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Transcription modifiée de la conférence téléphonique ou de la présentation des résultats NOVN.VX 28 avril 20 11h00 GMT

Bâle, 10 mai 2020 (Thomson StreetEvents) – Transcription modifiée de la conférence téléphonique ou de la publication des résultats de Novartis AG le mardi 28 avril 2020 à 11 h 00 GMT

Barclays Bank PLC, Division de la recherche – MD et chef de la recherche pharmaceutique européenne

BofA Merrill Lynch, Division de la recherche – MD et chef de la recherche sur l'équité en santé

Crédit Suisse AG, Division Recherche – MD et co-directeur de European Pharmaceutical Equity Research

Jefferies LLC, Division de la recherche – Analyste principal des actions et analyste pharmaceutique européen

Guggenheim Securities, LLC, Division de la recherche – Analyste principal, Global Pharmaceuticals

* Simon P. Baker

Bonjour et bon après-midi et bienvenue à la conférence téléphonique et à la webdiffusion audio en direct du premier trimestre 2020 de Novartis. (Instructions de l'opérateur) La conférence est en cours d'enregistrement. (Instructions pour l'opérateur) Un enregistrement de la conférence téléphonique, y compris la session de questions et réponses, serait disponible sur notre site Web peu après la fin de l'appel. (Instructions pour l'opérateur)

Sur ce, je voudrais passer la parole à M. Samir Shah, responsable mondial des relations avec les investisseurs. Allez-y, monsieur.

Merci et bienvenue à tous lors de la conférence téléphonique du premier trimestre 2020 de Novartis. Avant de commencer, je veux juste vous lire la déclaration de la sphère de sécurité.

Les informations présentées aujourd'hui contiennent des déclarations prospectives qui impliquent des risques connus et inconnus, des incertitudes et d'autres facteurs. Celles-ci peuvent faire en sorte que les résultats réels soient sensiblement différents de tous résultats, performances ou réalisations futurs exprimés ou sous-entendus dans ces déclarations. Pour une description de certains de ces facteurs, voir le formulaire 20-F de la société et ses derniers résultats trimestriels sur le formulaire 6-K, respectivement, qui ont été déposés et déposés auprès de la Securities and Exchange Commission des États-Unis. USA

Je tiens à vous remercier tous d'avoir participé à l'appel d'aujourd'hui et de passer maintenant à Vas.

Merci, Samir, et merci à tous d'avoir participé à l'appel aujourd'hui. Je suis accompagné aujourd'hui de Harry Kirsch, notre directeur financier; Marie-France Tschudin, présidente de Novartis Pharmaceuticals; Susanne Schaffert, présidente, Novartis Oncology; John Tsai, notre responsable du développement mondial des médicaments et CMO; Richard Saynor, le PDG de Sandoz; et Shannon Klinger, notre avocate générale de groupe.

Passons à la diapositive 5. Ce trimestre, nous avons pu maintenir une solide performance opérationnelle tout en soutenant la réponse mondiale à COVID-19. Lorsque vous regardez notre performance opérationnelle, les ventes ont augmenté de 13%, le résultat opérationnel de base a augmenté de 34%. Cela comprend l'effet d'environ 400 millions de dollars d'achats à terme que nous avons constatés sur une gamme de marques. Lorsque vous éliminez cet effet de 400 millions de dollars, les ventes ont augmenté de 9% et le résultat d'exploitation de base a augmenté de 22%. Par conséquent, une croissance très saine et forte au cours du trimestre avec une solide expansion des marges à la fois dans Innovative Medicines et Sandoz, hors effet COVID.

Nous passons maintenant à notre pipe. Nous avons connu un trimestre chargé pour livrer à nouveau notre portefeuille afin de générer une croissance à long terme. Tout d'abord, concernant Zolgensma, un avis positif du CHMP et l'approbation du Japon. Concernant Cosentyx, nous avions un avis positif du CHMP sur la SpA axiale non radiographique. ofatumumab et inclisiran ont vu leurs présentations acceptées aux États-Unis. USA et l'UE, et les deux soumissions sont en cours avec la FDA.

De plus, nous avons déposé le – nous avons transmis la soumission à la FDA. Beovu avait son approbation sur une variété de marchés. Et nous avons également eu une refonte prioritaire pour le capmatinib et la désignation accélérée pour TQJ, notre ARN antisens pour Lp (a).

Maintenant aussi, je pense, nous avons démontré une réponse pandémique très forte au cours du trimestre. Je voudrais vous guider un peu plus en détail sur la façon dont nous nous sommes préparés à répondre à la pandémie de Novartis. Aller à la diapositive 6.

Tout au long du trimestre et pour le reste de l'année, nous voulons démontrer notre engagement implacable envers les associés, les patients, les prestataires de soins de santé et la société. Dans chacun de ces domaines, nous avons mis en place des efforts clairs, des groupes de travail pour nous assurer que nous essayons vraiment de faire la bonne chose pour assurer la continuité de nos activités, mais aussi que nous servons toutes ces parties prenantes.

Donc, en prenant chaque quart de travail, si nous passons à la diapositive 7, en commençant par la continuité des activités et les opérations de fabrication et de chaîne d'approvisionnement, nous mettons en œuvre un plan solide parmi nos fournisseurs, nos propres opérations et nos relations avec les clients pour nous assurer que nous ne le faisons pas. il y a des interruptions dans notre capacité de fournir des médicaments aux patients.

Concernant les fournisseurs, nous avons une excellente transparence tout au long de la chaîne de valeur. Nous avons travaillé en temps réel pour ajuster nos niveaux de stock. Et il convient de noter que moins de 2% de nos ventes sont soutenues par des API d'origine unique en provenance de Chine et d'Inde, ce qui nous donne une grande résilience dans cette chaîne d'approvisionnement.

En ce qui concerne nos propres opérations, nous avons vraiment mis en œuvre d'excellents plans dans l'ensemble de notre réseau d'approvisionnement afin de garantir que nous pouvons maintenir des opérations de fabrication solides et que nous maintenons actuellement plus de 6 mois d'inventaire sur les marques clés.

Enfin, en termes de fiabilité d'approvisionnement auprès des clients, nous atteignons actuellement 99,5% de niveaux de service client dans notre portefeuille de médicaments innovants.

Passons maintenant aux essais cliniques sur la diapositive 8. Premièrement, il est important de noter que nos dépôts réglementaires pour 2020 sont toujours en cours. Et notre impact de COVID-19 dans nos essais cliniques est largement gérable. Vous pouvez voir ici une liste de nos principaux dépôts réglementaires. Ils continuent de progresser. Nous les traitons bien avec les régulateurs compétents.

En ce qui concerne les essais cliniques, nous avons actuellement plus de 300 essais opérant sur 96 000 patients. Les seules interruptions que nous voyons sont principalement des études qui sont en phase d'initiation ou en phase de planification, où nous avons un certain ralentissement des nouvelles inscriptions aux études en cours et le début de nouvelles études. Mais je dirais que dans les studios qui sont plus dans une situation de maintenance ou d'arrêt, nous avons été en mesure de gérer extrêmement bien avec un minimum d'interruptions.

Dans l'ensemble, dans l'ensemble du portefeuille, notre capacité à déployer des technologies numériques pour rechercher en temps réel sur tous nos sites d'essais cliniques, sur l'ensemble de notre portefeuille d'essais cliniques nous permet d'intervenir et de nous assurer de minimiser les perturbations. Certains des faits saillants comprennent un nombre important de visites de surveillance à distance, que nous continuons d'étendre et espérons également utiliser la post-pandémie comme un cours normal des affaires pour accroître l'efficacité de nos opérations.

Nous avons 2500 utilisateurs sur notre plateforme Sense basée sur l'IA pour prédire où sont les problèmes, où il y a des problèmes dans les essais cliniques et intervenir. Et nous avons une capacité très rapide à l'échelle du réseau pour détecter, évaluer et répondre à tout problème au niveau du site.

Nous passons maintenant à la diapositive 9. Lorsque vous examinez notre approche pour assurer le bien-être de nos associés, nous avons essayé de garantir la sécurité de l'emploi sans pertes liées à l'emploi pour COVID-19. Nous nous sommes arrêtés sur la restructuration en cours, fournissant des permis supplémentaires et une aide à la garde d'enfants. Nous avons une variété de programmes de bien-être des employés. Et nous cherchons également à adapter, et nous avons adapté, nos façons de travailler avec notre force de terrain, à protéger nos associés sur le terrain et à changer la façon dont nous voyons les incitations et les régimes pour garantir que nos associés soient traités équitablement. Il s'agit d'une diapositive très importante, car je pense que c'est ce qui nous permet de vraiment voir le type de performance opérationnelle que nous avons vu au premier trimestre et nous espérons voir plus tard cette année. Nous avons des niveaux d'engagement très élevés dans notre base de partenaires.

Nous passons maintenant à la diapositive 10. Lorsque vous regardez notre engagement envers les professionnels de la santé et les patients, nous sommes passés très rapidement à la recherche de solutions numériques qui permettent aux patients d'avoir des recharges de médicaments en ligne, un accès à l'éducation sur la maladie et un accès direct aux patients. . services. En ce qui concerne HCP, nous avons rapidement étendu les réunions Web, WeChat et le courrier électronique en Chine. Nous avons fourni une variété d'outils à nos commerciaux afin de participer en temps réel et nous construisons des portails supplémentaires pour vraiment essayer d'être à l'avant-garde de la façon dont les technologies numériques peuvent améliorer la capacité d'interagir avec les clients.

Enfin, je voulais revenir sur le rôle important que nous jouons en réponse à la pandémie de COVID-19 sur les diapositives 11 et 12. Tout d'abord, à partir du côté gauche, vous pouvez voir avec nos fonds de réponse COVID-19 et nos dons Nous avons engagé 40 millions de dollars dans des pays du monde entier pour soutenir véritablement les efforts locaux et alléger les efforts locaux pour que les systèmes de soins de santé renforcent la résilience face à cette situation difficile. Nous avons également engagé plus de 130 millions de doses de médicaments hydroxychloroquine donnés, qui atteignent plus de 60 pays avec 50 millions de doses expédiées à ce jour. Et cela, bien sûr, à la demande de ceux-ci, des ministères de la santé. Nous travaillons sur une variété de collaborations externes, l'accélérateur COVID où, avec la Fondation Bill et Melinda Gates, je copréside, et nous travaillons très fort pour accélérer la prochaine génération de traitements qui, nous l'espérons, proviendra de nos collaborations, ainsi qu'une variété d'autres associations que vous voyez ici.

Du point de vue de la découverte interne, nous avons lancé nos propres efforts de découverte de médicaments pour essayer de trouver nos propres antiviraux directs en collaboration avec un certain nombre d'universitaires et d'autres collaborateurs. Et Jay Bradner et l'équipe NIBR travaillent dur pour faire avancer ces efforts.

Enfin et surtout, nous nous sommes engagés dans notre propre recherche clinique avec des études parrainées par Novartis et l'IIT. Sur la diapositive 12, juste pour passer brièvement en revue certains de ces efforts, concernant les études de phase III parrainées par Novartis, nous avons 3 études de phase III désormais approuvées par la FDA sur le canakinumab, le ruxolitinib et l'hydroxychloroquine. Bien sûr, il est important de noter que nous devons être humbles à chaque fois que nous essayons de réutiliser des médicaments dans ce type d'environnement. Et nous avons vu, bien sûr, avec les premières données IL-6, ce sera difficile. Cependant, nous pensons qu'il est essentiel que nous nous concentrions maintenant sur la génération d'études en double aveugle, randomisées, contrôlées et correctement alimentées pour déterminer laquelle de ces interventions pourrait aider les patients.

Nous avons soutenu plus de 32 propositions IIT à partir d'une gamme complète de notre portefeuille, allant de médicaments tels que le sécukinumab, Cosentyx, ainsi que l'imatinib, le valsartan et l'omalizumab Xolair.

Enfin, concernant les initiatives d'accès, nous avons approuvé 697 demandes individuelles et 23 de gouvernements du monde entier.

Alors, Slide 13, en pensant à prendre du recul dans la dynamique que nous espérons voir tout au long de l'année. Je pense que l'une des choses: les choses que nous observons très attentivement sont la dynamique hospitalière / médicale. Du côté positif, nous voyons des longueurs de script plus longues. Nous constatons des taux de conformité plus élevés pour bon nombre de nos médicaments. Mais d'un autre côté, je pense que nous avons tous vu le déclin des visites des prestataires et des hôpitaux au cours des dernières semaines, en particulier pour nous dans certains domaines thérapeutiques comme l'ophtalmologie. Nous examinons donc de près cette dynamique. Nous sommes optimistes que, étant donné le désir des médecins et de la communauté des soins de santé de ne pas avoir le coût caché du report des soins aux patients, ainsi que les incitations financières inhérentes à ces systèmes de soins de santé pour leurs systèmes de soins de santé correctement le travail médical, je parviendrai à une situation équilibrée dans les prochains mois.

En outre, le principal payeur et la dynamique du système de santé. Je pense que nous verrons, tout au long de l'année, des changements dans les sources de remboursement aux États-Unis à mesure que les patients passeront leur assurance à un régime d'assurance privé ou privé. De plus, en Europe, nous pouvons constater des retards dans les décisions de remboursement selon l'endroit où les différentes autorités sanitaires décident de prendre les choses dans les années à venir. Ce sont donc des dynamiques que nous observons. Il est difficile de dire exactement comment cela se déroulera, mais une dynamique importante.

Et enfin, d'un point de vue dynamique des essais réglementaires et cliniques, la FDA travaille très dur sur tout notre engagement à respecter le calendrier de l'examen clinique. Telle est notre attente actuelle. Mais bien sûr, nous devons surveiller ces dynamiques de très près au cours de l'année.

Donc, je pense, cela résume où nous en sommes dans la pandémie. Vous pouvez voir avec des opérations stables, essayer d'être un leader en ce qui concerne la réponse mondiale pour surmonter cette situation et prendre soin de nos associés, de nos employés et nous mettre au bon endroit pour avoir une résilience à long terme.

Nous reprenons maintenant notre performance opérationnelle sur la diapositive 14. Vous pouvez voir qu'au cours du trimestre, nous avons enregistré une très forte croissance de nos principaux moteurs de croissance. Les points forts incluent, bien sûr, Entresto, Zolgensma et Cosentyx, également avec des performances très solides. Et puis, dans toute la gamme des actifs contre le cancer, vous pouvez de nouveau constater que nos médicaments fonctionnent bien sur les principales marques de Novartis.

Et du côté droit, nous avons maintenant déplacé jusqu'à 46% de nos ventes totales de médicaments innovants à partir des principaux moteurs de croissance et lancements, démontrant le rajeunissement de notre portefeuille à moyen et long terme.

Revenons maintenant à la diapositive 15, quelques mots sur Sandoz. Sandoz a connu un trimestre exceptionnel, bénéficiant en partie des achats à terme liés au COVID-19, mais également d'une très bonne performance sous-jacente avec une croissance des ventes de 11% en devises constantes. Cette évolution s'explique par une solide performance biosimilaire avec une croissance constante de 31% des devises, ainsi que par une excellente performance en Europe avec une croissance constante des devises de 19%.

Maintenant, en ce qui concerne le désinvestissement d'Aurobindo aux États-Unis, nous avons mutuellement convenu, comme nous l'avons annoncé, de mettre fin à cette transaction. Et maintenant, nous allons nous concentrer sur l'optimisation de cette activité EE. Et Harry aura également quelques commentaires supplémentaires sur la taille globale et la dynamique de ce portefeuille.

Nous passons maintenant à Zolgensma sur la diapositive 16. Notre dynamique de croissance aux États-Unis. USA Continuez. Vous avez vu, au cours du trimestre, que nous vous guidons, nos ventes du premier trimestre étaient en ligne avec nos ventes du quatrième trimestre pour 2019. Le prochain catalyseur pour Zolgensma sera sans aucun doute le lancement au Japon et en Europe. Et c'est ce qui, je pense, mènera à la prochaine rampe de vente de ce produit. Mais au premier trimestre, nous avons également annoncé des données importantes sur l'AMM, qui ont montré que la formulation intraveineuse avait des résultats exceptionnels, à la fois en termes de persistance pendant plus de 5 ans et chez les patients asymptomatiques qui ont atteint les étapes motrices de l'OMS. Et nous avons également annoncé au cours du trimestre que la FDA avait achevé son examen de sa réponse au formulaire 483 en août 2019 sans autre mesure d'application.

Ensuite, les prochains jalons, l'avis positif du CHMP atteint et la décision de la Commission européenne sont attendus sous peu; La décision de remboursement du Japon est attendue sous peu. Et je pense, importants et peut-être sous-estimés, les lancements que nous aurons dans une variété d'autres pays à travers le monde qui offrent des opportunités supplémentaires de croissance.

Nous passons maintenant à la diapositive 17. Avec AVXS-101 IT, nous pensons qu'au cours du trimestre, nous avons également montré, avec des données robustes, un profil clinique très convaincant en utilisant le score Hammersmith standard démontrant une réponse très robuste avec une augmentation moyenne de 6 à Hammersmith, deux fois le seuil clinique significatif, ainsi que 92% des patients de cette étude dans la tranche d'âge de 2 à 5 ans ont obtenu une réponse cliniquement significative. Nous sommes donc en train de travailler avec la FDA pour résoudre le bloc clinique avec les études précliniques en cours que nous sommes en train de lancer. Nous rencontrerons la FDA au cours du deuxième trimestre pour clarifier la portée des données requises, puis passerons à une réunion pré-BLA, où nous espérons clarifier davantage notre capacité à présenter un BLA pour AVXS-101 IT.

Passons maintenant à la diapositive 18. D'ici 2020, dans l'ensemble, nos catalyseurs sont toujours en route. Vous pouvez voir la gamme complète de catalyseurs ici. J'ai hâte de continuer à vous fournir des mises à jour sur les diverses soumissions d'approbation, les lectures et la première phase III.

Je pense donc que c'est un très bon début d'année. Vous pouvez voir d'excellentes performances opérationnelles, de fortes performances d'innovation, être bien préparé à la pandémie et faire preuve de résistance pour la prochaine période.

Sur ce, je vais donner à Marie-France de vous donner plus de détails sur les performances des produits pharmaceutiques.

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Marie-France Tschudin, Novartis AG – Présidente de Novartis Pharmaceuticals [4]

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Je vous remercie. Le premier trimestre a été un très bon début d'année pour l'industrie pharmaceutique, avec une forte demande sous-jacente globale, en croissance de 14%. Nous avons vu l'impact de COVID-19, qui était net positif, et nous prévoyons qu'il s'inversera plus tard dans l'année. L'achat et le stockage à terme que nous avons vus étaient principalement en Europe. Et comme mentionné précédemment, Vas, la franchise d'ophtalmologie a été la plus touchée jusqu'à présent. Nous avons vu que certains nouveaux patients commencent à décliner dans le portefeuille. Cela dit, nous avons également fait beaucoup de progrès dans notre programme d'innovation au cours du premier trimestre.

Nous avons franchi les étapes réglementaires pour Beovu, Mayzent, Cosentyx SpA axiales non radiographiques, inclisiran et ofatumumab. Nos sorties sont en route. Et, bien sûr, nous travaillerons en étroite collaboration avec les clients, les autorités et les systèmes de santé pour surmonter certaines des incertitudes liées à la pandémie.

Si nous passons à Cosentyx, notre demande de Cosentyx continue de dépasser le marché de la dermatologie et de la rhumatologie. Nous avons vu quelques actions en Europe, très peu aux États-Unis. USA Et notre stratégie d'accès de première ligne, qui est notre objectif, fonctionne. La majeure partie de notre croissance provient de la première ligne, ce qui représente 70% du marché.

Nous continuons également à renforcer notre proposition de valeur. Nous sommes en route vers une SpA axiale non radiographique, qui sera notre quatrième indication. Nous continuons de publier des données convaincantes. Et si vous regardez l'exemple d'ULTIMATE, c'est la première grande étude échographique randomisée sur le PsA, elle montre l'impact rapide de Cosentyx sur l'inflammation articulaire. Et cela ne fait que renforcer notre profil en tant que traitement complet pour la peau et les articulations.

Nous venons également de recevoir l'approbation chinoise en AS. Nous sommes donc très confiants pour l'année. Dans l'environnement actuel, nous nous attendons à ce que Cosentyx continue de bien performer sur des recettes répétées. Et les médecins demandent à leurs patients de continuer la thérapie. Cosentyx devrait également être le choix préféré pour les produits biologiques une fois que les patients reviennent au bureau, compte tenu de son profil de sécurité solide et de la récupération rapide de la réponse après l'interruption du traitement. Nous avons des données sur 5 ans. C'est très convaincant.

Avec Entresto, nous avons enregistré une croissance impressionnante dans le monde au premier trimestre. Nous avons atteint un point de basculement avec Entresto, et c'est vraiment considéré comme une norme de diligence aux États-Unis. USA Et l'Europe. Nous observions un NBRx pré-COVID à un niveau record de 4 500. Et la Chine a également connu l'adoption la plus rapide des soins primaires à ce jour, ce qui en dit long sur les besoins non satisfaits et le profil de produit solide.

Nous espérons également lancer au Japon au second semestre, et nous avons maintenant un partenaire local solide. Introduction du pEF aux États-Unis USA Et notre croissance au premier trimestre a été tirée par la demande avec juste un petit coup de pouce des actions. Nous prévoyons évidemment un ralentissement lié aux COVID pour les nouvelles initiations au cours du deuxième trimestre, mais le besoin d'un produit comme Entresto qui empêche les patients de sortir de l'hôpital est maintenant plus important que jamais.

Si nous avons déménagé à Beovu, Beovu a connu un très bon début, peut-être l'une de nos meilleures versions. Et maintenant, nous avons été frappés par le panneau de sécurité, il est confirmé et rare. Il y a 2 principes qui nous guident dans ce que nous faisons. Le premier est la sécurité des patients. Et pour nous, c'est primordial. Et le second est la transparence avec les régulateurs, les prescripteurs et toutes les parties prenantes. L'enquête initiale est en cours d'achèvement. Les étiquettes sont en cours de mise à jour et nous travaillons actuellement avec des experts de la rétine pour découvrir comment mieux comprendre et atténuer les problèmes de sécurité.

Nous voyons que les spécialistes de la rétine sont vraiment intéressés à nous aider, et cela reflète l'efficacité qu'ils ont constatée dans le monde réel. Nous restons pleinement attachés à Beovu, comme en témoigne notre programme complet d'essais cliniques de phase III. Nous avons maintenant une approbation dans 9 marchés en dehors des États-Unis. USA Par conséquent, pour les patients du monde entier, notre priorité est de fournir en toute sécurité les avantages que Beovu peut offrir.

Peut-être que cela vaut la peine de passer un peu de temps dans la franchise ophtha car c'est clairement celle qui est la plus affectée par COVID. Nous avons vu des visites à la clinique et des baisses d'ordonnances en mars et avril. Et semaine après semaine, nous avons vu ces chiffres baisser. Il est clair que, dans la rétine, on parle d'une population de patients très vulnérable. Et bien sûr, ce sont des produits administrés par un médecin. De plus, si nous examinons la sécheresse oculaire, qui n'est pas considérée comme salvatrice, nous avons vu que l'annulation des rendez-vous et des visites est beaucoup annulée. Il est difficile de prévoir quand les choses reviendront à la normale. Cependant, il est également vrai que les patients rétiniens auront besoin de leurs traitements. À l'heure actuelle, notre objectif est de travailler avec les fournisseurs pour trouver des solutions aux problèmes de capacité une fois que les patients commencent à retourner dans les centres.

Si nous passons à l'ofatumumab, nous sommes très enthousiasmés par le potentiel de l'ofatumumab. La possibilité d'avoir une thérapie par lymphocytes B très efficace pour une large population précoce et l'impact que cela pourrait avoir sur la progression de la maladie pourraient changer la façon dont les médecins traitent la SEP. Par conséquent, nous restons entièrement concentrés sur la mise sur le marché de l'ofatumumab.

Actuellement, nous ne nous attendons pas à des retards réglementaires. Et du point de vue du lancement, nous sommes prêts à toute situation lors du lancement, que nous voyions des prescripteurs ou d'autres parties prenantes face à face ou virtuellement état par état. Plus que jamais, apporter une thérapie à base de cellules B hautement efficace et administrée à domicile est très attractif. Et notre objectif est que lorsque les patients reviennent, nous leur facilitons le début de l'ofatumumab.

Enfin et surtout, ils comprennent. Nous accélérons vers le lancement. Nos dossiers réglementaires ont été acceptés aux USA. USA Comme dans l'UE. Nous avons publié nos données dans le New England Journal of Medicine. Nous avons terminé notre intégration de The Medicines Company. Nos équipes sont recrutées et formées. Notre accord avec le NHS progresse et nous sommes ravis de cet atout car il a le potentiel réel de changer la mortalité CV dans une très grande population de patients. Nous attendons toujours l'approbation des États-Unis en décembre.

Dans l'ensemble, ce fut un trimestre solide. Clairement, cette année, nous aurons des défis avec COVID. Mais malgré tout cela, nous aurons une forte croissance dans le portefeuille, nos moteurs de croissance et nos lancements.

Vers Susanne.

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Susanne Schaffert, Novartis AG – Présidente de Novartis Oncology [5]

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Merci Marie-France. Aller à la diapositive 28.

De même pour l'oncologie, nous avons connu un très bon trimestre 1. Nous avons atteint un chiffre d'affaires de 3,6 milliards de dollars et obtenu une forte croissance de 12%. Et nous avons observé une très bonne dynamique dans notre portefeuille, tirée principalement par l'excellente performance de nos dernières versions, Piqray et Adakveo, et la croissance continue à deux chiffres de nos moteurs de croissance. Kisqali a produit une croissance de 82%, ce qui en fait l'inhibiteur de CDK 4/6 à la croissance la plus rapide au cours du trimestre. Et aussi, Revolade / Promacta et Tafinlar + Mekinist ainsi que Jakavi ont poursuivi une trajectoire très forte. Ces facteurs de croissance ont plus que compensé l'impact de l'entrée de génériques d'Afinitor et d'Exjade aux États-Unis. USA Et Sandostatine LAR en Europe.

Depuis la pandémie de COVID-19, nous avons constaté une demande supplémentaire dans notre portefeuille, tirée par les achats anticipés, principalement en Europe, en Chine et aux États-Unis. USA De toute évidence, de nos jours, les professionnels de la santé et les patients essaient de minimiser les visites à l'hôpital et au bureau, ce qui aura un impact potentiel sur les produits nécessitant une hospitalisation, comme Kymriah et Lutathera. Mais dans l'ensemble, le domaine de l'oncologie est très résilient et nous continuons d'être très positifs avec des performances en année pleine.

Passons à la diapositive suivante. Piqray a continué de très bien performer avec un chiffre d'affaires de 74 millions de dollars au premier trimestre. Il s'agit du premier inhibiteur de PIK3CA du genre indiqué pour 40% des patientes atteintes d'un cancer du sein métastatique HR + HER2- présentant une mutation PIK3CA. Le produit a pris un bon départ en 2020 avec une couverture de police élargie et une dynamique continue de Rx aux États-Unis. USA Nous nous attendons à une acceptation continue des tests PIK3CA, et notre objectif est d'atteindre 40% d'ici la fin de 2020 et nous prévoyons également que le test plasma Foundation Medicine sera approuvé d'ici le deuxième trimestre de 2020.

Ce trimestre également, nous avons élargi notre empreinte géographique depuis les États-Unis. USA Piqray étant désormais approuvé sur 13 marchés dans le monde, dont la Suisse, le Canada et l'Australie, il devrait générer une croissance supplémentaire à partir du deuxième semestre 2020. Nous prévoyons l'approbation du CHMP plus tard cette année. Donc, dans l'ensemble, nous faisons beaucoup de progrès avec notre très vaste programme de développement appelé EPIC. Et nous sommes heureux de partager avec vous que les protocoles d'étude pour l'indication avancée du cancer du sein HER2 +, pour le cancer du sein triple négatif, pour le cancer de l'ovaire et pour PROS ont été alignés avec la FDA.

Passons à la diapositive suivante. Notre dernière version, Adakveo, a également connu un très bon départ, atteignant 15 millions de dollars de ventes au premier trimestre. Pour rappel, Adakveo est le seul traitement mensuel approuvé pour la réduction des crises vaso-occlusives de la drépanocytose. Aux États-Unis, plus de 54 000 patients atteints de drépanocytose ont plus de 1 COV par an. Par conséquent, une grande nécessité médicale.

Nous nous sommes concentrés sur l'accès, et cela fonctionne avec plus de 320 comptes commandés par Adakveo, dont plus de la moitié des plus grands centres d'anémie falciforme. Nous avons reçu des commentaires positifs des hématologues et sommes très heureux de voir une très grande notoriété de la marque. Déjà, 12 agences d'État Medicaid des 23 principaux États à forte prévalence ont publié leurs lignes directrices pour Adakveo. Nous avons reçu le code C le 1er avril et nous prévoyons recevoir le code J le 1er juillet, ce qui renforcera davantage la confiance dans les remboursements.

Nous continuons d'étendre notre présence mondiale avec 2 approbations américaines précédentes. USA Et nous nous attendons à une décision concernant l'EMA dans la seconde moitié de 2020. De toute évidence, comme pour tous les traitements administrés par le HCP, chez COVID & # 39; 19, nous nous attendons à des retards dans les nouveaux départs alors que les médecins essaient d'éviter de mettre le patients à risque d'infection. Mais dans l'ensemble, nous restons très positifs pour la performance annuelle d'Adakveo.

Donc, avec ça, je vais céder la parole à Harry.

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Harry Kirsch, Novartis AG – Directeur financier [6]

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Merci Susanne Bonjour et bon après-midi à tous. Et comme toujours, mes commentaires se réfèrent aux résultats des opérations continues et aux taux de croissance en devises constantes, sauf indication contraire.

Donc, sur la diapositive 32, cela montre le résumé de nos activités et performances continues pour le premier trimestre. Le tableau montre un nombre de chiffres très élevé – ensemble de chiffres. Et les ventes ont augmenté de 13%, le résultat d'exploitation de base a augmenté de 34%. Hubo 2 factores principales que contribuyeron a estos resultados. Claramente y principalmente, un rendimiento operativo subyacente muy fuerte; y en segundo lugar, algunas compras a plazo relacionadas con COVID-19 y un menor gasto. Estimamos que el impacto financiero favorable de COVID-19 en el trimestre 1 será de aproximadamente $ 0,4 mil millones en ventas y aproximadamente lo mismo en los ingresos operativos básicos. Excluyendo estos impactos, estimamos que las ventas habrían crecido un 9% y los ingresos operativos básicos habrían crecido un 22%. Claramente, nuestro rendimiento operativo y de ventas del primer trimestre fue muy sólido; como se anticipó, cuando proporcionamos nuestra guía anual en enero.

El crecimiento del ingreso neto se vio afectado principalmente por mayores disposiciones legales. El flujo de caja también fue fuerte, aumentando un 8% en dólares estadounidenses a $ 2 mil millones, y daré un poco más de detalle más adelante en la presentación. Esperamos que los beneficios financieros relacionados con COVID-19 en el trimestre 1 y en ventas e ingresos operativos centrales se reviertan más adelante en el año.

En la Diapositiva 33, verá el crecimiento de las ventas del primer trimestre y los márgenes básicos por división y para operaciones continuas. En el lado izquierdo, verá las ventas y los márgenes centrales según lo informado. En el lado derecho, verá ventas y márgenes subyacentes, excluyendo nuestros impactos financieros estimados de COVID-19 en el trimestre 1.

Me gustaría centrarme en el rendimiento financiero subyacente en el lado derecho. Entonces, si excluimos allí el impacto de COVID-19, las ventas para el primer trimestre han aumentado aproximadamente un 10% para medicamentos innovadores, un 7% para Sandoz y un 9% para operaciones continuas. Los márgenes continuos de las operaciones han mejorado en aproximadamente 3 puntos al 32% de las ventas netas. Nuestro margen básico de medicamentos innovadores ha mejorado aproximadamente 2 puntos al 35% de las ventas netas. Sandoz, como ya mencionó Vas, tuvo un trimestre realmente sobresaliente y mejoró significativamente el margen subyacente subyacente en aproximadamente un 6% a un 25% de las ventas. Un gran trabajo en los programas de productividad mejoró aún más el margen bruto de Sandoz y las estructuras de costos de venta, generales y administrativos.

Además, el primer trimestre de Sandoz se benefició de un menor impacto en los precios y de los primeros lanzamientos al mercado en los EE. USA

La Diapositiva 34 muestra la dinámica de cómo esperamos pasar de los muy fuertes números reportados del primer trimestre a la guía anual completa. Primero, esperamos que el impacto de COVID-19, como se mencionó, se revierta más adelante en el año. Por supuesto, es difícil decir cuándo exactamente. Probablemente sea una combinación del trimestre 2 y el trimestre 3. Pero también tenga en cuenta que la compra anticipada de $ 0,4 mil millones es al final, solo 2 días de envío para nosotros, por lo que la desconexión también podría ocurrir por completo en el trimestre 2.

También esperamos mayores impactos genéricos principalmente en Afinitor, Exjade y Travatan. En el primer trimestre, hemos visto algunos efectos de los respectivos impactos genéricos, pero esperamos que aumenten a medida que avance el año. Además, comenzaremos a trasladar la adquisición de Xiidra y un par de otros lanzamientos del año anterior en la segunda mitad. Por último, planeamos aumentar las inversiones de lanzamiento y prelanzamiento de ofatumumab, capmatinib e inclisiran en el resto del año.

En la Diapositiva 34-35, quiero compartir nuestras suposiciones clave en las que hemos basado nuestra orientación para todo el año. La orientación previa en enero excluyó la cartera de productos sólidos y dermatológicos orales de Sandoz en EE. USA Como ahora estamos reteniendo esta cartera, esperamos que tanto el crecimiento de las ventas como el crecimiento de los ingresos operativos básicos sean aproximadamente un 1% menos que la orientación proporcionada en el supuesto anterior. Por supuesto, la base desde la que crecemos también es aproximadamente $ 1 mil millones más alta en 2019, exactamente $ 1.074 mil millones, ya que mantenemos el negocio ahora.

Continuamos asumiendo que ni Gilenya ni los genéricos Sandostatin LAR ingresan en 2020 en los EE. USA Además, estoy seguro de que han visto esto, acabamos de recibir noticias de una decisión positiva de apelación de derechos de propiedad intelectual de Gilenya. Por supuesto, supervisamos de cerca la decisión del Tribunal de Distrito y le informaremos cuando sepamos más.

Ahora, a una suposición aproximada en relación con los impactos de COVID-19. Por supuesto, nadie sabe exactamente qué sucederá en los próximos meses y trimestres. Esto es lo que hemos asumido aproximadamente para nuestra orientación sin cambios.

Incluimos el supuesto de que los sistemas de atención de salud vuelven a la prescripción normal y la dinámica de consumo durante el trimestre 2 en nuestros principales mercados. Entonces, no las economías, sino la atención médica y la prescripción. Suponemos que los beneficios del primer trimestre de las compras a plazo y el menor gasto se revierten más adelante en el año. Of course, we will closely monitor those business dynamics, and we'll update you also on the guidance, if needed, at quarter 2 earnings.

With these assumptions, on Slide 36, we confirm our full year outlook, continuous operation sales expected to grow mid- to high single-digit and core operating income expected to grow ahead of sales and increasing the margin at high single to low double digit.

For Innovative Medicines division, also unchanged. We expect sales to grow mid- to high single-digit and for Sandoz to grow low single-digit.

Let me add a few words on quarter 2 dynamics. Of course, quarterly growth rates are likely more volatile in this COVID-19 situation. For us, quarter 2 sales growth is likely to be low to mid-single digits. This mainly depends on how much COVID-19 forward buy of Q1 unwinds in Q2 and how sales of our ophtha portfolio is impacted by significantly lower physician visits, as Marie-France also has laid out.

On the bottom line, please remember that, in quarter 2 of 2019, we had roughly $0.1 billion benefit from prelaunch inventory provision releases, mainly for Zolgensma — upon Zolgensma approval. This is, of course, considered in our full year 2020 guidance, but please include this also in your quarter 2 core operating income modeling.

On Page 37, just a quick word on cash flow. Of course, cash flow remains very important for us, particularly in view of the current situation. And you see here strong cash flow growing 8%, mainly driven by higher operating income. We do have higher working capital in the quarter, mainly impacted by higher accounts receivables as the forward purchasing mostly happened in March. But no worries here. We are absolutely on track to collect that. And that's also what we see overall. Our cash collections remain very strong. It's, of course, a big focus of the organizations. And days sales outstanding remain totally in line with year-end 2019, so very good cash collection discipline and cash flows.

Finally, on Slide 38, I want to bring to your attention the significant change in the estimated currency impact on our results. Since last time we spoke 3 months ago, we do update each month, but maybe not everyone looks at the website every month. And it's, of course, the result of the dollar — U.S. dollar strengthening versus most other currencies. So if late April rates prevail for the remainder of 2020, the full year impact of currencies on sales would be negative 3% points and on core operating income negative 6% points. For quarter 2, it would be negative 4% and negative 7% respectively. And again, as a reminder, we do update this monthly in our website. I do recommend that you look at it, not only business situations or the currencies, of course, are volatile and it's worthwhile watching.

So with that, I'll turn it back to Vas.

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Vasant Narasimhan, Novartis AG – CEO [7]

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Excelente. Je vous remercie

(technical difficulty)

In Q1, and we're maintaining our full year outlook, as Harry has nicely outlined. So we remain excited for the future, optimistic about 2020, and we look forward to taking your questions.

So with that, operator, we can open the line.

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Questions and Answers

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Operator [1]

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Our first question comes from the line of Keyur Parekh.

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Keyur Parekh, Goldman Sachs Group Inc., Research Division – Equity Analyst [2]

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Two, please, if I may. One, Vas, for you. From a big-picture perspective, would love your thoughts on how you see the current pandemic impacting the way you were doing business in the longer term. How do you think the value of the broader health care system kind of within the health care system changes? And what do you think kind of young new CEOs like you can do to make the industry at a better place given previous public perception of the industry? That's kind of question #1.

And then question #2, for Marie-France. Kind of given the new findings on Beovu, would love to hear your views on where you think Beovu should be used if there's a patient subset where you think this might be better fitted? Or do you still see this as a broad therapy across the entire patient population base? How should we think about the peak sales opportunity for Beovu today?

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Vasant Narasimhan, Novartis AG – CEO [3]

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Thank you, Keyur. So first, I'll divide my comments into big-picture comments for the sector or the industry and then some specific comments on new ways of working, I think, will reshape how we think about running our company in the years ahead. First, this is, I think, a remarkable perhaps once-in-a-generation for a company — company's opportunity to reset our reputation in the broader public mind. When you look today, we're in a moment in time where our industry, combined with the work of academia and the broader ecosystem, has stepped up to make unprecedented, I think, collaborations with over 170 now drug candidates somewhere in the clinic or in preclinical testing, over 90 vaccine candidates, well over 500 clinical trials now running massive efforts to do this in a nonprofit or donation basis to really lead the charge in trying to overcome this pandemic. And I think what that's leading to is, you see already in survey data, a shift in the perception of the value of this sector.

I hope we can seize this moment to remind the world that this industry is why we've seen such remarkable — part of the reason, at least, why we've seen such remarkable gains in life expectancy over the last 100 years. It's why we're able to withstand pandemics of the past and we'll be ultimately able to withstand this pandemic. So I think it's a remarkable opportunity to reset our reputation as an industry. And also, I think, for Novartis, part of the reason we took the time to walk you through all the things we're doing is we take it as a significant opportunity to make a major contribution around the world and also completely reposition ourselves as a company that's truly trying to be valued, maybe most valued by society.

And specifically, I think 3 things will shift health care systems. I think the rise of telemedicine, the rise of digital technologies, all the physicians we talk to clearly are seeing a big shift in how they engage with patients. Alongside that, of course, we're going to have a short-term impact of the shifts because of unemployment. But longer term, I believe that the digital technologies have now really taken hold in health care systems. And then on the same side, within our company, digital technologies and how we run our sales force, manufacturing lines, our R&D operations, have now also been forced to go to scale. I mean all of our AI and data science efforts are now being taken to scale simply because we have no choice.

And that, I think, will ultimately lead to more distributed ways of working across large companies, which if companies can embrace distributed ways of working shift from just taking office space work and moving it into an auto office setting, but really rethink how we work, you could see dramatic increases in productivity, margin — further margin expansions and, hopefully, a better output and innovation from our company longer term. So that's just some brief perspectives.

Marie-France, on Beovu.

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Marie-France Tschudin, Novartis AG – President of Novartis Pharmaceuticals [4]

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So as you have noted, Beovu is off to an incredible start in our launch, and we still believe that this product will be a blockbuster. Of course, safety does come first, and we have a signal, it's rare, but the benefit/risk profile for the product remains positive. We have to understand the root cause. This may take some time. But we also have a long exclusivity in the U.S. and EU, and so we will play the long game on this one. What we're seeing in the marketplace from physicians is that physicians are in 2 camps. They're either pausing and waiting to understand more or they're actually taking a more cautious approach with their patients. We see approximately half the centers continue to order. Of course, now with the COVID situation, it's hard to say what is impacting what, but we are — I think the fundamental point is that we're committed to resolving this issue. We have approval across 10 markets. And as we launch this product across the world, we will learn also about different treatment practices and how these have an impact on outcomes.

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Operator [5]

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Our next question comes from the line of Graham Parry from Bank of America.

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Graham Glyn Charles Parry, BofA Merrill Lynch, Research Division – MD and Head of Healthcare Equity Research [6]

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So firstly, you expressed confidence in meeting your PDUFA date on ofatumumab. But I think at your last update, you said the FDA hadn't inspected the manufacturing site in Stein yet, and that is obviously, an international inspection, which they had to at least temporarily shut down. So do you have a date for that inspection? Or has it already happened? Perhaps an update on your confidence in achieving that prior to the PDUFA date.

And then secondly, when you talk about the $400 million COVID benefit to sales and EBIT, is that just purely an inventory calculation? And have you also included in there the impact of the surge in prescriptions for chronic therapies like Entresto and Cosentyx as people rush to get their prescriptions filled?

And also, in your full year guidance, to what extent have you factored in the reduction we're seeing in new-to-brand on those drugs and the lack of new patient starts? Or are you just thinking these are getting warehoused and you should see them actually pick up with a new surge in end of Q2, Q3 as patient visits start to return?

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Vasant Narasimhan, Novartis AG – CEO [7]

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So thanks, Graham. So I'll make a general comment on our engagement with FDA as an industry, and then John can comment specifically on ofatumumab. And we've had — and I shared the FDA BRC for the pharma industry organization. In all our interactions with FDA, FDA has stayed committed to their view that they can meet their PDUFA time lines, and they will be using technology, virtual inspections, paper inspections, et cetera, to do their best to meet their PDUFA time lines. And in particular, when they look at prioritizing, priority reviews would, of course, be the ones they want to ensure they hit their time lines on. And it's worth noting that ofatumumab has a priority review with the priority review voucher. And John, specifically on ofa.

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John Tsai, Novartis AG – Head of Global Drug Development & Chief Medical Officer [8]

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Ouais Thanks, Graham. Specific to ofatumumab, we've had good discussions with the regulatory agency, FDA specifically. In terms of inspections, as you noted, we had a clinical trial site inspection in the U.S. very recently, and that went very well. In terms of the manufacturing inspection, the manufacturing site is in Switzerland, and we had that site inspected about a year ago. And that went well. Now as Vas said, that sometimes they're granting waivers or asking other agencies to do the inspection. And we've not heard anything else in terms of the current inspection. But the most recent inspection that occurred a year ago was — went very well.

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Vasant Narasimhan, Novartis AG – CEO [9]

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And then, Harry, on the guidance on the $400 million?

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Harry Kirsch, Novartis AG – CFO [10]

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Ouais Thank you, Graham. So the $400 million, roughly, right? It's never easy to approximate these, but that's why we did it at company level as well as a division level, but not further down, easier to triangulate at a higher level. And the $0.4 billion is very little actually at the wholesalers. So we actually also held back orders where we felt they just would fill the wholesaler pipelines. And in good discussions with our customers, we reassured them that our supply chains are extremely robust and customer service levels are at normal record high. So most of this effect, we see longer scripts and basically maybe patients filling early or getting longer scripts, depends on the country and the payer allowing that. It is only 2 days on average, but it's majorly at the patient level, not so much at the wholesaler level.

And so we do expect that this unwinds. On the other hand, could have a positive effect on more adherence to chronic medicines. And so that's a positive. On the other hand, of course, depending on the therapeutic areas, we also expect — and that's also needed for the full year guidance, that systems return back to normal physician visits. That's certainly on new patient starts, in the launch area. And then on the other hand, of course, in ophthalmology where injections are necessary. And there we see, in April, a bigger impact. You don't see it yet so much in Q1, and that's also where we need this assumption that the systems start back up. Vas mentioned that there's a big urge and also health care systems looking at the unintended consequences of COVID, which means other diseases may be neglected.

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Operator [11]

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Next question comes from the line of Steve Scala.

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Stephen Michael Scala, Cowen and Company, LLC, Research Division – MD & Senior Research Analyst [12]

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I have two questions. First, why didn't Cosentyx appear to benefit from forward buying and it even fell a bit short of your guidance provided on the Q4 call? And then secondly, one theory for Beovu safety issues is a contaminant or impurity in the formulation. I'm curious, was the delay in filing Beovu several years ago due to the need to purify the formulation? I don't recall the company ever actually being specific on why the filing was delayed.

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Vasant Narasimhan, Novartis AG – CEO [13]

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Thanks, Steve. On Cosentyx, Marie-France?

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Marie-France Tschudin, Novartis AG – President of Novartis Pharmaceuticals [14]

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So as we mentioned before, there's a very strong performance across the board both the derm and rheum markets. We did see some small stocking, but it was mostly in Europe. There was no stocking in the U.S. It was very demand-driven results. We did see, obviously, Q1 seasonality around the reverification and our further strengthening of our first-line access strategy. But we continue to grow and be strong. And clearly, we do anticipate a COVID effect on our NBRxs. But we have a very solid TRx base, strong market share, so we're confident on our trajectory.

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Vasant Narasimhan, Novartis AG – CEO [15]

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And I'd just say on Cosentyx, we're confident that this brand will continue on its trend to exceed $5 billion. And so we're very confident in where Cosentyx is heading. These small variations quarter-to-quarter that get so scrutinized, I think, miss the bigger picture that this is a brand that's on its way to 9 indications, that has an outstanding market share position across its various therapeutic areas and a very unique positioning in rheumatology. So it's important to take a step back, I think, for our investors and not always focus on these small variances on the quarter.

Now with respect to Beovu, just to remind everyone, we — this is a history to see you've got a good memory, if you go back in time, we — the original Phase III program took into Phase III the Phase I/II formulation. And then after Phase III, we did bridging study to final marketing image that ultimately went into the market. So we are doing a very detailed technical analysis just to understand was there anything that happened in that process. We have not identified anything to date that would be causative. But nonetheless, we are very carefully assessing that to fully understand that. These are very rare events. I mean if you look at these numbers, we're talking about 1 to 2 cases per 10,000. So this is not easy to find causative relationships. The other nuance to note is in — outside the U.S., we've launched in a prefilled syringe. In the U.S., we launched in a vial. How that might impact the dynamic, we think, is something as well we'll have to watch.

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Operator [16]

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Next question comes from the line of Peter Welford from Jefferies.

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Peter James Welford, Jefferies LLC, Research Division – Senior Equity Analyst & European Pharmaceuticals Analyst [17]

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I've got 2, please. Firstly, just on the cost base, I wonder if you could just comment perhaps on how we should think about COVID-19 potentially impacting that. Obviously, significant efforts by you, both on supplying drugs like hydroxychloroquine as well as obviously investing in new studies and perhaps also having to increase costs on existing studies to keep them going. But at the same time, obviously, like us, travel budget is significantly down. I wonder if you could just — you could sort of talk us through the varying dynamics there we should think about for cost this year.

And then secondly, just on marketing. I guess with all the efforts now that have gone into digital marketing and some of the significant changes that have been there starting in China and now other major markets, have you got any data so far in-house that can point to how effective that digital marketing is or could be? And how could this potentially shape your thinking in the future? Or do you think things will largely return to normal once the COVID situation finishes?

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Vasant Narasimhan, Novartis AG – CEO [18]

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So Harry, on the cost base?

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Harry Kirsch, Novartis AG – CFO [19]

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Ouais Thank you, Peter. So on the cost base, as you have seen in quarter 1, it's roughly, right, I mean, $400 million top line, $400 million bottom line. We have a little over 20% cost of goods. So that's roughly $80 million of the cost base. And that's basically effect of 2 weeks. So you can imagine that there's never a formula, don't now take the $80 million times how many weeks. But there's quite some variable spend. That, of course, has to do with what is the possibility, how much is working from home, how much are the lockdown procedures basically also impacting the cost base in a positive way it would, right? Of course, we rather don't have it and have the top line be extremely dynamic. But there is clearly quite a potential, which is partly a natural hedge for some of the top line, if there would be a slowdown.

And then in the overall scheme of things, of course, we do a lot as a company, but it's not so material in terms of $50 billion company roughly, right, and our significant amount of profit and cash flow. So we are in a range that is manageable within our forecast. And we also make very good progress, slightly even ahead of target on our productivity efforts. So what — I would not see that our COVID-related efforts would hinder us from margin progression or would then to truly blame. More important is to see how is the top line developing and are health care systems for the areas, therapeutic areas, that point to us starting to work normal again as we go through quarter 2.

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Vasant Narasimhan, Novartis AG – CEO [20]

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And then Marie-France, on digital marketing?

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Marie-France Tschudin, Novartis AG – President of Novartis Pharmaceuticals [21]

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Ouais So we've clearly had to pivot very quickly to a very, very different way of working. And we've seen some remarkable initiatives across the globe. We've been able, for example, in China to reach 900,000 HCPs through WeChat and web-triggered e-mails. We've seen in the U.S. 1,500% increase in telemedicine. And so clearly, digital is going to take a new role in the future if we think about online drug refills, education, direct-to-patient and, of course, how we can enhance our face-to-face interactions with physicians.

So one of the clear opportunities that we see is really in this stage is to understand what physicians prefer, what the markets prefer and then really clearly understand what are the most effective tactics that we have out there. The goal is to really just increase our effectiveness or our productivity in the marketplace, the efficiencies of the system, such as diagnosis and maybe adherence. And clearly, we're seeing opportunities also on how quickly we can bring products to market. So we've seen, for example, in the case of Xolair, home delivery being accelerated across different markets. So yes, there are some challenges, but there are clearly opportunities for us in the future.

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Vasant Narasimhan, Novartis AG – CEO [22]

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And Peter, I'd say, overall, our goal is how can we make these changes stick and really now accelerate that transformation, not go back, I think, to your point, to the old ways of working.

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Operator [23]

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Next question comes from the line of Simon Baker from Redburn.

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Simon P. Baker, Redburn (Europe) Limited, Research Division – Head of Pharmaceutical Research [24]

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Firstly, on Zolgensma, you talked about the next catalyst for growth being Europe and Japan. But I wonder if you could give us an update on the potential growth sources in the U.S., given the current level of state testing and Medicaid reimbursement. And then a question for you, Vas, going back to Keyur's opening question. Rather than just thinking about the long-term potential benefits for the perception of the industry from COVID-19 and the industry's response, I wonder if you could give us any thoughts on your interactions with governments here and now and how the perception of the industry has changed or (technical difficulty).

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Vasant Narasimhan, Novartis AG – CEO [25]

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Excelente. Thanks, Simon. I think you're breaking up. I think we lost you, Simon. But I think I got the gist of the second question. So first, on Zolgensma, in the U.S. right now, we are at a steady state of around 100 patients per quarter within the current indication. That's in part as we grow in newborn screening, we, of course, also have the aging-out of the older kids and the older cohort. I think the other element that did dampen a little bit Q1 was that with the COVID pandemic, fewer patients were coming in for switches. And we see that dynamic as well in the early part of April. Nonetheless, we feel confident we're in that steady state of approximately 100 patients a quarter within the current indication.

Now when you look at Europe, as a reminder, we have a very broad indication within Europe. We've already seen early access agreements announced by German — a few German sick funds that would be available as soon as we're approved in Europe. So we expect to see very rapid uptake in some countries within Europe on launch. So that will give us the next, I think, inflection point is our launch across a range of European markets. And our teams are working hard to get early access agreements in place to enable patients to receive the therapy even ahead of the final reimbursement agreement and then of course, Japan and a range of other markets around the world. So that will be the next set of inflection points for the brand and then following on that, the U.S. expansion beyond 2 years of age. So when you take each of those in turn, we're still well on track to a multibillion-dollar product with respect to Zolgensma.

I would say on government — I would say broadly within a range of stakeholders, if you look at the engagement from government groups ranging from the G20, individual governments reaching out to industry and asking for our support in a very positive way, a range of collaborations that involve the biopharmaceutical industry, the nonprofits, government, academic institutions, I certainly feel that the overall tone is very positive towards the industry at this time. I think if we can do our part and behave in a way that is really supportive to the overall pandemic response, this is an opportunity as well to reset, I think, the overall relationship between the industry and government. So I am hopeful on that front. But of course, it's still early days, and we'll have to see how the situation evolves over the coming year.

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Operator [26]

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Next question comes from the line of Tim Anderson from Wolfe Research.

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Timothy Minton Anderson, Wolfe Research, LLC – MD of Equity Research [27]

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A couple of questions, please. On Entresto and the filing for HFpEF, that was on a primary endpoint that technically failed. And FDA is usually quite stringent on how they interpret cardiovascular trials. So I'm wondering what you're realistically hoping to accomplish with that filing? And if you could just kind of identify what you think is the subgroup of most relevance there?

And then a second question on inclisiran, you'll be launching that years ahead of having outcomes data. I'm thinking one potential strategy, especially with this very novel type of product, would be to be disruptive on price if you're positioning it almost as a vaccine-like product. So I'm just wondering if you can comment on launch dynamics in the absence of outcomes data and how price may play a role?

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Vasant Narasimhan, Novartis AG – CEO [28]

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Thanks, Tim. First, on Entresto, HFpEF, John?

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John Tsai, Novartis AG – Head of Global Drug Development & Chief Medical Officer [29]

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Ouais Thanks, Tim. Thanks for the question. On HFpEF, as you know, we narrowly missed this statistical significance for the broader population. We've had good dialogue with the agency on this. I think, as you know, a p-value of 0.05 versus 0.06 is a 6% chance versus a 5% chance that was by Type 1 error. So given that, we see the benefit in the broader overall population. We've also readjudicated and looked at the endpoints with another group, this time with DCRI. And we're having good conversations with the FDA in terms of looking at these endpoints. So we are moving forward and have had good dialogue with the agency. And we look forward to having these discussions with them.

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Vasant Narasimhan, Novartis AG – CEO [30]

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And then Marie-France, on the inclisiran?

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Marie-France Tschudin, Novartis AG – President of Novartis Pharmaceuticals [31]

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So clearly, the idea with inclisiran is to bring the product to a very broad patient population. We know that there's a huge unmet need in the cardiovascular area. We know it's a leading cause of death, and we know that this is hugely costly to health care systems. What we want to do is price this product responsibly. And what we're learning from payers is that there is an interest in entering much broader agreements with us on this product. So it's early to talk about what that would potentially look like. But certainly, the idea behind the acquisition of this product was to bring it to a broad patient population who can benefit from it and potentially bend the curve of life.

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Vasant Narasimhan, Novartis AG – CEO [32]

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Thanks, Marie-France. Just one more comment I'm thinking on HFpEF. I think maybe 3 nuances, one, that the study this under central adjudication missed the primary endpoint, but on physician adjudication actually was statistically significant. And then there were 2 groups, women as well as patients with ejection fraction less than, I think, 68% or 69% that also had positive results. So there's a lot of dynamics, I think, here. But as John pointed out, most important, great dialogue with the FDA to agree on a readjudication approach. We've completed that and we'll submit the full data package. I've already submitted the full data package to the agency.

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Operator [33]

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Next question comes from the line of Eric Le Berrigaud from Bryan Garnier.

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Eric Le Berrigaud, Bryan Garnier & Co Ltd, Research Division – Managing Partner Equity & Research [34]

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Ouais Two questions. First is after the impressive operating margin for Sandoz in Q1, excluding COVID-19 effect of 25%, maybe to understand what was behind that in terms of mix of different businesses but also productivity gains and the sustainability of that going forward? And the second question is maybe to talk a little bit about the dynamics behind the MS market and maybe for the different classes and the S1P class, in particular.

Excluding COVID-19 impacts, how is Gilenya doing, especially in the U.S.? Mayzent was pretty much in line. How are they doing versus other products in the class? How do you see them going forward? And is it fair to expect a significant shift in your resources when ofatumumab is available? And since you've reiterated confidence in reaching $1 billion with Beovu, would you say the same for Mayzent, please?

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Vasant Narasimhan, Novartis AG – CEO [35]

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Thank you, Eric. So first, on Sandoz margins, Richard?

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Richard Saynor, Novartis AG – CEO of Sandoz [36]

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Thank you, Eric. Yes, it's pleasing to see such a strong quarter for Sandoz really across all geographies and most of the portfolio. The margin growth really came from a number of places, a good cost control, which washed out through our excellent work that we saw last year. Mix, the portfolio has evolved, particularly around strong performance around the biologics, which have generally have higher margins. And pricing has not eroded to the same degree. Plus we saw a delay of some of the pricing reforms that we expected in quarter 1, which we'll expect later into the year. Clearly, margin is always variable in the generics business. So clearly, we're still focusing on maintaining cost control and driving margin forward, and we'll continue on that basis.

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Vasant Narasimhan, Novartis AG – CEO [37]

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Thanks, Richard. And on MS market dynamics, Marie-France?

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Marie-France Tschudin, Novartis AG – President of Novartis Pharmaceuticals [38]

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So if I start with Gilenya, just remind you that Gilenya remains the second-most prescribed DMT brand worldwide. It's still a strong product. And it's actually doing very well in this COVID period due to, obviously, the very strong TRx base. So we expect relatively stable performance with Gilenya. If I can make some comments on Mayzent, we actually saw very good momentum in Q1. So we had a 76% quarter-over-quarter growth and NBRx of plus 16% in the U.S. So that was the highest growth of any DMT with a prescriber base that's growing steadily.

Again, we have a strong value proposition in this space. We're the only product that has been studied and has shown data in a typical SPMS population. We still believe that Mayzent has blockbuster potential. But we do acknowledge that this is going to take time as we try to identify patients and make sure that we have the right positioning in the marketplace. As we're in this COVID period, clearly, the MS space is being affected, especially the dynamic side of the market. So we do expect a slowdown. But as things get back to normal, we believe we have a good foundation for Mayzent in this patient population.

Lastly, on ofatumumab, that's clearly the focus, bringing a highly efficacious B-cell therapy, which is safe, which can be administered at home. And particularly now in a post-COVID period, this is going to be absolutely paramount for the market and for patients. So we're very excited about this prospect. And clearly, we're focusing for a big launch in this area.

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Operator [39]

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Next question comes from the line of Seamus Fernandez from Guggenheim.

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Seamus Christopher Fernandez, Guggenheim Securities, LLC, Research Division – Senior Analyst of Global Pharmaceuticals [40]

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So just wanted to get a couple of updates. One, could you guys just update us on timelines for your factor B inhibitor? I know that, that's one agent that many investors are really interested to see updates on. Just hoping to get a better understanding of that and perhaps data presentations that could occur later this year or timelines for completion of some of the Phase II studies.

And then second, can you just help us understand a little bit better the relative impacts of the Gilenya settlement opportunity? We saw the successful conclusion of the IPR. Just wanted to get a quick sense of how you're thinking about the duration of Gilenya going forward.

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Vasant Narasimhan, Novartis AG – CEO [41]

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Thanks, Seamus. So first, on LNP023, our factor B inhibitor, John?

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John Tsai, Novartis AG – Head of Global Drug Development & Chief Medical Officer [42]

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Seamus, thanks for the question. On LNP023, our factor B inhibitor, as you know, we're going for multiple indications. First, in the PNH, paroxysmal nocturnal hemoglobinuria, we're moving forward. The approach that we're taking is a mixed Phase IIa/b approach with interim analyses. And we're looking to get results at the end of this year. This is tracking on time, and we'll be seeing those results and moving forward with a Phase III at the close of this year.

The second set of indications is in our nephropathy. So we've got C3 glomerular nephropathy, membranous and IgA nephropathy. Those are also combined Phase IIa/b studies. Those are moving forward also. We expect to see results early part of next year and those also are on time. And once we get those results, based on the interim, we could either file with the interim or we would move forward in terms of a full Phase III at the beginning of next year.

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Vasant Narasimhan, Novartis AG – CEO [43]

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Thanks, John. And on Gilenya, it's worthwhile noting there's really 2 separate — there were 2 separate paths, one is the IPR hearing, one is the district court. The IPR case, as you saw and Seamus reported in his note, was dismissed. That was based on procedural grounds for the standing of the claimant. And so on the district court, there really is no read-across from the IPR to the district court hearing. There is a single filer still remaining in the district court, and we expect a ruling in the mid of this year. And we stand fully behind the IP of Gilenya, both the current patent as well as the additional patents that we've subsequently been granted. And so we'll look forward to keeping you up to date on that and, of course, give the market clarity as soon as we have clarity ourselves.

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Operator [44]

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Next question comes from the line of Florent Cespedes from Societe Generale.

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Florent Cespedes, Societe Generale Cross Asset Research – Senior Equity Analyst [45]

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Florent Cespedes from Societe Generale. Two quick questions. The first one for Marie-France on ofatumumab, a follow-up on ofatumumab. Marie-France, could you share with us how do you see the launch of this important product mid-year, given the current environment and also given the fact that MS is pretty competitive? You have given some examples during your presentation. But if you could share with us a little more detail, that would be great.

My second question for John and Susanne. It's on Lu-PSMA-617 on prostate cancer. As this year, we anticipate and you expect the Phase III trial, could you maybe share with us the opportunity for this product and the positioning on the prostate cancer market?

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Vasant Narasimhan, Novartis AG – CEO [46]

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So first, on ofatumumab, Marie-France?

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Marie-France Tschudin, Novartis AG – President of Novartis Pharmaceuticals [47]

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So the first thing I'd say is that we have very well-established relationships with physicians in this area. So we have a very strong portfolio across MS and bringing ofatumumab to a physician population that we know and we're familiar with. Having said that, clearly, this is going to be a different launch from what we're used to. And that's exactly what we're preparing for. We're looking at this from a prescriber and other key stakeholder perspective, whether there are going to be digital interactions at first. We're playing it flexible, whether we have different approaches, country-by-country, state-by-state.

But clearly, what we're not going to do is slow down. Because if there was any time for us to bring a highly efficacious product to a broad population in a setting where patients don't have to be in the hospital, it is now. So we're going to continue to work with payers. And our first priority is clearly we understand that there is going to be a slowdown in the dynamic market in MS. But our clear priority is to make sure that we make it as easy as possible so that when patients do go back to their physicians, they can easily transition to ofatumumab.

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Vasant Narasimhan, Novartis AG – CEO [48]

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And then on the PSMA-617 opportunity, Susanne?

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Susanne Schaffert, Novartis AG – President of Novartis Oncology [49]

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Ouais Je vous remercie Thank you, Florent, for the question. So actually, prostate cancer is the second-most commonly diagnosed cancer in men. There's an incidence of 1.3 million globally. And for the U.S., you have to assume around 175,000 patients. And what we know is that about 10% to 20% of patients with prostate cancer become castration-resistant with a 5-year follow-up — and 80% 5-year follow-up, so — and 80% of these patients become metastatic. So there's a very, very high unmet medical need and we're very much looking forward to have Lu-PSMA-617 moving out later in the year.

And first regarding positioning, so the VISION trial that is fully recruited is in treatment of patients with metastatic CRPC after 1 line of novel antiandrogen androgen-receptor-directed therapy and 1 line of chemotherapy. So it means third and fourth line of therapy. As said, the VISION trial is fully recruited. It's an event-based trial, and we expect readout versus the end of the year.

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Operator [50]

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Next question comes from the line of Matthew Weston from Crédit Suisse.

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Matthew Weston, Crédit Suisse AG, Research Division – MD and Co-Head of European Pharmaceutical Equity Research [51]

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Just two quick follow-ups, please, on previous questions. The first on ofatumumab, Marie-France. You made it clear a number of times how confident you are on taking the launch to market irrespective of the underlying circumstances. Can you just remind me, is it correct that the first dose has to be administered in the clinic and therefore, we do at least need some degree of normality within the health care system before we can see patients getting dosed? Or do you expect that there's going to be some waiver around that requirement?

And then the second question regarding Sandoz margins. You clearly set out the positive drivers. Can I just check, particularly given that we have seen a meaningful impact of generics in the oncology setting, was there any benefit within the Sandoz business of you launching generics against your own product at the beginning of this cycle and therefore we're in a very positive mix environment of U.S. exclusivity launches, which should erode rapidly in the second half of the year?

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Vasant Narasimhan, Novartis AG – CEO [52]

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Thank you, Matthew. So on ofatumumab, first up is Marie-France.

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Marie-France Tschudin, Novartis AG – President of Novartis Pharmaceuticals [53]

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So as I mentioned before, clearly we do see some disruption happening in the multiple sclerosis market, certainly in the dynamic sector. And we can't say that, that's not going to affect us. But regarding the first dose observation, it can be done by the observation of a health care professional. So technically, we could be sending nurses home. So we think that, that's definitely an opportunity to basically, let's say, address the current situation as it is. Clearly, we're very ambitious about the value proposition that ofatumumab brings to market. And like we said, we feel that there's no reason for us to slow down, even though clearly in the dynamic sector, we will see fewer switches to new therapies in this marketplace.

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Vasant Narasimhan, Novartis AG – CEO [54]

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Thanks, Marie-France. And Richard, on the Sandoz generic dynamics on Novartis products?

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Richard Saynor, Novartis AG – CEO of Sandoz [55]

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Thank you, Vas. I mean nothing really significant. I mean the bulk of its margin growth has really come from biosimilar and project launches and first-to-market launches that we saw in the end of last year and the beginning of this year rather than generics of the oncology business. So we don't see any really material link between the 2 things.

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Operator [56]

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Next question comes from the line of Mark Purcell from Morgan Stanley.

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Mark Douglas Purcell, Morgan Stanley, Research Division – Equity Analyst [57]

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It's Mark Purcell from Morgan Stanley. Two questions. Firstly, on digital and it's a bit of a follow-up. Vas, could you help us understand which regions and therapy areas are most ready to adapt to your new digital initiatives when it comes to HCPs and patients and which have the greatest upside over the long term? The reason why I asked the question is that, I guess, if you look at U.K. and Germany, over 60% of patient initiations are remote already, whereas in Italy, where it was very low, you've seen 146% increase in remote initiations over the last 30 days or so. Clearly, in oncology, telemedicine, U.S. penetrations at around 5%, whereas neuroscience has always been in the 20% to 30% over time. So some thoughts on that would be fantastic.

And then secondly, in terms of pricing in the U.S. At the beginning of the year, you guided to net prices declining by around 2.5% in the U.S. with the U.S. list price increases you put through. Given there's less pricing pressure, it seems, in Sandoz and when we look at the implied list price — sorry, the implied net price increase on Cosentyx, it looks pretty stable in 1Q despite the fact we've seen a lot of new entrants and a perception that there's going to be increased pricing pressure with that. So if you could help us understand the evolution of price in the U.S., that would be fantastic as well.

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Vasant Narasimhan, Novartis AG – CEO [58]

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Ouais Thank you, Mark. I think on digital, there's a few dynamics I would highlight. And you rightly point, different countries are in different places. But in my mind, for us, Germany being, I think, a relatively positive outlier. But there are 3 markets, in particular, where we have an opportunity to make significant inroads. First and foremost, of course, the United States, where all of our conversations with physicians and health care systems indicate a sudden and dramatic shift to telehealth. And as long some of that can stick as well as digital — use of digital tools, digital engagement, that could be a significant upside. China, as Marie-France already noted, we've taken this now to scale ourselves. We have partnerships with Tencent, partnerships with other companies. We're now reaching many thousands, tens of thousands, sometimes hundreds of thousands of physicians outward from ourselves to reach our customers but then also enabling patients and physicians to interact on digital channels at scale. And we have a few examples of this already with Tencent and a plan to add others.

Probably one of the most striking ones, as an example, would be Japan. In Japan, prior to COVID-19, it was unheard of for physicians to engage via digital channels with medical teams or sales representatives. Now it's been forced upon the system and that has to happen digitally. And the uptake is actually quite rapid and quite striking. And that could be a market that sees now a complete switch in the dynamic in terms of the use of digital technologies. Therapeutic areas, of course, I think not a fair time to get into all, but there's a lot of variations. And of course, across therapeutic areas, some are more digitally savvy than others. In our mind, the key is to build platforms, integrated datasets. And we invest a lot on our data plumbing, the hard work, the unsexy work of just getting your data straight and then trying to build scalable platforms around that. And we're trying to collect talent from outside of this sector, whether from the digital consumer health, consumer, other places that have really cracked this at scale and then trying to deploy that within Novartis. And so we'll look forward to keeping everyone up to date as we progress on that. On price dynamics, Harry?

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Harry Kirsch, Novartis AG – CFO [59]

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Ouais So just a few words. Fundamentally, for Innovative Medicines, nothing has changed versus what we have seen 3 months ago. You see this also reflected in our overall pricing effect in quarter 1, which is minus 3% on prices on Innovative Medicines and the total company. Where we potentially have a bit of an upside, and this, of course, what Richard also alluded to, is the Sandoz pricing negative impact is much lower than usual. It's minus 4% on a worldwide basis. But there, we have to watch, is this a temporary effect because maybe other supply chains are a bit more stressed than ours? Or what — how will that develop? So there maybe in Sandoz maybe a little bit less negative pricing. But overall, also Innovative Medicines at the moment, we see in quarter 1 minus 3%. And nothing from our initial assumption has changed there.

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Operator [60]

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Next question comes from the line of Richard Vosser from JPMorgan.

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Richard Vosser, JP Morgan Chase & Co, Research Division – Senior Analyst [61]

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Two, please. Just to get your thoughts on second waves. Clearly, not in your guidance, but we're seeing second waves come through in Asia, in Singapore and other areas. And it's, I suppose, reasonably likely that we'll see them across Europe and the U.S. So just your thoughts of that impact maybe over the overall business and maybe particularly with ophthalmology division. And then linked to that, in ophthalmology, I think there was some idea that patients could — there could be some catch-up dosing of patients maybe in the retinal space. Just a thought in terms of capacity there and how you might do that, given stretched capacity previously and, of course, COVID being the greatest morbidity and mortality in the above 65s.

Second question just on Ultibro, clearly benefiting from being a respiratory product in this space and up a lot. Do you see a new level for Ultibro going forward? How much of that was stocking? How much do you think you've got a new level?

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Vasant Narasimhan, Novartis AG – CEO [62]

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Thanks, Richard. First, with respect to second wave, the way I like to think about how these things happen and especially in this instance is human beings tend to be caught off guard by the exponential nature of outbreaks in general and especially in these kinds of global viral outbreaks. So the exponential curve hits us. Health care systems have to respond. We're not always well prepared, and we have to then as society and then have to scale up to respond. Now for subsequent waves, what's going to happen, I believe, over the course of the coming months is there'll be an exponential expansion of our knowledge of the underlying epidemiology of the virus, how do health care systems need to respond, how the public health systems need to track rates and responses, outbreaks, the improvement, of course, in medical technology if we are able to repurpose drugs or identify better technological solutions.

So all of that makes us think and make me think that if there are future waves, we can manage them more effectively without having hopefully the same level of disruption to the health care system. Because I think one of the things that will become more clear, and we hear this from our conversations with physicians and health care systems, is there is a hidden cost, a significant hidden cost to all of the averted and delayed care that's happening for patients with chronic diseases all around the world. That's okay for a little bit of time, but it's not something that's sustainable. And there will be significant morbidity and mortality associated with that. So I think we're aligned with health care systems, physicians and patients to get people back into the clinic in a safe, sustainable way and hopefully keep it that way, independent of future COVID outbreaks. Now specific on ophthalmology, Marie-France, thoughts?

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Marie-France Tschudin, Novartis AG – President of Novartis Pharmaceuticals [63]

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Ouais So maybe — I mean it's a very good segue because clearly retina patients are not going to the centers, but that cannot last. They're going to have to go back to their therapies. So we do anticipate capacity issues for sure and clearly as social distancing rules will probably continue in this space. But what we're doing right now is we're trying to work with clinics and health care centers to improve, first of all, how that capacity can look like, how we can work with centers to help them with their flow of patients. We're also looking at home monitoring solutions for patients to track their own vision and connect with HCP from home, so they're really only going to the centers when they need to go. There are some remote care solutions, where HCPs can move nearer to the patient. We're looking at sort of mobile units in the U.K. and trying to just address some of these capacity issues post the confinement period.

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Vasant Narasimhan, Novartis AG – CEO [64]

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Ouais And the only thing I would add is the conversations we've had with specialist physicians in ophthalmology, dermatology, neurology in the U.S. all point to a readiness and that preparation to have weekend clinics, after-hour clinics to kind of rapidly catch up on the backlog of patients. Now on respiratory, I'll just briefly answer that Ultibro, I think, continues in a very steady way. We did have a positive CHMP opinion for Atectura. And hopefully, we'll soon be launching a triple in asthma. So really for us, the next inflection point in inhaled respiratory will be the launch of our triple combination.

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Operator [65]

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Next question is coming from the line of Laura Sutcliffe from UBS.

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Laura Sutcliffe, UBS Investment Bank, Research Division – Equity Research Analyst [66]

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Firstly, on Beovu, we know you've instigated new sort of safety monitoring investigations and so on. But what is it that you actually need to see from that activity to get this back on track commercially? Is it a specific data point? Is it a publication? Is it just looking at it over a long time? So that's the first question.

And then the second question is on Sandoz. You've mentioned that terminating the Aurobindo agreement provides you with an opportunity to optimize the U.S. business. So could you just tell us maybe a little bit more about that and what you think is the right sort of shape for Sandoz in the U.S.?

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Vasant Narasimhan, Novartis AG – CEO [67]

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Ouais So just in the interest of time, I'll take the remaining questions because we only have a few minutes left. So on Beovu, right now, the goal is to reassure physicians on the clinical profile, ensure that we are only injecting the product in patients who don't have inflammation in their eye. As we — we believe as we continue to get more experience, we'll have a better sense of these rates and get physicians more comfortable. It's notable that outside the U.S. there is slit-lamp examination for any inflammation in the eye, which doesn't always happen in the U.S. So we're hopeful that, that could potentially mitigate any of these rare signals outside the U.S. In the medium term, we have a full team that's working around the clock to try to find any of the specific determinant, either from a patient standpoint, a product standpoint or a setting in the clinic standpoint that might be leading to these rare events.

And if we can find any insights, including potential treatment with steroids or other interventions, we'll, of course, then roll that out. And then in the longer term, we have a full range, the largest range of Phase III head-to-head studies and other studies to fully characterize the product, which we hope will demonstrate the clear clinical benefit and overall profile of the product to support its significant use. And we continue to stand behind our belief we can make this a blockbuster medicine. I would note we had similar challenges with Gilenya, other products in other classes have had challenges. But based on a strong profile, it can ultimately overcome them.

With respect to Aurobindo, I think, as been highlighted on the call, we're still — important to see really the pricing dynamic — the Aurobindo business or the oral solids business that we're now retaining, important to see the pricing dynamics in the U.S. And Richard and team are investing now in a full-scale portfolio longer term that will bring hopefully a steady flow of [Sandoz] into the U.S. market. And this will form a base for that. But really, the key now is really to look at the pricing dynamics. We'll be able to formulate a clearer strategy over the coming months and provide you a clearer outlook alongside that at that time.

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Operator [68]

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Next questions come from the line of Emmanuel Papadakis from Barclays.

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Emmanuel Douglas Papadakis, Barclays Bank PLC, Research Division – MD & Head of European Pharmaceuticals Research [69]

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I'll try to be brief. Maybe a couple on Piqray. Great initial momentum seems to have slowed a little bit. The testing ambition for 40% by the end of this year seems a little on the low side. I think it was 25% by the end of Q4. So just what's the hurdle there? Is that the main gating factor on driving the commercial uptake? Any thoughts on competitive risk from the Akt inhibitors would be welcomed as clear overlap in terms of the biomarker selection of population? Could you just confirm you're not planning to do a combination study with Kisqali as part of the EPIC program?

And then Vas, maybe just your thoughts on business development. You've been pretty clear in the past on saying that the envelope planning to remain relatively active. Does the current situation offer opportunities? Or does it rather force you to concentrate your time in terms of internal situation at Novartis? And then if I may, a quick follow-up on inclisiran. You've flagged the costs in the second half. Are you actually planning to put a primary care resource behind the product at this stage?

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Vasant Narasimhan, Novartis AG – CEO [70]

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On which — Emmanuel, your last question was on which product, inclisiran?

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Emmanuel Douglas Papadakis, Barclays Bank PLC, Research Division – MD & Head of European Pharmaceuticals Research [71]

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Inclisiran.

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Vasant Narasimhan, Novartis AG – CEO [72]

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On inclisiran. Lo siento. Bueno. Je vous remercie So Susanne, on the two Piqray questions?

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Susanne Schaffert, Novartis AG – President of Novartis Oncology [73]

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Ouais Thanks a lot, Emmanuel, for the questions. So we were actually quite pleased with the performance of Piqray. And we see really continued strong momentum and uptake in Rx. I mean, as you say, testing is critical, and we believe it's realistic also, particularly in Foundation Medicine, a plasma test to be approved in Q2, that we will reach these numbers and testing will continue.

Maybe just a quick comment on the Akt inhibitors. I mean we have to be clear, it's a fundamentally different MOA. So it's really a very different mode of action. And just not to go too much into science, PI3K is mechanistically upstream of Akt, so we would expect a potential greater inhibition of the pathway. And just to emphasize, there is no, study as far as we know with an Akt inhibitor specifically designed for PIK3CA mutation cohort. And so far, Piqray is the only product approved for patients with this specific mutation. So we still remain very confident with Piqray and very optimistic.

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Vasant Narasimhan, Novartis AG – CEO [74]

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And we don't have — we've already, I think, completed earlier-stage studies of combinations of our PI3 kinase with CDK 4/6 and aromatase inhibitors and are not taking forward that combination as part of the EPIC program. With respect to BD, we are continuing our business development program. Capital allocation priorities remain in place. You've seen us conduct early stage deals out of NIBR, our research unit, over the course of the first quarter.

So we continue to look at business development opportunities that fit our overall profile. I think, overall, as you can imagine, with the current turmoils in the market, there is a sector-wide decline in M&A activity. And I think that's going to be true for the foreseeable future until things stabilize a bit more. But I think from a business development and licensing standpoint, still active and remains a lot of opportunity. And on inclisiran primary care, Marie-France?

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Marie-France Tschudin, Novartis AG – President of Novartis Pharmaceuticals [75]

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Ouais Just to say that clearly we see a lot of synergies with Entresto. We'll have a very clear focus on cardiology, lipid clinics but also looking at government and systems of care.

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Operator [76]

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Last question comes from the line of Kerry Holford from Berenberg.

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Kerry Holford;Berenberg;Head of Global Pharmaceutical Equity Research, [77]

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Just one left, COVID-related. Vas, you mentioned briefly earlier, I wonder if you can help us understand the potential risk to the (inaudible) from the rising U.S. unemployment. Where do you see those risk across your portfolio? I know in relative terms, you have a lower exposure to the U.S. But it's good to get your thoughts on where there could be a pockets of risk. And if you're able, can you remind us of the broad split of your U.S. sales base by channel?

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Vasant Narasimhan, Novartis AG – CEO [78]

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Well, thanks, Kerry. So on U.S. unemployment, I mean I think — first, I think, of course, we're all saddened to see the incredible tide of rising unemployment in the United States and around the world. So I think this will, of course, have disruptions to the provision of health insurance. I think it's important to note there's a lot of uncertainties right now. First, of course, extended coverage through COBRA and similar policy initiatives. Second is the ability of patients to potentially get coverage through the various care consortia that now exists in states through Obamacare and then ultimately, to see how many patients move on to Medicaid. Then there's an additional dynamic that different products have different exposure in terms of the rebate gap between what we have in the private markets and in Medicaid and related segments.

Newer products have, of course, a much smaller split because there have been fewer price increases. Older products, of course, have a much bigger gap in terms of differences on gross to net. So all of these dynamics are in there. Overall, I would say, we don't expect significant impacts in 2020. If we saw impacts, that would be in 2021. And we expect those impacts to be limited based on all of the assessments that we've done. I don't have a specific breakout in hand. But we view this as a manageable topic. We, of course, monitor it, doing all the assessments. But from what we can tell within our portfolio, worth noting, we're roughly 1/3 U.S., the remainder ex U.S. Within our U.S. business, lots of new product launches. And within our overall portfolio, relatively limited exposure to Medicaid versus our peer set.

Bueno. So thank you all for joining. Apologies we went a few minutes late. We hope you found the updates informative. Thank you for investing in Novartis, and we'll look forward to keeping you updated in the year to come. Please stay safe and healthy, and wish you all the best.

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Operator [79]

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This concludes the conference for today. Thank you for participating. You may all disconnect.