Novartis AG Q4 2024 Earnings Call Transcript

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

Question: Florent Cespedes - Bernstein - Analyst : Good afternoon. Thank you very much for taking my question. A quick one on the guidance as the guidance is a little bit better than expected on the top line, but also on the margin. And as Entresto is a very profitable product and that you will lose percent in Europe generics from the mid of this year. I was just wondering if you could elaborate, Harry, what are -- where we should see some pressure? And where you will have some growth that will offset the generic impact on the P&L and on the top line. Thank you.

Question: Simon Baker - Redburn Atlantic - Analyst : Thanks for taking my question. And it's kind of a continuation from Florent question. Just mindful of the lots of exclusivity potentially for Entresto later in the year. Historically, you have been very, very good at managing gross margin through patent expires. I just wonder, Harry, I know you don't guide on gross margin. If you could just give us any commentary around the resilience of the gross margin in 2025 in light of that event? Thanks so much.

Question: Simon Baker - Redburn Atlantic - Analyst : Great. Thanks so much.

Question: Richard Parkes - BNP Paribas Exane - Analyst : Hi. Thanks for taking my question. I think I'll take one on the Huntington's program. Obviously, a huge unmet medical need, terrible disease, but there have been some of the failures in that area in the past. So I'm just wondering what makes you more confident in the approach what you've learned from those past experiences. And to what degree do you think the PIVOT HD trial will derisk the probability of success given it's a slowly progressive disease in the studies relatively short? Or will we still be seeing it as a high-risk program? That would be really helpful. Thank you.

Question: Richard Parkes - BNP Paribas Exane - Analyst : Thank you.

Question: Emily Field - Barclays - Analyst : Hi. Thanks for taking my questions. The first one was just a clarification question from the first question that was asked by Florent. If you could just confirm the contribution of favorable gross net adjustments to sales in Q4 '24. And then I just wanted to ask a question about Pluvicto. I mean I know the guidance has been not to expect significant sales growth until the additional indication of PSMA 4 was added. But was there any particular driver between the sequential decline in the US quarter-over-quarter. And would you expect any of the DTC and promotional efforts that you've been putting in place to have an impact on sales ahead of the PSMA for approval? Thank you.

Question: Matthew Weston - UBS Equities - Analyst : Thank you. I don't know what happened earlier. It's a question for Harry. And it's again about guidance, Harry, but particularly about the impact of Medicare Part D reform on what you've assumed within your growth. So one of the questions we've had a lot this morning from investors is how can you be so confident given that you have a very large oral oncology portfolio, which is assumed to be used largely in the Medicare Part D population. So what have you assumed in your outlook are the puts and takes around that portfolio from that new reform?

Question: Matthew Weston - UBS Equities - Analyst : Thank you.

Question: Richard Vosser - JPMorgan - Analyst : Hi. Thanks for taking my question. Question on Kisqali. Looking at the NBRx share in metastatic, it stayed at sort of 50% for a number of quarters and maybe a couple of years now. So I'm just wondering what it takes to change that. You have a superior product. Does the -- the sort of halo effect from the adjuvant allow you to get more accounts on board -- just can we see that displacement of [Ibrance], just your thoughts.

Question: Richard Vosser - JPMorgan - Analyst : Cool. Thanks.

Question: Graham Parry - BofA Global Research - Analyst : Great. Thanks for taking my question. It's just on Entresto, just wanting to get perhaps a little bit more detail on the dynamics that are factored into the guidance for 2025. So what sales progression are you looking at worldwide and in the US. And in the US GCA benefit in the first half of the year from donut hole discount removal? And to what extent does that offset some of the generic decline you should get in the second half of the year. And on generics, how confident you can hold off Entresto Genex until 16th of July, and the court filings suggest MSN is trying every which way to launch at the moment and there's only one appeal court stay in place, blocking them from doing that? And are you confident they haven't shipped any product at all in that narrow window there wasn't actually stay in place a couple of weeks ago. Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 1:00PM, NOVN.S - Q4 2024 Novartis AG Earnings Call

Question: Etzer Darout - BMO Capital Markets - Analyst : Great. Thanks for taking the question. I had a couple of inbound this morning. Just wondering if you had any maybe additional commentary you could provide on the push out of the Horizon Phase 3 and maybe what could be driving that the event sort of rate dynamic relative to your initial event rate assumptions? Thank you.

Question: Etzer Darout - BMO Capital Markets - Analyst : Great. Thank you. I appreciate the color.

Question: James Quigley - Goldman Sachs - Analyst : Great. Thanks for taking my questions. Going on the guidance, unfortunately. Harry, would you be able to sort of split the guidance out between volumes, generic impact and pricing, presumably, pricing is close to 0 or slightly negative. But super helpful if you could give us an idea of how that breaks down? And then secondly, on the slide, where you break out the half one versus half two, obviously, the second half takes a hit because of generics. Where would that land if you didn't have the generic impact and is low to mid-single digits, say, a sort of sensible exit rate for the second half of your guidance out to the end of 2029. I appreciate that you don't guide on the individual years, but just some color would be useful.

Question: James Quigley - Goldman Sachs - Analyst : Thank you.

Question: Seamus Fernandez - Guggenheim Securities LLC - Analyst : Great. Thanks for the question. So my question is on imalumab. You guys have Sj÷gren's data coming this year in my understanding as well as some additional Phase 2 and 3 data sets. Where are you most excited about the opportunity for ianalumab, it would strike me that Sjogren's is the highest unmet medical need where even just a positive study would gain substantial utilization. Just trying to get a better understanding of how you're thinking about the market opportunity in Sjogren's and then more broadly for ianalumab. Thanks so much.

Question: Naresh Chouhan - Intron Health - Analyst : Hi, there. Thanks for taking my questions. Just one on OAV, please. So the consensus currently modeling very little, if anything at all for OAV101. Can you help us think through the bolus opportunity and the speed of ramp up? We think it could be a blockbuster by 2027. Is that unreasonable? And how do you think about the speed of ramp-up. Thanks. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JANUARY 31, 2025 / 1:00PM, NOVN.S - Q4 2024 Novartis AG Earnings Call

Question: Eric Le Berrigaud - Stifel Nicolaus and Company, Incorporated - Analyst : Yes. Hi. Again, on guidance, but this time on the midterm guidance and trying to put the '25 guidance in the context of midterm guidance. Since you implemented this midterm guidance, you systematically beat and raise. '23 was much higher, '24 was much higher. And then we thought that maybe the transition with the significant LOEs in '25, '26 would be the reason for the midterm guidance to be lower than what you achieved. But now in '25, you're guiding for mid- to high single digit, which is again higher than the midterm guidance. And so, if we think that '26 will very much look like '25 because it's a 50-50, mid '25, mid '26 impact. And then '27, '28 should see some rebound with no significant LOE. It becomes hard to understand why the midterm guidance is not more, let's say, higher or, let's say, to articulate things. So maybe something is missing, but could you put that in some context or just the global policy of underpromise and overdeliver. Thank you.

Question: Richard Parkes - BNP Paribas Exane - Analyst : Hi. Thanks for taking my follow-up. It's just on Cosentyx, the competitive environment. We've now had Benzalex on the market for a year or so. And I believe that has some recent formulary wins and obviously launching in the HS indication. So just wondering how that competitive environment is playing out and what you anticipate in your guidance? And maybe if you could quantify the opportunity for Cosentyx and the new indications that you outlined, GCA and PMR. And then finally, I'd like to thank you for the [LP] test at your management day because given it was minus borderline, I've now started on a statin. So I appreciate the opportunity.

Question: Richard Parkes - BNP Paribas Exane - Analyst : Thank you.

Question: Florent Cespedes - Bernstein - Analyst : Good afternoon, again. Thank you for taking my follow-up question. This time, not on guidance, but on the pipeline for US, as pelacarsen is now expected in 2026, and it was supposed to be the big Phase 3 readout. Now, on the list of the products that will read out this year, that would be the Phase 3. Please, could you share with us, which is, or which are the most meaningful one, please?

Question: Florent Cespedes - Bernstein - Analyst : Okay. Thank you very much.