Novartis(US:NVS)2024-10-29 16:13Financial Data and Key Metrics Changes - In Q3 2024, Novartis reported a 10% increase in net sales and a 20% increase in core operating income in constant currency, with a core margin of 40.1%, reflecting a 340 basis point improvement year-over-year [8][34] - For the first nine months of 2024, net sales grew 11%, core operating income also increased by 20%, and core EPS was $5.83, up 21% [35][36] - Free cash flow reached $6 billion in Q3, the highest ever achieved in a single quarter, and $12.6 billion for the first nine months, a 15% increase [34][35] Business Line Data and Key Metrics Changes - Entresto's sales increased by 26% in Q3, marking its 10th consecutive year of growth, with strong performance in hypertension in China and Japan [11] - Cosentyx grew by 28%, driven by new launches, with a 38% increase in the U.S. and 16% outside the U.S. [12] - Kesimpta saw a 28% growth, with a 56% increase in constant currencies when excluding a one-time adjustment [14] - Kisqali achieved 43% growth, with a 50% increase in the U.S. and a 36% increase outside the U.S. [16] - Pluvicto grew by 50% in Q3, with a focus on preparing for the PSMAfore launch in 2025 [19] - Scemblix grew by 72% in Q3, becoming the preferred option for third-line CML [24] - Fabhalta received accelerated approval in the U.S. for IgA nephropathy, with strong early performance [28] Market Data and Key Metrics Changes - Novartis expects continued strong performance across key growth drivers, with a 5% sales growth guidance extended to 2028 [10] - The market for Cosentyx in HS is projected to expand significantly, potentially reaching over $5 billion [13] - The PSMAfore launch is expected to triple the patient population eligible for Pluvicto [20] Company Strategy and Development Direction - Novartis raised its full-year guidance for the third time, indicating strong underlying momentum across growth drivers and new launches [36][42] - The company is focused on innovation, with multiple Phase III readouts and submissions planned for key products [42] - Novartis is committed to a shareholder-friendly capital allocation strategy, including ongoing share buybacks and investments in R&D [38] Management's Comments on Operating Environment and Future Outlook - Management noted that the coverage gap reform in 2025 is expected to have a neutral impact on the business, with adjustments already factored into long-term guidance [47] - The company remains confident in its ability to grow top and bottom lines in 2025, despite anticipated headwinds from generic entries [53] - Management emphasized the importance of maintaining strong market positions for key products, particularly in the face of increasing competition [58] Other Important Information - Novartis is actively pursuing M&A opportunities to strengthen its pipeline and technology platforms, particularly in RLT and immunology [38][81] - The company is also focused on legislative efforts to amend the IRA, which could impact pricing and market access for its products [112][113] Q&A Session Summary Question: Impact of coverage gap reform on Cosentyx and Entresto - Management indicated that the coverage gap reform will have both positive and negative impacts, but overall is expected to be neutral and already factored into guidance [47] Question: Timing of promotional efforts for Pluvicto - Management stated that promotional efforts would take about six months to show impact, with significant growth expected post-PSMAfore launch [50] Question: Tailwinds and headwinds for 2025 - Management highlighted new indications and launches as tailwinds, while LoEs for certain products are anticipated as headwinds [54] Question: Competitive dynamics for Cosentyx in HS - Management expressed confidence in Cosentyx's market position due to strong clinical data and established relationships with dermatologists [58] Question: Growth expectations for Pluvicto - Management noted that growth in the ex-U.S. market is ongoing, but pricing dynamics are currently limiting revenue translation [62] Question: Kisqali patent expiry - Management confirmed that the estimated patent expiry for Kisqali in Europe is August 2032 [68] Question: Future M&A appetite - Management indicated a balanced approach to capital allocation, with ongoing share buybacks and M&A opportunities being pursued [81][92] Question: Impact of GLP-1s on Pelacarsen study - Management clarified that while GLP-1s have modest effects on Lp(a), the focus of the study is on patients with significantly elevated Lp(a) levels [77] Question: Update on IRA legislation - Management provided an update on ongoing legislative efforts to amend the IRA, highlighting bipartisan support for proposed changes [112][113]