Novartis AG (NYSE:NVS) projects a stronger growth trajectory through 2030, lifting expectations for several key medicines and outlining a pipeline strategy it believes will sustain momentum well into the next decade. • NVS is having a challenging session. See the full story here.The company updated its mid-term outlook ahead of its Meet Novartis Management event in London, emphasizing higher confidence in long-term demand drivers and upcoming drug launches.The drugmaker now anticipates a compound annual sal ...

Novartis (NYSE:NVS) Update / Briefing November 20, 2025 04:15 AM ET Company ParticipantsNaresh Chouhan - PrincipalDianne Auclair Rocha - U.S. Therapeutic Area Head for CRMBob Baloh - Global Head of Neuroscience Biomedical ResearchReshema Kemps-Polanco - Chief Commercial Officer of the U.S. UnitVictor Bulto - President of the U.S. UnitRuchira Glaser - Global Head of CRM DevelopmentShaun Coughlin - Global Head of Cardiovascular and Metabolism Biomedical ResearchHarry Kirsch - CFOMukul Mehta - Head of Business ...

Core Insights - Novartis has updated its mid-term sales guidance for 2025-2030 to a compound annual growth rate (CAGR) of +5-6% at constant currencies, reflecting strong growth momentum from existing products and upcoming launches [2][7] - The company has raised peak sales guidance for key products, now identifying eight de-risked, in-market assets with peak sales potential ranging from USD 3 billion to USD 10 billion [2][8] - Novartis anticipates over 15 potentially submission-enabling readouts in the next two years, supported by a robust pipeline of more than 30 high-value medicines [3][7] Financial Performance - Novartis achieved a core operating income margin of 41.2% in the first nine months of 2025, ahead of its plan, and expects to maintain margins above 40% by 2029 despite some dilution from the acquisition of Avidity Biosciences [4][5] - The company has executed over 30 strategic deals in the past two years, enhancing its pipeline and long-term growth outlook [5] Product and Pipeline Highlights - Key products Kisqali and Scemblix have seen their peak sales forecasts increased, with Kisqali now projected to exceed USD 10 billion and Scemblix expected to reach over USD 4 billion [8] - The pipeline includes over 30 potential high-value medicines, with more than 10 licensed or acquired in the last two years, positioning Novartis for sustainable growth beyond 2030 [3][7]

Financial Performance - Novartis reported a 7% increase in net sales and core operating income for Q3 2025, with a core margin of 39.3% [5][27] - Core EPS rose by 10% to $2.25, and free cash flow totaled $6.2 billion for the quarter [28][27] - For the first nine months, net sales grew by 11%, core operating income by 18%, and core EPS increased by 21% to $6.94 [28][29] Business Line Performance - Key brands showed strong growth: Kisqali grew 68%, Pluvicto 45%, Leqvio 54%, and Scemblix 95% in constant currency [6][10][14][16] - Kisqali's U.S. growth was particularly strong at 91%, with a market-leading position in both metastatic and early breast cancer [7][9] - Pluvicto's growth was driven by new patient starts, with U.S. sales up 53% [11][12] - Leqvio is on track for over $1 billion in sales, with significant growth in both the U.S. and international markets [14][15] - Scemblix is expected to become the most prescribed TKI in the U.S. [16] Market Performance - The U.S. experienced negative growth due to net true-ups related to Medicare Part D redesign, but underlying growth would have been 9% without these adjustments [27][28] - Outside the U.S., Kisqali saw 37% growth in constant currency, and Pluvicto is expanding in Europe, Canada, and Brazil [7][12] - The renal portfolio, particularly IGAN, grew 98% in the U.S., significantly outpacing market growth [20][21] Company Strategy and Industry Competition - Novartis is focused on driving growth through its priority brands and pipeline advancements, despite facing generic erosion from products like Entresto [5][28] - The company is pursuing strategic acquisitions, including Avidity Biosciences, to enhance its growth trajectory [35][36] - Novartis aims to maintain a core margin of around 40% despite expected short-term dilution from new product launches [35][36] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in mid to long-term growth, reaffirming guidance for high single-digit growth in net sales and low teens growth in core operating income for the full year [31][38] - The company anticipates challenges in the first half of 2026 due to generic competition but expects a stronger second half [33][34] - Management highlighted the importance of addressing pricing and reimbursement issues with the administration to support innovation [41][42] Other Important Information - Novartis is preparing for regulatory submissions for several products, including remibrutinib and ianalumab, with expectations for rapid uptake in the market [22][24] - The company is focused on enhancing its R&D capabilities and expanding its manufacturing base in the U.S. [43] Q&A Session Summary Question: Impact of Medicaid and tariffs on the industry - Management indicated that while some companies have reached agreements with the administration, Novartis is in ongoing discussions to find suitable solutions [41][42] Question: CapEx and cash flow modeling - Management clarified that the majority of the $23 billion commitment over five years is for R&D OpEx, with CapEx expected to remain stable at 2.5%-3% of sales [42][43] Question: Market reaction to ATR abstract - Management expressed confidence that detailed data presentation would improve market perception and emphasized the importance of patient benefits over statistical measures [46][47] Question: Pluvicto launch curve and peak sales ambition - Management stated that Pluvicto is on a strong growth trajectory, expecting to reach peak sales of $5 billion with ongoing efforts to tackle commercialization challenges [55][56][58] Question: Remibrutinib ramp-up and European adoption - Management highlighted the focus on payer negotiations and the potential for rapid uptake in the U.S. and Europe, emphasizing the innovative profile of remibrutinib [62][64] Question: Ianalumab study results and secondary endpoints - Management explained the statistical significance achieved in primary endpoints and the importance of patient-relevant outcomes for future discussions with physicians [68][71] Question: Cosentyx market share and new formulation - Management noted that there has been no significant impact from competitor launches and emphasized ongoing efforts to maintain market share in a growing market [74]

Financial Performance - In Q3 2025, net sales grew by 7% year-over-year, and core operating income also increased by 7%, with a core margin of 39.3% [4][26] - Excluding negative adjustments, underlying growth would have been 9% for net sales and 11% for core operating income, driven by priority brands and new launches [26][27] - Core EPS reached $2.25, reflecting a 10% increase, and free cash flow totaled $6.2 billion [27][28] - For the first nine months, net sales grew by 11%, core operating income increased by 18%, and core EPS was up 21% at $6.94 [27][28] Business Line Performance - Kisqali experienced a 68% growth in Q3, with U.S. growth at 91%, making it a leader in both metastatic and early breast cancer markets [5][6] - Pluvicto grew by 45% in constant currency, with U.S. sales up 53%, driven by new patient starts [10][11] - Leqvio sales increased by 54%, on track for over $1 billion in annual sales, with strong performance in both the U.S. and international markets [13][14] - Scemblix grew by 95% in constant currency, becoming the most prescribed TKI by NBRx in the U.S. [15] - Cosentyx had a mixed quarter, with a slight decline in growth due to one-time effects, but remains on track for mid-single-digit growth for the full year [16][17] Market Performance - Kisqali's early breast cancer indication is approved in 56 countries, with significant growth potential outside the U.S. [6][10] - Pluvicto is expected to reach peak sales potential with ongoing approvals in Japan and China [12] - Leqvio shows strong uptake in various international markets, particularly in China and the Middle East [14] - Scemblix is gaining traction in both first-line and second-line settings, with a strong launch momentum in Japan [15] Company Strategy and Industry Competition - The company is focused on driving growth through its priority brands while managing the impact of generic erosion from key products [4][5] - The proposed acquisition of Avidity Biosciences is expected to enhance long-term growth prospects and support mid-single-digit growth over the long term [33][34] - The company is committed to maintaining a strong pipeline and investing in R&D to support future growth [28][29] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in navigating generic headwinds and reaffirmed guidance for high single-digit growth in net sales and low teens growth in core operating income for the full year [29][30] - The company anticipates a challenging first half of 2026 due to the impact of generics but expects to emerge stronger in the second half [31][32] - Management highlighted the importance of addressing pricing and reimbursement challenges in the current regulatory environment [38][61] Other Important Information - The company achieved significant pipeline milestones, including FDA approvals and positive phase 3 results for several key products [4][20] - Management emphasized the importance of cash flow for reinvestment and shareholder returns, with a new $10 billion share buyback program announced [28][29] Q&A Session Summary Question: Industry response to Medicaid and tariffs - Management noted ongoing discussions with the administration and emphasized the need for solutions that address underlying industry issues [38] Question: CapEx over the next five years - Management clarified that the majority of the $23 billion commitment is for R&D OpEx, with no significant increase in CapEx expected [39][40] Question: Market reaction to ATR abstract - Management expressed confidence that detailed data presentation would improve market appreciation of the product [43][44] Question: Impact of Ocrevus subcutaneous launch on Cosentyx - Management indicated no significant impact from Ocrevus, with Cosentyx maintaining its market share [69][70] Question: Pluvicto launch curve and peak sales ambition - Management stated that Pluvicto is on a strong growth trajectory, with expectations of reaching $5 billion in peak sales [52][56]

Core Viewpoint - Novartis announced its acquisition of Avidity Biosciences for approximately $12 billion, marking a significant move in the biotech sector aimed at enhancing its pipeline in neuromuscular diseases [3][4]. Group 1: Acquisition Details - The acquisition involves Avidity shareholders receiving $72 per share, representing a 46% premium over the last closing price of $49.15 [3]. - Avidity will spin off its early precision cardiology projects into a new company named Spinco, which is expected to become publicly listed [3][4]. - The deal is anticipated to close in the first half of 2026, with significant commercial opportunities projected by 2030 [5]. Group 2: Strategic Rationale - Novartis is proactively pursuing multiple transactions to address patent expirations of key drugs, including Entresto, Xolair, and Cosentyx [4]. - The acquisition will provide Novartis with advanced RNA development projects targeting diseases such as Duchenne muscular dystrophy (DMD) and facioscapulohumeral muscular dystrophy (FSHD) [4][6]. - The expected compound annual growth rate (CAGR) for Novartis's sales from 2024 to 2029 is projected to increase from +5% to +6% due to this acquisition [5]. Group 3: Company Profiles - Avidity Biosciences, based in San Diego, is a clinical-stage company focused on developing treatments for various muscle diseases [6]. - Avidity's lead drug, Del-zota, is in early to mid-stage development for treating DMD, alongside other candidates for severe muscle diseases [6].

Core Viewpoint - Novartis has agreed to acquire Avidity Biosciences for approximately $12 billion in cash to enhance its portfolio in rare muscle disorder treatments, offering Avidity shareholders $72 per share, a 46% premium over the previous closing price [1][4]. Group 1: Acquisition Details - The acquisition price of $12 billion will provide Avidity stockholders with $72 per share, reflecting a significant premium of 46% [1]. - Avidity will spin off its early-stage precision cardiology programs into a new publicly traded company named Spinco as part of the deal [4]. Group 2: Strategic Rationale - This acquisition allows Novartis to expand into areas with limited treatment options, thereby strengthening its position in the rare disease market [4]. - Novartis is actively pursuing deals to mitigate the impact of an impending patent cliff for several of its blockbuster drugs, including Entresto, Xolair, and Cosentyx [2]. Group 3: Avidity's Profile - Avidity, based in San Diego, is a clinical-stage company focused on developing treatments for various muscle disorders and has several first-in-class drug candidates in its pipeline [5][7]. - The lead drug, Del-zota, is in early-to-mid-stage development targeting a rare form of Duchenne muscular dystrophy, alongside two other drugs for serious muscle diseases [6].

Core Insights - Novartis has agreed to acquire Avidity Biosciences for approximately $12 billion in cash to enhance its portfolio for rare muscle disorders [1][3] - Avidity stockholders will receive $72 per share, reflecting a 46% premium over the company's closing price prior to the announcement [1][2] - The acquisition aligns with Novartis's strategy to address the patent cliff of its major drugs and expand into areas with limited treatment options [2][3] Company Strategy - The acquisition is part of Novartis's proactive approach to mitigate the impact of patent expirations on key drugs like Entresto, Xolair, and Cosentyx [2] - Avidity will spin off its early-stage precision cardiology programs into a new publicly traded company named Spinco [2][5] - This move strengthens Novartis's presence in the rare disease market, particularly in muscle disorders [3][4] Avidity Biosciences Overview - Avidity, based in San Diego, is a clinical-stage company focused on developing treatments for various muscle disorders [3] - The company has a market capitalization of nearly $6.7 billion and is advancing several first-in-class drug candidates [4] - Avidity's lead drug, Del-zota, is in early-to-mid-stage development for a rare form of Duchenne muscular dystrophy, with additional candidates targeting serious muscle diseases [4]

Core Viewpoint - Novartis has agreed to acquire Avidity Biosciences for approximately $12 billion in cash to enhance its portfolio in rare muscle disorder treatments [1][2]. Group 1: Acquisition Details - Avidity stockholders will receive $72 per share, reflecting a 46% premium over the company's closing price prior to the announcement [1]. - Avidity will spin off its early-stage precision cardiology programs into a new publicly traded company named Spinco [2][5]. Group 2: Strategic Rationale - The acquisition allows Novartis to expand into areas with limited treatment options, strengthening its position in the rare disease market [3]. - Avidity is developing treatments for various muscle disorders, including a lead drug in early-to-mid-stage development for a rare form of Duchenne muscular dystrophy [4]. Group 3: Market Context - Novartis is proactively making deals to address the impending patent cliff for several of its blockbuster drugs [2]. - The deal positions Novartis to establish a stronger foothold in the U.S. market amid potential pharmaceutical tariff threats [5].

Group 1: Kratos Defense & Security Solutions, Inc. - Kratos Defense secured a $68.3 million contract for a hypersonic materials testing facility through the Defense Department's Industrial Base Analysis and Sustainment Program [1] - Jim Cramer described Kratos Defense as a "terrific" stock and suggested it is a good time to invest as the stock has come down a bit [1] - Kratos Defense shares increased by 6% to close at $89.32 [4] Group 2: Novartis AG - Novartis recently shared topline data from the Phase 3 REPLENISH trial of Cosentyx in patients with polymyalgia rheumatica [2] - Novartis shares rose by 0.2% to settle at $131.64 [4] Group 3: IonQ, Inc. - IonQ shares rose by 37.75% year to date, closing at $59.37, following news of potential equity stakes from the Trump administration in quantum-computing firms [2] - IonQ shares gained 7.1% to close at $59.37 [4] Group 4: Qfin Holdings, Inc. - Qfin Holdings reported worse-than-expected second-quarter results on August 14 [3] - Qfin shares gained 1.3% to settle at $26.51 [4] - Jim Cramer expressed that Qfin Holdings is not a preferred investment choice, while recommending Alibaba Group instead [3]