Novartis AG (NOVN) Earnings Call Transcript & Summary

Welcome to the Annual Meet Novartis Management Event 2020. [Operator Instructions] The event is being recorded. [Operator Instructions] A recording of the full event will be made available on our website shortly after it ends. With that, I would like to hand over to Samir Shah, Global Head of Investor Relations. Please go ahead.

Good morning and good afternoon, everybody, and thank you for taking the time to join us for our Annual Capital Markets Day, which is the Meet Novartis Management. Before we start, I'll just lead with the safe harbor statement and go through 1 or 2 logistic details. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause the actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. For a description of some of these factors, please refer to the company's Form 20-F and its most recent quarterly results on Form 6-K that, respectively, were filed with and furnished to the U.S. Securities and Exchange Commission. So that's the safe harbor statement. And then just to let you know a bit about the day today. We've got 5 sessions beginning with the group presentation, which is overall strategy for the company and our operational performance. We then move on to the pipeline section followed by pharma, followed by Oncology and then Sandoz. We've allowed sufficient time for breaks in between each of the sessions. So you'll get a 15-minute break, and during that break, you'll hear some music, if you still continue with the actual call itself. There's a longer break between a couple of the sessions to allow you to do other things for about an hour or so. What we've tried to do in today's agenda is to keep it open for Q&A for the vast majority of the session with the exception of the opening session when we'll actually go through some of the key messages and key slides and key strategy updates from Vas and Harry. So with that, I'll now hand across to Vas Narasimhan. Thank you, Vas.

Thank you, Samir, and thanks, everyone, for joining today's broadcast. We're really grateful to you for spending some time with us and getting to talk to our management about the mid- and long-term prospects for the company. As you've seen already this morning, we're confident in the long-term growth of Novartis. We're confident in our pipeline. We're confident in the potential of our shares, which is why we initiated a share buyback, which Harry will go through in a bit more detail. And we hope to relay to you the confidence we have across our business. Turning to the next slide. In this opening presentation, I'll start with a little discussion of where we are today. We'll then turn to looking ahead and some of the key drivers for our mid- to long-term growth. Harry will cover some of the financial parts of our story: margin, free cash flow and capital allocation. I'll close with some perspectives on Sandoz and then lastly, ESG and conclusions. So moving to the next slide. When you look at where we are today as a company, in 2018, we set out a clear strategy that we're executing against. Our strategy was to focus the company and deliver on 5 strategic priorities. We'll go through them in a bit more detail, but when you look at it, we're delivering consistent top line growth, sustained bottom line expansion. And we're positioning Novartis for the long term, whether it's in our culture with our high engagement scores, the pipeline performance, the productivity delivery, our digital and data science transformation or the improvements that you've seen in ESG. Now moving to the next slide and first focusing on the financial performance of the company. You've seen over the past 3 years, we've consistently delivered against our goals. We've delivered sales growth of 5% to 9% in 2018 and 2019; year-to-date this year, 4% even on a difficult pandemic year. Our core operating income has accelerated from 7% in 2018 to now 17% and again, 16% year-to-date this year with outlook to grow low double digit to mid-teens. And importantly, we've delivered against our core operating income margin target for Innovative Medicines. You can see we're well on our way to the target of mid-30s, with now a new goal to reach the high 30s in the midterm, which Harry will discuss in a bit more detail. Now moving to Slide 5. When you think about how we've positioned the company over this period of time, our efforts have been to focus Novartis as a medicines company -- as a large-scale medicines company. And we believe right now, given our size of roughly $200 billion of market capitalization and our pure-play medicines focus through both the deals that have enabled us to exit certain categories as well as build into new spaces that will drive our long-term growth, we believe we have positioned the company in the right way for the future of medicine all around the world. Now going to the next slide. When you look at some of the details of our profile that we've now developed as a company, you can see that we are today a company that has scaled across 10 therapeutic areas, which gives you exposure to the -- some of the most important therapeutic areas in medicine. We don't present significant binary risk. Only 8% of our sales come from our largest product, Cosentyx. Today, we sit with 15 blockbusters and exposure to all 4 of the most important advanced therapy platforms in our sector: cell therapy, gene therapy, radioligand therapy and RNA therapy. And we believe versus our peer set, this is a unique profile that within the spectrum of medicines can drive sustained long-term growth, which is highly attractive for investors and highly attractive for our contributions to society. Now turning to geographical diversification, which is, of course, an important topic now as we continue to see volatility in pricing environments around the world. On the next slide, you'll see that Novartis is well spaced and well diversified with respect to its geographic focus. We sit with 34% of our sales in the U.S., 38% in Europe and 21% and growing in Asia and Africa, with a presence as well in Canada and Latin America. Relative to our peer set, we have one of the lowest exposures to U.S. government drug pricing programs where I know many investors are focused on and rightfully so. But we present a diversified perspective and importantly, with a high growth in China where we're rapidly moving up the rankings both in Oncology and in Pharmaceuticals with the portfolio of medicines we're launching consistently now in China with strong reimbursement. Now turning to the next slide and moving to the 5 focus areas of our strategy. We're also making sustained important progress, though we know that the journey is long in each of these areas. With respect to the culture, you can see that in engagement, curiosity as well as manager effectiveness and leadership, we're making strong progress. We measure this regularly, quarterly in the case of engagement scores, with over 75,000 associates each quarter participating on our online surveys. We do upward feedback to our managers now on a consistent basis and with increasing transparency so those managers feel accountable for leading in the way we want them to lead for a knowledge-based organization. So we feel like we're making good progress on the culture journey. On the pipeline story, 10 key approvals over the past 3 years, 6 NMEs approved last year, which was a record in the industry. I think the consistency that Novartis has demonstrated over time in delivering important medicines is what really enables us to be confident about our longer-term outlook. Now moving to the next slide. In some of the other focus areas, we've also made important progress. With respect to manufacturing, you can see that we've had really a remarkable -- one of the largest transformations in the sector, led by Steffen Lang and his team, and you can see some of the metrics here. This has enabled us to drive solid and sustained gross margin expansion. We've also continued our journey in business services with a goal to be a fourth-generation business services organization, which would put us in the leading edge even beyond the biopharmaceutical sector. In data and digital, we continue our progress with scaled efforts with some of the most important digital partners that one could have in this era. And we continue our way as well as you saw with our ESG Investor Day, the improvement we've had in some of the rankings. We are continuing to integrate ESG across our business, and we remain committed as a company to put the past behind us and focus on our future and being a leader in building trust with society. Now moving to the next slide. As we look ahead, I think one of the critical things is growth, and we understand that. When you look at the consensus outlook for the company out to 2025, the consensus currently expects us to grow at 4%, and we believe we can deliver this. Whether it's with our growth drivers of in-market brands, whether it's with the diverse array of launches that we're currently in the process of bringing to patients, our pipeline contribution which you can see here is relatively modest in these forecasts, our Sandoz growth, all of this will enable us to offset the generics that we, of course, face as a sector and an industry on an ongoing basis to deliver that consistent growth over time. At the same time, we believe we can also consistently grow the IM margin consensus view today, 33.5% actuals 2019 to 37.6% out in 2025. And we'd like to go through each one of these areas in a bit more detail. So starting with the next slide, thinking about our growth drivers. Of course, the importance of our growth drivers, I think, is highlighted by the fact that they now represent 48% of our sales in Q3. The transition has happened through a new wave of products. You saw brands like Entresto growing 48%, Zolgensma now cumulatively at $1 billion in sales, solid growth across Cosentyx as well as the full range of oncology products. Our growth drivers are picking up. And even in a pandemic year with the disruptions that the pandemic has had to the health care system, we've been able to grow these brands, and I think that sets us up well for a post-pandemic period, where we expect further acceleration. Now taking some of these brands in a bit more detail, going to the next slide. High on everyone's mind, of course, is Cosentyx. And when you look at Cosentyx right now, the 2025 consensus is $5.6 billion. And this is something we believe is reasonable for us to achieve both through our existing indications in dermatology and rheumatology. But I think what's underappreciated is the amount of effort we're putting into future growth, both driven by market expansion with the use of biologics in psoriasis, ankylosing spondylitis and psoriatic arthritis, but equally important and very under-recognized is the 6 new indications that Cosentyx is being studied in as well as additional formulations which would enable us to address up to 7 million additional patients with Cosentyx. So Cosentyx is on a strong trajectory. Of course, it faces intense competition, but we think given that the brand's long term is in rheumatology and in new indications, we can hold our position in psoriasis and build for the future with those new indications. Turning to Entresto. Entresto, again, had very solid growth throughout this year. We're continuing to have strong momentum with Entresto. And the new indications, both HFpEF, which we'll see with the FDA feedback -- FDA outcome in December and an action date in the first part of next year, as well as the PARADISE-MI study, we have the opportunity to further expand Entresto's indications. And what's also important to recognize, important opportunities in China and Japan. With a $4.9 billion consensus outlook for 2025, clearly, Entresto has more room to grow, and we're optimistic about the outlook for this brand. Now moving to the next slide. With Zolgensma and Kisqali, we have 2 exciting brands that we believe also can deliver important growth for the company over the coming years. The Zolgensma consensus outlook of $2 billion is something we believe we can achieve with the IV indication we currently have in the U.S. under 2 and of course, uncapped with respect to age in Europe. We've had very solid growth thus far, and we still haven't reached the full potential of the brand in terms of reimbursement across Europe as well as a range of emerging markets. We see acceleration potential in Europe over the first part of next year, new approvals coming online and then the opportunity over time to work through the situation with the FDA on the IT formulation as well as continue to generate more data on the IV formulation to enable us to position the brand for the long term. Kisqali has an outlook of 2020 -- in 2025 of $1.6 billion. And we believe that given the profile of the product, the fact that it hit CDK4 harder than any other medicine in the class, the fact that we have 2 OS studies with a third OS study reading out in next year in the metastatic setting and then we have done the work to position our adjuvant study for success, we believe Kisqali can deliver upside to this outlook. With the -- particularly the adjuvant opportunity where we've expanded the study population, we're ensuring patients stay on drug, we've done the right steps in terms of optimizing the dose, we believe we've done the things to enable this brand to hopefully be available to women with adjuvant -- within the adjuvant setting for breast cancer hopefully in the coming years. Now moving to the next slide. When you look at the pipeline for -- excuse me, first, with respect to launches, there's a few launches we wanted to particularly highlight. Kesimpta is off to an excellent start even in the face of the pandemic's limitation and with our sales rep's ability to access physicians. When you look at it, 5.2% NBRx share 11 weeks post launch puts us on a trajectory of multibillion-dollar MS launches. We're securing broad and rapid access with over -- approximately 50% first-line commercial access, including with, as you can see here, some of the most important commercial formularies, which will set us up once we're through this initial period, we believe, to rapidly accelerate in 2021. Patient initiation has been optimized to be simple, easy and fast. With respect to inclisiran, where we have now the CHMP positive opinion in Europe and are awaiting the EU Commission approval as well as our U.S. FDA action, we continue to believe this is a medicine that could be one of the largest, if not the largest, medicine at Novartis' history. The ability to tackle cardiovascular disease with a twice-a-year physician-administered drug has created excitement with respect to some governments such as the U.K., where we're on track to launch a major initiative in the middle part of next year. We're working very hard with systems of care across the United States to ensure that they are set up to take on this drug seamlessly. And we're quite excited about the outlook. The medicine will take off slowly as we get these systems on board. But what's important already is in the U.K. and the U.S., there's recognition of the mortality benefit potential of such a medicine from its LDL lowering, even without waiting for the outcomes trials, which we expect over the coming years. So well set up. We're excited to discuss this later over the course of the day, but we believe inclisiran sets us up well for the future. Now moving to the next slide. In Oncology, we have a range of launches that we believe can fuel our oncology growth over the short to medium term, even putting aside some of the exciting pipeline assets that we have. Piqray, Lutathera, Kymriah are all brands which we believe can be blockbuster medicines, off to very strong starts. Kymriah now is expanding with better manufacturing, faster turnaround times and the opportunity with life cycle management to build a stronger position with Kymriah in the future. Adakveo, Tabrecta and importantly, asciminib are all brands as well we believe there's upside potential to the outlooks we see in '25. Asciminib, an exciting brand, which we'll talk about as well in the pipeline section, approved -- to be filed in the third line with great data, which we look forward to sharing and also with the potential to move to earlier lines of therapy over time. So moving to the next slide. Now when you look at the Novartis pipeline, we believe it's perhaps a bit under-recognized at the moment given the scale, breadth and consistent performance we've had over the long term, 116 projects, 65 new molecular entities in the clinic. We have 20 projects in advanced therapy platforms, which we'll show a little bit more on the next slide. We have a focus in first-in-class, first-in-indication medicines. When you look at the Evaluate database, #2 in replacement power in this sector, well ahead of many of our peer set. We believe the pipeline is well set up to not only enable us to grow from '20 to 2025 but in that next half of this decade. So moving to the next slide. When you look at the advanced therapy platforms in the company, we are building these platforms for the long term. There's certainly challenges that we've learned, and happy to answer questions with respect to gene therapy and cell therapy. But when you look at each of these areas, we're building the blocks that you need -- the foundational blocks that you need to win for the long term. In gene therapy now, we expect to have 4 clinical programs as well currently have 19 preclinical programs, 3 manufacturing sites with over 1 million square feet of space. 35 countries Zolgensma is approved and 5 reimbursed. You can see for cell therapy, the numbers are 8 and 10 for R&D, significant manufacturing capacity around the world. And Kymriah now approved in 27 countries, reimbursed in 23 markets. And lastly, with radioligand therapy, an opportunity we have largely to ourselves and where we believe we can address a range of solid tumors over time, 4 projects in the clinic, 14 in -- [ and they were ] working their way towards the clinic, a scaled manufacturing operation. And again, Lutathera, broadly approved and reimbursed. So we believe these platforms will be engines of our growth in the coming years and importantly, in the 2025 period and beyond. So moving to the next slide, diving a bit deeper in the pipeline. What we try to do is highlight 5 life cycle management programs -- assets for you to watch, 5 pharmaceutical projects, 5 oncology projects and 5 wild cards which have high risk but also potential for significant upside. On the life cycle management front with Entresto, I've already mentioned HFpEF and the post-AMI. For Cosentyx, our hidradenitis suppurativa first interpretable results are in the second half of 2021, which will be the first of what we hope are a range of additional indications you can see on the right-hand side of the chart. I mentioned Kisqali in adjuvant breast cancer. BYL or Piqray has the opportunity as its own -- BYL in PROS and Piqray, you can see in a range of other cancers, triple-negative breast cancer, ovarian cancer amongst others. And lastly, with Beovu with DME, we have the final FIR readout in Q4 of this year for the second study in DME. And we continue to build Beovu with additional data in RVO and diabetic retinopathy. The goal very much remains to build Beovu into a multibillion-dollar asset over time. Now moving to the next slide. Looking at Pharmaceuticals, 5 assets we wanted to highlight. And again, you can see more details in our asset deck, the interactive PDF that I hope all of you have access to. These are, of course, a sample -- we have many projects in the pipeline, but these were 5 we wanted to call attention to: iptacopan, LNP023, where a range of indications is being developed. You've already seen the data in PNH and C3G, IgA nephropathy coming next. Our hope is to get the first submissions in 2023, and we believe this could be a multibillion-dollar asset. CFZ, our anti-CD40 ligand with data coming out in Sjögren's syndrome in 2022, also being developed in transplant, again a very significant opportunity. QGE, our anti-IgE antibody, which in Phase IIb study showed superiority to Xolair in CSU with a readout in the second half of '21. We also are announcing today that we'll be taking QGE into not only pediatric CSU as well as CINDU, an induced form of urticaria, but also into food allergy. And taken together, we believe, again, a multibillion-dollar opportunity with QGE. TQJ, our antisense RNA for LP(a), is slated for an FIR in 2024, could build on Entresto and inclisiran to give us that long-term capability -- long-term portfolio in cardiovascular disease. And lastly, as we disclosed in the Q3 call, LMI070 in Huntington's disease, I would encourage you to look at the data we have in the asset deck. We plan the Phase IIb first patient, first visit in the first half of '21. This is an oral splicing inhibitor that reduces the mutant and the normal Huntington protein transcripts. We're excited about its preclinical data and the clinical data and look forward to taking that forward while continuing to also explore LMI and SMA. Now moving to the next slide. In Oncology, also a range of assets we wanted to highlight, 5 in particular. Canakinumab, I think, has been well commented on, so I won't go through it here. Similarly, Lu-PSMA, which is on track for a third line readout in the first half of 2021, and we continue to work on the studies to move this therapy into earlier lines of therapy in the pre-taxane setting for prostate cancer. MBG, our anti-TIM-3 monoclonal antibody with a readout in the second half of next year in myelodysplastic syndrome, again a drug we're very excited about and has the potential to then also move into multiple lines of AML. TNO155, our SHP2 inhibitor, which is a first-in-class SHP2 inhibitor, data we expect to be presented in the first half of 2021. We are studying this in a range of combinations, including with first-line KRAS and in the first-line non-small cell lung cancer in combination with KRAS. Very excited about this molecule and the potential to use it broadly in cancer. And lastly, LXH254, which is our BRAF, mRAS inhibitor, with the possibility to build on our leadership position with Mekinist and Tafinlar over time, both in melanoma and in non-small cell lung cancer. So an exciting set of oncology assets, not all of which I think have been fully considered in the outlooks of many of you. Now moving to the next slide. On Slide 21, a few high-risk, high-reward projects. We don't typically go through these but just to show the depth and breadth of the pipeline. CSJ117 is an inhaled anti-TSLP. It's in a Phase IIb study right now. And we continue to advance that study. With the recent data of TSLP -- anti-TSLP in asthma, both low- and high-Th2 asthma, I think there's the potential for an inhaled version of this molecule to be quite exciting, and we're very interested to see that the results. ECF834 in dry eye, it's lubricin, a type -- one of the compounds in human tears. Our goal is to hit both signs and symptoms, build on Xiidra and hopefully then build on our leadership in dry eye over time. LNA043, an intra-articular injection for the regrowth of cartilage, Phase IIb slated to start in first half of 2021. FDA feedback has now been incorporated. Obviously, if it were to work and if we could regenerate cartilage in the knee, a significant opportunity. QBW251 is our CFTR potentiator, where we've opted to take it into COPD, where there's a large unmet need for oral drugs that can help these patients. That has a Phase IIb readout in the second half of next year. And then NIS793, which is our anti-TGF-beta monoclonal antibody, a lot of interest in this target and its potential application in solid tumors. We are taking it forward in a number of solid tumors now into later stage -- to solid tumors into later-stage studies, which we look forward to providing more updates on in 2021. So moving to the next slide. With that, I will hand it to Harry. So Harry?

Yes. Thank you, Vas. Good morning, good afternoon, everybody. So I just want to give a few quick words on our margin performance, our margin outlook, of course, then leading to free cash flow and our capital allocation. So as you see here on this slide, we broke it a bit down into the details by cost line so you see the progress in an easy way hopefully over time. And if you focus on the core margin at the bottom, each year, we increased by 1 point or 1.5 points over the last 3 years. Now the first 9 months are a bit better than usually full year so we expect full year 2020 to be around 35%, plus/minus, in that range of mid-30s. What you see here is a really good contribution from the cost of goods line, driven by our manufacturing network transformation that our technical operations team, Dirk and Steffen Lang is also with us here, leading that very important effort, of course, never compromising on quality or customer service levels. That has been a significant journey and will continue to be a significant journey and margin contributor. On the R&D line, also nice contributions here. And by the way, we did increase each year the absolute amount. You may recall that probably 2015 or so, we were 23%. Now going forward, I do expect that R&D line to be in the range of 19% to 20% but further contributions from SG&A with the expected continued good sales growth. So a lot of important work on the productivity, from manufacturing and supply chain, from our business services but also, of course, superb resource allocation in our commercial businesses, which are very important as we have many products to launch, but all of them being in the therapeutic areas we are already in. Maybe to the next page, 23. Thank you. So here, the outlook. We are raising our outlook for the Innovative Medicines margin to the high 30s. Now several of you have already asked us over the last months when is it coming. Today, it comes. And we have achieved our basically mid-30s margin for Innovative Medicines a couple of years ahead of time. We are confident in our near-term mid- to high 30s and then midterm, high 30s margin for Innovative Medicines. Just want to mention, certainly, the key of our technical operations, supply chain, continued productivity program, starting the next wave, if you will, in '21 for the midterm. It's, of course, part of this margin guidance. And we even increased it to $2 billion as Steffen Lang and his team have identified further productivity opportunities. We called here also evolution of ways of working. Certainly, if there is a positive element of this pandemic we are all in, we have learned a few ways to also more effectively and efficiently run the company, which we will continue to do so as we go forward. And this will further help us on our margin journey as we go forward. And we are confident that all of these efforts, together with the expected sales growth, will be more than offsetting the expected generic erosion and launch investments. Page 24, please. Here, we see the progress we've made on free cash flow. In the end, sales growth, margin improvement are very important but also the conversion into cash flow. Clearly, if you go to the right side, our sales and core margin improvement here from continuing operations is significant and of highest importance. At the same time, we also have got, I think, very good capital expenditure discipline. Of course, the reduction of our manufacturing footprint, making it a bit more capital-light operation is important as well as of the leasing our offices outside of our main campuses and also scaling back the main campuses as we leverage even before the pandemic activity-based working concepts. Some of you may remember that in 2013, '14, we had CapEx in the range of 5% to 6%, clearly too high. And the outlook we have is that we will likely stay in this range of 2% to 3% of sales to always ensure highest quality, of course, manufacturing, laboratories and office spaces. We mention here receivables and payables. Also in this pandemic, we have continued to achieve very robust collections. If you look at the collection, DSO and DPO KPIs, you wouldn't know that there is something like a pandemic. So like our supply chain, our cash collection has been extremely robust. One opportunity we continue to have is the inventory line. Of course, with the manufacturing transformation, many technical transfers of products and within the pandemic, one does not want to go to lower inventory. But this is the one cash flow KPI and a key driver where we are not yet at benchmark levels. And clearly here, our technical operations and supply chain team is looking into opportunities as we go forward but always in a way to keep the customer service levels at our record-high levels. Now to capital allocation on the next page. So you have seen this slide very often. I hope it's not boring. But I think it's very important that we rigorously continue to follow these very important capital allocation priorities. They have served us very well, and I expect them to serve us very well in the future. So clearly, first priority is the investment into our organic business. The second is a growing annual dividend in Swiss franc. And then third, value-creating bolt-ons up to 5% of market cap, so roughly $10 billion. And of course, we did complete The Medicines Company acquisition for over $9 billion earlier this year. And then last but not least, share buybacks, should the share price be, in our view, undervalued, which we believe is the case at the moment and should the first 3 priorities then leave some cash over. So we do announce, as you have seen this morning, a $2.5 billion immediate share buyback. And I just want to give you a few details on the next page of that share buyback. So first, I want to say this is an additional share buyback. Some people asked about if this is including buying back employee participation shares. This is on top. So we have, as many of you know, an ongoing commitment to always buy back shares from our employee participation programs. And this is a program on top of that and will reduce the share count of our outstanding shares. So clearly, a sign of our confidence in our future top and bottom line growth. And we are executing this within the $10 billion framework. We got a couple of this back from our -- at the AGM. And of course, we have a very strong liquidity and balance sheet position, so we do not expect a change in the credit rating. And we will start this buyback immediately, so basically starting tomorrow and do expect that we would execute it within half 1 of next year. And with that, it will be back to Vas.

Thank you, Harry. If we can move to the next slide. Wanted to say a few words on Sandoz. Our goal with Sandoz is to, over time, become the leading generics company in the industry with a profile that delivers a low to mid-single-digit top line growth by focusing on selected segments in generics. Clearly, in biosimilars, we have the opportunity for long-term leadership. It's worth noting we have now 15 molecules in our pipeline, and we have the ability to grow off of a $2 billion base business today to what we hope could be, in the end of the decade, a $5 billion to $6 billion business, given that next wave of biosimilar entries that we expect to have in a few years. We're also continuing to invest in our small molecules portfolio, where we're on track now with 40 first-to-files in the U.S. by 2024. We're improving our coverage of LOE in Europe and U.S. but also trying to focus in key areas of specialty generics, such as oncology and respiratory. Now moving to the next slide. We also have clear ambitions with respect to Sandoz and margins. We've been able to deliver important margin expansion in terms of the core ROS, you can see here, out to 2020. And a lot of that was driven by outstanding execution in the core gross margin, as you can see on the bottom half of the slide. We expect to continue that margin expansion over time with a goal to reach the mid- to high 20s core return on sales. And some of that will be network optimization as well as our continued mix shift to biosimilars, which will create a better overall positive mix dynamic. So with Sandoz, we have the building blocks, we believe, over time, to build that leader in generics that can consistently deliver growth with excellent profitability over time. So lastly, I wanted to comment on ESG. And when you turn to the next slide, we know that ESG has rightfully become a very important topic for investors across sectors. And it's our aspiration to be a clear leader in ESG in the biopharmaceutical industry. I personally share our efforts on this. In this slide, you see some of the concrete goals we've put forward and some of the achievements we have to date in our 4 core areas. We transparently report on these goals. We have annual targets that are linked with MI and ECN balanced scorecards. We report transparently on how we're progressing. And we want to be a leader in this space and do it in a transparent, clear way. And you can see -- I won't go through some of the details, but I think it shows that we are very ambitious in what we're trying to accomplish but also hold ourselves accountable. We believe that's starting to be recognized by the external agencies. If you go to Slide 30, on the next slide, this slide shows the -- some of the ratings improvements that we've achieved. Important for investors to be aware that we are no longer on the MSCI Global Compact red list. We have improved dramatically our scores on other benchmarks, where, in some cases, we're #1 in the industry with top-tier sector-leading performance. But this is not enough. We're not satisfied. We know we have a lot more to do. And you can expect that this management team consistently tackles ESG over the coming years. So moving to the next slide. And just in closing, before opening for questions, we're executing on our strategy, and we've done so, I think, well over the last few years. Clearly had some setbacks but continue, I think, on the journey to be this leading medicines company -- most valued medicines company in the sector and in the world. Looking ahead, we believe we can consistently grow top and bottom line between our growth drivers, our launches as well as continue to drive this consistent margin expansion. I would really encourage you -- we've built a comprehensive document on our mid-stage pipeline as well as late-stage pipeline. We've tried to make it simple and easy to navigate. Please take the time, if you're interested, to learn more about the depth and breadth of what we believe is one of the [Audio Gap] And then lastly, we believe we prevent -- we present investors with a unique profile with breadth and depth exposure to cutting-edge platform and important diversification of revenues both in terms of assets and geographies. So with that, we'll go to questions. We did get a few e-questions over our Pigeonhole platform. I'll quickly answer those, and then we'll open the line to the operator.

So the questions that we received over the last 24 hours, there was a question on inclisiran manufacturing. We -- and particularly with respect to the U.K. As part of our agreement with the U.K., we have a manufacturing innovation effort which we're excited to advance with the U.K. government as well as with other companies to improve RNA manufacturing. In our own operations, we are currently scaling operations in Switzerland to enable us to scale RNA interference manufacturing in-house to meet the expected very significant demand for inclisiran. In gene -- and there was a question regarding delays and challenges in gene therapy. As I've said in a few other venues, right now, we are seeing a shift with respect to regulatory expectations in gene therapy, moving towards a more traditional biologics approach with robust preclinical packages, very robust manufacturing packages and expectation of pivotal, randomized control, sometimes placebo-controlled clinical trials. Over time, that is going to slow down new gene therapies. But I do expect for a company like ours with our scale and commitment, we can continue to advance our pipeline of gene therapy. You saw in an earlier slide the depth and breadth of that pipeline. And we expect in the 2025 period and beyond to be able to bring forward multiple gene therapies each year. And in the meantime, we'll continue to build on Zolgensma and our work on AVXS-101 IT. In terms of the buyback program, there was a question around that. I think Harry addressed that. And then the last 2 questions were with respect to our recent ESG access to medicines bond and how do we measure. We have 2 independent groups, Sustainalytics and the Access to Medicine Foundation, which will independently monitor that we actually deliver our goals of rapidly expanding access to both our innovative portfolio as well as our global health portfolio. Our goal in these markets is to price the medicines to our emerging market brands and our other tiered pricing mechanisms in a way to reach broad populations. And we expect to be all accountable by those third parties and also to transparently report how we perform. So let's move to operator and to the first question on the line.

We can now take our first question from Matt Weston from Crédit Suisse.

Two, if I can, please. Vas, in your introductory comments, you highlighted that Novartis had relatively lower U.S. exposure than peers. But you are still on the Board of Pharma, and we do have the proposal from President Trump with respect to most favored nations with an executive order, which would come into effect before President-elect Biden will take over. So I wonder if you could share some comments as to what path you think the industry will take to ensure that, that executive order doesn't come into force or if it does, what impact it could have on your business. And then a second overarching question. Again, in your introductory slide, you've highlighted how you've focused the Novartis business as a pure-play pharma business over recent years. And it's very notable in this meet management how much incremental data there is on Sandoz than what we've seen previously. And I just wondered whether that was a prelude to potentially carving Sandoz out from the Novartis business and whether that's something that we should expect in terms of messaging in the coming quarters or years.

Thank you so much, Matthew. First on the pharma question, we'll have to see in the coming weeks. I think right now, the expectation is there will be legal challenges to the interim final rule, given the procedure and given the scope of the rule. I can't comment, I think, on the specific legal approaches that will be taken. But I expect there to be certainly legal challenges to that as well as to the rebate rule, and we'll have to see how those unfold. For Novartis, our exposure to Part B and the 50 drugs listed in that interim final rule are limited to Xolair and Sandostatin LAR, so very limited exposure for us in the current rules. So it's something we wouldn't expect to have a material impact on our business. And we'll see how the coming months unfold. Now with respect to Sandoz, we've successfully now carved out the manufacturing operations with a strong link to our global manufacturing footprint. Our goal is, as I said, to build a very strong Sandoz business. We have -- with Richard and his team, a very strong focus on being a leading generics player. I think we have a lot of clarity on the strategy, which is why you're seeing a lot more detail in the slide decks now because we have that clarity, which should, hopefully, over time, enable us to achieve those goals on growth in margin. No change otherwise though on our perspective on Sandoz as part of Novartis. Thank you, Matthew.

Next question comes from Graham Parry from Bank of America.

So firstly, in the slides, you highlighted the consensus estimates for a number of products, including Cosentyx, Entresto, Zolgensma, Kisqali and Kesimpta. I was just wondering to what extent we should see that as you're endorsing those figures or which of those you think are maybe a stretch or perhaps those that you just feel are too low and you're in a good position to easily beat. Secondly, just sort of following on to Matt's question on the executive orders and the interim final rules. Assuming they don't go ahead and then you're dealing with the new Biden administration, to what extent do you think Novartis is ready to be able to engage with and how easy it will be to engage with the new administration? And then thirdly, I noticed that you didn't slot canakinumab in your wildcards, which is perhaps how -- more how the market views it. Is there anything in the interim or the passage of the interim that you've seen that's increased confidence in that asset versus last time you commented on it?

Thanks, Graham. On the consensus, we put those figures forward because I think they're a way to provide, hopefully, some aligned perspective on the potential of these brands. We feel good about those consensus figures. A few I would call out that we think we have the potential to overdeliver if we execute well. I mentioned Kisqali. Kisqali, currently, the assumption in that number is clearly that we don't win on the adjuvant. And we believe with the opportunity to address both medium- and high-risk patients with an appropriately sized study, with an extra year of exposure to the drug, with an optimized regimen, there's the potential to address that very substantial patient population. We would see an upside there. We also believe with Kesimpta. We have the opportunity to be one of the leading, if not the leading, B-cell inhibitor in MS over time, which we believe will become the standard of care. Our goal is to become a first choice for switch opportunity, first start for a switch for patients with MS. Certainly, an upside there. I think with Zolgensma, it will depend on the timing of further label expansions. But as I said, the $2 billion, we believe, we can achieve with our IV formulation alone. And so I think that hopefully gives the market a sense that we believe we can deliver on that growth outlook out to 2025. Now with respect to the new administration, of course, we're committed to what we've always been committed to, which is reducing patient out-of-pockets at the pharmacy counter and a better benefit structure that doesn't expose patients to undue burden, fixing some of the discrepancies in the system which need to be fixed, whether that's in Medicaid Part B, et cetera. We continue to believe we need structures that support value-based pricing and value-based access over time. And those are all things that we would continue to be for and work with our industry colleagues to see how to shape the policy of a new administration. I think it's very early days to know exactly where the new administration will go. I expect priorities to be on other things for at least the first period for the new administration. Canakinumab was on our oncology slide, not on the wildcard slide, of course, one of our key Phase III programs in oncology. No insights from the interim look. As always, these have clear stopping rules. And if the data safety board tells us to continue, we simply continue as planned. So no other insights. Certainly, you could argue that's a high-risk, high-reward program. But I would argue most oncology Phase III programs are in the end of that category, given how fast these move into late-stage studies. Thank you, Graham.

Next question is from Kerry Holford from Berenberg.

Two please, probably for Harry. Firstly, on the pharma margin guidance range, I wonder if you can talk about how much of that raise reflecting margin savings you've highlighted from NTO and low travel, et cetera, and how much reflects a more bullish sales growth outlook for the business. And if that is a key driver, what assets would you highlight as outperforming versus your prior expectations when you true-up that guidance originally? And secondly, on the buyback, I guess the question for me is what's led you to push through now with a $2.5 billion buyback program over the next 6 months or so? Why not earlier this year when the shares have been under pressure? And also, do you have capacity and any willingness to continue that program into the latter half of next year?

Yes. Thank you, Kerry. So on the first one on the margin contribution there on -- I mean Vas has mentioned some of the assets where we think there is upside. Now internally, we always had similar, I would say, expectations. So the majority, I would say, is the speed of progress we have made on our current productivity program. So we have achieved some of them a bit earlier as well as the further identification in technical operations, supply chain of additional opportunities, which is great. And then I would say also our commercial business units have made good progress to leverage and resource allocate. So I think it's a mix of several elements that gave us the progress to date as well as further identified opportunities, the confidence to raise that margin target. In terms of share buyback, I mean, first of all, share buybacks are part of the capital allocation, but they are also the last priority. So as I often say, don't expect from us aggressive and large ones, right? This is 1.3% of our market cap and clearly a sign of our confidence in our future growth and a sign we think the share price is quite undervalued at the moment. Of course, earlier, in the pandemic, I would say, you probably have seen from many companies a bit of hesitation to do share buybacks to see how things play out. We have been in the same camp. And now that we have clarity that we are extremely well going through the pandemic operationally, cash collection-wise, supply chain-wise and we see the underappreciation of our future growth, it's the right moment to execute such a share buyback.

Great. Thank you, Harry. And just for everyone's note -- to take note, we'll go until the top of the hour and then go directly into the pharma session. There will be a break after that and then a longer break as well later on in the day. But given the number of questions, we want, of course, to give people an opportunity.

Next question comes from Richard Vosser from JPMorgan.

Just one question on...

[Operator Instructions] Sorry to interrupt. I'll let you finish.

Okay. Absolutely fine. Then I'll just ask -- we're seeing obviously some other companies suggesting continued impact from the pandemic maybe even into the first half of '21. So your business in certain areas has been affected, so just your thoughts on how we should think about the more near-term elements of the impact of the pandemic on growth.

This fourth quarter and the first half of the next year, we continue to expect volatility. It's very difficult to predict how health care systems will perform. We continue to see the primary impact in front of the ophthalmology, a little bit in dermatology and, of course, in Sandoz. But I think most important in my mind is coming out of that, we believe we'll be well positioned to grow and accelerate as the pandemic and hopefully, the vaccines get rolled out. And we're hopeful by the middle of next year, any of the kind of uncertainty and volatility starts to leave the system. Harry, anything you want to add?

No -- maybe one point, Richard. As I mentioned on the quarter 3 call, one of our assumptions was continued return to normal prescribing behaviors in quarter 4. As we had seen in the second half -- or in September and first half of October, that is not playing out. So we are looking, as I mentioned, as a scenario, a more flattish quarter 4. But on the bottom line, as I mentioned also in October, we are kind of naturally hedged, so very well in line with our increased guidance of low double digit to mid-teens on core operating income.

Thank you, Richard.

Next question comes from Andrew Baum from Citi.

Could you talk, Vas, to -- you mentioned the breadth of Novartis portfolio, but the breadth is potentially associated with an increased risk of going slow on key focus products. Just thinking about, historically, in oncology, of areas such as eGFR, MET and others, the development has been slower than one might think. As I look to your SHP2 and your TGF-beta programs, when you have these in the clinic, there was little in the way of competition. I think there's now 5 SHP2, and I've lost track of how many TGF-betas there are. Could you just reassure us that the focus is not compromised by the breadth of your portfolio?

Yes. Thanks, Andrew. I think it's -- in general, I think we have accelerated particularly with the interface between NIBR and GDD being very tightly aligned between Jay and John. And I would say outside of oncology, the performance has been very good. In oncology, historically, we had a tendency to wait much longer before moving to pivotal studies. And now we really shifted that. We do seamless development, so whether it's with our TGF-beta now moving towards -- into pivotal studies, our decision to move our SHP2 in combination into pivotal studies, the cRAF inhibitor. I mentioned we have our own KRAS G12C, which we now are also moving forward with. So we have a range of products, and we're trying to move them much more quickly into pivotal studies given the pace of competition. We believe, in SHP2, we still have a significant lead. But I think it's a very fair point given the pace in which biotechs now enter. Once you have a target identified and published on your solution to the target, you have competition very quickly. And we have to maintain the pace, and that's been a huge priority now for the oncology R&D organization. And hopefully, you'll see that over time. I also would point to some of the new platforms. Particularly, radioligand therapy is a place where we think we have the opportunity to move very fast with limited competition, and that's another place we'll be focused on. Thank you, Andrew.

Next question comes from Simon Baker from Redburn.

Vas, questions on ESG and commercial. One of the things we've seen through the pandemic is a significant increase in early disclosure, the publication of study protocols at inception. Do you think this is simply a one-off given the nature of the pandemic and a move that would be resisted by the industry on ground -- on commercial grounds? Or do you think the genie is out the bottle in terms of realigning the social contract between the industry and society?

Thanks, Simon. I always appreciate your reporting on ESG in your reports that you put out. On study protocols, I think in areas where there is a substantial public interest like in this pandemic situation, you're going to have this rightful push to publish the protocols and understandable. I think more broadly, where there is the possibility that there is competitive information and how endpoints are designed or patient populations, et cetera, really the normalization of protocols happens at the regulator level. And I don't see that changing outside of places like the situation that we're in. Now whether in the development of antibiotics, other areas like that, could this happen, maybe even global health, that could be a possibility. But I don't see it as a broad-based shift.

Next question is from Mark Purcell from Morgan Stanley.

Just one on RNAi. You've laid out the building blocks as you build out the gene and cell and RLT platforms. Useful comments on the production side of inclisiran. But when it comes to RNAi technologies and additional targets beyond the deals you've done in acquiring The Medicines Company, Ionis, et cetera, what are your plans there? Should we see this as a [ fourth ] advanced therapeutic platform? And where do you need to go to be competitive in that space?

Yes. Thanks, Mark. Right now, our focus is on building what we believe will be the largest manufacturing scale in the world of RNA interference, which, of course, builds on small molecule chemistry but is novel, and that's going to support our upcoming launches. Longer term, NIBR is now investing -- and perhaps in the R&D session, Jay could talk a little bit more about it, is investing in a next wave of therapeutic technologies in the world of RNA interference in the liver and beyond. So we have that capability in-house, but I think it's still in the preclinical stage. But given that we will have a scaled position, we'll have scaled manufacturing and scaled technical development capabilities to support clinical trials, it's certainly an area now that we're much more focused on. And I think Jay could comment a bit more later. Thank you, Mark.

Next question comes from Tim Anderson from Wolfe Research.

I have a question on the revenue growth slide where you show 2019 to 2025 CAGR of 4%. What's the cadence across that period? My guess is that when you get to '23, '24, '25, it drops down below the prior years just because of some scheduled LOEs. And as part of that comment, what does that embed for U.S. Gilenya generic timing?

Yes. So overall, Tim, our goal is to consistently grow over the period. You're absolutely right, there's going to be years, of course, we grow faster and others that will be a bit slower. But I think over the period, our expectation is we can consistently grow top line ahead of LOEs and then also consistently expand the margins. And we hope that consistency is reassuring to investors for the medium to long term. In terms of Gilenya LOE, our only guidance -- and we'll update our guidance for -- at earnings, of course, in January, but at this point, we expect another 12 to 18 months for the current appeals process to run its course. And once we have clarity after that appeals process, maybe perhaps we'll be in a position to provide more clarity to the markets. But in the meantime, we're in this space of just providing 12 to 18 months outlook, given that we do have a single player continuing to appeal the district court ruling. So thank you all for joining this first session. I apologize if we went a little bit over. We're very grateful. I think we have close to 400 -- over 450 people on the line. We're grateful for your interest in Novartis. We hope we provided some useful background. And really, the remaining sessions are all open Q&A as to enable you to talk to what I think is a best-in-class management team across each of our various units.

So with that, we'll sign off here, and I will hand it, I believe, to Samir or Marie-France, I'm not sure.

No, it's John actually, John Tsai.

To John, all right. Go ahead, John. Thank you.

Yes. Thanks, Vas. And it was fun to go through the group section here. We're excited to be here with you to share with you our pipeline as well as address questions that you may have. Along with me here is some of my colleagues that you see on the panel. And I'll introduce them first before we get into the Q&A section of our pipeline presentation. I think I know many of you on the line here. I lead the global drug development organization. And I have my partner in crime here, Jay Bradner, who leads Novartis biomedical research institute, Head of NIBR. Also with me here is Jeff Legos, who leads our oncology group; and David Feltquate, who leads our hematology group. You'll also see that David Soergel, who leads our cardio, renal and metabolic group along with us; and Angelika Jahreis, who recently joined Novartis during the lockdown and joined us earlier this year, who leads our immunoscience, hepatology and dermatology franchise. In the audience, we have a couple of other members: Jeff Engelman, who leads NIBR in oncology; Rob Kowalski, who leads our regulatory group here; and Norman Putzki, who leads our neuroscience development organization. I'll keep my introduction section here fairly short because I know that you guys have a number of questions given the amount of information that we shared during our pipeline section here. As you know, we have an industry-leading pipeline across multiple dimensions. From a scale standpoint, we have over 160 projects in clinical development, including 65 new molecular entities across mid to late stages. And just in clinical development, we have 42 assets across 50 diseases. From an innovation standpoint, we have 20 projects based on our advanced therapy platforms in clinical development. From a value standpoint, we have over 30 projects in clinical development that have blockbuster potential. And we're #2 in terms of pipeline replacement power, as you may have seen. And from a productivity standpoint, we have 10 key drugs that have been approved over the last 3 years, and in fact, the year is not over yet. And from a COVID standpoint, we've conducted over 35,000 remote monitoring visits and over 2,000 direct investigational medicinal products, where we've delivered drug directly to the patients' homes to ensure that we continue the continuity of our clinical trial conduct. With that as a short summary, we're advancing our overall portfolio with a leading pipeline to ensure innovation and value for the midterm and long term. With that short introduction, maybe we'll jump right into the Q&A section. And so operator, I'll turn it over to you to see if we can take a few questions.

We'll now take our next question from Keyur Parekh from Goldman Sachs.

Can you hear me okay?

We can you hear you fine.

Great. So my question is on -- as we think about canakinumab, I was just wondering if you can talk about kind of what the next steps are as it relates to the steps between the second interim and the final analysis and talk about any specifics you can provide about prior commentary that there are multiple ways to win in this asset.

Thanks, Keyur. With that question, I'll maybe turn it over to Jeff Legos, who leads our oncology development unit. Jeff?

Yes. No, thanks for the question, Keyur. So maybe just a brief overview for the CANOPY program. As you're aware, there's 3 ongoing Phase III registration trials, 2 of which have completed enrollment to date. So far, we've enrolled more than 1,500 patients across the 3 clinical trials. We have confirmed good safety in combination with standard of care chemotherapy and anti-PD-1 therapy and/or as monotherapy. We've also demonstrated good pharmacology in terms of reductions of CRP levels and IL-6 in the safety run-ins. The next steps for the trial are the final data readout for CANOPY-2 in the first half of 2021 and the final data readout for CANOPY-1 in the second half of 2021. And CANOPY-A, which is the adjuvant trial, continues recruitment as we speak. Thank you.

Thanks, Jeff.

Next question comes from Laura Sutcliffe from UBS.

I was just wondering if you could elaborate a bit more on some comments from earlier around things we might see coming out of your gene therapy business after 2025. Does that mean we shouldn't expect anything other than Zolgensma IT hopefully between now and then? Or is there -- are there other programs we can look to prior to 2025?

Yes. On the gene therapy programs, maybe I'll turn that over to Jay here. Jay?

Thank you very much for the question. We remain just heavily invested in next-generation gene therapies. The platform afforded by the acquisition of AveXis has proven already a very powerful catalyst for programs in our neuroscience drug discovery disease area, where we continue to advance programs as described in this deck for Rett Syndrome. We have behind this about 10 AAV9-based gene therapies as well as some additional gene therapy programs in ophthalmology. So yes, please do consider steady progress on this new paradigm of therapy that's still -- despite all the challenges associated with the innovation and the development of these medicines, they are truly transformative. They can be for patients with profound neurologic, ophthalmologic and other serious medical conditions. So do expect steady progress in this space.

Thanks, Jay. Appreciate it.

Next question comes from Peter Welford from Jefferies.

If you don't mind, I'll ask 2 quick questions. One of them is actually just putting clarity on the gene therapy, which is just with regards to the Zolgensma intrathecal, where, I think, obviously, discussion is going on with regulators. Can you just talk a little bit about ex U.S.? I guess why -- is the same situation true ex U.S. and you don't therefore need -- there is an opportunity to go into Europe and Japan without a pivotal study? And is this intrathecal work with Zolgensma in any way impeding or slowing down development of some of these other neurological gene therapies that are in development? Or should we think of them as 2 completely separate processes? And then could I just ask a broader question on sort of technologies. I noticed Novartis has relatively few, if any, bispecific antibodies or similar sort of antibodies in development. I realize obviously you don't have a big history in this area, but obviously, a lot of companies have developed quite extensive pipelines around this. Is this sort of antibody engineering an area you think of interest to Novartis? Or perhaps you could just talk a bit about the reasons why you don't think that's an area you should be in.

Yes. Thanks, Peter. Thanks for the question. Maybe I'll start with Zolgensma ex U.S. and then turn it over to Jay for some additional comments. For Zolgensma program outside the U.S., you probably know, Peter, we have 2 different indications, separate: one in the U.S. with a weight limit; and outside the U.S., where we can go beyond the 13.5-kilogram weight limit. So we have a broader population of patients that we can actually treat. I know that we continue to advance, and we're excited about bringing intrathecal to outside the U.S. as well as in the U.S. So we're advancing those programs as we understand -- and we've disclosed how we're advancing those programs, understanding the nonclinical data that we continue to understand in the nonhuman primates. So Jay, over to you on the other programs in gene therapy.

Thank you very much, John, and thanks for the question. At Novartis, we have 5 discovery platforms. These are platforms where we not only innovate products off the platform as new inventions, but we also have a capacity for global manufacturing and medicines access. And these platforms are global discovery chemistry and chemical biology where we have for decades and remain, I think, a leader in innovative small-molecule science. Second is biologicals. I'll circle back to that in a moment for your question. Third is AAV9 gene therapies. 4 is stem progenitor therapies, hematopoietic stem cells for CRSPR, CAR-T cell therapies. And the last is radioligand therapies. As you've asked about our biologicals, we have, I think, a remarkable track record in biologicals. Though the concept of monoclonal antibody therapeutics was not innovated at Novartis, it's fair to say the download is complete. With medicines like Cosentyx and Alaris now proving very important medicines for patients and growth brands for the company, we have a quite mature biologicals discovery platform. And antibody and recombinant protein medicines remain a significant proportion of the Novartis pipeline. Just curated approximately 300 discovery programs in total, of which 30% to 40% are biologicals, so heavy investment there. As you ask about bispecifics, we do indeed have a small number of bispecifics. We have a BCMA in the clinic, and we have a couple of rising programs that should arrive shortly. We have an active collaboration with Xencor, through which we've gained experience in CD3 bispecific medicines as immuno-oncology therapy. More and more, however, our biologicals are multimodal, complex next-generation biologicals and not simple monoclonal antibodies. There are a few cytokines left out there to silence and remove. So yes, a quite active area of study in a thriving biologicals platform. Thank you.

Next question comes from Steve Scala from Cowen.

Vas mentioned in the intro that Novartis still sees Beovu as a multibillion-dollar asset. I'm wondering if that is predicated on resolving the inflammation issue. And are you any closer to resolving that issue? You've been studying it for about a year. And I'm wondering if you have any answers at this point. And then on Kisqali, it was mentioned that Novartis is doing what needs -- what it needs to do to keep patients on treatment in the adjuvant study. Can you elaborate on what those things are? And does this imply that Novartis attributes palbo's adjuvant failure to adherence?

Yes. Thanks for the question, Steve. And I'll start off on Beovu and turn it over to Jeff on the question for Kisqali. We certainly understand that for Beovu, there is significant number of patients who have an unmet need, both in AMD as well as in DME, diabetic macular edema. As we continue to look for the root causes, we know that there are a number of patients, as we've spoken to the retinal surgeons, who are getting significant benefit. And it's finding that right balance of benefit/risk for patients with Beovu. As we explore the root causes as well as the patient epidemiology of who may actually have the events, we're getting better and better at understanding. And most recently, at AAO, we shared some additional data in terms of those patients who may be predicated or who may be at higher risk. And those are steps that we're understanding. I would say we're probably well along the way in terms of understanding. But obviously, this is not a single cause, and we don't believe it's something that we're going to find overnight, that one single event or one single root cause will be able to clarify this entire picture. I guess one additional element that I'll note is that you've also seen that we released the KITE data, which is from the DME patients, diabetic macular edema patients, who showed that we reached the primary endpoint of non-inferiority with aflibercept, and the intraocular inflammation rates were fairly equal amongst those 2 populations. So based on this, we find there's a good benefit versus risk in these patient populations, and we'll continue to explore more in Beovu. And we do have confidence that this will be an opportunity for us moving forward. So maybe over to Jeff on Kisqali.

Yes. No, thanks, Steve, for the question on the NATALEE trial. So maybe 2 important points here, just to reiterate. I think first, we continue to see that there's been mixed results in the metastatic and the adjuvant setting. And I think that suggests that there is differences within the CDK4 and 6 as a class. And I think Vas alluded to one of those differences being the greater inhibition of CDK4 over CDK6, which we continue to believe to be an important mechanistic rationale for these potential differences that likely contributed to the overall survival that we have observed in the 2 metastatic trials. With respect to the ongoing NATALEE trial and your question around patient adherence, we know very well that in adjuvant trials, patient adherence and dose intensity is very important. For our trial, in particular, we have gone with a 400-milligram dose. This dose has been shown to be able to maintain the same level of efficacy and removed or reduced some of those concentrated dependent adverse events of special interest. The one in particular for palbo was neutropenia, which led to a very high rate of discontinuation in the PALACE trial. What we are doing specifically in our study beyond the lower dose is to continue to educate and work with the sites on the importance of maintaining dose for the period of time up to 3 years. Secondly, we have seen, thus far, there has been very low rates of discontinuation to date in the trial. And then thirdly, making sure that the sites are well aware of the management protocols in place because most of these side effects are transient, asymptomatic and reversible. So hopefully, that addresses your question.

Yes. Thanks, Jeff. And what we've seen is the 400 milligram is well tolerated by the patients, and we look forward to seeing the results as they come out in the future.

Next question comes from Seamus Fernandez from Guggenheim.

So just a couple here on -- I was hoping to get a little bit of an update from you guys on ligelizumab in terms of the -- how the enrollment has continued during the pandemic as well as just your expectations for this particular product is the key demonstration of superiority. Or is there an opportunity just to have a better delivery and dosing profile for this asset and have it be successful? And then the second question is on iscalimab. Just hoping to get an update on how that trial has recruited in Sjögren's syndrome. And then if we're going to see the interim or if an interim is still planned for the second half of this year.

Yes. Thanks, Seamus. Maybe I'll start the answer here on the recruitment progress for the 2 studies and turn it over to Angelika who may give us a little bit more in terms of what we're expecting for results. On the ligelizumab, when we started to have the COVID, we saw a little bit of a slowdown, given that it was a dermatologic condition, CSU, which we were recruiting for. As we started to deploy our digital capabilities in terms of recruitment we quickly caught out. So initially, we saw that there was a slowdown in recruitment, and we're fully recruited for the CSU indication. And now it's just a follow-up of those patients. And you heard earlier, we've conducted 35,000 remote monitoring visits. Obviously, that's not just the ligelizumab study but across all of our indications, but we've been following those patients. And we expect to get results next year for the CSU indication. Maybe on the clinical results, we expect to get, Angelika, I'll turn it over to you, and then we can address iscalimab.

John, thank you very much. Certainly, we have seen in our Phase II study, where we have been looking at efficacy for omalizumab versus ligelizumab, that ligelizumab has a significant -- has a greater efficacy in CSU. With that increase in efficacy, our studies are looking to establish superiority versus omalizumab, which would allow us to really show an additional benefit compared to current standard of care. So it's a very ambitious program. I would like to also add to that, that we are starting Phase III studies not only also in CINDU, which is an additional indication in patients who have inducible Urticaria as well as talk about a little bit about the benefits that ligelizumab may bring for patients with food allergy and thereby also address a patient population that has a high unmet medical need. With that, maybe I turn it back over to you, John, to talk about iscalimab.

Yes. Thanks, Angelika. And I think, Seamus, you probably are aware of the New England Journal publication on our Phase II data in terms of ligelizumab versus omalizumab that showed superiority in that Phase II study. On iscalimab, your question was really around the recruitment for the various indications, including transplant as well as in Sjögren's syndrome. For transplant, we are seeing some impacts because these are patients who are immunocompromised as they get transplants obviously. So we're seeing a little bit of a slowdown in terms of recruitment, hoping that we'll be able to catch up as we get back to somewhat level of normality. In terms of the Sjögren's syndrome, we're still in the Phase II study, and we expect to get the Phase II results in 2022. That is continuing to recruit, and the recruitment is going fairly well even during the COVID situation. So we're hoping that we'll continue to advance and see these results in '22. So we have a path forward. So I'll stop there.

Next question comes from Graham Doyle from Liberum.

Just one on CAR-T because we hear a little bit less about -- I think the market is probably less excited than it has been in the past. In terms of allogeneic, could you give us an update on where you are there? And I know you've got some investments in some companies with some pretty interesting technology there. So it'd be great to get an update on where you are in allogeneic and also what you think will get people more excited on CAR-T as we move through the next 2 or 3 years.

Maybe on that one, I'll turn it over to Jay, and maybe Dave Feltquate after that, if there's any comments.

Thanks, John, and appreciate the question. Dave, please weigh in. CAR-T cell therapy is a very important paradigm of cancer medicine, can be curable for patients with relapsed and refractory B-cell malignancies and can provide important and long-lived durable responses in advanced and common cancers, like diffuse large B-cell lymphoma and multiple myeloma. And for this reason, we believe and remain heavily invested in the innovation of next-generation CAR-T cell therapy. We have learned the hard way what is required to provide global access to this type of medicine. And we have harvested these learnings back into our research labs at NIBR to imagine the next-generation of CAR-T cell therapy. We have taken a decision internally to focus on the blood cancers, where we have an established and relevant presence in clinical management today through Kymriah; and through collaboration. As you also nicely call out, thank you for noticing, we remain a partner of choice, we believe, for innovators, first, to disrupt allogeneic CAR-T cell therapy, which has been hard and has yet not accomplished and who can bring CAR-T cell therapy to the treatment of solid tumors perhaps through T cell receptor-mediated CAR-Ts. And we have collaborations with ambitious start-ups like T scan in that space. What you can therefore expect to see from Novartis are a series of breaking waves of innovation. Most immediately, we are working to disrupt the manufacturing process to strip it down and rebuild it completely so that we can provide access to CD19, BCMA and other CAR-T cell therapies to a much broader group of patients. We also anticipate that such innovation will improve the business of CAR-T, which, owing to high cost of goods, is a challenge for everybody in the space and a barrier to entry for so many. So both our internal research focused on next-generation blood cancers and through collaboration and partnering in spaces like allo and intracellular antigen targeting, we remain committed to CAR-T cell therapy as an important and disruptive cancer medicine. Dave, anything to add, please?

No, perfect answer. Very, very bullish about the future of CAR-T.

Thanks, Jay. Thanks, Dave.

Next question comes from Andrew Baum from Citi.

A couple of questions. I'm sure you're busy prepping for your forthcoming Entresto panel meeting with the FDA. Could I just ask what you're actually hoping to achieve with the meeting? Are you looking for expansion of the patient population to include the whole of the PARAGON population or -- instead of focusing on the subgroups where the efficacy was strongest? And also, when I look at the p-value that you report for the expanded endpoint that you are using to support your application, it doesn't seem to be consistent, at least from my calculations, on the confidence in intervals, but maybe I'm making a mistake there. But that would be the first question on Entresto in preserved. And then second, thinking about both TGF-beta and your SHP2. Could you talk to what cardiovascular and bleeding adverse events you may be seeing with your TGF-beta monoclonal comparing others in the class? And separately, on SHP2, this is a molecule where others have reported some tolerability issues. Are you resolving them through intermittent dosing? Or is your molecule for some reasons more tolerable than others?

Thanks, Andrew. And maybe for Entresto, I'll turn it over to Dave first on the expectations for the ad com and subgroups.

Yes. Thanks, Andrew, for the question. Indeed, we are deep in preparation right now for the advisory committee. And I think the thing to look at in the data, as we showed in our deck, is the remarkable consistency of the data you see from PARAGON, right? So whether you look at the primary analysis where we narrowly missed the p-value for significance at 0.059 instead of 0.048, but you look at the other metrics that we prespecified in the analysis, including the expanded composite endpoint, which includes urgent heart failure visits or if you look at the investigator-reported events, in other words those events where heart failure hospitalization didn't meet the very stringent clinical events committee adjudication process, you see a remarkable consistency of the effect size between 13% and 16% relative risk reduction. And that's driven by heart failure hospitalization. There doesn't appear to be an effect on cardiovascular mortality in this population. So I think that's the first thing to consider. And then the other thing to consider is within the trial itself, if you look at the secondary endpoints as well, they are also very consistent with the primary analysis and the sensitivity and supportive analyses. To the extent that the probability that these endpoints all move in the same direction by -- purely by chance is extraordinarily low. It's extraordinarily unlikely. So from within PARAGON, we have a very strong data set. And then if you look at PARADIGM, the adjacent heart, failure reduced ejection fraction population or you look at other supportive data like PARAMOUNT, which was our Phase II study, you see again more evidence that Entresto appears to be an effective agent in heart failure with preserved ejection fraction. So with respect to the subpopulations, when you evaluate the primary analysis in the prespecified group, you see clearly that the effect seems to be driven by patients who have an ejection fraction that's in the lower range of the heart failure with preserved ejection fraction grouping, so below the median, as you saw from our publication. So we believe that this is a population that likely benefits the most from Entresto, and we'll be having that discussion at the advisory committee on December 15, as we've talked about.

Thanks, Dave. And on TGF-beta as well as SHP2. I'll turn it over to Jeff Legos.

Yes. Thanks for the question, Andrew. First, I think with respect to your question around TGF-beta, specifically the bleeding and cardiovascular risk that you mentioned, we have evaluated our TGF-beta inhibitor, both as monotherapy across a very wide dose range as well as in combination with anti-PD-1 therapy, and we have not seen any significant safety concerns to date. We're quite excited by the potential of this molecule to go into a range of solid tumors, in particular, pancreatic cancer, colorectal cancer as well as other solid tumors. And we have just achieved our first patient, first visit in our Phase II randomized trial. We will continue to closely monitor and evaluate the safety in the upcoming randomized studies. For our SHP2 inhibitor, this is one that I'm really excited about and one -- in particular, one of the most exciting assets coming out of our early pipeline. It's hard to believe just a few years ago we were talking about this being an undruggable phosphatase and now one of the first companies to bring this first-in-class first indication molecule into the clinic. The science is really exciting, as you're aware, because this is a critical node for RTK signaling as well as PD-1 signaling in the immune cells, and we have a range of combinations ongoing. There's 4 combinations ongoing and 1 upcoming and planned. We expect to present some more data in the spring of 2021 and continue to evaluate the safety and tolerability across a range of doses as part of our combination therapy program.

Thanks, Jeff. Appreciate it.

Next question comes from Mark Purcell from Morgan Stanley.

Just going back to my original question on RNAi. Could you help us understand the range of diseases you're looking to target in those early stage programs, expanding into chronic diseases where there's the capacity challenges you've described or rare diseases or a mixture of the same? Secondly, on Cosentyx, Vas talked about some new formulations in development, great to understand where you are going with those formulations? And then lastly, going back to SHP2 and Andrew's question, which are the indications do you feel to provide the sort of fastest route to market for that asset?

Great. Thanks. On RNAi, maybe I'll turn it over to Jay to address that question to start.

Yes. Thanks for the question. As Vas mentioned in the opening, we've been excited about the progress and the development of first-world therapeutics using RNA interference technology. These are very hard-won lessons by innovators who've remained in this space for a long, long time. And through the process of acquiring inclisiran, we had a front-row seat to the technology innovation needed to create what we think can be a new paradigm of cholesterol management, with idealized drug-like properties, even for a biomolecule, imagine to give a medicine just twice a year with stable pharmacologic control over target. Never in research had a significant investment in RNA interference going back about 10 years ago and spun much of that technology out into Arrowhead where it is indeed thriving. Over the last 5 years, we've entered a couple of spaces for liver targets, in particular, where RNA interference biomolecules tend to accumulate. And though the targets that we are presently going after are not as yet disclosed and though this is a fraction of the research portfolio, we regard it as a growth area here, as hopefully many peer companies will, because the technology has progressed to first world therapeutics. I'm sorry to be vague, but in the fullness of time, we'll have a chance to share with you our plans beyond RNA interference with inclisiran and beyond ASOs with TQJ into new disease spaces, I think you'll be pleasantly surprised.

Yes. Thanks, Jay. And on your question, Mark, regarding Cosentyx, as you've seen, we've actually explored a number of indications, not only in dermatology, but also in rheumatology. You asked specifically about the formulations and the approaches, maybe I'll turn it over to Angelika for the formulation.

Yes. Thank you, John. And yesterday, you may have seen we got European Commission approval for the 300-milligram auto-injector and prefilled syringe. We've also filed in the U.S. and expect approval next year. This is a really important advance because we are reducing the number of injections for patients by 50% with having a 300-milligram auto-injector. In addition, we have also an IV formulation in PSA as well as AS. And with that IV formulation, we will be able to provide an alternative treatment option for secukinumab for patients who do not want to self-inject as well as for Medicare patients in the U.S., which make quite a significant part of our patient population. So with that, we are really excited not only to advance Cosentyx into new indications in rheumatology as well as in dermatologic diseases but also to offer these new modes of applications to patients to really work toward patient centricity and help patients have choices of different treatments.

Great. Thanks, Angelika. And maybe for the last question, I'll turn it over to Jeff Legos on SHP2.

Yes. Thanks, John, and thanks for the question, Mark. Obviously, it's a bit too premature to speculate as to which indication could come first. But as you see in our pipeline deck, we have a range of combination trials ongoing in both non-small cell lung cancer as well as colorectal cancer. I think preclinically one of the most exciting areas in combination is with the G12C inhibitors in KRAS mutant G12C non-small cell lung cancer. And there's also some early encouraging emergent clinical data as well to support that as a potential path to market.

Thanks, Jeff. Appreciate it.

Next question comes from Florent Cespedes from Societe Generale.

A few quick ones on inclisiran and pelacarsen in cardiology. First, on inclisiran. On your Slide 77, we can see that the cardiovascular outcome trials are due in 2025 and beyond. I was just wondering if it could be possible to see some results earlier. I think you said it could be as early as 2024, knowing that 2024 is when pelacarsen cardiovascular outcome trials are expected. My second question is regarding the clinical trial design of the cardiovascular outcome of -- for these 2 products. Could you remind us what level of relative risk reduction is required to show statistical significant difference in the 2 trials? And the last question is, could you elaborate on how you will position the 2 products? We understand that pelacarsen could be for the LP(a) population, but could it be possible to combine those 2 products?

Yes. Thanks, Florent. Maybe I'll start the answer and turn it over to Dave Soergel. And on the last part, in terms of positioning the assets, we may want to turn that over to Marie-France during the pharma section just so that she could give her insights too. In terms of the way that we look at on Slide 77 and building in the interims, well, we currently are projecting for both pelacarsen as well as for inclisiran is 2024 and beyond in terms of those end points being reached. As we've -- for a large cardiovascular endpoint trials, there are interims built in. But I think when we've disclosed interims, I think what we've been held to high regard and people expect us to stop the trial. So moving forward, as Vas mentioned, probably heard earlier, Florent, that we're not going to disclose our timing of the interims moving forward, but these are endpoint-driven trials. So maybe, Dave, I'll turn it over to you for comments around the relative risk reduction.

Yes. I mean, I think so the 2 programs are quite different, obviously, very different targets. With inclisiran, targeting LDL reduction with twice-a-year administration, as Jay indicated earlier, the aim is really to show cardiovascular outcomes benefit in terms of MACE reduction, but also potentially to show mortality benefit in that trial, right? So the idea behind that study is that it's run out for 5 years. Median follow-up is 5 years. So we need to see somewhere around 1,700 events and a minimum of 5 years for follow-up. And that gives us the best opportunity to show a big relative risk reduction and cardiovascular benefit for inclisiran. So it's different because LDL reduction is a precedented mechanism for improving cardiovascular outcomes. So what we want to show is that, that prolonged exposure actually delivers a greater benefit. When you look at pelacarsen, it's very different strategy because it's a first-in-class, first-to-target LP(a). So this is a more traditional type of cardiovascular outcomes trial where we expect recruitment and follow-up to take us until 2024 with top line readout. The detailed study design hasn't been disclosed yet. We expect that the study to be manuscript to be -- come out next year sometime. But as we talked about in the past, we have 2 strata in this population looking at the 70-milligram per deciliter population and the 90-milligram per deciliter population, which gives us 2 opportunities to show benefit of the medicine. So first-in-class, first-in-target versus LP(a) in pelacarsen versus inclisiran where showing a dramatic benefit with prolonged exposure is the answer.

Thanks, Dave. I know we still have a number of questions in the queue. [Operator Instructions]

We can now take our next question from Graham Parry from Bank of America.

I was going to ask about branaplam in Huntington's. So when we expect to see the Phase I data in healthy adult volunteers, is that imminent now? And what's the endpoint of the study and the hurdle that you're looking for to move into that Phase IIb dose-finding study? So I think Roche's target profile for their asset is around 30% to 50% Huntington's protein reduction. So is that the same sort of thing you're looking for in a Phase I healthy volunteer study?

Yes. Thanks, Graham. I appreciate the question. And we are finishing up the Phase I healthy volunteers study for branaplam by year-end, and we likely will see the results in the early part of next year. That will help us move forward in terms of how we would design our Phase II studies. And I'll ask Norman to see if he can weigh in here in terms of what we're looking for moving forward and how we would design the studies. Norman, are you there?

Yes. Thank you, John. Thank you, Graham, for the question. So the Phase I study will -- so let me start elsewhere. So I would say we're in a unique position with branaplam because we have data from children in SMA. We have animal model data on top, and we have seen a reduction of mRNA for HTT in the same ballpark that you just alluded to for -- that Roche is going after. So we are now seeking to replicate those data and find those data in a Phase II to plan for -- in the Phase I that we will finish towards the end of the year. And that will allow us to go into interaction with the regulators and then go into Phase II.

Next question comes from Matt Weston from Credit Suisse.

Can I ask a question to Jeff on canakinumab, please? If I think back to the CANTOS data that acted as proof-of-concept for the current oncology program, I think that the adjuvant setting is probably the best suited to the CANTOS population and that the first-line and second-line cohorts have potentially got less proof-of-concept behind them, if I were to put it that way. Can you comment on those thoughts? I noted -- I know in the slides that the revenue potential that's been set out is based on that first-line, second-line metastatic setting with adjuvant considered in addition. But I guess I would have thought it the other way around. So explain why I'm wrong.

Jeff, over to you.

Thanks for the question, Matthew. And maybe to start, some of the data that emerged post the initial CANTOS findings was the relevance of the ctDNA that was present in the plasma at the time of study entry within CANTOS. So about 2/3 to 70% of these patients did have detectable ctDNA to suggest some degree of subclinical non-occult lung cancer at the time of study entry into the cardiovascular trial. Secondly, we know that in lung cancer, overall, this patient population is enriched naturally and will have high levels of CRP across all 3 patient populations. These are 3 mutually independent hypotheses that we are testing. One is monotherapy in the CANOPY-A trial, one in combination with standard-of-care platinum chemotherapy and anti-PD-1, and then one in combination with docetaxel. It's probably important to first just talk about mechanistically what we believe pro-tumor inflammation is actually doing and plays 2 key roles. So one is in the initiation, proliferation, migration and metastases of cancer. And I think to your point, right, the CANOPY-A is very much akin to that hypothesis that emerged out of the CANTOS trial. I think in the CANOPY-1 trial, it's a very different hypothesis, and this probably speaks more to the role of pro-tumor inflammation as a potential way to modulate the tumor microenvironment. We know that pro-tumor inflammation significantly influences the level of immunosuppressive cytokines and immunosuppressive cells within the tumor microenvironment. So the hypothesis here is that blocking IL-1 beta would potentially reduce that immunosuppressive environment allowing anti-PD-1 and platinum to work. Last point I would make is we know that high levels of CRP tend to be a very poor prognostic marker, and patients with metastatic disease tend to do poorly on standard-of-care treatments today. So this could potentially enable patients in the metastatic setting to do even better on standard of care. In terms of expectations and outcomes, right, because CANOPY-1 and CANOPY-2 have already completed enrollment and have their data coming out in the first half and then second half of 2021, that is our near-term focus to look to those key data readouts first.

Thanks, Jeff. And knowing that we've been going for -- without a break since the last session, we'll take one last question here.

Next question comes from Richard Parkes from Exane.

Hopefully, you can hear me okay. Just like to ask about iptacopan, which I don't think was really covered. You highlighted the move into Phase III in IGA nephropathy. I just wondered if you could talk about your confidence in the PNH opportunity, which wasn't covered to the same extent? It seems like physicians are very open to having an alternative first-line option versus Soliris. So just wondered if you had any plans to initiate trials in first line and maybe what proportion of your multi-blockbuster sales come from new indications versus those where complement inhibitors are already approved? And then second question, just on iscalimab. I'm just wondering if you could talk -- and forgive me for not knowing the target as well as maybe I should, but maybe you could talk about the profile of the product? And are we talking here about just more specific immunosuppressant or have you got confidence that this is really inducing immune tolerance induction in the renal transplant setting?

Yes. Thanks, Richard. On iptacopan, I'll turn it over to Dave Soergel to give you specifics. But I think, as alluded to earlier, in the group section, we have high expectations. We expect to move iptacopan into 5 Phase IIIs by 2022, a couple of those, obviously, in the renal indication. So I ask Dave to weigh in specifically on PNH. Dave?

Yes. I mean, thanks for the question. I mean the data are great. I mean, the Phase II data we showed last year, I think you saw very clearly that iptacopan does -- is a very effective agent of reducing LDH, which is the marker, of course, of hemolysis in patients with PNH. So if you look at clinicaltrials.gov, we have our Phase III design posted there, which is a study in which patients who have residual hemolysis despite being treated with C5 inhibitors are then treated with either LNP, iptacopan, or with a C5 inhibitor like eculizumab in this case. And so the aim here is to show that because iptacopan can control intravascular and extravascular hemolysis more effectively in these patients than the C5 inhibitor, that we should be able to show that iptacopan is indeed a potentially superior therapy. So that's the aim. And then of course, there's a commonality between the pathophysiology in patients who've been previously treated and those who are naive. So we would expect to have conversations with health authorities on the basis of that head-to-head comparison data when the data roll out.

Yes. And iscalimab, maybe I'll start on the anti CD40 monoclonal antibody. It's a human anti-CD monoclonal antibody. It's a non-B-cell depleting antibody. And what I'll do is maybe I'll ask -- I don't know if Jay is there to weigh in or I can also turn it over to Angelika to give a little bit more on the mechanism and the reasons to believe.

I'm happy to start and Angelika, a real immunologist, please chime in. CD40 is a vital pathway that drives antigen presentations, amplification of immune signaling. And so you could think of it as a very targeted and focused immunomodulation more than engendering immune tolerance, which can be a consequence of restabilized or rebalanced immune signaling generally. CD40 pathway inhibition has been a longstanding ambition in biomedical research, initially focusing on the ligand, but directed therapeutics towards the ligand proved toxic with on-target thromboembolic complications. Our research scientists in Basel innovating CFZ533, and moreover establishing the pharmacologic guidance as to how to use such a medicine with high tissue-specific distribution and inflammatory target tissue potency we think has created a really differentiating offering well beyond B-cell depleting and other strategies, which are important modalities for antiinflammatory and autoimmune disease therapeutics. Angelika, I invite any more sophisticated insights from a real immunologist.

Well, thank you. Thank you, Jay. But I think you have already described the mechanism of action really well. I would just like to add maybe a little bit of a clinical pearl at the end of it. What we have seen in nonhuman primate studies is that we have a pristine histology after anti-CD40 therapy. So iscalimab really does not lead to an influx of immune cells there. And when we looked at our chronic allograft damage index score, we have seen -- and that is 12 to 24 months after we have transplanted the patient. In humans as well, we see a pristine histology, which seems to indicate that there is some tolerance that we can induce. With that, I hand it back to you, John.

Thanks. Well, thanks for your questions on our pipeline, and appreciate all the interest in our overall pipeline. We continue to move and bring great value with our robust pipeline, and I know that we've been going for quite a long time. So maybe we'll stop here. And come back and take a break and we'll be back with the pharma section. So we'll stop here.

Thank you, everybody. And the pharma section with Marie-France and her team starts at 16:45 Central European time. Thank you all. [Break]

Welcome back to the Meet Novartis Management event. We will now continue with the pharma session. [Operator Instructions] I would now like to hand over to Marie-France Tschudin, President of Novartis Pharmaceuticals.

Apologies, I was on mute. It's probably the most heard sentence you've had this year, apologies for that. So let me start again. So Good morning, good afternoon, and welcome to all of you to the pharmaceuticals part of this session. It's my pleasure to introduce part of the pharma executive team today. I'll start with Rod Wooten, who's our Head of Global Marketing; Victor Bulto, who is our Head of the U.S. business; Haseeb Ahmad, who's our global Head of Value and Access and Commercial Development; Ingrid Zhang, who is joining us from Shanghai. So thank you, Ingrid, for standing up so late for this session. And also Mukul Mehta, who's the CFO for pharma. I'll start off with a few words just to set the context. Overall, 2020 performance has been strong. If we look at our year-to-date Q3, it's 90 -- sorry. $17.9 billion or 6% growth despite the significant disruption that you all know in some of our therapeutic areas this year, where we continue to see sustained momentum in our key growth drivers, Cosentyx, Entresto. We continue our focus on the launches: Beovu, Kesimpta, Leqvio. And we're also preparing for key future launches. So in a nutshell, we have clarity on our priorities within the portfolio, and we're working on innovative approaches to deliver customer value to drive productivity, to contribute to the margin improvement but also setting up the organization for the short and long term. Earlier this morning, we had a question. So I'd like to read out the question and answer it, and then we can move on to the questions online. So the question is can you please let us know the prospects for Beovu post the FDA pullback and how competition is moving ahead. So let me first clarify that Novartis has asked regulatory agencies, including the FDA, to update the safety label of Beovu following the original approval and based on the review that we had of the HAWK and HARRIER data. So the FDA and regulatory bodies across the world have approved a safety label update, and this only reconfirms the benefit-risk profile of Beovu. But what we're doing right now is, and according to our label, we're educating physicians that Beovu should not be administered in the case of active inflammation. It is very important for physicians to monitor patients for inflammation, and it's also important that there is timely and proper treatment in the case of an event. We believe that by doing so, we will help reduce the risk of some of these adverse events. We're now approved in 50-plus countries and in the top 10 markets. And as John was saying earlier today in the R&D session, the patient need is very high. We still see 50% of patients that are currently treated with the available anti-VEGFs on the market that have unresolved fluid, and 30% of patients are in monthly intervals. When we look at the data that we have to date, so whether it's the clinical trial data, whether we're talking about real-world evidence, which we presented recently at AAO, and the clinical experience we see that Beovu is highly effective at drying retinal fluid. We've also seen data that shows that it's important to dry retinal fluid. And this does lead to extended treatment intervals. What we hear physicians say is that Beovu is probably the most potent anti-VEGF on the market. So our priority is to address the concerns of the community, and we're making progress. We're going to stay committed because we do believe that the competitive profile of this product addresses a real unmet need in the market. So on that note, we're ready now to take questions on the line. Operator, thank you.

We can now take our first question from Graham Parry from Bank of America.

So firstly, on consumer. Could you just explain to us whether you feel that 5% NBRx market share after 11 weeks on the market is above or below your expectations around original or initial launch? And what has been the key challenges being launched to date? And when you start thinking about where this can go, that said, the $1.8 billion peak sales was consensus would look conservative. Then you try to see if you think B-cell therapy could be 34% of it, a $28 billion market. So do you think you can exceed half of that B-cell therapy class, and that would get you to be more like a $5 billion product, for example? And then secondly, on Inclisiran. Is there a potential if the FDA to miss the PDUFA date that we are seeing manufacturing site inspection delays, again, for example, with Bristol [indiscernible] cells?

We will now take our next question due to the fault of that line from Andrew from Citi.

We can take the question. I think I understood the first part of the question. If we can take the first part of the question. I understood the first part of the first question that was asked, if that's okay.

Go ahead, Mary. Go ahead, Mary.

So the first question was around Kesimpta and how happy we are with the 5% NBRx share. How do we feel about our ability to take the share in the B-cell market, and what does the sort of total percent potential look like? And maybe Victor, I'm going to turn that over to you. That's a good opportunity to talk about where we are with the launch in the U.S.

Yes. Thank you very much, Marie-France. I think as Vas mentioned in the introduction, we are off to an excellent start with Kesimpta in the U.S. despite the challenges that come with COVID, right? And I think there's a number of early indicators that point into the right direction, the first one being access, for example, right? So the response [indiscernible] was warmly positive. They respond well to the profile of the drug. And we've seen already post [indiscernible] with tax. So as notable we CVS and ESI, and we're seeing some of the first Medicare lives coming up and all supply schedule as well added. So that means the DOD and the VA can start prescribing. So from an access perspective, really good. One of the objectives we had, where we launched is to make sure we made this initiation easy for patients and HCPs, and we are seeing that as well -- been really well. So we have very good feedback from HCPs. We're seeing fast institution, the high conversion rates. So all in all, that is going really well. And then from a prescriber breadth perspective, also very pleased. We have close to 500 unique prescribers in the U.S. as we speak, and the 2 -- I mean, the quality of that is also notable in terms of -- we see that geographically spread. So we see 100% of our sales territories seeing already uptake, which is great. And also in terms of the composition of the prescribers, we think both MS specialists from MS centers but also general neurology, right? And that's very important because we want to position Kesimpta to help patients in the early lines of therapy, even naïve or first switch. And many of those patients are actually, those neurologists or MS nuerologists across the country, not necessarily DNA centers. So that is going really well so far. Then from an execution perspective as well, we're very pleased. I mean this is a unique launch, right, in times of COVID. So we had very high aspirations for our digital engagement and nonpersonal promotion. And I'm very pleased to say that, that's tracking to our expectations. We have an algorithm that reassesses every channel, every HCP, what information is most likely to be useful. And that's refreshed every week, and that's going really well so much so that we have leading share of voice, both in the digital channels and also in the face-to-face channels. Now you asked specifically about key challenges. Well, the key challenges continue to be the in-person or of real to one-to-one interactions with prescribers, right? We know that's key to drive depth and breadth. And of course, we are not at the levels that we would have had pre-COVID, and we're working hard to overcome all of those. But all in all, as Vas said, excellent start. We're really proud of what the team is able to do in the case of the pandemic. And we're really excited for really having a really strong 2021.

Thank you, Victor. Perhaps on the second question, which I also believe I did hear, which was on the timing and the inspection for inclisiran. Maybe, Rod, you can comment on that?

Yes. Thanks. In terms of the U.S. approval timing, we, of course, have completed the full clinical review. So the one outstanding item that we have is referenced to the inspection. And it's a single manufacturer inspection in Italy, and it's a paper-based inspection where we've already provided extensive documentation. So we're working very hard with the agency to maintain the action date for inclisiran in the U.S. in December of this year. So we would expect approval either then or shortly thereafter based on closing out this final inspection.

Next question comes from Andrew Baum from Citi.

In relation to inclisiran, I'm sure you're going to do an excellent job in managed market and access things which you can bring to smoothing the launch and facilitating reimbursement. But one thing you can't change is the absence of cardiovascular outcome data. How much do you think that's going to be a barrier in realizing the potential of the drugs, despite all the other medical and economic benefits it brings to the patients? That's the first question. The second question is a short one. Could you just update us on your planning assumptions for Entresto LOE in the U.S.? And then the third question, and my final question is, given the indebtedness post the pandemic, how are you thinking about the outlook for European pricing going forwards? I'm assuming it's going to be fairly brutal, but maybe you can tell me I'm going to be wrong.

So Rod, why don't you take the first 2 questions.

Yes. On the first question with inclisiran and the outcomes data, I think as we look to the U.S., we don't see the lack of having ORION-4 completed yet as a significant barrier to access. The amount of data that has shown the strong correlation between the value of lowering LDL-C and reducing cardiovascular events is very well established and accepted by payers in the U.S. And so we don't see that outcomes -- lack of outcomes data yet restricting that. In our -- we've been very encouraged with the conversations that we've had with health care systems that see the burden of atherosclerotic cardiovascular disease, the cost to their system, the challenges that patients have with other nonclinical barriers like adherence. And so they see those as a much bigger issue than not having the outcomes data. And we've gotten really positive feedback at this point about the clinical profile that inclisiran or Leqvio will offer to patients with just the 2 HCP administered doses per year. So at this time, we don't think it will be restrictive in terms of our access and reimbursement in the U.S. And I'm sorry, Marie-France, it broke up, but I did not hear the second question.

So the question -- the second question was on Entresto LOE in the U.S.

So Entresto LOE in the U.S., won't comment specifically other than to acknowledge that we've got 6 orange book patents that range from July of 2023 to November of 2027. So we're confident in our IP and protection, but that's currently the dates.

And on -- specifically on European pricing, so European pricing has been challenging for years now. And I do think that we have learned to navigate the systems. So I do think that everything that's happened this year is just going to put an extra layer of complexity on the systems and is just going to bring affordability front and center. I think that's an integral part of the way we want to work with systems in the future is to really partner to try and understand more carefully what the burden looks like for systems holistically and then try and partner with them through either population health agreements or different types of agreements. But we're fully conscious of the fact that doing things the way we've done so far is not necessarily going to bring us broader access in the future. So we also have to change the game while we're bringing innovation products to market. Having said that, I will say that innovation always matters, and the systems have always been open to discuss and talk about making sure that patients do get access to innovations of products that can really make a difference in patients' lives. So we're going to continue on that quest. But clearly, that is a challenge, frankly, not only in Europe but across the world. So next question, and I maybe ask you to limit to 1 or 2 questions so we can get as many questions as possible.

Next question goes to Steve Scala from Cowen.

A couple of follow-ups. First, Ross reiterated that inclisiran could be one of Novartis' largest drugs ever this morning. So can you set expectations for the rollout? Could it also be one of the best rollouts. And for reference, Gilenya did $500 million in its first year. So can I do that? Or if not, maybe you can characterize the strength of its rollout. Second question is on Kesimpta. So Novartis previously said that Kesimpta may be to Ocrevus what Humira was to REMICADE. So I know that Novartis is happy with Kesimpta's early rollout, but Novartis clearly has expectations to dominate or at least did at one point. Is that still the objective?

So Rod, do you want to take the first question on inclisiran?

Yes. So our worldwide preparation for launch is going extremely well. And as I alluded to earlier, we're having outstanding conversations with many stakeholders in this market. And so if we look ahead to both the U.S. and the EV launch, one of the things that's most important about getting this launch right is identifying the patients that can benefit most from the unique clinical profile of Leqvio or inclisiran. And so as we think about our launch and start working with those health care systems, we'll leverage our strong clinical and commercial expertise that we've already got in place in the footprint, in particular, that we have in the U.S. marketplace with these health care systems. As we see more and more vertical integration in the U.S. health care systems, these patients essentially are being treated by health system affiliated health care professionals. And so our focus right now is really working with those health care systems on identifying the right patients and the value that inclisiran or Leqvio can add for them. Really, this is all about making a difference if you're going to treat population health at scale, which more and more of these health care systems are focused on by addressing these nonclinical barriers. So that's where our launch will focus on, adherence to therapy, which has been problematic to try and manage atherosclerotic cardiovascular disease at scale with the existing treatment options. We still see more than 80% of patients not reaching their target guideline-directed goal many with the oral therapies that are available today. And this also creates an opportunity with the unique profile of 2 health care professional-administered doses that you have this real opportunity to leverage the medical benefit where physicians can themselves buy inclisiran in their inventory and also make a decision on the spot about a prescribing basis and be able to, at that point of decision-making, ensure that the patient is onboarded quickly. So we're excited about the early response that we've had from health care professionals. We're working hard to educate physicians on the burden of ASCVD and expecting a strong launch in the U.S. and then later in 2021 in the EU. We'll continue also to pursue our agreement with the NHS England, where, as Marie-France earlier stated, we're really looking towards innovative access models to make sure we can reach broad populations early in the launch for Leqvio.

And then Victor, do you want to comment on Kesimpta? I think looking at it from a U.S. perspective, we'll also reflect how we're thinking about this for the rest of the world.

Yes. No, absolutely, Marie-France. Our objective here is to really be able to bring high efficacy therapy to a larger population, right, and to the early lines of therapy. But right now those patients who are diagnosed or newly diagnosed in their first suite. And there -- and that's why we're focusing our attention. And the early read on sourcing [indiscernible] in the case in patients, not necessarily from Ocrevus but from all kinds of different therapies. And that's what we'll continue to drive. I think we believe that, that's where we can make the most difference for patients, right, when treated early and aggressively. And that continues to be our ambition, and we believe that's the best way to help as many patients as possible. And Marie-France, if I may -- and if I can build on the Leqvio inclisiran question, particularly in the U.S. to Rod's point. The one thing that we will really put our efforts on year 1 is to establish that buy-and-bill capability amongst cardiologists, right? So they are part of systems of care that those of here have, the buying capabilities. But in specific offices in the cardiology space, we have the right teams right now to help set up that. We know it will take time, right? It did take time for retina specialists, for example, at the launch of the VEGFs. But right now they know how to do it the same in oncology. But that's an effort that will take time on year 1, and that's our main objective as we enter into the launch phase.

Next question comes from Laura Sutcliffe from UBS.

Firstly, one on Entresto in the post-acute MI setting. Could you perhaps try and ballpark for us a dollar value for that potential opportunity? I think it's listed on your side as being in the $100 million to $2 billion range, which is quite wide. So any granularity there would be great. And then secondly, on inclisiran. I realize that most favored nation pricing may not happen. There'll be multiple challenges. But if it does, are you at all concerned about how your market access strategy in Europe might interact with your market access and pricing strategy in the U.S.? Specifically, I'm thinking of your U.K. agreement, which seems to be set up to get the drug into a large population and return for a fixed amount of money.

All right. So Rod, I'm going to send you the one on Entresto for post-MI. And then maybe Victor or Haseeb, do you want to comment on the inclisiran? Specifically in the U.S., maybe Victor, and then overall, how we see pricing worldwide and our strategy around basically these population health agreements.

Yes. So if we think about the opportunity for Entresto and on post -- preventing heart failure post-acute MI, you roughly have the 800,000 myocardial infarction events per year in the U.S. alone, and about 1 in 5 or 1 in 6 of those patients will progress to heart failure within the first 5 years after their event. So the opportunity is significant. I think where our focus is going to be once we get the data and we get an indication is working like we did with Entresto in the heart failure with reduced ejection fraction to get it part of the protocolization and hospitals. So that's where the focus will be. But the opportunity is significant just given the pure volume of CV events that occur every year.

Great. So on pricing for Leqvio, I think we will definitely price likely to reflect the value that it brings to patients with those systems of care and to payers in society in general with the ambition to really go growth, right, go growth in terms of the number of patients that we can help and of course, that will be in sync with the discussion that we're having with Haseeb and his team to ensure a consistent approach across the globe. So Haseeb, maybe you want to comment on that further?

Thank you, Victor. Yes. So we remain committed to working with health care systems around the world to make sure we have not just broad access but also have affordable access. What we're doing in the U.K. is really quite unique and an inspiration, I think, to the rest of the world. What we are doing with the U.K. is obviously a confidential commercial agreement. And it's different to what we're perhaps doing in other health care systems. It's worth recognizing that what we're doing in the U.K., one is confidential. Two, it divorces unit price from overall budget impacts. So we're working, specifically in the U.K. with the NHS, not just to introduce a medicine at a particular price point, but really working with them on population health management, how do you risk stratify a population, bring them into the pathway and treat them most effectively. That's really quite a unique agreement, and we're starting to explore similar agreements in other markets around the world. Clearly, it's not a lift and chip because each health care system is different, but we see a number of countries showing interest in this type of approach.

Next question comes from Keyur Parekh from Goldman Sachs.

Two questions, please. One, on Kesimpta, the 5% share that you are talking about from an NBRx perspective, do you have any insights into where that share is coming from? So what proportion of it is coming from previous anti-CD20 users versus other categories of drugs? And is there a particular category that you are gaining more share from? And then secondly, on inclisiran, I'm a bit surprised kind of given the agreement with NHS and the nice was kind of at the start of this year and, obviously, lots of things have happened this year. But just wondering if you can guide as to when we might expect similar agreements with some of the other governments around the world. And as we think about the U.S. launch, are there kind of population agreements with individual payers or individual kind of organizations that might be feasible there? So just help us through the launch kind of the commercialization early expectations around inclisiran in the U.S. and then rest of the world?

Victor on Kesimpta, and then Haseeb, maybe you can pick up on some of the population health questions.

Yes. So on Kesimpta, I think it's early days to have solid source of business data. But what I can tell you is that the vast majority of patients are non [indiscernible] [ advise ] we are receiving, and that's more, I think, all over the place from the kind of therapeutic areas -- sorry, the classes. We're also seeing some naive patients as well coming through in very early days in the launch, which is very encouraging as well.

Yes. Maybe if I just come back in then on the topic around population health and other markets. So clearly, these types of agreements take a number of months to release, go out. We've really started in the last number of months in a number of countries, particularly in our top 11 markets, really reaching out to policymakers, those systems involved in delivery of care but also payers. We're still engaged in discussion around to ASCVD and treatment of patients. We're making some good progress and there's a handful of countries that are starting to engage in some quite detailed discussions. So we look forward to the coming months and next year, talking a bit more about this going forward.

And Victor, perhaps describe a little bit our approach to INDs?

Well, our approach with systems of care really is, as Rod described before, the vast majority of these patients are treated currently in systems of care, right? And there's around 200 systems of care in the U.S. that care for 60% to 70% of this ASCVD population. So it only makes sense to work with them. And the vast majority of the systems, as we engage with them, which we had for the last 2 or 3 years intensively with Entresto, have as one of the top priorities reducing cardiovascular events, right? At the end, it's 1 in 3 beds in the U.S. today are driven by these events. And it's a key priority for all of them. And on top of that, most of them have already been set up for buying deals. I think those are discussions that are going well and will continue to accelerate the [indiscernible].

Next question comes from Graham Doyle from Liberum.

Great. Just one on cardiovascular as an area of investment. Clearly, it's a very difficult area to launch drugs in, and most of your competitors have avoided that. But it's not the case with Novartis. You've obviously got inclisiran coming up and longer term, TQJ. Look, it would be interesting to know what you think you see in that market that's either changing, that makes it more attractive or that you have internally that makes you best place to sort of have success where I suppose others have failed.

Maybe, Rod, you can take sort of an overall view, and I'd like to actually invite Ingrid to speak about the expansion and the possibility in China. It's obviously a huge market and talk about what our thinking is around cardiovascular in China.

Yes, thanks. I think one is to start to build on our experience that we've got in heart failure. We feel incredibly strong about the impact we've been able to have in establishing Entresto as standard of care and the strong presence that we've been able to build and the difference that we've made in patients' lives with Entresto, given its benefits. If we think about then moving into atherosclerotic cardiovascular disease, we feel like we have 2 of the leading assets to address atherosclerosis driven by LDL-C, which is the #1 modifiable risk factor. And then if you look at Pelacarsen or TQJ, we have an opportunity to address the most significant nonmodifiable risk factor in Lp(a). And so when we can do that at scale and take that partnership and leadership that we've been able to build, we're able to work with health care systems like Haseeb said in addressing cardiovascular disease, honestly, at a scale and tackled in such a unique way that's never been able to done before. And so we believe with these partnerships with the health care systems and the governments, we can tackle this in a new and significant way. And I'll turn it over to Ingrid, and she can talk about how they're thinking about it in China.

Thank you, Rod. So clearly, cardiovascular has a significant burden to society. In China with 1.3 billion population, we have roughly 270 million hypertensive patients -- and heart-leader patients as well as 100 -- over 100 patients suffering from this lipidemia. It's the #1 cost of death, and it's also the #1 priority for our government. Now as I think about our portfolio as well as footprints, I will talk about how we've actually broadened our footprint to making sure we can reach a broader set of patients, especially as during COVID, patients are staying locally and seeking care locally. So we've been able to broaden channels including online and offline pharmacies as well as hospitals of different tiers to care for a large number of population, for example, for Entresto. As a result, we've seen Entresto growing significantly over 100% as we have reported in Q3 earnings release. And secondly, as I think about many of these patients, hundreds of millions have comorbidities. Opportunities of leveraging standard of care and working with hospitals and working with government to care for cardiovascular in a synergistic manner will offer tremendous opportunity, especially as you alluded to with inclisiran as well as TQJ. I think maybe the third point I want to talk about is essentially power of digital, not only allowing us to better engage and reach broader set of audience, customers but also will allow us to be able to care for patients and reaching higher adherence.

Next question comes from Peter Welford from Jefferies.