Meet Novartis Management - Investor Presentation May 16, 2018
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Novartis AG
Investor Relations
Meet Novartis Management
Investor Presentation
May 16, 2018
Disclaimer This presentation contains forward-looking statements that can be identified by terminology such as such as “potential,” “expected,” “will,” “planned,” “pipeline,” “outlook,” or similar expressions, or by express or implied discussions regarding potential new products, potential new indications for existing products, or regarding potential future revenues from any such products; or regarding potential future sales or earnings of Novartis; or regarding the potential outcome of the strategic review being undertaken to maximize shareholder value of the Alcon Division; or regarding the potential financial or other impact of the significant acquisitions and reorganizations of recent years; or regarding potential future sales or earnings of the Novartis Group or any of its divisions or potential shareholder returns; or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Such forward looking statements are based on our current beliefs and expectations regarding future events, and are subject to significant known and unknown risks and uncertainties. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward looking statements. There can be no guarantee that any new products will be approved for sale in any market, or that any new indications will be approved for any existing products in any market, or that any approvals which are obtained will be obtained at any particular time, or that any such products will achieve any particular revenue levels. Neither can there be any guarantee that the strategic review being undertaken to maximize shareholder value of the Alcon Division will reach any particular results, or at any particular time, or that the result of the strategic review will in fact maximize shareholder value. Neither can there be any guarantee that Novartis will be able to realize any of the potential strategic benefits, synergies or opportunities as a result of the significant acquisitions and reorganizations of recent years. Neither can there be any guarantee that shareholders will achieve any particular level of shareholder returns. Nor can there be any guarantee that the Group, or any of its divisions, will be commercially successful in the future, or achieve any particular credit rating or financial results. In particular, our expectations could be affected by, among other things: global trends toward health care cost containment, including government, payor and general public pricing and reimbursement pressures and requirements for increased pricing transparency; regulatory actions or delays or government regulation generally, including potential regulatory actions or delays with respect to the development of the products described in this release; the potential that the strategic benefits, synergies or opportunities expected from the proposed acquisition of AveXis, Inc. may not be realized or may take longer to realize than expected; the successful integration of AveXis into the Novartis Group subsequent to the closing of the transaction and the timing of such integration; potential adverse reactions to the proposed transaction by customers, suppliers or strategic partners; dependence on key AveXis personnel and customers; the potential that the strategic benefits, synergies or opportunities expected from the significant acquisitions and reorganizations of recent years may not be realized or may take longer to realize than expected; the inherent uncertainties involved in predicting shareholder returns; the uncertainties inherent in the research and development of new healthcare products, including clinical trial results and additional analysis of existing clinical data; our ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity on key products which commenced in prior years and will continue this year; safety, quality or manufacturing issues; uncertainties regarding actual or potential legal proceedings, including, among others, actual or potential product liability litigation, litigation and investigations regarding sales and marketing practices, intellectual property disputes and government investigations generally; uncertainties involved in the development or adoption of potentially transformational technologies and business models; general political and economic conditions, including uncertainties regarding the effects of ongoing instability in various parts of the world; uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; and uncertainties regarding potential significant breaches of data security or data privacy, or disruptions of our information technology systems; and other risks and factors referred to in Novartis AG’s current Form 20-F on file with the US Securities and Exchange Commission. Novartis is providing the information in this presentation as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events or otherwise. 2 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
Agenda
1 Focusing as a medicines company
2 Positioned for growth
3 Driving margin expansion
4 Leading innovation power
5 Alcon update
3 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
We outlined a clear strategy in January 2018
Focus the company and our capital Pursue 5 priorities to drive growth
Medicinal
chemistry and Portfolio
industrials transformation 1 Operational Execution
2 Breakthrough Innovation
1920 - 1996 1996 - 2009 2009 - 2017 2018+
3 Data / Digital Leadership
Diversified Focused medicines 4 Trust & Reputation
healthcare
company powered
group
by data / digital 5 Culture Transformation
4 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
We have started the journey to focus our company
and our capital
2018
January February March April
Acquired AAA Agreement with GSK Agreement to acquire
to divest OTC JV1 AveXis
Licensing agreement
with Spark for Collaboration with
Luxturna® ex-US Pear Therapeutics
1. GSK shareholders approved the transaction on May 3, 2018. Divestment is subject to customary closing conditions.
5 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
Our reshaped executive team is now in place
2018 appointments
Liz Barrett Bertrand Shannon Steffen Lang John Tsai Robert Natacha
CEO, Novartis Bodson Klinger Global Head, Head of Global Weltevreden Theytaz
Oncology Chief Digital Officer General Counsel Novartis Technical Drug Development Global Head, Global Head,
Operations (NTO) (GDD) & Chief Novartis Business Internal Audit1
Medical Officer Services (NBS)
Prior companies:
All trademarks are the property of their respective owners 1. Not a member of the Novartis Executive Committee (ECN), but a permanent attendee of ECN meetings. All other executives on this slide are members of the ECN.
6 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
To lead, we have to be realistic about our strengths
and weaknesses
What we do well What we don't do so well
Researching new science, and Sustainably managing broad
developing innovative medicines diversification
Integrating non-innovative
Manufacturing complex drugs
medicine acquisitions
and biologics at high quality
(e.g. Alcon, generic integrations)
Marketing and selling our
Fast paced, continuous
products to specialist
incremental R&D
physicians
Integrating innovative medicine Cost leadership to aggressively
acquisitions (e.g., GSK portfolio) take cost out year-on-year
7 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
In Innovative Medicines, we have the key ingredients to lead and are actively addressing our gaps Established growth 13 potential Increasing pipeline Disruptive technology drivers in key blockbuster launches focus on first-in-class platforms to drive therapeutic areas in next 3 years medicines innovation Global scale with Plan to drive margin Credible strong Engaged, high leadership ex-US1 expansion management team quality people 1. Source: Novartis peer group (as outlined on page 123 of the 2017 Novartis Annual Report) analysis of peers’ FY 2017 press releases; Novartis ranks #2 in ex-US sales. 8 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
Alcon is returning to a position of strength as the
world leader in eye care devices
Alcon net sales growth Strong market position
vs. PY, % cc Variances in cc
7%1 7%1,2 % of total sales Americas EMEA Asia/JP
6%1
excludes OTC
includes OTC
3% Surgical
1% 51% 25% 24%
FY 2017 sales: USD 3.7bn
Q1 Q2 Q3 Q4 Q1 Share position4 #1 #1 #1
2017 2018
Core margin % 13.2% 13.9% 15.6% 14.1% Vision Care3 50% 32% 18%
excl. OTC FY 2017 sales: USD 3.0bn
Core margin %
16.2% 17.0% 18.5% 17.1% 20.2% Share position4 #1 #1 #4
incl. OTC
1. Alcon sales growth benefitted from stock in trade movements, approx. 2% (cc) in Q3 2017, 1% (cc) in Q4 2017, and 1% (cc) i n Q1 2018. 2. Alcon Division Q1 2018 growth rates and core margin include the Ophthalmic OTC products and a
small portfolio of surgical diagnostic products, transferred from the Innovative Medicines Division effective January 1, 2018, and are compared against the Q1 2017 updated financials including the aforementioned product transfer. 3. Includes
Ophthalmic OTC products 4. Based on revenues; source: company filings
9 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
In Sandoz, we are evolving our strategy based on
macro trends and our core competencies
Macro trends Sandoz position
US: US:
• Impacted by industry-wide pricing pressure and • Optimizing our portfolio through targeted pruning/
customer consolidation divestment of low-margin products
• Limited market uptake of biosimilars so far • Pivoting to differentiated segments for profitability
and growth, and learning from recent setbacks
Ex-US: Ex-US:
• Stable growth in Europe with strong adoption of • Continuous growth across regions from biosimilars
biosimilars and generics, market leader in Europe1
• Increasing demand for high-quality medicines in • Focus on branded generics, as well as continuously
largely out-of-pocket driven emerging markets optimizing geographic and product mix
1. Source: IQVIA MIDAS, FY 2017
10 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationOur capital allocation priorities support our strategy
to become a focused medicines company
Capital allocation priorities M&A / BD&L priorities
Investments in M&A BD&L
1 organic business
Growing annual
2 dividend in CHF
Strengthen Oncology pipeline
Strengthen Pharma TAs
Value-creating
3 bolt-ons1
Cell and gene therapies
4 Share buybacks Digital and data science
1. Includes M&A and BD&L
11 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationAcross our five strategic priorities, we are reshaping
Novartis for the future
From: To:
Operational Mixed launch performance Consistent launches
Execution Expanding costs Productivity excellence
Breakthrough Mix of me-too’s and Focus on first or transformative in class
Innovation first/best-in-class New therapeutic platforms
Data / Digital
Pilot data/digital projects Data/Digital at scale company-wide
Leadership
Trust &
Mixed reputation Respected leader
Reputation
Culture
Hierarchical, bureaucratic Inspired, empowered
Transformation
12 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationBeginning our journey to rebuild trust with society
Select ongoing issues Strong actions being undertaken,
Trust &
multi-year effort
Reputation
Southern District of New York / New integrated risk function; Chief Ethics, Compliance
speaker programs and Risk Officer elevated to ECN
Alcon Asia New Head of Internal Audit
Greece New Professional Practices policy rolling out globally
Korea Independent Ethics Board in place for managed access /
Essential Consultants patient issues
Tightened controls on IIT, Phase 4 and grants activities
Planning deployment of big data analytics system for
compliance monitoring
“
“ Let me be absolutely clear: I never want Novartis to achieve our financial performance or objectives
because we compromised on our ethical standards or our values – we must always choose our values.
Vas Narasimhan
13 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationAgenda 1 Focusing as a medicines company 2 Positioned for growth 3 Driving margin expansion 4 Leading innovation power 5 Alcon update 14 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
Our growth prospects are strong, despite upcoming
patent expiries
Illustrative sales FY 2017–2022
in cc
1
1. Aimovig™ is developed in collaboration with Amgen. The brand name Aimovig™ has been provisionally approved by the FDA and EMA for the investigational product AMG 334 (erenumab), but the product itself has not been approved for
sale in any country. Companies to co-commercialize in the US (Amgen to book sales to third party), Novartis to have AMG 334 exclusive rights in rest of world excluding Japan.
15 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationCosentyx® performing strongly in a competitive
market; Entresto® accelerating
Cosentyx® Entresto®
US NBRx share1 US weekly NBRx1
Rheumatology Dermatology
50% 60%
60%
Cosentyx® 4,000
Humira®
45% 42% 50%
50% 3,040
40% Stelara® 3,000
35% Taltz®
40%
40%
30%
Tremfya®
25% 30%
30% 2,000
Enbrel®
20%
15%
20%
20%
17% 1,000
10%
10%
10%
5%
0% 0%
0% 0
Oct 2016 Feb 2017 Jun 2017 Oct 2017 Feb 2018 OctOct 2016Jan
2016 Feb2017Apr 2017Jul
2017 Jun 20172017Oct 2017JanFeb
Oct 2017 2018
2018 Jul 2015 Jan 2016 Jul 2016 Jan 2017 Jul 2017 Jan 2018
• NBRx leader in Rheumatology1, with anti-IL17A the only new MoA to • Strong trajectory with US weekly NBRx reaching
have shown sustained efficacy in AS new all-time high in Q1 20183
• Competitively positioned in Dermatology as an effective, complete and • Growing body of evidence showing Entresto® helps
safe treatment, with sustained response over time2 patients with HFrEF live longer, stay out of the
• Ph3 trial in nrAxSpA and head-to-head superiority trials in AS and PsA hospital and have better quality of life4
on track • Ongoing HFpEF Ph3 trial could be a significant
opportunity, with similar prevalence to HFrEF5
See slide 47 for references; all trademarks are the property of their respective owners.
16 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationStrong momentum behind Oncology growth drivers
Net sales
USD million
Tafinlar® + Mekinist®
0.8bn
13k+ BRAF+ melanoma patients p.a. in G7
Market leader in melanoma targeted therapy (>70%+ patient share in G7) 1
Approved for adjuvant melanoma in US and filed in EU, potentially increasing eligible patients by 50%
Added to NCCN guidelines for 1L treatment in BRAF+ lung (~2% of lung patients)
267 Ph3 study with PDR001 progressing
0.5bn
Promacta®/Revolade®
0.4bn 187 300k+ ITP patients diagnosed globally p.a.
Promacta® gaining share on strength of data, convenient administration & broad label
257 EXTEND publication confirms long-term efficacy and safety data
150
FDA Breakthrough Therapy designation in SAA (1.4k+ newly diagnosed patients in US/EU5 p.a.)
175
131 Jakavi®
234 ~30k MF patients in EU
124 162 Market leader in MF across EU with 50%+ patient share 1 supported by long-term safety and
survival data
PV indication similar in size, ~20% share in EU and growing
Q1 2016 Q1 2017 Q1 2018 Ph3 studies in GVHD expected filing in 2020 (~5k new cases per year)
1. Novartis estimated share based on weighted average volumes in 2017
17 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationExecuting against recent Oncology launches in
complex and competitive environments
Kisqali® Kymriah® Lutathera®
EU countries launched US centers on-line Progression free survival (PFS)
Positioned well to grow in Europe, with Over 40 centers ready to prescribe
reimbursement in UK, ES, DE Kymriah® across two indications (r/r Rapid acceptance as best second line option for
Rolling out refined messages and targeting pediatric & young adult ALL, r/r DLBCL) in NET patients after somatostatin analogues
in the US the US
Already showing strong uptake in the US
MONALEESA 3 & 7 submissions planned in Patients able to achieve and maintain a
durable response EU approved in Sep. 2017, reimbursement
2018 underway
EU filed for r/r pediatric & young adult ALL
and r/r DLBCL in Nov. 2017; also filed in
Australia, Switzerland, Canada and Japan
18 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationFull pipeline of late-stage assets with blockbuster
potential
6
Positive pivotal readout Cosentyx®
Launched nrAxSpA
Potentially first in class or indication
Entresto®
4 HFpEF
3
ACZ885 OMB157
CV risk reduction Relapsing MS
Aimovig™2 BAF312 QAW039
Migraine SPMS Asthma
Kymriah® RTH258 QVM149
DLBCL nAMD Asthma
Expected
Lutathera® AVXS-101 SEG101
GEP-NET SMA Sickle cell disease launches
20181 20191 20201
1. Exact launches and timing depends on filing date, HAs decisions and timelines. 2. Aimovig™ is developed in collaboration with Amgen. The brand name Aimovig™ has been provisionally approved by the FDA and EMA for the investigational
product AMG 334 (erenumab), but the product itself has not been approved for sale in any country.
19 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationLeveraging differentiated data to support upcoming
launches in competitive settings
AimovigTM1 (erenumab) New unique LIBERTY2 data showed nearly 3x higher odds of having
migraine days cut by half or more with Aimovig™ (vs. placebo) in patients
Potentially the first monoclonal who failed multiple treatments
antibody targeting the CGRP receptor FDA action expected May 2018, EMA action expected Q3 2018
BAF312 (siponimod) EXPAND study demonstrated 21% reduction with siponimod in 3 month
confirmed disability progression vs. placebo in an SPMS population3
Efficacy in SPMS creates opportunity US submission planned in H1 2018, EU submission planned in H2 2018
to address an unmet need
RTH258 (brolucizumab) • Met primary endpoint of non-inferiority to aflibercept in BCVA, with >50% of
patients maintained on q12w dosing at 1 year4,6
Comparable vision gains, less fluid and • Superiority was shown in three key secondary endpoints; central subfield
less disease activity vs. aflibercept4,5 retinal thickness, retinal fluid and disease activity5
• US submission targeted for Q4 2018, EU in first half 2019
See slide 47 for references
20 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationChina emerging as a key growth opportunity
China pharmaceutical market growth trend1 Number of products listed 2017 approvals3
USD bn, hospital purchase price in 2017 NRDL2
NOVARTIS 7 NOVARTIS 4 6
MSD 7 J&J 6
6.4% Pfizer 6 AstraZeneca 3
177 Xi’an Janssen 3
157
167 Bayer 2
6.9% 148 Sanofi 4
130
139 AbbVie 2
116 122 Lilly 2
107 Roche 1
100 BMS 2
AstraZeneca 2 GSK 1
Bayer 1 Pfizer 1
Roche 0 Sanofi 1
2014 2015 2016 2017 2018e 2019e 2020e 2021e 2022e 2023e
... and up to 11 more NDA approvals expected (2018-20) for Novartis
See slide 47 for references
21 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationSandoz is the global market leader in biosimilars,
but has faced pipeline setbacks
Total biosimilars gross sales vs. competitors1
USD billion Market leader with 5 molecules on the market
Rixathon® and Erelzi® launches in Europe
continuing to ramp up
Sandoz 1.1
® ®
Pfizer 0.8
Ongoing strong contribution from the base
Lilly 0.8
business
Mundipharma 0.4
Biogen 0.4
Received Complete Response Letter for
Celltrion 0.1 biosimilar rituximab in the US
1. Source: IQVIA FY 2017 biocomparable products category
22 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationAgenda 1 Focusing as a medicines company 2 Positioned for growth 3 Driving margin expansion 4 Leading innovation power 5 Alcon update 23 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
Key drivers of our margin expansion
Innovative Medicines
Core margin (%) + Sales momentum
Mid 30’s + Product mix
+ Resource allocation and productivity
31 programs in commercial units
+ Cross-divisional synergies: technical
operations (NTO), business services
(NBS) and drug development (GDD)
− Generics (mainly Gilenya®, Afinitor®,
and tail end of Glivec®)
IM Division
2017
Large Pharma
average1
− Launch investments for potential
future blockbusters
1. Source: Novartis analysis of average 2016 core margins of Large Pharma peer companies
24 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationExpected launches leverage existing infrastructure
1
Oncology Pharmaceuticals
THERAPEUTIC AREA DEPTH
Oncology Immunology Cardio-Metabolic Ophthalmology Respiratory Neuroscience
Hepatology
Dermatology
Kymriah® Cosentyx® ACZ885 RTH258 QAW039 Aimovig™1
DLBCL nrAxSpA CV risk reduction nAMD Asthma Migraine
SEG101 Entresto® Luxturna® QVM149 BAF312
Sickle cell disease HFpEF RPE65 mutations Asthma SPMS
Lutathera® OMB157
GEP-NET Relapsing MS
AVXS-101
SMA
1. Aimovig™ is developed in collaboration with Amgen. The brand name Aimovig™ has been provisionally approved by the FDA and EMA for the investigational product AMG 334 (erenumab), but the product itself has not been approved for
sale in any country.
25 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationMajor cost savings efforts ongoing
Novartis Technical Novartis Business Procurement
Operations (NTO) Services (NBS) Strategy
Stage I
On track to deliver on Operational go-live in Evolved from a multi-division
USD 1bn savings plan1 by January 2015 with the approach to coordinated
2020 objective to keep costs flat sourcing with the creation of
as sales grew NBS
Stage II
Effort ongoing to develop New mandate to reduce Developing plan to
predictive capabilities to costs through location accelerate savings and
reduce inventory and strategy and lean radically simplify supplier
increase efficiency and processes base
automation
1. NTO responsible for ~85% of the savings plan announced in January 2016; the rest comes from Global Drug Development and other functions. Novartis is on track to deliver the full USD 1 billion in savings by 2020.
26 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationAgenda 1 Focusing as a medicines company 2 Positioned for growth 3 Driving margin expansion 4 Leading innovation power 5 Alcon update 27 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
Strong track record of R&D excellence1
#1 In US/EU approvals past 10 years2 Areas of focus for the future
1. Prioritize aggressively to focus
21 Breakthrough Therapy designations3
on transformative medicines
90+ New molecular entities in the clinic 2. Use data and digital to drive
clinical trial productivity
175+ Projects in the clinic
3. Leverage and build new
500+ Active clinical trials distinctive therapeutic platforms
1. Data for Global Drug Development: Innovative Medicines and Sandoz biosimilars 2. In number of new molecular entities (NMEs) approved including fixed dose combinations 2007-2016 3. Since introduction of the Breakthrough Therapy
Designation (BTD) by the FDA, the Novartis pipeline included a total of 21 BTDs of which 18 are currently actively under development or in approved indications.
28 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationEmerging assets reflect therapeutic area focus
Select Early Phase 3 & Phase 2 Programs1
Oncology Pharmaceuticals
THERAPEUTIC AREA DEPTH
Oncology Immunology Cardio-Metabolic Ophthalmology Respiratory Neuroscience
Hepatology
Dermatology
ABL001 (CML) LJN452 (NASH) APO(a)-LRx2 ECF843 (Dry eye) CSJ117 (Asthma) AVXS-101 (SMA label
(Atherosclerosis) expansion)
ACZ885 (NSCLC) QGE031 (CSU) SAF312 (Ocular pain) QBW251 (COPD)
CLR325 (Cardiac failure) BYM338 (Hip fracture,
BYL719 (Breast) CFZ533 (Sjogren’s) UNR844 (Presbyopia)
QCC374 (PAH) sarcopenia)
Entresto® (Post-MI)
CAR-T (Multiple) VAY785 (Liver disease)
LHW090 (rtHypertension) VAY736 (IPF) CNP520 (Alzheimer’s)
EGF816 (EGFRmut NSCLC) ZPL389 (Atopic dermatitis)
LTW980 EMA401 (Pain)
INC280 (NSCLC) (Hypertriglyceridaemia)
1. Selected assets not including the near-term potential blockbuster launches on slide 19 2. Novartis has an option to license APO(a)-LRx from Ionis Pharmaceuticals, Inc. and its affiliate Akcea Therapeutics, Inc.
29 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationApproaching immuno-oncology (IO) with a focus on
CAR-T and only selected differentiated IO assets
CAR-T Other IO assets
Optimizing manufacturing Taking a rigorous approach to prioritizing
Advancing multiple indications beyond pediatric & young adult ALL IO assets for development
and r/r DLBCL: Looking for single agent activity, or
CAR-T type Indication Ph 1 Ph 2/Pivotal Ph 3 Submitted Approved synergistic combinations with appropriate
CD19 CAR-T Ped. r/r ALL EU US control arms
Selected IO studies:
CD19 CAR-T r/r DLBCL EU US
CD19 CAR-T DLBCL in 1st relapse Starting 2018
CD19 CAR-T r/r FL Starting 2018 Asset Indication Status
CD19 CAR-T r/r DLBCL in combination ACZ885 NSCLC, adjuvant Ph 3 ongoing
Starting 2018
with pembrolizumab ACZ885 NSCLC, 1st line Initiating Ph 3
CD19 CAR-T Adult r/r ALL Starting 2018
ACZ885 NSCLC, 2nd line Initiating Ph 3
CD19 CAR-T CLL Starting 2018
PDR001+Tafinlar+Mekinist Melanoma Ph 3 ongoing
CAR-T-BCMA r/r M/M Started
PDR001+INC280 NSCLC Initiating Ph 2
CAR-T-EGFRvIII Recurrent GBM Started
LAG525+PDR001 TNBC Initiating Ph 2
CAR-T-Meso Adv. ovarian cancer, Started
mesothelioma
30 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationBuilding new platform capabilities in therapeutics
and advanced therapies...
CAR-T CRISPR AAV Covalent Binders
Cancer cell
T-cell
mRNA Novel IO Rx Delivery Targeted Protein Radiopharmaceuticals
Degradation
All trademarks are the property of their respective owners.
31 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation... and leveraging M&A to build and accelerate our
pipeline
Radiopharmaceutical theragnostics Gene therapies
Selected assets Indication Status
AVXS-101 (AAV9) SMA Pivotal studies
1
CGF166 (AAV5) Hearing loss Phase 1b
CPK850 (AAV8) Retinitis pigmentosa Phase 1b
AVXS-201 RTT Rett Syndrome Preclinical
AVXS-301 SOD1 Inherited ALS-SOD1 Preclinical
Homology Ophthalmology Preclinical
Medicines & hematology
collaboration
Gene therapy A Undisclosed Preclinical
Gene therapy B Undisclosed Preclinical
1. USAN lutetium Lu 177 dotatate / INN: lutetium (177Lu) oxodotreotide
32 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationAVXS-101: Additional 2 years data1 indicate strong efficacy
across survival, nutrition, respiratory and motor endpoints
AVXS-101-CL-101 study (n=15) • CL-101 study: Efficacy maintained, no new safety signals at 2 years
• Long-term follow-up (n=11):
2 1
100 • 4 patients achieved 5 new motor milestones beyond 2 years, 3 of
whom not treated with other agents
• Longest total follow-up – 40.6 months
Event-free survival (%)3
80
• Additional studies in SMA:
60 1. STR1VE: Type 1 (n=15-20); first 6 patients followed for >1 month
show improvements in CHOP scores similar to CL-101
40 2. STR1VE EU: Type 1 (n=30); to start H1 2018
3. STRONG: Type 2, i.t. dose selection (n=27); first 4 patients dosed
20 Long- 4. SPRINT: Type 1-3, pre-symptomatic (n=44); first patient dosed
term
5. REACH: Type 1-3 (n=50); planned to start H2 2018/H1 2019
follow-up
0
0 3 6 9 12 15 18 21 24 • Pre-BLA meeting planned for Q2 2018, BLA submission planned
Month for H2 2018; EU and Japan submissions planned for 2019
1. AAN Annual Meeting April 25, 2018 2. N Engl J Med 2017;377:1713-22 3. Event = Death or permanent ventilatory support , defined as ≥16 hrs/day of respiratory assistance continuously for ≥14 days in the absence of an acute, reversible
illness or perioperative state
33 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationStrong market opportunity for AVXS-101
Significant unmet need in SMA affecting 23,500 patients Potential for newborn
worldwide1, 2 screening to transform
Type 1 Type 2 Type 3 Type 4 SMA patient care
SMN2 copy number 2 35 3 or 4 4 to 8
Onset Before 6 months 6-18 months Early childhood to early Adulthood (20s-30s), All available treatments work
adulthood (juvenile) usually after 30 better when started earlier, lost
Incidence split ~60% ~27% ~13% Uncommon/limited
information available function unlikely to be regained
Prevalence split3 ~14% ~51% ~35% Uncommon/limited
~3,300 ~12,000 ~8200
information available
Uncommon/limited
Type 1/2/3 categorization
Est WW prevalent
population information available expected to be replaced by SMN2
Development Will never be able to sit Will never be able to walk Stand unassisted and Stand alone and walk gene copy assessment and
milestones without support without support walk independently, but but may lose ability to
Difficulty breathing/ Most will never stand may lose ability to walk walk in 30s-40s genetic diagnosis of early-onset
swallowing without support over time or late-onset SMA
Cannot crawl/will never
walk
Clear progress in US newborn
Survival Over 90% die or have 32% die before age 25 Normal Normal
significant critical event4 by screening for SMA; EU and other
age 2
countries also evaluating
See slide 47 for references
34 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationAgenda 1 Focusing as a medicines company 2 Positioned for growth 3 Driving margin expansion 4 Leading innovation power 5 Alcon update 35 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
Alcon is the world leader in eye care devices today
Revenue by eye care segment
FY 2017, USD billion
Surgical Vision Care
USD 8 billion market growing +4% p.a.1 USD 12 billion market growing +4% p.a.1
3.7 3.0
2 2
1.0 3.0
1.0 1.7
0.7 1.3
1. Based on Novartis analysis, company filings; Vision Care includes Ophthalmic OTC products. 2. J&J FY 2017 represents partial year reporting after AMO acquisition.
36 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationStrong execution on the turnaround plan
Fix the foundation & Service and supply at multi-year highs
Backorders -84% since Q1 2016; disassociation rates -71%
strengthen execution E-commerce platforms launched in US and EU
SAP covers 60% of revenue
Invest in promotion DTC promotion behind consumer-driven products
Strengthened frontline capabilities
Shift internally-focused resources to externally-focused
Reinvigorate innovation Launched new IOLs (PanOptix®, ReSTOR® Toric, Clareon® with AutonoMe™)
Ramped up R&D pipeline to 100+ projects
pipeline BD&L deals with 20 companies, including launches of CyPass® and NGENUITY® 3D
Strengthen the customer Increased training and service personnel by ~10%
Equipment quote turnaround time improved 60%
relationship Opened 4 Alcon Experience Centers globally for customer training and education
Customers: “Alcon is back!”
Improve internal culture Voluntary employee turnover at 5-year low
Associate surveys show strong morale improvement
37 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationResulting in a return to growth in 2017
Net sales growth
vs. PY, % cc 1 1,2
excludes OTC
7% 6%
1 7%
includes OTC
3%
1%
Q1 Q2 Q3 Q4 Q1
2017 2018
Core margin %
excl. OTC 13.2% 13.9% 15.6% 14.1%
Core margin % 16.2% 17.0% 18.5% 17.1% 20.2%
incl. OTC
1. Alcon sales growth benefitted from stock in trade movements, approx. 2% (cc) in Q3 2017, 1% (cc) in Q4 2017, and 1% (cc) in Q1 2018. 2. Alcon Division Q1 2018 growth rates and core margin include the Ophthalmic OTC products and a
small portfolio of surgical diagnostic products, transferred from the Innovative Medicines Division effective January 1, 2018, and are compared against the Q1 2017 updated financials including the aforementioned product transfer.
38 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationWe expect margins to be in line with the medical
device industry average by 2022
Core margin evolution
%, incl. OTC
Low- to mid-20’s
Expected key drivers:
20.2% Top-line growth
17.3%
New opportunities in high-
potential markets
Operational efficiencies
Long-term expect
FY 2017 Q1 2018 2022 mid-20’s core margin
39 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationAlcon has built a robust pipeline to fuel growth into
the future
Recent launches 2018 – 2020 planned launches 2020+ planned launches
Surgical Clareon® with AutonoMe™ – EU Non-diffractive extended depth of focus 4 major new IOL platforms
IOL – OUS (e.g. accommodating)
UltraSert™ – US/OUS
PanOptix® Trifocal – US Next generation cataract and
PanOptix® Trifocal – OUS vitreoretinal technology platforms
Clareon® with AutonoMe™ – US
ReSTOR® Toric with Integrative technologies to connect
ACTIVEFOCUSTM – US ORA™ System with VerifEye™ Lynk – the clinic to the operating room
US/OUS
NGENUITY® 3D – US/OUS
Vision AIR OPTIX® plus HydraGlyde® AIR OPTIX® plus HydraGlyde® 2 innovative new contact lens
(Toric and Multifocal lenses) platforms
Care Dailies Total1® Multifocal
AIR OPTIX® Colors – 3 new colors Accommodating contact lens
Clear Care® plus HydraGlyde®
FRESHLOOK® – 5 new limbal lenses Systane® Ultra
Systane® Complete Systane® Hydration
New daily disposable lens
40 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationAlcon summary
1 Alcon is the global leader in eye care devices, with leading positions in Surgical and Vision Care
2 The eye care industry is underpinned by favorable megatrends, including aging demographics,
expanding wealth, and significant market expansion opportunities
3 Alcon has a global footprint with significant sales and brand presence in all key markets
4 Alcon is differentiated by the strength of its customer relationships, breadth of portfolio and
powerful brands
5 Alcon continues to build on the momentum of a successful turnaround
6 Alcon expects to achieve a core margin in the mid-20% range in the long-term, driven by top-line
growth, operational efficiencies and new market expansion opportunities
41 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationConcluding thoughts
We have taken steps to focus the company and our
capital in areas where we have the key ingredients to lead
We are positioned to deliver sales growth and margin
expansion through 2022
We have pipeline depth in our key therapeutic areas, and
are building new, distinctive platform capabilities
Alcon is returning to a position of strength as the world’s
leading eye care devices company
42 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationAppendix
2018 pipeline milestones
H1 2018 H2 2018 ✓ Achieved ✕ Missed = On track
Regulatory Kymriah® DLBCL (US) ✓ Aimovig™1 Migraine (EU) =
decisions and Tafinlar® + Mekinist® Adjuvant melanoma (US) ✓ Kymriah® Pediatric and young adult r/r ALL (EU) =
opinions Lutathera® NET (US) ✓ Kymriah® DLBCL (EU) =
Gx Advair®2 Asthma, COPD (US) ✕ Tafinlar® + Mekinist® Adjuvant melanoma (EU) + ATC (US) (✓7)
Aimovig™1 Migraine (US) = Gilenya® Pediatric MS (US) ✓
Glatopa® 40mg Relapsing MS (US) ✓ GP2017 Adalimumab BS (EU) =
LA-EP2006 Peg-filgrastim BS (EU) =
GP1111 Infliximab BS (EU) =4
GP20136 Rituximab BS (US) ✕
Submissions ACZ885 CV risk reduction (US/EU) ✓ BAF312 MS (EU) =
BAF312 MS (US) ✓ RTH258 nAMD (US/EU) =
Kisqali® Advanced BC (US/EU)3 = BYL719 HR+ BC (US/EU) =
Cosentyx® AS (JP) =
CTL019 Pediatric ALL + DLBCL (JP) =
Promacta® 1st line SAA (US/EU) =
Major trial Kisqali® Advanced BC (MONALEESA-3) ✓5 BYL719 HR+ BC =
readouts LJN452 NASH = INC280 ALK- cMET amplified NSCLC =
Entresto® HFpEF (interim analysis) =
1. Aimovig™ is developed in collaboration with Amgen. The brand name Aimovig™ has been provisionally approved by the FDA and EMA for the investigational product AMG 334 (erenumab), but the product itself has not been approved for
sale in any country 2. Complete Response Letter received from FDA after Q4 2017 results; Advair ® is a registered trademark of Glaxo Group Ltd. 3. Indication expansion based on MONALEESA-3 & 7 results
4. Positive CHMP opinion received 5. Data to be presented at ASCO 6. Complete Response Letter received from FDA after Q1 2018 results 7. US approval in ATC received; EU approval in adj. melanoma still outstanding
44 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationPlanned filings 2018 to 2022
2018 2019 2020 2021 2022
AVXS-101 Kisqali® + fulv INC280 ABL001 LMI070 BYM338 VAY736
Spinal muscular atrophy23 HR+, HER2 (-) postmenopausal NSCLC6 CML4 3rd line Spinal muscular atrophy Hip fracture recovery Autoimmune Hepatitis
adv. BC9 1st/2nd line
BAF312 Kisqali® + tmx + gsn/or NSAI + gsn PDR001 + Tafinlar ® + Mekinist ® EGF816 MTV273 CAD106 VAY785e
SPMS22 HR+, HER2 (-) premenopausal Metastatic BRAF V600+ melanoma NSCLC2 Multiple myeloma Alzheimer’s disease NASH18
adv. BC9 1st line
BYL719 + fulv LAM320 SEG101 QAW039 UNR844 CFZ533 ABL001
HR+, HER2 (-) postmenopausal
adv. BC9 2nd line MDR8 tuberculosis Sickle cell disease Asthma Presbyopia Solid Organ Transplant CML4 1st line
LCI699 Lucentis® Cosentyx® Arzerra® QGE031 CNP520 ACZ885
Cushing’s disease ROP10 nrAxSpA12 iNHL11 (refractory) CSU/CIU16 Alzheimer’s disease Adjuvant NSCLC
RTH258 Promacta®/Revolade® Entresto® Entresto® ZPL389 ECF843d ACZ885
nAMD7 SAA3 1st line Heart failure (PEF)13 Post-acute myocardial infarction Atopic dermatitis Dry eye 1st Line NSCLC
1. Secondary prevention of cardiovascular events OMB157 Cosentyx® ACZ885 EMA401 BYM338
2. Diffuse large B-cell lymphoma Relapsing multiple sclerosis PsA H2H17 2nd Line NSCLC Peripheral neuropathic pain Sarcopenia
3. Severe aplastic anemia
4.
5.
Chronic myeloid leukemia
Long-acting release QMF149 CTL019 (Kymriah® US) CTL019 (Kymriah® US) HDM201 Cosentyx®
Asthma r/r Follicular Lymphoma CLL22 Acute myeloid leukemia AS H2H19
6. Non-small cell lung cancer
7. Neovascular age-related macular degeneration
8. Multi-drug resistant QVM149 Jakavi® PDR001 KAE609 CTL019 (Kymriah® US)
9. Breast cancer Asthma Chronic GVHD14 Metastatic Melanoma Malaria + pembrolizumab - r/r DLBCL
10. Retinopathy of prematurity LA-EP2006 (pegfilgrastim, US)
11. Indolent Non-Hodgkin’s lymphoma Chemotherapy-induced neutropenia Jakavi® KAF156 CTL019 (Kymriah® US)
12. Non-radiographic axial spondyloarthritis and others (same as originator) Acute GVHD14 Malaria r/r DLBCL in 1st relapse
13. Preserved ejection fraction
14. Graft-versus-host disease RTH258 LHW090 INC280
15. Neuroendocrine tumors Diabetic macular edema Resistant hypertension NSCLC6 (EGFRm)
16. Chronic spontaneous urticaria / chronic idiopathic urticaria
17. Psoriatic arthritis head-to-head study versus adalimumab Xolair LJN452 Kisqali®
18. Non-alcoholic steatohepatitis Nasal Polyps NASH18 HR+, HER2 (-) BC9 (adjuvant)
19. Ankylosing spondylitis head-to-head study versus adalimumab
20. Acute myeloid leukemia
21. Chronic Obstructive Pulmonary Disease
LOU064 Rydapt®
Chronic spontaneous urticaria AML20 (FLT3 wild type)
22. Chronic Lymphocytic Leukemia Combination abbreviations: New molecule
23. Exact language of indication pending regulatory interactions fulv fulvestrant
tmx tamoxifen New indication MAA868 VAY736
a) EU filing, approved in US. Stroke prevention in atrial fibrillation Primary Sjoegren’s syndrome
b) US filing, approved in EU. gsn goserelin New formulation
NSAI Non-steroidal aromatase inhibitor
c) US filing, submitted in EU.
Taf Tafinlar® (dabrafenib) Biosimilars QBW251
d) Lubris LLC transaction announced in April 2017. COPD21
e) Conatus transaction for exclusive global license for Mek Mekinist® (trametinib)
emricasan announced in May 2017.
45 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationKey definitions and trademarks
This presentation contains several important words or phrases that we define as below:
AAA: Advanced Accelerator Applications HR+/HER2- mBC: Hormone Receptor positive / Human Epidermal growth factor receptor 2 negative metastatic
ADHF: Acute decompensated heart failure breast cancer
AE: Adverse Event ITP: Immune thrombocytopenia
ALK: Anaplastic lymphoma kinase LoE: Loss of exclusivity
MF: Myelofibrosis
ALL: Acute lymphatic leukemia
M/M: Multiple myeloma
AMD: Age-Related Macular Degeneration
MI: Myocardial infarction
AMI: Acute myocardial infection
MS: Multiple sclerosis
AML: Acute myeloid leukemia
NASH: Non-Alcoholic Steatohepatitis
Approval: In Pharmaceuticals and Alcon in US and EU; each indication and regulator combination counts as
NET: Neuroendocrine tumor
approval; excludes label updates, CHMP opinions alone and minor approvals
New assets: Assets acquired in the GSK transaction which closed on March 2, 2015
aRCC: advanced renal cell cancer
NSAI: Nonsteroidal aromatase inhibitor
ARNI: Antiogensin receptor neprilysin inhibitor
NSCLC: Non-small cell lung cancer
AS: Ankylosing Spondylitis
NTD: New Therapeutic Drug
ASM: Aggressive systemic mastocytosis
ORR: Overall response rate
ATC: Anaplastic thyroid cancer
OS: Overall survival
BC: Breast cancer
PA: Prior authorization
BCMA: B-cell maturation antigen
PASI 90: 90% reduction in Psoriasis Area Severity Index from baseline
BCVA: best corrected visual acuity
PFS: Progression free survival
BS: Biosimilars
PsA: Psoriatic arthritis
BTD: Breakthrough therapy designation
PsO: Psoriasis
CGRP: Calcitonin gene-related peptide
PV: Polycythemia vera
CLL: Chronic lymphocytic leukemia
PY: Prior year
cITP: Chronic immune thrombocytopenia
QoL: Quality of Life
CM: Chronic migraine
RCC: Renal cell cancer
CML: Chronic myeloid leukemia
ROP: Retinopathy of prematurity
COPD: Chronic Obstructive Pulmonary Disease
r/r ALL: relapsed/refractory acute lymphoblastic leukemia
CR: complete remission
RRMS: relapsing-remitting multiple sclerosis
CRC: Colorectal Cancer
SAA: Severe aplastic anemia
CRi: Complete remission with incomplete blood count recovery
scFv: Single chain variable fragment
CSU / CIU: Chronic spontaneous urticaria / Chronic idiopathic urticaria
SCPC: Sickle cell pain crisis
CVRR: Cardiovascular risk reduction
SpA: Spondyloarthropathy
DLBCL: Diffuse large B-cell lymphoma
SPMS: Secondary progressive multiple sclerosis
DMC: Data monitoring committee
TFR: Treatment-free Remission
EDSS: Expanded Disability Status Scale
TNBC: Triple negative breast cancer
EF: ejection fraction
EM: Episodic migraine
FL: Follicular lymphoma Trademarks
FPFV: First patient first visit Eylea® is a registered trademark of Regeneron Pharmaceuticals, Inc.
GBM: Glioblastoma multiforme Enbrel®, Epogen® and Neulasta® are a registered trademark of Amgen Inc.
GvHD: graft vs. host disease Humira® is a registered trademark of AbbVie Ltd.
HbA1C: Glycated hemoglobin
HCC: Hepatocellular carcinoma MabThera® is a registered trademark of Roche, Ltd.
HF: Heart failure Procrit® is a registered trademark of Janssen Products, LP.
HF-pEF: Heart failure with preserved ejection fraction Remicade® and Stelara® are registered trademarks of Janssen Biotech, Inc.
HFrEF: Heart failure with reduced ejection fraction
Rituxan® is a registered trademark of Biogen Inc
46 Meet Novartis Management 2018 | May 16, 2018 | Investor PresentationReferences Slide 16: Cosentyx® & Entresto® 1. NBRx Share in Rheum / Derm specialty, IMS NBRx allocated using SHS APLD Factors where only PsO/PsA/AS uses are carved in for TNFs. IMS NPA restated as of week ending August 11, 2017 to include Cosentyx® free drug access program. Data as of week ending March 30, 2018. Market definition includes Cosentyx®, Enbrel®, Humira®, Taltz®, Stelara®, Tremfya®, Siliq® (Includes Cimzia® and Simponi® for Rheumatology). All trademarks are the property of their respective owners. 2. Secukinumab USPI, Secukinumab SmPC, Bissonnette R, et al. JEADV 2018;doi: 10.1111/jdv.14878 (e-pub ahead of print), Reich K, et al. PGC 2017;Poster 021; Bagel J, et al. JAAD 2017;77:667, Gottlieb AB, et al. PGC 217;Poster 026, McInnes IB, et al. Rheumatol 2017;56:1993 3. US data, NBRx and TRx across specialties from week ending July 10, 2015 to March 30, 2018 (Source: IMS) 4. Chandra, A et al. The Effects of Sacubitril/Valsartan on Physical and Social Activity Limitations in Heart Failure Patients: The PARADIGM-HF Trial. JAMA Cardiol. 2018. 5. Benjamin E. J et al. Heart disease and stroke statistics 2017 update: a report from the American Heart Association. Circulation 135, e146– e603 2017 Slide 20: Upcoming launches 1. Aimovig™ is developed in collaboration with Amgen. The brand name Aimovig™ has been provisionally approved by the FDA and EMA for the investigational product AMG 334 (erenumab), but the product itself has not been approved for sale in any country 2. Reuter, et al. Presented at: American Academy of Neurology Annual Meeting; April 21–27, 2018; Los Angeles CA, USA. Oral Presentation P009. 3. Kappos L, et al. Lancet Neurology 2018; 391: 1263-1273 4. Primary Endpoint. Dugel PU, et al. AAO 2017 [Oral presentation]. 5. Prespecified secondary endpoint in both HAWK and HARRIER with confirmatory analysis in HAWK (brolucizumab 6 mg vs aflibercept 2 mg 6. Prespecified secondary endpoint in both HAWK and HARRIER with confirmatory analysis in HAWK (brolucizumab 6 mg vs aflibercept 2 mg). Slide 21: China 1. IMS Market Prognosis China Q3 2017, Novartis analysis, FX is 6.86. As IMS MIDAS database has low coverage of retail channel, actual China pharmaceutical market sales exceed figures shown above. Total Chinese Pharma market sales are projected to exceed USD 200 bn by 2020 2. NRDL – China’s National Reimbursement Drug List; Negotiation products are not included in this chart; Lucentis and Afinitor have entered China negotiation list for high value drugs 3. Source: GBI report. China CFDA/CDE website. Refer to only new molecular entities and indication expansion is not included 4. For Novartis 6 new molecular entities approvals: Entresto, Xolair, Ultibro, Jakavi, Votrient, Revolade Slide 34: AVXS-101 1. Established markets estimate: US, Japan, EU15, Australia, Canada, Turkey 2. Estimated incidence of SMA is 1 out of 6,000 births; there were 3.95 million births in the US in 2016 (per CDC Center for Health Statistics) 3. Spinal Muscular Atrophy: Introduction to SMA families: SMA Foundation 4. Event = Death or >= 16 hr/day ventilation continuously for >=2 weeks, in the absence of acute reversible illness 5. 100% have 3 copies (PNCR) 47 Meet Novartis Management 2018 | May 16, 2018 | Investor Presentation
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