion remaining to be executed by the end of 2025.

Harry: As a reminder, this.

Harry: This is hard to forecast from the outside and moving all the time, we are updating our expected FX impact on our website on a monthly basis and with that I hand back to Bob.

Bob: Great. Thanks, Terry So as you heard a strong start to the year with double digit sales growth strong core margin expansion.

Bob: With the strong momentum we see in the business, we're able to raise our guidance for the year. We saw this momentum across all of our key growth brands and across geographies I think indicating the high quality of the performance that we're seeing in the company. Our pipeline continues to advance with multiple submissions and submission enabling readout those we outlined and we.

Harry: All right, on my final slide, 24, we have outlined some of the details regarding the FX impacts. And as you can see, in quarter one, FX had a 1% negative impact on sales and six points negative on corporate income, the latter driven by the strong Swiss franc. And if late April rates prevail, including the most recent strengthening of the US dollar, we expect a four-year impact of currency still to be less than it was in 23.

Bob: To have confidence in our midterm guidance of 5% constant currency sales growth, 23% to 28% and 40% plus core operating income margin by 2027.

Phone: So with that I'll hand, it back to phone, who will outline some of our upcoming investor events.

Phone: Before we open up for questions I, just wanted to flag a few investor events that we are planning to hold this year first we will have an in person event at <unk> in Chicago on June 2nd highlighting assemblers asked for first data, which I mentioned will also have a virtual event on our renal pipeline in the second half of the year and we will be having our annual meet Novartis managed.

Harry: On the top line, negative 2%. Bottom line, negative 4%. As a reminder, as this is hard to forecast from the outside and is changing all the time, we are updating the expected effects impact on our website on a monthly basis. And with that, I head back to about.

Phone: Event in London on November $20 to 21, we hope to see many of you at these events.

Beth: Great. Thanks, Harry.

Vas: So, as you heard, a strong start to the year with double-digit sales growth, strong core margin expansion, and with the strong momentum we see in the business, we're able to raise our guidance for the year. We saw this momentum across all of our key growth brands and across geographies, I think indicating the high quality of the performance that we're seeing in the company, margin by 2027. So with that, I'll hand it back to Sloan, who will outline some of our upcoming investments.

Speaker Change: And with that operator, let's open the line for questions. Please.

Speaker Change: Thank you to ask a question you will need to press star one on one and you'll tell us and one thing operator can we just ask each participant to limit themselves to one question and then we'll go back through the queue.

Speaker Change: Thank you Sir.

Speaker Change: Once again, if you'd like to ask a question. Please press star one on your telephone and wait for you.

Speaker Change: Name to be announced to withdraw your question. Please press star one on one again.

Speaker Change: We will now go to your first question.

Speaker Change: And your first question comes from the line of Matthew Weston UBS. Please go ahead.

Unknown Executive: Thank you, Vas. Before we open up for questions, I just wanted to flag a few investor events that we're planning to hold this year. First, we'll have an in-person event at ASCO in Chicago on June 2nd, highlighting the Semblex Ask for First data, which Vas mentioned. We'll also have a virtual event on our Renal Typeline in the second half of the year. And we'll be having our annual Meet Novartis Management event in London on November 20-21. We hope to see many of you at these events. And with that, operator, let's open the line for questions, please.

Matthew Weston: Thank you for taking my question.

Matthew Weston: Be on prolific toe.

Matthew Weston: So vast you set out some of the metrics in terms of improving revenue.

Matthew Weston: I think there's definitely an expectation amongst investors that we might see an inflection.

Matthew Weston: As supply comes online and physicians get more comfortable with your ability to supply at nurses and chaz into their networks.

Speaker Change: Wanted to understand whether you thought that was a realistic assumption or whether or not investors should get more comfortable with that.

Operator: Thank you. To ask a question, you will need to press star 1 and 1 on your telephone.

Operator: And one thing, operator, can we just ask each participant to limit themselves to one question and then we'll go back through the questions. Thank you, sir. Once again, if you'd like to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now go to your first question.

Speaker Change: Kind of continuous grind and the growth.

Speaker Change: Over the coming quarters.

Speaker Change: Yeah. Thanks, Matthew So first on flu Victor we have resolved our supply issue, but we are still working through I think the remnants of the base of patients that were a bit lower than quarter. Four given that we were still working through things. Then now when you think about the growth of to Victor medium to long term first we have this.

Operator: Once again, if you'd like to ask a question, please press star one and one on your telephone and wait for your name to be announced. To withdraw your question, please press star one and one again. We will now go to your first question. And your first question comes from the line of Matthew Weston, UBS. Please go ahead.

Speaker Change: <unk> Taxane indication, where you can see we're already annualizing at a pretty healthy blockbuster by $1 billion plus sales range.

Speaker Change: And we expect that to steadily grow and we guided to that indication to being a multibillion dollar so $2 billion plus indication. So we expect it to steadily grow over the coming quarters and that post taxane setting and this will be primarily driven by as I mentioned expanding the base of medical oncologists, who are able to.

Beth: Yeah, thanks, Matthew. First, on Plavicto, we have resolved our supply issue, but we are still working through, I think, the remnants of the base of patients that were a bit lower in quarter four, given that we were still working through things then. Now, when you think about the growth of Plavicto medium to long term, first, we have this post-taxing indication, where you can see we're already annualizing at a pretty healthy blockbuster, about a billion plus sales range.

Speaker Change: We're into the existing centers, we don't see the opportunity at this point in terms of expanding the number of centers for this indication so that will steadily grow over the course of 2014 2024 to get us steadily marching up towards that multibillion dollar guidance $2 billion plus guidance that we've given in the individual indications.

Beth: And we expect that to steadily grow, and we guide it to that indication of being a multi-billion dollar, so a $2 billion plus, indication. So we expect it to steadily grow over the coming quarters in that post-taxing setting. And this will be primarily driven by, as I mentioned, expanding the base of medical oncologists who are able to refer patients into the existing centers. We don't see the opportunity at this point in terms of expanding the number of centers for this indication.

Speaker Change: Then we expect the PSM may four pre taxing indications to be the next catalyst and we do expect an inflection on that launch, which we'll then I should also mentioned in flu Victor outside of the U S. As well, we will get additional momentum as we bring onboard Germany, France other countries in Europe.

Speaker Change: And then in the coming years, we do expect a substantial inflection from China, and Japan were building dedicated manufacturing facilities for those countries in order to drive further growth both in the pre tax gain in the post vaccine indication next catalysts will be the pre taxane approval, which we hope to have in the first half of next year.

Beth: So that will steadily grow over the course of 2024 to get us steadily marching up towards that multi-billion dollar guidance, two billion dollar plus guidance that we've given in the vision indication. Then we expect the PSMA-4 pre-taxing indication to be the next catalyst. And we do expect an inflection on that launch, which will then, I should also mention in Pluvicto, outside of the US as well, we will get additional momentum as we bring on board Germany, France, other countries in Europe.

Speaker Change: Then the hormone sensitive indication they all go metastatic and then we also have two programs advancing with actinium SMA as well. It's also further bolster the overall portfolio. So I think a steady growth in the vision indication within catalysts coming from ex U S expansion and the indication.

Speaker Change: Expansions for the brands.

Speaker Change: Thanks, Matthew next question operator.

Thank you.

Speaker Change: Your next question comes from the line of Steve Scala from TD Cowen. Please go ahead.

Beth: And then in the coming years, we do expect a substantial inflection from China and Japan. We're building dedicated manufacturing facilities for those countries in order to drive further growth, both in the pre-taxing and the post-taxing indication. The next catalyst will be the pre-taxing approval, which we hope to have in the first half of next year, then the hormone-sensitive indication, then the oligometastatic, and then we also have two programs advancing with actinium PSMA as well to further bolster the overall portfolio. So I think there will be steady growth in the vision indication within catalysts coming from XUS expansion and indication expansion. Thanks, Matthew. Next question, operator?

Steve Scala: Thank you so much.

Steve Scala: As you noted in the prepared remarks that the <unk> review was on track, but how confident is novartis that FDA will meet the priority review regulatory deadline for <unk> with a broad label there seems to be a number of things that could give FDA pause, including the nitrosamine issue as.

Speaker Change: Well as liver tox.

Speaker Change: So what is your level of confidence thank you.

Speaker Change: Yes, we're very confident on the broad label I think on the on the timeline. We currently guide to the current timeline that we have as we implement these manufacturing shifts we of course are discussing these manufacturing.

Speaker Change: Adjustments in their minor adjustments, but they do require discussions with FDA.

Operator: Your next question comes from the line of Steve Scala from TD Cowan. Please go ahead.

Speaker Change: So once we have a better clarity on it.

Speaker Change: If at all if there was any shift in timeline, we would of course, let the markets know, but we think this will be still a second half launch for this medicine and we feel very good about that guidance and so on.

Beth: Oh, thank you so much. Voss, you noted in the prepared remarks that the Kaskali review was on track, but how confident is Novartis that FDA will meet the priority review regulatory deadline for Kaskali with a broad label? There seems to be a number of things that could give FDA pause, including the nitrosamine issue, as well as liver tox. So what is your level of confidence? Thank you.

While we talked to you about minor shifts we're not talking about anything significant and again expect a broad label. We don't have concerns about liver. This is something thats well known with good Golly Lst's are currently monitored in the metastatic breast cancer setting no change in monitoring requirements is what we expect so overall, we feel we feel good about the ability to launch.

Beth: Yes, Steve, we're very confident in the broad label. I think on the timeline. We currently guide to the current timeline that we have as we implement these manufacturing shifts. We, of course, are discussing these manufacturing adjustments, and they're minor adjustments, but they do require discussions with FDA. And so once we have better clarity on, you know, if at all, if there was a mini-shift in timeline, we would, of course, let the markets know.

Speaker Change: This medicine in the second half of the year.

Speaker Change: Thank you next question operator.

Speaker Change: Thank you.

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

Graham Parry: Great. Thanks for taking the question another one on <unk>. So just could you just explain to us what the price. This amendment needed to kiss Cali is in any breast cancer so as that.

Beth: But we think this will still be a second half launch for this medicine, and we feel very good about that guidance. And so while we talk here about minor shifts, we're not talking about anything significant. And again, expect the broad label. We don't have concerns about the liver. This is something that's well known with Casali. LFTs are currently monitored in the metastatic breast cancer setting, so no change in monitoring requirements is what we expect. So overall, we feel good about the ability to launch this medicine in the second half of the year. Next question, operator.

Graham Parry: Anything in the actual reaction is it purification.

Speaker Change: And do you know.

Graham Parry: Whether you do or does it need a an inspection by FDA and if there is one do you think that would still be completed within the second quarter timeframe and therefore not delay the <unk> timeline. Thank you.

Graham Parry: So first of all on the on the.

Graham Parry: On the manufacturer adjustments that we talked about here just as a reminder, because golly already meet the requirements in metastatic breast cancer. So these are just additional requirements given that early breast cancer as an asymptomatic population.

Graham Parry: Since we talked about here are primarily.

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

Graham Parry: How we source materials from third parties, we wanted to get a higher quality of sourcing of third party material, which is something we believe we can implement in a very straightforward way and then also just some additional.

Beth: Great, thanks. I'll take your question.

Operator: Another one on Kiscali, actually. Could you just explain to us what the process amendment needed for Kiscali is in early breast cancer? So is that something in the actual reaction? Is it purification? And do you know at the moment whether you do or don't need an inspection by FDA? And if there is one, do you think that it would still be completed within the second quarter timeframe and, therefore, not delay the Natalie-Pedusa timeline? Thank you. Graham, so first on the on the on the

Graham Parry: Adjustments within our supply chain for the management of kits golly prior to actually leaving our supply chain to go to physicians. So these are we.

Graham Parry: We believe relatively minor changes nonetheless changes, we do need to review with the regulators in terms of an.

Graham Parry: Inspection, we don't believe there would be any inspection required for this and so that's what I think overall it gives us confidence in the guidance to launch the medicine in the second half.

Speaker Change: Thank you for your question operator.

Beth: Graham, so first on the manufacturing adjustments that we talked about here, just as a reminder, Cascale already meets the requirements in metastatic breast cancer. So these are just additional requirements given that early breast cancer is an asymptomatic population.

Speaker Change: Thank you.

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

Emily Field: Thanks for taking my question I, just thought I'd ask.

Emily Field: I know you mentioned in your second a J code, but currently generating much sales from the IV formulation.

Emily Field: Context, if you could frame.

Beth: The adjustments we talked about here are primarily, you know, how we source material from third parties; we want to go to higher quality sourcing of third party material, which is something we believe we can implement in a very straightforward way. And then also just some additional adjustments within our supply chain for the management of Cascale prior to actually leaving our supply chain to go to physicians. So these are, we believe, relatively minor changes; nonetheless, changes we do need to review with the regulators. In terms of inspection, we don't believe there would be any inspection required for this. And so that's what I think overall gives us confidence in the guidance to launch the medicine.

Emily Field: Current pricing environment in the U S. Specifically thank you.

Emily Field: Yes, thanks, Emily So concentrix IV, I'd say better than expected uptake than what we had thought prior to the J code, but when you look at Concentrix current outperformance in the quarter. It was driven primarily by the strong hidradenitis suppurativa launch as well as that leading to stronger performance as well.

Emily Field: Psoriasis globally so.

Emily Field: So the IV launch, it's still I think in the midst of picking up what I would say is we.

Emily Field: We are having a rehab.

Emily Field: We have reached already the vast majority of accounts that we expected to order so centex IV theyre already at.

Beth: Thank you. Your next question?

At least in the process of ordering the medicine ahead of the J code trying to use an exceptional code to use the medicine. So in terms of account reached we're already in a very good position and we think we'll be able to then drive a strong depth once we actually get the J code in place. So we feel very good. So this could be another I think good driver for us.

Beth: Hi, thanks for taking my question. I just want to ask a question on pathetics. I know you mentioned you're expecting the J code, but are you currently generating much sales from the IV formulation just in that context?

Beth: Yeah, thanks, Emily. So Cosentyx IV, I'd say it has better than expected uptake than what we had thought prior to the J code. But when you look at Cosentyx's current outperformance in the quarter, it was driven primarily by the strong hydradenitis superativa launch, as well as that leading to stronger performance as well in psoriasis globally. So the IV launch is still, I think, in the midst of kicking off. What I would say is that we are on a high; we have already reached the vast majority of accounts that we expected to order Cosensics IV.

Emily Field: <unk> growth in the second half post that J code being.

Emily Field: <unk> being being rolled out.

Speaker Change: Next question operator.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Simon Baker at that Atlanta. Please go ahead.

Simon Baker: Thanks, so much for taking my question.

Simon Baker: A question on the <unk>.

Simon Baker: Commercial performance.

You've highlighted a few specifics.

Simon Baker: Recent strength in the quarter and like the Concentrix Hs launch, but to what extent is the broad based performance. We've seen in this quarter as a result of the changes to the commercial organization that have been.

Beth: They're already, at least in the process of ordering the medicine ahead of the J code, trying to use an exceptional code to use the medicine. So in terms of account reach, we're already in a very good position. And we think we'll be able to then drive a strong depth once we actually get the J code in place. So we feel very good. So this could be another, I think, good driver for Cosensics growth in the second half post that J code.

Simon Baker: Underway for the last couple of years I wonder to what extent that is responsible.

Speaker Change: If you could give any any color on where it's impacting and how much is left to come from that initiative. Thanks. So much yes. Thanks, Simon we do believe that probably the biggest big picture driver for our strong performance over the recent quarters has been the reorganization and focus of the focusing of the company and as a reminder for <unk>.

Operator: Next question operator. Thank you. Your next question comes from the line of Simon Baker, Redbird Atlantic. Please go ahead. Thanks so much for taking my question. It's a broad question on commercial performance.

Speaker Change: There's a few things we did we elevated the U S and we went to a geographic model U S. International we focus down the portfolios of four key therapeutic areas, we focus the commercial area on nine key drugs.

Operator: Thank you. Your next question comes from the line of Simon Baker, from Redburn Atlantic. Please go ahead. Thanks so much for taking my call.

Beth: Thanks so much. Yeah Thanks, Simon. We do believe that probably the biggest big picture driver for our strong performance over the recent quarters has been the reorganization and focus of the company. And as a reminder for investors, a few things we did. We elevated the US, and we went to a geographic model, US international. We focused the portfolio to four key therapeutic areas. We focused the commercial area on nine key drugs.

Speaker Change: And shifted our investments in most places over 75% of MFS investments go to the growth drivers a heavy focus on U S, China, Japan and Germany.

Speaker Change: Taken together that I think is compounding to show the broad based performance you see across across the U S and international and particularly in some markets like China very very strong performance. So that is I think the biggest sustainable driver in terms of specifics in the quarter clearly concentrix performed extremely well.

Beth: We shifted our investments in most places; over 75% of M&S investments go to the growth drivers, with a heavy focus on the US, China, Japan, and Germany. And taken together, that I think is compounding to show the broad-based performance you see across the US and international, and particularly in some markets like China, very, very strong performance. So that is, I think, the biggest sustainable driver. In terms of specifics in the quarter, clearly, Cosentix performed extremely well.

Speaker Change: Putting aside consensus if you look at the growth rates of <unk> Ghali and consumed.

<unk>.

Speaker Change: <unk>.

We're all very very strong even flew Victor if we put aside on quarter on quarter growth. These were all very strong growth rate and I think that also I think gives us confidence to raise the guidance for the full year.

Beth: You know, putting aside consensus, if you look at the growth rates of Kisgali and Consimta, Lectvio, Semblix, these were all very, very strong. Even Pluvicto, if we put aside quarter-on-quarter growth, these were all very strong growth rates.

Speaker Change: Thanks, very much next question operator.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Manuel Papadakis from Deutsche Bank. Please go ahead.

Emmanuel Papadakis: Thanks for taking the question since you flagged it will be forthcoming at ASCI pumps, just say.

Beth: And I think that also, I think, gives us confidence to raise the guidance for the full year. Thanks so much. Next question operator. Thank you. Your next question comes from the line of Emmanuel Papadakis from Deutsche Bank. Please go ahead. Thanks for taking the question. Since you flanked it, it will be forthcoming at ASCO, perhaps just a...

Emmanuel Papadakis: Question on the Sam Thanks as equal pay.

Emmanuel Papadakis: The details.

Emmanuel Papadakis: Endpoint was MMR.

Emmanuel Papadakis: We're going to be very and see how that says it was obviously a physician standards.

Troy: This is Troy standard camera.

Troy: Versus the potential component has been particularly sickening data can you talk a little bit about what we can expect to see in terms of some of the standard of care.

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

Troy: <unk> primary end point, and indeed, any secondaries youre willing to go.

Beth: Yeah, let me outline how the Semblix study was designed and then hopefully give you some, some perspective. So this was a first line study.

Speaker Change: Alright, Thompson will be helpful as well.

Thompson: Yeah, Let me outline how the assembler study was designed and then hopefully give you. Some some perspective. So this was a first line study and.

Beth: And we, you know, this is, of course, our third medicine in the world of chronic myelogenous leukemia, so we have a long history in the company. The primary endpoint was Semblix versus investigator choice, TKI, with a goal that over 50, roughly 50% of patients would be on imatinib or Gleevec. And the primary endpoint was Semblix versus the overall pool of patients who had an intention to treat, regardless of TKI. So that was the first primary endpoint.

This is of course, our third medicine in the world of chronic myelogenous leukemia, So long history in the company.

Thompson: Primary endpoint was assemblage versus investigator choice PKI with a goal that over 50, roughly 50% of patients would be on imatinib or gleevec.

Thompson: The primary endpoint with <unk> versus the overall pool of patients an intention to treat regardless of TK.

Beth: And the co-primary endpoint was Semblix versus Gleevec, and we hit both of those primary endpoints with clinically meaningful, highly statistically significant improvements in MMR. Then we had a descriptive secondary endpoint of Semblix versus the two second-generation TKIs. And again, we will disclose the full data at ASCO, but we feel very good about the profile of the medicine. And then on safety, which I think is one of the key elements of Semblec's story already in the third line setting, we saw an outstanding safety profile.

Thompson: First primary endpoint and the co primary endpoint was assemblage versus Gleevec and we hit both of those primary endpoints.

Thompson: With clinically meaningful highly statistically significant improvements in MMR.

Thompson: We had a descriptive secondary endpoint of semblance versus the two second Gen Teekay eyes.

Thompson: And again, there we will disclose the full data at ash, though but we feel very good about the profile of the medicine and then on safety, which I think it was one of the key elements assembler story already in the third line setting we saw.

Beth: So I think that's the other thing to look out for at the ASCO presentation is the overall safety profile of Semblec, because clearly, to move into that front-line setting, physicians will want to see both strong efficacy and a clean safety profile. Now, it's important to note that once we get to the point of filing the medicine shortly and then ultimately launch the medicine in the US, we believe there is a portion of the market where we can drive very rapid uptake.

Thompson: Outstanding safety profile. So I think that's the other thing to look out for at the <unk> presentation is the overall safety profile assemblies, because clearly to move into the frontline setting.

Thompson: Physicians will want to see both strong efficacy and a clean safety profile now it's important to note that once we get to the point of filing the medicine.

Thompson: Shortly and then ultimately launch the medicine in the U S. We believe there is a portion of the market, where we can drive very rapid uptake. These are patients who are currently on.

Beth: These are patients who are currently on second-generation TKIs or in physician practices that are very open to switching. We do know that there is an element of the CML market that's contracted and that tends to use generic imatinib that will take us longer overall to move through. But I think one of the exciting things about Semblec is that this has a long LOE and is based on targeting a rare disease which is not part of the IRA negotiations.

Thompson: Second Gen Teekay is or in physician practices that are very open to switching we do know that there is an element of the CML market that's contracted.

Thompson: Tends to use generic imatinib that will take us longer to overall to move through but I think one of the exciting things about <unk> is that this has a long low.

Thompson: And based on targeting a rare disease is not part of Iran. Negotiations. So we have here a medicine that can drive.

Beth: So we have here a medicine that can drive Novartis growth through this decade and well into the next decade, both in the US and around the globe. And we, of course, are one of the global leaders in CML. So I think that positions us well overall. Thanks for the question, Emmanuel. Next question, operator.

Thompson: Artists growth through this decade, and well into next decade, both U S and around the globe and we of course are one of the global leaders in CML, So I think that positions us well overall.

Speaker Change: So thanks for the questions next question operator.

Operator: Thank you. Your next question comes from the line of Richard Vosser from J.P. Morgan. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Richard <unk> from JP Morgan. Please go ahead.

Operator: Hi, thanks for taking my question. Can I return to Cosentix?

Richard: Hi, Thanks for taking my question can I return to Concentrix you mentioned.

Beth: You mentioned the launch in HS being sort of three times the mirror. How do you see the sizing of the indication of HS now? Is that a two to three billion indication for Cosentix? And thus, do you see continued potential double-digit growth over the next few years for the product? And one clarification, any quantification on the size of the HS contribution at this stage? And I don't think there was any pricing or stocking in the first quarter, but just to clarify that as well. Thanks very much.

Richard: The low G&A chess being sort of three times humira.

Richard: How do you see the the sizing of the indication of Hs now is that two to three indications for Concentrix and.

Speaker Change: And that's D. C continued potential double digit price as the next few years for the product and I suppose one just clarification just to.

Speaker Change: Any.

Speaker Change: Quantification on the size of the Hs.

Speaker Change: <unk> at this stage.

Speaker Change: I don't think there was any pricing or stuck in the first quarter that just just to clarify that as well thanks very much.

Beth: Yeah, thanks, Richard. So just as context, we estimate as best we can from public information that Adalimumab had over a billion dollars in sales in H.S. historically.

Speaker Change: Yeah. Thanks Richard.

Speaker Change: So just as context, we estimate as best we can from public information that <unk> had over $1 billion in sales in Hs. Historically, we do think that the market is significantly underserved theres a large number of patients who are not on.

Beth: We do think that the market is significantly underserved. There are a large number of patients who are not on biologics in this indication.

Beth: So it could be a substantial market. I don't think we've yet given guidance on specifically the overall size of the market, but certainly there's the potential for a multi-billion dollar market here. So we think Cosentix has the opportunity to drive very significant growth for the brand as we try to reach $7 billion. I am probably not in a position yet to give specific indication-based guidance on Cosentix, but we think with the combination of HS, IV, giant cell arteritis phase two, which is ongoing, the polymyalgia rheumatica indication that we also have, as well as the strong performance we have in China, this gives us even more conviction that we can get to that $7 billion peak sales by the end of the decade.

Speaker Change: Biologics in this indication so it could be a substantial market I don't think we've given yet guidance on specifically the overall size of the market, but certainly there is a potential of a multibillion dollar market here.

So we think cosmetics has the opportunity to drive very significant growth for the brand as we tried to reach $7 billion is probably not in a position yet to give specific indication based guidance on <unk>, but we think with the combination of Hs of IV giant cell arteritis phase II, which is ongoing.

Speaker Change: <unk> the poly Myology rheumatic indication that we also have as well as the strong performance. We had in China that you just gives us even more conviction that we can get to that $7 billion peak sale by the end of the decade.

Speaker Change: Next question operator, Thanks Richard.

Operator: Next question, operator? Thanks, Richard. Thank you. Your next question comes from the line of Tim Anderson of Research. Please go ahead. Thank you. I have a couple of questions on entrusto and just timing of generic entry into the U.S. Can you map out for us what we should be tracking from here?

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Tim Anderson off lease that please go ahead.

Timothy Anderson: Thank you.

Timothy Anderson: Couple of questions on Entresto, and just timing of generic entry so in the U S.

Timothy Anderson: Can you map out for us what we should be tracking from here in terms of events and news flow that will help inform whether mid 25 is a good assumption.

Timothy Anderson: Is it conceivable that sometime in 'twenty four youll have a different point of view.

Timothy Anderson: And then ex U S and the timing of generic entry you guide for a later 2006.

Timothy Anderson: Is there a similar level of uncertainty on that and then if you could wrap in China as part of that discussion on generic timing as well.

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

Beth: Yeah, thanks, Tim. So on Entresto right now, we do have an appeal ongoing in the Circuit Court on the combination patent, which we believe will be heard and ruled on in the second half of this year. It's important to note that there have been no Entresto generics approved as yet, and we have two citizen petitions pending at the FDA on the basis of approval and also the labeling for any potential product with respect to Entresto.

Speaker Change: Yeah. Thanks, Tim So uninterested right now we do have an appeal ongoing to the circuit court on the combination patent, which we believe will be heard and ruled on in the second half of this year. It is important to note that there have been no entresto generics accrued as of yet and we have to.

Speaker Change: Citizens petitions pending at the FDA.

Speaker Change: On the basis for approval and also the labeling for any potential product with respect to Entresto. So based on that fact that we don't we don't expect any generics.

Beth: So based on the fact that we don't expect any generics to launch this year, we can never exclude, of course, somebody trying to do something at risk. And then separate from that, we have a number of other patents that are currently being litigated towards the end of this year and then towards the end, all through the coming period, which is what overall makes us have the best estimate in the U.S. of mid-2025. And of course, as we get better resolution on that, we can, of course, provide further color.

Speaker Change: Launched this year that we can never exclude of course somebody trying to do something at risk and then separate from that we have a number of other patents that are currently being litigated towards the end of this year and then towards the all through the coming period.

Speaker Change: Which is what overall makes us have the best estimate in the U S. Mid mid 2025 and of course as we get better resolution on that we can of course provide further color I would also say that entresto is on the IRA.

Beth: I would also say that Entresto is on the IRA negotiation list so, to our best understanding, at least in the Medicare population, IRA pricing would hold, and we would get a better read on how that looks in September. Outside of the United States, we already include our pediatric exclusivity. So we think our current guide of the end of 2026 is reasonable. Of course, we're always looking for ways to adequately defend all of our patents, but we think that's a very reasonable assumption at this point in time. I am in China at the moment.

Speaker Change: Negotiation list, so that we would expect in Jan 2026.

Speaker Change: So our best understanding at least in the Medicare population that IRA pricing would hold and we would get better read on how that looks in September.

Outside of the United States. We already include our pediatric exclusivity. So we think our current guide or end of 2026 is reasonable of course, we're always looking for ways to adequately defend all of our patents, but we think that's a very reasonable assumption at this point in time.

Beth: We currently have, I think, a number of different approaches. But the key there will be the number of generics and when they get approved. And so I think we could reasonably reasonably expect the potential entry of Chinese generics sometime in the course of 2025. But the question in China was when China would enter the VVP list. And that, of course, is something we're monitoring. And once we have a better understanding of the number of generics and their status legally, when we enter the VVP list, we'll be able to provide further clarity. And lastly, in Japan, we currently outlook 2031, I believe 2031 or 2032. Our team will get back to you exactly. But certainly into the 2030s for Japan at the current rate.

Speaker Change: In China at the moment.

Speaker Change: We currently have I think a number of different approaches, but the key there will be the number of generics and when they get approved.

Speaker Change: So I think we could reasonably reasonably expect potential entry.

Speaker Change: Chinese generic sometime in the course of 2025, but the question in China was when we will enter the GBP list.

Speaker Change: And that of course is something we're monitoring and once we have a better understanding of the number of generics and they're in their status legally when we enter the <unk> will be able to provide further clarity and lastly in Japan, we currently outlook.

Speaker Change: 30.

Speaker Change: I believe 2031 or 2032, our team will get back to you exactly but certainly into the 2000 <unk> for Japan at the current point in time.

Beth: So hopefully that's helpful, Tim. Thank you for the question. Next question, operator. Thank you. Your next question comes from the line of Richard Parkes, BNP Paribas. Please go ahead. Hi, thanks for taking my question. I just wondered if you could help us with cost phasing.

Speaker Change: So hopefully that's helpful to them. Thank you.

Speaker Change: For the question next question operator.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Richard Parkes E&P, probably about please go ahead.

Richard Parkes: Alright, Thanks for taking my question.

Richard Parkes: Wondering if you could help us with cost phasing I think guidance is implying lower margin improvement.

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

Richard Parkes: The very strong margin improvement you saw in Q1 I don't know.

Richard Parkes: Slightly in this model last year going into Kimco extrapolating. The margins can you just help us understand the phasing in terms of.

Operator: Very helpful. Thank you. Thanks, Richard. I'll hand that to Harry.

Richard Parkes: Cost savings this year.

Harry: Thank you, Richard. So, overall, as you have seen, our quarter one costs were growing in constant currency by roughly 2%, which was driven by R&D right up by roughly 6%, whilst SG&A was basically flat. That's also a consequence of the full implementation of transformation for growth, restructuring programs, leaning out, going to one organization locally, Pharma Onco, and leaning out above country and customer-facing functions, our organization structures, and leading our processes.

Richard Parkes: Hopeful. Thank you thanks, Richard I'll hand that to Harry Harry.

Harry: Thank you Richard So overall as you have seen our quarter one cost we're growing constant currency, roughly 2%, which was driven by R&D.

Harry: It's up roughly 6% was SG&A was basically flat.

Harry: That's the consequence of full implementation of transformation for growth restructuring programs leaning out going to one organization locally between pharma uncle and leaning out above.

Harry: Country and customer facing functions, our organization structures and leading our processes. So we see some continued benefits from that of course, we will continue to leverage new technologies processes to keep driving the multiple launches, but all within our four therapeutic areas, where we have.

Harry: So you see some continued benefits from that. Of course, we will continue to leverage new technologies and leaner processes to keep driving the multiple launches, but all within our four therapeutic areas where we have significant commercial infrastructures and medical infrastructures. So I would expect that SG&A continues to be quite flattish, maybe here or there a bit more investment, but certainly significantly below sales growth. And then the level of especially development spend depends also a bit on the M&A, you know, in the licensing agenda.

Harry: Significant commercial infrastructures and medical infrastructures, so I would expect that SG&A.

Harry: Continues to be quite flattish, maybe here or there a bit more investment, but certainly significantly below sales growth and then the <unk>.

Harry: Level of especially the development spend it depends also a bit on the M&A in licensing agenda. So clearly we have some placeholder for that in the second half of the year as well and then we will update you.

Harry: So clearly, we have some placeholders for that in the second half of the year as well. And then we will update you, you know, after Q2, of course, on how things are going when we have clear visibility. But overall, very good focus on cost consciousness, as was mentioned, excellent resource allocation to our top nine brands and pre-launches. And with that, as always, outlook, you know, the key contribution to our margin growth is expected to come from SG&A as we expect very dynamic sales growth this year on a five-year basis and very limited SG&A growth.

Harry: After Q2 of course, how things are going when we have a clear visibility.

Harry: But overall very good focus on cost consciousness as Ross mentioned.

Harry: Excellent resource allocation to our top nine brands and pre launches and with that as always outlook not a key contribution to our margin growth is expected to come from SG&A.

Harry: We expect very dynamic sales growth this year, the five year basis, and very limited SG&A growth.

Harry: Thanks, sir. Thanks, Richard. Next question, operator.

Speaker Change: Thanks, Eric Thanks, Richard next question operator.

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

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Mark Purcell from Morgan Stanley. Please go ahead. Your line is open.

Operator: Thanks very much for taking my question. It's on Skemblex. I wonder if you could help us understand the level of uptake you anticipate in the first line setting. The slides show 40% MBRX shown in the third line setting, and you talked about the sort of potential ease of identifying specific patients who might most likely benefit from Skemblex versus the current standard TKIs. And I also wondered about Skemblex, have you seen any early impacts of the Part D redesign when it comes to treatment initiations and volumes? Any sort of comment there for Skemblex and across your business would be great. Thank you.

Mark Purcell: Thanks, very much for taking my question. It sounds <unk> I wanted to ask if you could help us understand.

Mark Purcell: Kind of uptake you're anticipating the first line setting the slide show, 40% NPL ratio in the third line setting and you talked about this as a potential is.

Mark Purcell: So if identifying specific patients.

Mark Purcell: Likely benefit from scale versus the current kind of <unk> I wish I wondered on <unk> have you seen any early impacts of the part D redesign when it comes to treatment initiation some volumes any sort of comment there.

Speaker Change: Across your business would be great. Thank you.

Beth: Yeah, thanks, Mark. I think on Semblix, we would expect, I would say, a modest early uptake because we would have to work through... CML is one of the few cancer areas that's currently contracted. And so we would need to work through access in the first couple of quarters from launch, but then after that, we believe that given the overall data set that we'll share at ASCO, it should be able to drive very strong uptake.

Speaker Change: Yes, Thanks, Marc I think an assemblage, we would expect I would say modest early uptake because we would have to work through our CML is one of the few cancer is currently contracted.

Speaker Change: And so we would need to work through the access in the first couple of quarters from launch, but then after that we believe that given the overall data set that we'll share at osco that it should.

Beth: And of course, you all know well that the second-gen TKIs were on the order of $2 billion medicines. Gleevec was a $4 billion plus global medicine. And so certainly, our goal is to make this, over time, the leading CML treatment in the world. We wouldn't face any competition, at least branded competition.

Speaker Change: Be able to drive very strong strong uptake and of course, you all know well.

Speaker Change: Second Gen <unk> were on the order of $2 billion medicines, Gleevec was a $4 billion plus global medicine.

Speaker Change: So certainly our goal is to make this overtime the leading CML treatment in the world, we wouldn't face any competition.

Beth: And given that we will have demonstrated MMR superiority over the pooled group of Gleevec and the second-gen TKIs, it should put us in a very good position over time to make this into a significant medicine. I think on the Part D redesign, it's really early days for us to have a strong sense of the impact. And so we're monitoring this very closely, also reading all of your reports on how you're monitoring it to really understand what the impact of out-of-pocket caps is.

Speaker Change: Branded competition and given that we will have demonstrated MMR superiority over the pool.

Speaker Change: Group of Gleevec in the secondary TKS it should put us in a very good position over time to make this into a significant medicine.

Speaker Change: I think on part D redesign, it's really early days for us to have a strong sense of the impact and so we're monitoring this very closely also reading all of your reports on how you're monitoring it to really understand what is the impact of out of pocket caps and.

Beth: You know, some of the other shifts that are happening in the system with patients taking up their medicine. I think certainly as we move down from a $3,500 cap to a $2,000 cap, I would expect, in general, more patients' ability to pay for their medicines to improve as the cost becomes lower at the pharmacy counter. But we need to see that, I think, in the data before we can really provide you with more color. Next question, operator. Thanks, Mark.

Speaker Change: <unk>.

Speaker Change: Some of the other shifts that are happening in the system on patients taking up their medicines I think certainly as we move down from a $3500 a cap to a $2000 of cap I would expect in general to see more pace.

Speaker Change: Patients' ability to fulfill their medicines to improve as cost the cost becomes lower at the pharmacy counter but we need to see that I think in the data before we can really provide you more color.

Speaker Change: Next question operator, thanks Mark.

Operator: Your next question comes from the line of Peter Welford from Jeffreys; please go ahead.

Speaker Change: Thank you.

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

Operator: Hi, thanks for taking my question. It's on the planned proposed Morphosis transaction. I wonder if you can just outline when you did that how much of the acquisition price that you're considering was based on getting broad both geographical and sent to the market approval for Palabrasiv and versus, on the other hand, how much of the transaction is described when you're thinking with regard to the EZH2 and also the Iron Alamad royalties that you would potentially owe and how we should should think about I guess with that deal Probably, I probably can't.

Peter Welford: Hi, Thanks for taking my question.

Peter Welford: The patents proposed more focused transaction I wondered if you could just outline when you gave how much of the of the acquisition price that you're considering.

Speaker Change: It was based on getting broad both geographical and send it to the market approval full pallet Brexit.

Speaker Change: Thus as all of you that how much of the of the transaction is described to what Youre thinking with regards to <unk> and also.

Speaker Change: The <unk> and Allomap royalties that you would potentially on them and how we should think about I guess.

Speaker Change: Neil.

Speaker Change: The potential is thinking about ADT.

Novartis cleaner cost structure.

Beth: Yeah, thanks, Peter. Probably, I can't say more than what we've already said, given that we have an ongoing share tender offer out in the market. So, you know, what we previously outlined is that we believe there is an opportunity globally for Palabrasiv in both Europe and the United States. And that's an exciting opportunity, given our Jacobi business and the opportunity that we have to leverage our long history in myelofibrosis and position in myelofibrosis outside the United States and our strong hematology footprint inside the United States.

Speaker Change: Okay.

Neil: Yeah, Thanks, Peter probably I can't say more than what we've already said given that we have an ongoing.

Neil: Sure.

Speaker Change: The tender offer out in the market. So what we've previously outlined as we believe there is an opportunity globally for <unk>.

Peter Welford: And in both Europe and in the United States, and that's an exciting opportunity given our Jack <unk> business and the opportunity that we have to leverage our long history in myelofibrosis and position in myelofibrosis outside the United States and our strong hematology footprint inside the United States. So we would see pillar <unk>.

Beth: So, we would see Palabrasiv as fitting nicely within that global infrastructure that we have. And yes, we would also benefit from the historical royalties, particularly on Ionilumab, where we see the opportunity for a significant medicine, both in immunology and in cancer. And so, I think that's a pretty exciting opportunity for us to get those royalties back and then hopefully drive very significant medicine with a significant medicine in a royalty-free way. And then lastly, the company does have an EZH1-2 inhibitor in prostate cancer that we think could also be very interesting for us going forward. So, those are the three components of why we saw value in the deal.

Peter Welford: <unk> is fitting nicely within that global.

Peter Welford: The infrastructure that we have.

Peter Welford: Yes, we would also benefit from the historical royalties, particularly on <unk>, where we see the opportunity of a significant medicine, both in immunology and in cancer and so I think that's a pretty exciting opportunity for us to get those royalties back and then hopefully drive very significant medicine.

Peter Welford: A significant medicine.

Royalty free and a royalty free way and then lastly, the company does have an <unk> inhibitor in prostate cancer that we think could also be very interesting for us going forward. So those are the three three components of why we saw some value in the deal.

Speaker Change: Next question operator.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Andrew Baum from Citi. Please go ahead.

Andrew Baum: Hello, Andrew is your line on mute.

Andrew Baum: Apologies, yes. Thank you.

Speaker Change: Back to the <unk> first trial with simplex.

Operator: Thank you. Your next question comes from the line of Andrew Baum from City. Please go ahead. Hello, Andrew, is your line on mute? Apologies.

Andrew Baum: Could you just expand your previous comments on the dynamics of the CML market.

Speaker Change: The current market shares in the first line.

Speaker Change: Genetically back versus others, the Medicare versus non Medicare segmentation, just to help us think about the barriers to entry in the different segments in terms of optimization step edits.

Operator: Yeah. So, Andrew, a couple of things.

Beth: I think, first of all, we see this is a market that's on the order of 40 percent, 35 to 40 percent in Matinib, so Gleevec generics, and 60 percent TKIs. And then in terms of commercial and Medicare, we can come back to you with the exact data, but my recollection is that it's largely evenly split between Medicare and private commercial plans. So, the way we look at the overall market opportunity, in that 60 percent or so of patients who are on second-gen TKIs, this is an opportunity, as this class goes generic, to certainly, and for commercial plans as well, given that we won't have to compete against a rebate from those players, we would certainly have the opportunity to educate physicians on the great profile that we have here, particularly around the safety profile, also the efficacy profile, and

Speaker Change: Yes so.

Speaker Change: So Andrew a couple of things I think one we see this as a <unk>.

Andrew Baum: Market that on on the order of 40%, 35% to 40% Imatinib, So gleevec generics and 60%.

Andrew Baum: <unk>.

Andrew Baum: And then in terms of commercial and Medicare we can come back to you with the exact data, but my recollection is it's.

Andrew Baum: Largely evenly split between between Medicare and private commercial plans. So the way we look at the overall market opportunity in that 60% or so of patients who are on second Gen. <unk>. This is an opportunity as this class.

Andrew Baum: Goes generic.

Andrew Baum: Certainly and for commercial plans as well given.

Andrew Baum: Given that we won't have to compete against the rebate from those players. We would we would certainly have the opportunity to educate physicians on the grade profile that we have here.

Andrew Baum: Particularly around the safety profile also the efficacy profile and then hopefully drive drive switches and we see that the early opportunity for the medicine and that second Gen. Teekay I, particularly second Gen Teekay commercial commercial and then eventually the Medicare we find that patients who are currently on imatinib tend to be in community.

Beth: And we see that's the early opportunity for the medicine in that second-gen TKI, particularly the second-gen TKI commercial, and then eventually Medicare. We find that patients who are currently on Matinib tend to be in community oncology and tend to be with physicians who have a long history of using Matinib and therefore might be more resistant to change.

Andrew Baum: <unk> oncology and tend to be with physicians, who have a long history of using imatinib and therefore might be more resistant to change.

Beth: And that will take us longer to eventually, I think, move through, though we do think we have good strategies to get there. That segment of the market will be a longer lift for us to eventually move through. So, that's in the U.S. setting. I think ex-U.S. will really vary by geography.

Andrew Baum: And that will take us longer to eventually I think we can move through though we do think we have good strategies to get there that segment of the market will be a longer lift for us to eventually move through so thats in the ex U S. In the U S setting.

Andrew Baum: Ex U S. We will really vary by by geography, certainly in Europe. It will be critical for us to demonstrate differentiation with imatinib from a payer standpoint to justify what we think is a fair.

Beth: Certainly, in Europe, it will be critical for us to demonstrate differentiation with Matinib from a payer standpoint to justify what we think is a fair price for the medicine. We would expect in Japan, and in China, the opportunity for strong uptake. These are markets where we do think we can get reimbursed. And certainly, in Japan, there's a very well-educated CML physician community. So, that's, I think, a relatively large opportunity as well.

Andrew Baum: Fair price for the Medicine, we would expect in Japan, and China the opportunity for strong uptake. These are.

Andrew Baum: Markets, where we do think we can get reimbursed and certainly in Japan. There is a very well educated CML physician community. So that's I think a relatively large opportunity as well so thats kind of a high level dynamic, but I think it would be.

Beth: So, that's kind of the high-level dynamic. But I think at the... To ask a presentation in June, we can provide more insights into the overall market structure and how we're seeing the opportunity to launch the medicine. Thank you, Andrew. Next question, operator.

Andrew Baum: <unk> presentation in June we can provide more insights into the overall market structure and how we're seeing the opportunity to launch the medicine.

Speaker Change: Thank you.

Speaker Change: Thank you Andrew next question operator.

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

Thank you.

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

Operator: Oh, thanks so much for the question. So, really, just wanted to focus in on IGAN and some of the activity that we're seeing from a competitive perspective there and acquisitions in the space. But I just wanted to get your thoughts on the acquisitions that you've made in IGAN and the opportunity that you see in that space, whether it be for Atacapan or for the acquisitions that you've made. I know you specified a lot of opportunity there, but I'm interested to sort of see if you view this as a validation of the IGAN market opportunity and how you're thinking about the competitive landscape going forward. Thanks. Yeah, thanks, Seamus. So, in general,

Speaker Change: Oh.

Seamus Fernandez: Thanks, So much for the question. So really just wanted to focus in on <unk> and some of the activity that we're seeing.

Seamus Fernandez: From a competitive perspective there.

Seamus Fernandez: And acquisitions in the space. So just wanted to get your thoughts on.

Seamus Fernandez: The acquisitions that you've made in <unk> and the opportunity that you see in that space, whether it be for attack a pan or four.

Seamus Fernandez: The acquisitions that you've made I know you specified.

Seamus Fernandez: A lot of opportunity there, but interested.

Sort of.

Seamus Fernandez: If you view this as a validation of the <unk> market opportunity and how youre thinking about the competitive landscape going forward. Thanks.

Beth: Yeah, thanks, Seamus. So in general, I mean, again, we believe there is a significant, you know, market opportunity. These patients don't have, and historically have not had, great medicines. However, they do progress at a relatively high rate in the 10-year period towards needing transplantation or going on to dialysis. And we're talking about a segment here that has over 130,000 patients in the US alone. So we think it is, you know, a sizable, sizable opportunity.

Yeah. Thanks, Seamus so so in general I mean again as we believe a significant market opportunity. These patients don't have historically have not had great medicines.

Seamus Fernandez: Do progress at a relatively high rate in the 10 year period towards needing transplantation or going onto dialysis.

Seamus Fernandez: And we're talking about the segment here that's over 130000 patients in the U S alone. So we think it is.

Beth: When we think about the treatment paradigm, you, of course, you start out, you know, you want to, historically, this has been a steroid-driven treatment paradigm, but we think this will shift to wanting to somehow manage the hemodynamic component of the medicine in these patients where we have atrocentin. You want to then manage the inflammatory component of these patients along two dimensions, complement inhibition and apral inhibition as well. Now, we're in a position where we will have atrocentin for hemodynamic inhibition.

Seamus Fernandez: A sizable sizable opportunity when we think about the treatment paradigm you of course, you start out.

Seamus Fernandez: You want to historically this has been a steroid driven treatment paradigm, but we think this will shift to wanting to somehow manage the hemodynamic component of the.

Seamus Fernandez: The medicine of these patients where we are after symptom you want to manage then the inflammatory component for these patients along two dimensions complement inhibition.

Seamus Fernandez: April inhibition as well now we're in a position where we will have after center for hemodynamic inhibition will have tackled pan for complement inhibition and we will have the gawky barred also acquired in our <unk> acquisition for the anti April component, we acknowledged there'll be competitors, particularly on the anti April side of things where.

Beth: We'll have octaclopan for complement inhibition, and we'll have Zygaki Bard also acquired in our Chinook acquisition for the anti-apral component. We acknowledge there'll be competitors, particularly on the anti-apral side of things, where, you know, we're going to have a few other competitors enter. We believe we'll be the only company positioned with really the full range of hemodynamic complement anti-apral. I should note as well, of course, upstream, the SGLT2 inhibitors, which are also going generic, will also be part of that early treatment paradigm, but post-SGLT2 inhibitors and perhaps generic hypertensives, you're going to want to move down this paradigm of really more potent hemodynamic control and then also trying to get to the inflammatory component, and we think having three medicines will allow us to be well-positioned with patients, physicians, contracting, you know, the various elements of the US supply chain and also globally.

Seamus Fernandez: We're going to have a few other competitors enter we believe will be the only company positioned with really the full range of hemodynamic complement anti April I should note as well of course upstream. The <unk> inhibitors, which are also going generic will also be part of that early treatment paradigm, but post <unk> two inhibitors.

Seamus Fernandez: Perhaps generic hypertensive youre going to want to move down this paradigm of really more potent hemodynamic control and then also trying to get to the inflammatory component and we think having three medicines will allow us to be well positioned with patients physicians contracting.

Seamus Fernandez: The various elements of the U S supply chain and also globally. So that's how we're approaching it I do think the recent acquisitions do point to that anti April in this hole.

Beth: So that's how we're approaching it. I do think the recent acquisitions do point to that anti-apral, and this whole area is exciting, right? And we have an asset there, others are now also coming, but certainly something we're looking at very carefully to also see whether you can expand apral inhibition with or without BAF inhibition for other indications Next question, operator. Thank you. Your next question comes from the line of Eric Liberigo from Stiefel; please go ahead.

Seamus Fernandez: Area is exciting right and we have an asset there are others now are also coming but certainly something we're looking at very carefully to also see can you expand.

Seamus Fernandez: April inhibition with or without <unk> inhibition for other indications as well.

Speaker Change: Next question operator.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Amit.

Amit: Barry go from Stifel. Please go ahead.

Yes. Thank you.

Amit: The split in sales by geography on <unk> being.

Amit: Significantly different from the past and Nellix U S being more significant than U S. Could you maybe elaborate a little bit on the kind of agreements reached in ex U S territories, maybe the main three markets in Europe.

Operator: Yes, thank you.

Operator: Yeah, thanks, Eric. We're, you know, pleased to see that we are now getting to, you know, a steady march upward in terms of its overall sales growth. Outside of the United States, there are a few key dynamics. So first, China self-pay, where I mentioned over 250 patients a day, and steady growth as well in terms of the number of patients that we're being able to get on treatment in China. And that's ahead of where we hope to get listed, full listing on the NRDL, in the first part of next year.

Amit: And China, how the drug is delivered how youre billing for the drug in those geographies. Thank you.

Speaker Change: Yes, Thanks, Eric.

Speaker Change: Pleased to see like Vietnam getting too.

Speaker Change: Steady March upward.

Speaker Change: In terms of its overall sales sales growth.

Outside of the United States that had been a few key dynamics. So first is China self pay where I mentioned over 250 patients a day steady growth as well in terms of the number of patients that were being able to get on treatment in China and that's ahead of where we hope to get listed full listing on the <unk> on the first part of next year and given the strength.

Beth: And given the strength of our cardiovascular operations in China, with Entrusto, we believe we can drive pretty significant uptake of Lectio over time in China. We also have reimbursement in Japan, and we're in the very early days of launching Lectio in Japan. So Japan was not a significant contributor in Q1. But we expect Japan consistently now in the coming quarters to be a more significant contributor. In Europe, we've had a very steady uptake in the commercial market in Germany, as well as improving performance in Italy and the UK.

Speaker Change: Of our cardiovascular operations in China with Entresto, We believe we can drive a pretty significant uptake of likely over time in China. We also have reimbursement in Japan and we're in the very early days of launching in Japan. So Japan was not a significant contributor in Q1, we expect consistently now in the coming quarters, Japan to be a more <unk>.

Speaker Change: <unk> contribution in Europe, we've had very steady uptake in the commercial market.

Speaker Change: In Germany, as well as improving our performance.

Beth: And so the UK has been a disappointment relative to where we hoped it would be, but nonetheless, it is steadily moving up as well. And then interestingly, while it's a smaller contributor, given the number of countries around the globe where we have reimbursement, and we do have public health agreements in places like the Gulf Coast countries, as well as other markets in our international business, that's also contributing. So step by step, all of this comes together to drive the performance that you saw in quarter one. And we'll see, we hope we can continue that now in the coming quarters and steadily get Lectio up to that multi-billion dollar outlook that we've given.

Speaker Change: Italy, and the U K.

Speaker Change: So I mean, the U K has been a disappointment relative to where we hoped it would be but nonetheless is steadily moving up as well and then interestingly, while it's a smaller contributor given the number of countries around the globe, we have reimbursement and we do have public health agreements in places like the Gulf coast countries as well as the other markets.

Speaker Change: In our international business. That's also contributing so step by step all of this comes together to drive the performance that you saw in quarter, one and we'll see we hope we can continue that now in the coming quarters. It steadily get let up to that multibillion dollar outlook that we've given.

Speaker Change: Next question operator.

Operator: Your next question comes from the line of Steve Scala from TD Cowan. Please go ahead.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Steve Scala from TD Cowen. Please go ahead.

Operator: Oh, thank you so much. On Entrusto, were there any one-time factors driving Q1 sales, such as rebates and or inventory? If not, then what, in your opinion, led to it not tracking prescriptions in the quarter?

Steve Scala: Thank you so much uninteresting were there any one time factors driving Q1 sales such as rebates <unk> inventory if not then what in your opinion lead to it not tracking prescriptions in the quarter. Thank you.

Beth: Thank you.

Beth: Yes, we're not aware of any one-timers on in Tresto. We saw strong TRX growth, and we saw outstanding growth in China. And I think that was a big driver of the performance you saw in the quarter, as well as steady uptake in Japan. But no, no one-timers that we were aware of looking at the area. So no one-timers that we see; this was just underlying performance. And I think it is driven both in the US but also in China and Japan.

Steve Scala: Yes, we're not aware of any one timers on on.

Steve Scala: Entresto, we saw strong <unk> growth, we saw outstanding growth in China, and I think that was a big driver of the performance you saw.

Steve Scala: In the quarter also steady uptake in Japan.

Steve Scala: But no no one timers.

Steve Scala: We're aware of looking at her yet so no one timers that we see this was just underlying performance and I think driven both in the U S, but also China and Japan.

Thank you.

Speaker Change: Next question operator.

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

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Graham Parry Bank of America. Please go ahead.

Operator: Great, thanks for the follow-up. Just wondering, in terms of the NACLI charges we were talking about timing earlier, just what's assumed in your guidance for adjuvant breast cancer for Kiscali this year? So is there any significant contribution in there? How is that de minimis at this point? And then just, I'll slip in a second one, just at the ASCO event on Semblix, I was wondering if you're going to be in a position to give some sort of updated peak sales guidance for that asset? There are obviously a lot of questions about

Graham Parry: Okay. Thanks for the follow up and just wondering in terms of.

Graham Parry: We were talking that timing in it just what's assumed in your guidance for adjuvant breast cancer. Since a case Scully for this case there is any any significant contribution and that de Minimis at this point and then just a second one just at the ask of event on Assembly. So I was wondering if you are going to be in a position to give some sort of update.

Peak sales guidance set for that asset a lot of questions on the call that marketable tissue.

Beth: Yeah, thanks, Graham. On Natalie, not a material contribution or really no contribution this year, so I don't think that's something that needs to be factored in, in terms of our guidance. On Semblix, we'll take it under advisement. We can't commit one way or another, but we'll certainly take the feedback on trying to guide it. It's always tough, of course, before we've even gotten approval or launched a medicine to really know the outlook, but I think we've got reasonable benchmarks.

Speaker Change: Fishing for thank you.

Speaker Change: Yes, Thanks, Graham on on Natalie not a not a material contribution or it really of any contribution in this year. So I don't think that's something that needs to be.

Natalie: Factored in in terms of our guidance.

Speaker Change: On Assembly will take it under advisement.

Speaker Change: Cant commit one way or another but we'll certainly take the feedback I'm trying to guide its always tough of course before we've even gotten approval or launch to medicines, who really know the outlook, but I think we've got reasonable benchmarks in the CML.

Beth: In the CML market with Gleevec and the second-gen TKIs, and as I outlined, we really believe, but we'll see as we present the data, that this could be really the best-in-class medicine to treat CML that's been launched in this industry. So we hope we can live up to that profile. Next question, operator.

Speaker Change: Market with Gleevec in the second Gen <unk> and as I outlined we really believe but we'll see as we present the data that this can be really the best in class medicine to treat <unk>.

Speaker Change: <unk> that's been launched in this industry. So we hope we can live up to that profile.

Speaker Change: Yes.

Speaker Change: Next question operator.

Speaker Change: Thank you we will now take our final question.

Speaker Change: And Youll final question today comes from the line of Emily Field Barclays. Please go ahead.

Emily Field: Alright, thanks, so much.

Operator: Hi, thanks for taking my question. I want to ask a question on Inalamab, given that

Emily Field: Question.

Emily Field: Now.

Emily Field: Good morning, Steve.

Emily Field: From a competitor.

Speaker Change: Thank you.

Speaker Change: Just wondering given this ralph thank you Ken.

Steve Scala: Why you're pursuing ICP with that.

Steve Scala: That's the right mechanism.

Steve Scala: Sure.

Speaker Change: We are also prioritizing second line or first line I believe that when it does.

Operator: [inaudible]

Beth: Yeah, so first on BTK inhibition, we really tried to focus our BTK inhibitor outside of the oncology indications. I mean, we look at the indication range we're pursuing. It's immunology, the full range, HS, you know, food allergy, CSU.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Yes, so first on the Teekay inhibition, we really tried to focus our <unk> inhibitor outside of the oncology indications I mean, we look at the indication range, we're pursuing its immunology.

Speaker Change #100: Full range.

Speaker Change #100: Yes.

Beth: We also have ideas to pursue remibrutinib and other immunology indications and multiple sclerosis. So we've tried to steer clear of the oncology setting overall and really focus ionilamab in both oncology but also in more hard-to-treat immunology indications. You know, based on our best guidance from FDA and the agreements in the Phase III study, we think this was a stepwise approach in ITP, especially for a sub-Q medicine like ionilamab. And then, yeah, we'll see if we can move into the frontline setting.

Speaker Change #100: Food allergy CSU, we have also the idea is to pursue.

Speaker Change #100: Bruce <unk> and other immunology indications and multiple sclerosis. So we've tried to steer clear of the oncology setting overall and really focus <unk> mab.

Speaker Change #100: In both oncology, but also in more more hard to treat.

Speaker Change #100: Immunology indications based on our best guidance from FDA and the agreements on the Phase III study. We think this was a.

Speaker Change #100: It's a step wise approach in <unk>, especially for a sub Q medicine like <unk> and then yes, we will see if we can move into the frontline setting. So I think thats, probably the best guidance I can give I'm trying to recall, if we looked at Remy Bruton nib in ATP, but we'd have to get back to you Emily I just can't recall, if we looked at it in our phase Iia.

Beth: So I think that's probably the best guidance I can give. I'm trying to recall if we looked at remibrutinib in ITP, but we'd have to get back to you, Emily. I just can't recall if we looked at it in our Phase IIa programs. We can come back to you if we have studied our BTK inhibitor in those indications. So, thanks very much. I think that was the last question. So, we really appreciate everybody's time today. We look forward to keeping you updated, and we'll see you all at our event at ASCO. So thank you, and have a great quarter season, and I wish you a great spring.

Speaker Change #100: Programs, we can come back to you. If we have studied our beta <unk> inhibitor in those in those indications.

Speaker Change #101: So thanks very much I think that was the last question. So really appreciate everybody's time today and we look forward to keeping you updated and we will see you all at our event at <unk>. So thank you and have a great quarter season, and wish you a great spring.

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

Speaker Change #102: Thank you. This concludes today's conference call. Thank you for participating you may now disconnect.

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Speaker Change #102: [music].