Q4 and Full Year 2016 Results - Media presentation | January 25, 2017
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Novartis AG
Media Relations
Q4 and Full Year 2016
Results
Media presentation | January 25, 2017
Disclaimer This presentation contains forward-looking statements that can be identified by terminology such as such as “potential,” “expected,” “will,” “planned,” 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; potential shareholder returns or credit ratings; or regarding the potential outcome of the announced review of options being undertaken to maximize shareholder value of the Alcon Division; or regarding the potential financial or other impact on Novartis or any of our divisions of the significant reorganizations of recent years, including the creation of the Pharmaceuticals and Oncology business units to form the Innovative Medicines Division, the creation of the Global Drug Development organization and Novartis Operations (including Novartis Technical Operations and Novartis Business Services), the transfer of the Ophthalmic Pharmaceuticals products of our Alcon Division to the Innovative Medicines Division, the transfer of selected mature, non-promoted pharmaceutical products from the Innovative Medicines Division to the Sandoz Division, and the transactions with GSK, Lilly and CSL; or regarding the potential impact of the share buyback plan; or regarding potential future sales or earnings of the Novartis Group or any of its divisions; 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 the current beliefs and expectations of management 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. Nor can there be any guarantee that the review of options being undertaken to maximize shareholder value of the Alcon Division will reach any particular results, or at any particular time. 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 reorganizations of recent years, including the creation of the Pharmaceuticals and Oncology business units to form the Innovative Medicines Division, the creation of the Global Drug Development organization and Novartis Operations (including Novartis Technical Operations and Novartis Business Services), the transfer of the Ophthalmic Pharmaceuticals products of our Alcon Division to the Innovative Medicines Division, the transfer of selected mature, non-promoted pharmaceutical products from the Innovative Medicines Division to the Sandoz Division, and the transactions with GSK, Lilly and CSL. 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, management’s expectations could be affected by, among other things: regulatory actions or delays or government regulation generally; the potential that the strategic benefits, synergies or opportunities expected from the significant reorganizations of recent years, including the creation of the Pharmaceuticals and Oncology business units to form the Innovative Medicines Division, the creation of the Global Drug Development organization and Novartis Operations (including Novartis Technical Operations and Novartis Business Services), the transfer of the Ophthalmic Pharmaceuticals products of our Alcon Division to the Innovative Medicines Division, the transfer of selected mature, non-promoted pharmaceutical products from the Innovative Medicines Division to the Sandoz Division, and the transactions with GSK, Lilly and CSL may not be realized or may take longer to realize than expected; the inherent uncertainties involved in predicting shareholder returns or credit ratings; 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; global trends toward health care cost containment, including ongoing pricing and reimbursement pressures, such as from increased publicity on pharmaceuticals pricing, including in certain large markets; 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; general economic and industry conditions, including uncertainties regarding the effects of the persistently weak economic and financial environment in many countries; 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 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation
Agenda
1. Group review Joseph Jimenez, Chief Executive Officer
2. Financial review Harry Kirsch, Chief Financial Officer
Jay Bradner, President NIBR & Vas Narasimhan, Global Head
3. R&D Drug Development & CMO
4. Q&A All presenters
3
1. Group review 2016 in review Industry trends & our strategy to win The next growth phase
Last year we established 5 objectives for 2016
Deliver strong
Financial Results
Strengthen
Innovation
Improve
Alcon Performance
Capture
Cross-Divisional Synergies
Build a
High-Performing Organization
5 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation
We broadly delivered on these, with some areas
for improvement
Deliver strong
Financial Results Sales broadly in line despite Glivec® loss of exclusivity in US
Strengthen Launches: Strong Cosentyx® launch; Entresto® uptake slower than expected
Innovation
Breakthrough innovations: LEE011, BAF312, AMG 334, Biosimilars
Improve
Alcon
Alcon improved, but did not return to growth: Vision Care returned to
Performance growth, but Surgical taking longer
Capture
Cross-Divisional NBS-managed costs decreased, scaling up 5 Global Service Centers
Synergies
Build a
High-Performing Major organizational changes implemented without disruption
Organization
6 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation
Sales broadly in line due to strong performance
of Growth Products
Continuing operations1 Change vs. PY
(in USD bn) 2016 % USD % cc1
Net Sales 48.5 -2 0
Core Operating Income1 13.0 -6 -2
Operating Income1 8.3 -8 -3
Net Income 6.7 -5 +1
Core EPS (USD)1 4.75 -5 -2
EPS (USD) 2.82 -3 +2
Free Cash Flow1 9.5 +2
1. Continuing operations are defined on page 41 of the Condensed Financial Report. Constant currencies (cc), core results, and free cash flow are non-IFRS measures. An explanation of these measures can be found on page 50 of the
Condensed Financial Report.
7 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation
Pipeline: 2016 was a strong year for innovation
LEE011 Positive Ph III data: Filed in the US and EU
BAF312 Positive Ph III: Reduction of disability progression in SPMS1
AMG 334 2 Positive Ph III & Ph II: In episodic and chronic migraine
Breezhaler
Ultibro ®
®
FLAME data: Demonstrates superiority over Seretide®3
Erelzi ® US approval: Unanimous vote by Arthritis Advisory Committee
Rituximab EMA submission accepted: Demonstrated bioequivalence
1. SPMS: Secondary progressive multiple sclerosis 2. In collaboration with Amgen; Novartis has AMG 334 rights outside of US, Canada and Japan 3. Clinicaltrials.gov. QVA149 vs. Salmeterol/ Fluticasone, 52-week Exacerbation Study
(FLAME). NCT01782326. Seretide® is a registered trademark of GlaxoSmithKline
8 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation
Alcon: Vision Care turning but Surgical taking
longer
Vision Surgical
Care
• Continued strong global growth of • Continued solid growth of cataract
Dailies Total1® consumables and vitreoretinal
• Contact lens share positively • Weaker performance of IOLs and
impacted in US, EU equipment
• Introduced new innovation e.g., • Introduced new innovations:
Dailies Total1 Multifocal® CyPass® and NGENUITY®
9 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation
Integrating manufacturing and drug development
across divisions: Seeing early benefits
Improved
1 transparency
• Manufacturing: Integration
around technology platforms
Better resource
2
• Drug development: allocation
Integration of global functions
More
3 collaboration
10 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation1. Group review 2016 in review Industry trends & our strategy to win The next growth phase
The demand for healthcare is growing...
The population is getting …
... larger ... older ... sicker
+1bn ~1 in 3 Chronic diseases
By 2030 Over 50 years old >70% of all deaths
Source: United Nations, “World Population to Increase by One Billion by 2025,” 2013 Source: World Health Organization, “The Global Burden of Disease: Updated Projections,” 2015
12 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation...creating opportunities in key diseases
Expected high growth areas (2025)
• Heart disease and cancer alone
expected to cause 50% of all deaths
• More than 2bn people expected to
Cardio- suffer from presbyopia and ~18m
Metabolic Oncology Neuroscience Ophthalmology cases of cataracts expected in US
Source: WHO, OECD
13 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationHowever, the same forces creating this demand,
are putting pressure on the industry
• Increased pressure on
pricing and access
2x • Increasing attention to
Real World Evidence
If unchecked, healthcare spending
forecast to double by 2030
Source: Business Monitor International, Harvard Business Review and CMS (Centers for Medicare and Medicaid Services)
14 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationTo win in this environment, we are rethinking all
aspects of our business
We are “Reimagining Medicine”
1 How we innovate 2 How we sell 3 How we operate
15 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation1. Group review 2016 in review Industry trends & our strategy to win The next growth phase
Novartis is positioned well for the future with
growth drivers expected to more than offset
Generics
Illustrative Sales FY 2017–2020 (in cc)
Mainly:
New Onco Mainly: Biosimilars
LEE011 Gilenya® US & Alcon
Jakavi® Afinitor® growth
Mainly: Ophtha
Cosentyx® Glivec®
Entresto®
2017 Pharma Onco Growth Gx impact Sandoz 2020
Growth Drivers Drivers and Alcon
17 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation... without including other key pipeline assets
with blockbuster potential
AMG 334 (erenumab)
BAF312 (siponimod)
RLX030 (serelaxin)
OMB157 (ofatumumab)
ACZ885 (Ilaris®)
QVM149 (indacaterol, glycopyrronium, mometasone)
QAW039 (fevipiprant)
18 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationLess exposed to Pricing or IP risks
Balanced Balanced
global presence portfolio
35% sales in US Gx, Biosimilars
19 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationToday, we are announcing two actions
Options to maximize shareholder value of the Alcon Division
Alcon Review under consideration
Share Buyback We are initiating share buyback of up to USD 5 billion for 2017
These actions demonstrate our commitment to maximizing
shareholder value and confidence in our future growth trajectory
20 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation2017 priorities
• Sales broadly in line with prior year
• Core Operating Income broadly in line with prior year or
1 Deliver financial targets
decline low single digits1
• Regulatory decisions: LEE011, PKC412, Biosimilars
2 Strengthen R&D • Submissions: CTL019, AMG 334
• Trial readouts: RLX030, ACZ885, RTH258
• Accelerate sales: Cosentyx®, Entresto®
Ensure world-class
3 • Successfully launch new approvals: potentially LEE011,
commercial execution
Biosimilars rituximab and etanercept, PKC412
4 Transform Alcon into an agile • Return Alcon to top-line growth
medical device company • Strengthen innovation and commercial execution
5 Create a stronger company • Embed new operating model & capture synergies
for the future • Strengthen quality, compliance and develop the best talent
1. Barring unforeseen events
21 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationAgenda
1. Group review Joseph Jimenez, Chief Executive Officer
2. Financial review Harry Kirsch, Chief Financial Officer
Jay Bradner, President NIBR & Vas Narasimhan, Global Head
3. R&D Drug Development & CMO
4. Q&A All presenters
222016 actuals in line with our guidance
Actual
Full Year Guidance, Q2 2016 – reconfirmed in Q3 2016 vs. PY
(in cc) (in cc)
“Sales are expected to be broadly in line with prior year” +0%
“Core operating income is expected to be broadly
in line with prior year or decline low single digits”
-2%
23 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationSummary of Q4 2016 and FY financial results
Q4 Change vs. PY FY Change vs. PY
Continuing Operations1
2016 % USD % cc 2016 % USD % cc
(in USD m)
Net Sales 12 322 -2 0 48 518 -2 0
Core Operating Income 3 013 -1 1 12 987 -6 -2
Operating Income 1 455 -13 -9 8 268 -8 -3
Net Income 936 -11 0 6 698 -5 1
Core EPS (USD) 1.12 -2 1 4.75 -5 -2
EPS (USD) 0.40 -9 2 2.82 -3 2
Free Cash Flow 2 976 1 9 455 2
1. An explanation of continuing operations can be found on page 41 of the Condensed Interim Financial Report. Core results, constant currencies and free cash flow are non-IFRS measures. Further details regarding non-IFRS measures can
be found starting on page 50 of the Condensed Interim Financial Report
24 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationQ4 Core margin slightly improved with Innovative
Medicines offsetting Alcon
Q4 2016
Core operating
Net sales income Core margin
change vs. PY change vs. PY Core ROS change vs. PY
(in % cc) (in % cc) (%) (% pts cc)
Innovative Medicines -1 4 29.1 1.2
Sandoz 3 4 20.0 0.1
Alcon 0 -36 11.3 -6.3
Q4 continuing operations 0 1 24.5 0.2
25 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation12M free cash flow was USD 9.5bn
Continuing operations free cash flow
(USD bn)
+0.2
9.3 9.5
Key drivers vs. PY:
+ Working capital
+ Lower CapEx
+ OTC/JV dividend
− Lower OpInc
12M 2015 12M 2016
26 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationNovartis follows a capital allocation framework
focused on shareholder value
Novartis 1. Investments in organic business
priorities
Create
2. Growing annual dividend in CHF
sustainable
3. Value-creating bolt-on1 shareholder
value
4. Share buybacks
1. Includes M&A and BD&L
27 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationNovartis reinvests substantially back into the business 1. Investments in organic business Key R&D investment in the pipeline Key M&S investment in current LEE011 (ribociclib) growth drivers AMG 334 (erenumab) BAF312 (siponimod) RLX030 (serelaxin) OMB157 (ofatumumab) Rest of pipeline +200 projects Biosimilars 28 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation
Novartis proposes the 20th consecutive dividend
increase to the AGM: 2.75 CHF / share
2. Growing annual dividend
3.00
CHF USD
2.75
2.75
2.70
2.70
2.50
2.00
1.50
Proposed1 dividend
1.00
growth 2016 vs. 2015:
1.9% in CHF; 1.9% in
0.50 USD
0.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
1. Proposal to shareholders at the 2017 Annual General Meeting, taking place on February 28, 2017 2. Converted at historic exchange rates on the dividend payment date as per Bloomberg; assumes an exchange rate of USD / CHF of
1.0001 as of January 23, 2017 for 2016
29 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationNovartis executed various value-creating bolt-on
transactions to support growth
3. Value-creating bolt-on
Evaluation criteria
2
Strategic priorities
1
Ofatumumab
Financial discipline
Infliximab
(Europe)
IRR and value creation
1. Subject to customary closing conditions 2. Regulatory approval is required to exercise the option
30 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationInitiating a share buyback of up to USD 5 bn in
2017 reinforcing confidence in growth prospects
4. Share buybacks
• Initiating a share buyback1 of up to USD 5 billion, reinforcing confidence in growth
prospects
• Novartis aims to execute this buyback in 2017
• Novartis envisages to finance the buyback through new debt, actively using its
strong balance sheet
• Attractive funding rates reflecting historically low interest rates
1. Under the existing authority of the seventh share buyback program granted by the AGM in February 2016
31 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationExpected key drivers of 2017 performance
• Pharmaceuticals growth • Generics (mainly Glivec®)
products (including
• Launch investments
Cosentyx® and Entresto®)
• Alcon growth plan
• New oncology assets,
investments
Jakavi® and LEE011
• Expected biopharmaceuticals
sales acceleration
• Capture NBS, NTO and
GDD1 cross divisional
synergies
1. NBS = Novartis Business Services; NTO = Novartis Technical Operations; GDD = Global Drug Development
32 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation2017 Full Year Guidance
Barring unforeseen events (in cc)
• In 2017, we expect continued genericization of Glivec® to impact results
• Group net sales expected to be broadly in line with PY
• IM Division broadly in line
• Sandoz low single digit growth
• Alcon broadly in line to low single digit growth
• Group core operating income expected to be broadly in line with PY to
low single digit decline
33 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationAgenda
1. Group review Joseph Jimenez, Chief Executive Officer
2. Financial review Harry Kirsch, Chief Financial Officer
Jay Bradner, President NIBR & Vas Narasimhan, Global
3. R&D Head Drug Development & CMO
4. Q&A All presenters
34A new era for R&D at Novartis 35 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation
NIBR 2.0 - A Strategy for the Next Generation of Discovery
Deliver Medicines First for Innovate the New Science of Open our
Those Who Need Them Most Therapeutics Framework
36 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationInduction of fetal hemoglobin in
Gene-edited human blood stem cells
40
% Fetal Hemoglobin
30
20
10
0
Control Region 1 Region 2 Region 3
Target Gene
Source: NIBR in-house data
Investigational. Efficacy & safety not yet establishedTarget
LMW
ligand
DNA tagTarget
LMW
ligand
DNA tagTarget
LMW
ligand
DNA tagTarget
LMW
ligand
DNA tagTarget protein
DrugTarget protein
Drug
E3 complexTarget protein 24 hrs treatment of cancer cells
degraded
Target A
Drug
Target B
Target C
E3 complex
Source: NIBR in-house data
Investigational. Efficacy & safety not yet establishedImmuno-Oncology: Opportunities and Challenges
A relatively small number of patients currently
respond to immuno-oncology therapy options
Even among responders, a significant number
need to discontinue therapy due to adverse
events
Data emerging over the next 12-18 months
from Novartis and competitor trials will inform
the most impactful paths forward
We aim for a leadership position in oncology
by leveraging our broad immuno-oncology
and targeted therapy portfolios
50 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationThe Novartis Immuno-Oncology Pipeline
Focused on Major Mechanisms of Immune Escape
Immune Priming T-Cell Modulation
STING IL-15 TEC
TIM-3 GITR mTOR
cMET IAP
Porcupine
Tumor Environment
T-cell Engineering
PD-1 CSF-1
CART Bi-specific Ab PD-L1 CSF-1R
CD19 CD123 LAG-3 A2A adenosine
BCMA CD20 TIM-3 receptor
CD123 TGF-β HDAC
EGFRvIII IL-17 MEK
Mesothelin IL-1
51 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationCell-based Immunotherapy Anticipated to Reach Regulatory Consideration in 2017 Pediatric ALL filing on CTL019 expected in early 2017 DLBCL filing of CTL019 expected in H2 2017 Integration of the Cell & Gene Therapy Unit into broader Novartis organization Increased investment at NIBR in CART manufacturing science 52 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation
Strong pipeline focused on second generation immuno-therapy Rapidly progressing 18 checkpoint and additional novel targets 20 exploratory immuno-oncology studies expected by early 2017
Strong track record of R&D Excellence
Deep pipeline High Innovation Power Leading success rate
200+ projects in the 13 FDA Breakthrough 29 approvals1 in the last
clinic Therapy designations in 5 years
the last 5 years
90+ NMEs in the clinic 7 FDA Fast Track
designations in 2016
1. Includes only first approvals for a compound in an indication in any major region/country
54 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationCreating an efficient and agile organization
5 priorities
Priorities 1. Rigorous portfolio prioritization
2. Measuring performance • Higher return on
investment
3. Driving operational efficiencies
• Leading cost efficiency
• 20% sustainable R&D
spend in Innovative
4. Leveraging new technology & capabilities Medicines
5. Investing in our people
55 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationBroad and deep late stage pipeline
Selected key assets
Oncology Cardio-Metabolic Ophthalmology Respiratory
BYL719+fulv. RLX030 Acute heart failure LIK066 Weight loss RTH258 (Multiple) QAW039 Asthma
CTL019 Ped. ALL+ DLBCL ACZ885 CV risk reduction Lucentis® ROP QMF149 Asthma
INC2802 NSCLC Entresto® (Multiple) UNR844 (Presbyopia) QVM149 Asthma
Jakavi®2 (Multiple)
LEE0113 (Multiple)
PKC412 (Multiple)
SEG101 Sickle cell disease
Signifor® LAR Cushing’s disease
Neuroscience Immunology & Dermatology Biosimilars
Tafinlar®+Mekinist® BRAF V600+ NSCLC
Tafinlar®+Mekinist® BRAF V600+ melanoma (adjuvant) AMG 334 Migraine OMB157 Relapsing MS Cosentyx® (Multiple) VAY736 Prim. Sjoegren’s syndr. Adalimumab Pegfilgrastim
Tasigna® CML treatment free remission BAF312 SPMS CNP520 Alzheimer’s disease Ilaris® Periodic fever syndr. Emricasan1 NASH Epoetin-alfa Rituximab
Zykadia® ALK+ NSCLC (brain metastases) EMA401 Neuropathic Pain CAD106 Alzheimer’s disease LJN452 NASH ZPL389 Atopic dermatitis Infliximab Etanercept
FTY720 Pediatric MS BYM338 Multiple
In addition, ~100 projects (70+ NMEs) in exploratory clinical studies
1 Option to license in 2 licenced in from Incyte 3 "LEE011 was developed by the Novartis Institutes for BioMedical Research (NIBR) under a research collaboration with Astex Pharmaceuticals
56 | Novartis R&D Update | January 25, 2017 | Novartis Media PresentationProgressing development of 13 potential
blockbusters1 at Novartis
Exp. pivotal Exp. order Potential target
Therapeutic area Molecule Indication MoA
trial readout of entry population
LEE011 (ribociclib) HR+ HER2- advanced breast cancer CDK4/6 inhibitor ✓ 2 ~0.2m (US, EU)4
Onco Oncology CTL019 (CART-T) r/r B-Cell ALL, DLBCL CART-T Q2 20176 1 ~0.05m (US, EU)
SEG101 (crizanlizumab) Sickle cell pain crises Anti-P-selectin 2020 1 ~0.3m (US, EU, BRA)
RLX030 (serelaxin) Acute heart failure Relaxin receptor agonist Q2 2017 1 ~1.2m (US, EU5)
CM Cardio-metabolic LCZ696 (Entresto®) Heart failure with preserved EF ARNI 2019 1 ~4.2m (US, EU5)
ACZ885 (canakinumab) CV risk reduction Anti-IL1β H2 2017 1 ~4m (G7)
OMB157 (ofatumumab) Relapsing multiple sclerosis CD20 2019 2 ~0.6m (US, EU5)
NS Neuroscience BAF312 (siponimod)2 Secondary progressive multiple sclerosis S1P receptor modulator ✓ 1 ~0.3m (US, EU5)
AMG 334 (erenumab)3 Prophylaxis of migraine CGRP receptor antagonist ✓ 1 ~2.3m (EU5)
Immunology&
I&D AIN457 (Cosentyx®) Non-radiographic axial SpA Anti-IL17A 2018 1 ~1.1m (US, EU5)
Dermatology
QVM149 (indacaterol, Asthma LABA + LAMA + ICS 2018 1 ~7.0m (EU5+JP)
Resp Respiratory glycopyrronium, mometasone)
QAW039 (fevipiprant) Asthma CRTh2 antagonist 2019 1 ~4.0m (G7)
Oph Ophthalmology RTH258 (brolucizumab) Neovascular AMD Anti-VEGF (scFv) H1 2017 3 ~0.9m (US, EU, JP)5
Bios Biosimilars Multiple Multiple Multiple Ongoing Varying Varying
1. Blockbuster potential refers to specified indication 2. Next steps to be evaluated in consultations with health authorities 3. In collaboration with Amgen; Novartis has AMG 334 rights outside of US, Canada and Japan 4. Kantar Health;
Novartis analyses 5. Rudnicka et al. Am. J. Ophthalmol. 2015 Jul; 160(1):85-93.e3; Brown et al. Can J Ophthalmol. 2005 Jun;40(3):277-87; – Yasuda M et al. Ophthalmology. 2009 Nov;116(11):2135-40. doi: 10.1016/j.ophtha.2009.04.017.
Epub 2009 Sep 10; Novartis analyses 6. Ped. r/r B-cell ALL positive trial readout achieved in 2016; Note: sources for epidemiology information can be found in the respective sections
57 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationExpected key 2017 milestones
H1 2017 H2 2017
LEE011 HR+/HER2- adv. BC (US) LEE011 HR+/HER2- adv. BC (EU)
Regulatory
PKC412 AML and ASM (US) PKC412 AML and ASM (EU)
decisions
Tafinlar®+ Mekinist® BRAF+ NSCLC LA-EP2006 Pegfilgrastim BS3 (EU)
GP2015 Etanercept BS3 (EU) GP2013 Rituximab BS3 (EU)
AMG 334 Migraine GP2013 Non-Hodgkin’s Lymphoma (US)
Submissions
CTL019 Ped. ALL (US) RLX030 Acute heart failure2
Secondary progressive
BAF312 ACZ885 CV risk reduction2
MS1
GP2017 Adalimumab BS3 (EU) CTL019 DLBCL2 (US)
GP1111 Infliximab BS3 (EU) GP2017 Adalimumab BS3 (US)
RLX030 RELAX-AHF-2 (AHF) CTL019 JULIET (DLBCL)
Major trial
readouts ACZ885 CANTOS (CVRR) RTH258 HARRIER, HAWK
1. Depends on outcome of consultations with health authorities 2. If results from Phase III trials are supportive 3. BS=Biosimilar Note: more detailed overview of expected newsflow can be found in the appendix
58 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationLEE011: Promising new treatment for breast cancer
LEE011 + letrozole showed superior PFS vs. letrozole in pre-
defined subgroups
Locally Assessed Progression-free Survival in Patients Progression-free Survival in Patients With Visceral
With De Novo Advanced Breast Cancer1 Metastases2
Hazard ratio (95% CI): 0.448 (0.267-0.750) Hazard ratio (95% CI): 0.535 (0.385-0.742)
[1] O'Shaughnessy J., presented at San Antonio Breast Cancer Symposium (SABCS), December 9, 2016, San Antonio, Texas (abstract # P4-22-05)
[2] Burris H., presented at San Antonio Breast Cancer Symposium (SABCS), December 9, 2016, San Antonio, Texas (abstract # P4-22-16)
59 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationRLX030 for Acute Heart Failure addresses a
significant unmet need
Acute Heart Failure Incidence RLX030 potential first-in-class therapy
• High mortality: ~10% in hospital, ~15% in 6
3.4
months, 20% in 1 year and 50% in 5 years
AHF events (US & EU5) / million
2.5
2017 estimates for number of
EU5
2.0 US
• No approved therapies with outcomes benefits
1.4 2.5
1.5
1.2 • Targets relaxin receptor to stimulate vasodilation in
0.8 a range of tissues
1.0 0.6
0.5 1.0
0.7
• RELAX-AHF-2 trial fully enrolled (6,610 patients)
0.6
and on track to read out in Q2 2017
0.0
All AHF events SBP≥125mmHg eGFR≥25mL/ − Primary endpoints: CV death through Day 180 and
min/1.73m2 worsening heart failure at Day 5
Source: Decision Resources Patient Base 2016; estimates for SBP and eGFR based on patient population studied in RELAX-AHF-2 trial – potentially eligible population pending final label
Abbreviations: AHF=acute heart failure; CV=cardiovascular; eGFR=estimated glomerular filtration rate; SBP=systolic blood pressure
60 | Novartis R&D Update | January 25, 2017 | Novartis Media PresentationMigraine: Disabling condition without effective
therapies – AMG 334* could be first new therapy
Migraine prevalence and target patients1 Unmet need: No new therapies in a decade
Million patients (EU5)
Episodic
2 • Migraine is sixth highest cause worldwide of
9.4 Chronic 3 years lost due to disability4
4.2 4.0
• Major prophylactic anti-migraine drugs are
2.9 repurposed with incomplete efficacy5
2.5
2.0
1.4 • Most prescribed drugs produce adverse
0.9
effects resulting in limited adherence6
Prevalence Diagnosed Acute (treated) Prophylaxis
(treated)
1. Patients in EU top 5; Decision Resources Group; Novartis analysis 2. Chronic Migraine: 15+ migraine headache days per month 3. Episodic Migraine: 4-14 migraine headache days per month 4. Global Burden of Disease Study 2013
5. Major prophylactic anti-migraine drugs include beta-blockers, tricyclic anti-depressants, anti-epileptic drugs; Pringsheim T. et al. CMAJ 2010 6. Hepp Z. et al. Cephalalgia 2015; 35: 478-88 CGRP=calcitonin gene related peptide
* Development in collaboration with Amgen; Novartis has AMG 334 rights outside of US, Canada and Japan
61 | Novartis R&D Update | January 25, 2017 | Novartis Media PresentationSteady flow of future potential significant
innovations - Pipeline Watch List
Therapeutic area Molecule Indication Phase Mechanism of Action
Oncology 15 IO assets incl. combos Multiple Phase Ib/II Anti-PD1 + multiple others
ABL001 CML Phase II Allosteric BCR-ABL inhibitor
Onco BYL719 Breast Cancer Phase III PI3k inhibitor
INC280 NSCLC Phase Ib/II cMET inhibitor
Jakavi® steroid refractory acute GVHD Phase III JAK1/2 inhibitor
Cardio-metabolic APO(a)-LRx1 High risk CVRR Phase II Lipoprotein(a) inhibitor
APOCIII-LRx1 High risk CVRR Phase II Apolipoprotein-CIII inhibitor
CM LHW090 Resistant hypertension Phase II NEP inhibitor
LIK066 Weight loss Phase II SGLT1/2 inhibitor
MAA868 Stroke prevention Phase I/II Anti-thrombotic
Neuroscience BYM338 Sarcopenia hip fracture Phase II Activin type-2 receptor
NS CNP520 Alzheimer’s Phase III BACE inhibitor
EMA401 Neuropathic Pain Phase II Angiotensin II Type-2 Receptor antagonist
Immunology-Dermatology CJM112 Multiple immune disorders Phase II High-affinity anti-IL17A
Emricasan1 NASH/Cirrhosis Phase II Oral pan-caspase inhibitor
I&D LJN452 Non-Alcoholic Steatohepatitis Phase II FxR agonist
VAY736 Sjoegren’s syndrome Phase II Anti-BAFF-R
ZPL389 Atopic dermatitis Phase II H4 receptor antagonist
Respiratory ACZ885 Sarcoidosis Phase II Anti-IL1
Resp CJM112 Asthma Phase II High-affinity anti-IL17A
QBW251 Cystic fibrosis/COPD Phase II CFTR potentiator
Oph Ophthalmology UNR844 Presbyopia Phase II Prodrug to metabolize DHLA
62 | Novartis R&D Update | January 25, 2017 | Novartis Media Presentation 1 Option to license inPioneering breakthrough approaches in multiple
disease areas
Liver Disease Alzheimer’s Obesity
63 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationOver 60 projects planned for filing 2017 to 2021
2017 2018 2019 2020 2021
AMG 334a Promacta®/Revolade® INC280 BAF312d ABL001 BYM338 QBW251
Migraine SAA5 1st line NSCLC7 SPMS14 CML6 3rd line Hip fracture Cystic fibrosis
CTL019 Tasigna®c LCI699 BYL719 + fulv QGE031 CAD106 UNR844e
CML6 treatment free remission Cushing’s disease HR+, HER2 (-) postmenopausal CSU/CIU18 Alzheimer’s disease Presbyopia
Pediatric acute lymphoblastic leukemia adv. BC12 2nd line
RLX030 Adalimumab (US/EU) RTH258 QAW039 SEG101 CJM112 VAY736
Acute heart failure GP2017 nAMD8 Asthma Sickle cell disease Immune disorders Primary Sjoegren’s syndrome
ACZ885 Epoetin-alfa (US) Arzerra® Entresto® Entresto® CNP520 ZPL389f
Sec. prev. CV events1 HX575 NHL9 (refractory) Heart failure (PEF)15 Post-acute myocardial infarction Alzheimer’s disease Atopic dermatitis
Afinitor®/Votubia®b Infliximab (EU) Cosentyx® Jakavi® Cosentyx® EMA401 BYM338
TSC2 seizures GP1111 nrAxSpA10 GVHD16 PsA H2H19 Neuropathic pain Sarcopenia
CTL019 Pegfilgrastim (EU) LAM320 OMB157 Jakavi® KAE609 Cosentyx®
DLBCL3 LA-EP2006 MDR11 tuberculosis RMS17 Early myelofibrosis Malaria AS H2H22
FTY720 Rituximab (US) LEE011+ fulv QMF149 RTH258 KAF156 INC280
HR+, HER2 (-) postmenopausal
Pediatric MS4 GP2013 adv. BC12 1st/2nd line Asthma DME20 Malaria NSCLC7 (EGFRm)
LEE011+ tmx + gsn/or NSAI + gsn
HR+, HER2 (-) premenopausal
QVM149 Tafinlar® + Mekinist® LIK066 LEE011
Asthma BRAF V600+ Colorectal cancer Weight loss HR+, HER2 (-) BC12 (adjuvant)
adv. BC12 1st line
Lucentis® Zykadia® LJN452 PKC412
ALK+ adv. NSCLC7
ROP13 (Brain metastases) NASH21 AML23 (FLT3 wild type)
Tafinlar® + Mekinist® Infliximab (US) PIM447 QAW039
BRAF V600+ Melanoma (adjuvant) GP2018 Hematologic tumors Atopic dermatitis
Pegfilgrastim (US)
a) In collaboration with Amgen; Novartis LA-EP2006 1. Secondary prevention of cardiovascular events 13. Retinopathy of prematurity
has AMG 334 rights outside of US, 2. Tuberous sclerosis complex 14. Secondary progressive multiple sclerosis
Canada and Japan. 3. Diffuse large B-cell lymphoma 15. Preserved ejection fraction
b) Submitted in EU (positive CHMP 4. Multiple sclerosis 16. Graft-versus-host disease
opinion). 5. Severe aplastic anemia 17. Relapsing multiple sclerosis
New molecule c) Submitted in EU. 6. Chronic myeloid leukemia 18. Chronic spontaneous urticaria / chronic idiopathic urticaria
d) Ongoing health authority consultations Combination abbreviations: 7. Non-small cell lung cancer 19. Psoriatic arthritis head-to-head study versus adalimumab
New indication to agree on path forward. fulv fulvestrant 8. Neovascular age-related macular degeneration 20. Diabetic macular edema
e) Encore Vision transaction closed in tmx tamoxifen 9. Non-Hodgkin’s lymphoma 21. Non-alcoholic steatohepatitis
New formulation January 2017. gsn goserelin 10. Non-radiographic axial spondyloarthritis 22. Ankylosing spondylitis head-to-head study versus adalimumab
f) Ziarco Group transaction closed in NSAI Non-steroidal 11. Multi-drug resistant 23. Acute myeloid leukemia
Biosimilars January 2017. aromatase inhibitor 12. Breast cancer
64 | Novartis R&D Update | January 25, 2017 | Novartis Media PresentationWe are poised to deliver the next wave of
breakthrough medicines for patients
Group-wide portfolio management World-class talent Cutting-edge Technology
Novartis strength
Unmet need
65 | Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media PresentationAgenda
1. Group review Joseph Jimenez, Chief Executive Officer
2. Financial review Harry Kirsch, Chief Financial Officer
Jay Bradner, President NIBR & Vas Narasimhan, Global Head
3. R&D Drug Development & CMO
4. Q&A All presenters
66Questions
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