Novartis AG Q3 2024 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Richard Vosser - JPMorgan Chase & Co - Analyst : It's a question on the impact of coverage gap reform on the business in '25. I'm particularly thinking about the impact on Cosentyx and Entresto. If you could give us any color on how that's panning out, that would be great. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 1:00PM, NOVN.S - Q3 2024 Novartis AG Earnings Call

Question: Emily Field - Barclays Bank - Analyst : I was just wondering when you'd expect some of these new promotional efforts to have an impact on political patient growth in the US in the vision population? Or should we more expect sales to really start to grow again once [PSMA4as] launched, I believe, early in the year, you said that, that launch would be an inflection in sales. So any color you can provide would be helpful.

Question: Florent Cespedes - Societe Generale Cross Asset Research - Analyst : A quick one on 2025, I know it's early days and you won't provide any guidance. But could you remind us which are the main tailwinds and headwinds for next year? And how you see this challenging year given the generics expected to be launched mid-2025?

Question: Simon Baker - Redburn (Europe) Limited - Analyst : One on Cosentyx and HS, if I may. You've seen a very, very fast adoption in HS, which is testament to the superiority. Cosentyx over previous treatment options. But there were quite a few behind Cosentyx coming into HS. So I just wondered if you could update us on your thoughts on the competitive dynamics there? How long do you expect that preeminence of Cosentyx to persist, bearing in mind what is coming behind over the next 12 to 18 months?

Question: Graham Parry - BofA Securities - Analyst : Question on Pluvicto. So the flat fourth quarter guide implies no growth ex US as well as in the US So I understand US centers are pretty fully penetrated in the vision population, but why no growth ex U.S? And on PSMA 4. I just wondered why you didn't use a priority (inaudible) or attempt to accelerate the review there in any way?

Question: Matthew Weston - UBS. - Analyst : My question is about payer dynamics in 2025 as well. Vas, I'm just aware that you have a very strong position in immunology and commercial PBMs have lost a significant amount of rebates from [HUMIRA] over the course of this year. I wonder whether we should expect a particularly strong and REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 1:00PM, NOVN.S - Q3 2024 Novartis AG Earnings Call dynamic rebate environment at the beginning of 2025, and we should be prepared for that as we look at the forecast into next year. If I can cheekily sneak a second. It's just can you remind us factually when do you anticipate Kisqali ex US patent expiry?

Question: James Quigley - Goldman Sachs Group, Inc. - Analyst : Got a quick one on (inaudible). So Vas, you've seen some strong uptake in the US for the food allergy indication, does Novartis plan to use the data from the (inaudible) trial to potentially from the indication in the Novartis territories? And what would you think about the potential opportunity here? Obviously, there's a (inaudible) in [ligelizumab] in this indication as well. So does that be a potential clear one for you and [Zola] in ex US markets.

Question: Peter Welford - Jefferies - Analyst : My question is on the broader cardiovascular portfolio now at Novartis, particularly focusing on the pipeline. I mean, obviously, we're aware of (inaudible) which I wonder if you can confirm we're still expecting the Phase III readout there next year. But obviously, following the news on [XXB], when you now look at the late-stage cardiovascular portfolio outside of nephrology, I guess how do you now think about the need perhaps in Novartis to bolster that, or are you comfortable given the long life that we see still with Leqvio ahead despite the loss of interest or in the US, so you will basically just build the cardiovascular pipeline largely internally through the early stage Phase I preclinical programs that you have? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 1:00PM, NOVN.S - Q3 2024 Novartis AG Earnings Call

Question: Etzer Darout - BMO Capital Markets Equity Research - Analyst : I had a question on [pelacarsen] readout next year for Lp(a). And apologies if you've commented on this in the past. Just curious, there's literature on the impact of (inaudible) on GLP-1 levels, but curious as to the reverse. And I guess, given the increasing use of GLP-1s broadly, just curious of GLP-1 use matters in the study? And if so, how you're accounting for its use in the trial?

Question: Kerry Holford - Joh. Berenberg, Gossler & Co. KG - Analyst : Just going back to the theme of M&A. Given your strong balance sheet and a growing patent expiry burden, just interested to hear you talk about your appetite for more M&A in the future here. I won if you can comment specifically on your degree of interest in (inaudible) it? Just any bad with regard to your early-stage internal pipeline. But interest in potentially bolstering that externally. And tied to this, I think somewhat disappointing that we should see an impairment (inaudible) onto the (inaudible) closure. So my question then is, how can investors gain confidence in your future M&A choices? Any commentary you would have there.

Question: Seamus Fernandez - Guggenheim Securities - Analyst : So really just one question to follow up on business development in areas of interest. The dynamics in immunology are obviously keying up accelerating across bispecifics, long-acting assets and overall asset development. I wanted to just ask, I guess, a bit of a blended question, not to, but what the effort with [Generate] is really seeking to execute? And if there is an awareness or when we might have the targets potentially disclosed REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 29, 2024 / 1:00PM, NOVN.S - Q3 2024 Novartis AG Earnings Call in that collaboration? And how you're thinking about immunology writ large from a BD perspective simply because we know that Generate is also doing quite a bit there along those lines?

Question: Rajesh Kumar - HSBC - Analyst : On capital allocation, can you help us understand how you think between your choice of doing deals versus buying back shares? And then what share price of multiples would doing a deal would become the only good use of capital? Then -- your share price has been quite strong if we leave today aside, but if we look at the earnings momentum, et cetera, at what point would you stop share buybacks and deploy more capital towards steelmaking?

Question: Steve Scala - TD Cowen - Analyst : No generics of Entresto and [Promacta] were already assumed in the 2024 guidance. So (inaudible) is the only update what amount of the guidance raise is attributable to no generics of [Tasigna] And it sounds like the extension to 2025 for all three is due to litigation for [Tasigna] and Promacta in addition to Entresto and not slower generic progress and/or settlement, is that correct?

Question: Emmanuel Papadakis - Deutsche Bank AG - Analyst : I'm trying my luck and squeezing 1.5. The half is a follow- on collaborative, just to understand what has changed versus a Harry noted your high conviction at the time of completing that transaction. And the one is on Kisqali, if I may, next year. It looks like it's going to be a particularly important to offset some of the potential headwinds you may face. Could you just talk about the realism of consensus or conservatism of consensus expectations of [$4 billion] -- is it realistic to expect you to add another $1 billion of sales? And are you expecting a gradual increase in pace of prescription adoption or some inflection both [NCCN], et cetera?

Question: Richard Vosser - JPMorgan Chase & Co - Analyst : Just one on Kesimpta. Just a competitor is rolling out their subcutaneous formulation. Just thoughts on how that's impacting you see any impact at the moment?

Question: Graham Parry - BofA Securities - Analyst : A follow-up is just on the Kisqali (inaudible) challenge from MSN just on time lines of ruling from the [Delaware] Court on that. And if MSN was actually successful in validating the patents, just your expected time lines for resolution of an appeal. And just correct me if I'm wrong, but are you sort of past the stage of settlement here? Or that would still be -- could that still be an option?

Question: Matthew Weston - UBS. - Analyst : It's a question about politics and [siRNA]. So clearly, siRNA is a mode of action is very important to Novartis. I believe you're very active in the legislation to try and get an amendment to IRA to extend the life from 9 years to 13 years in terms of government pricing action. Can you give us any update as to where that legislation is, please?