Graham Parry

Graham Parry asked about the gross-to-net impact on Kisqali from Q4 carrying into the next year, and the risk that oral SERDs might pose to encroaching on CDK4/6 combinations in the adjuvant setting.

Answer

Vasant Narasimhan, CEO of Novartis, stated that the higher gross-to-net for Kisqali in Q4 was a one-time effect due to higher Medicare utilization, expected to normalize as the early breast cancer launch accelerates. Harry Kirsch, CFO, added that Q1 2025 had a positive gross-to-net, creating a higher base. Regarding oral SERDs, Vasant Narasimhan expressed confidence in Kisqali's profile, expecting physicians to continue using CDK4/6 inhibitors alongside endocrine therapy (including oral SERDs), and reiterated confidence in the $10 billion+ guidance.

Graham Parry asked about the carry-through of Kisqali's Q4 gross-to-net impact into the next year and the potential risk posed by oral SERDs encroaching on CDK4/6 combinations in the adjuvant setting.

Answer

Vasant Narasimhan, CEO of Novartis, clarified that the higher Q4 gross-to-net for Kisqali was a one-time effect due to higher Medicare utilization, expected to normalize as the early breast cancer launch accelerates. Harry Kirsch, CFO, added that Q1 2025 had a positive gross-to-net, creating a higher base. Narasimhan expressed confidence that oral SERDs would likely become a standard endocrine therapy option, used in combination with CDK4/6 inhibitors, rather than predominantly replacing them, thus maintaining confidence in Kisqali's $10 billion+ guidance.

Graham Parry asked a series of questions regarding whether guidance accounts for potential impacts on its tax rate from transfer pricing actions, the potential for a settlement to alter Entresto's generic entry date, the expected OS data for Pluvicto's PSMAddition trial, and the specific conditions under which Most Favored Nation (MFN) legislation would be 'devastating' for the industry.

Answer

CFO Harry Kirsch expressed confidence in the company's robust tax planning, stating the 16-16.5% rate is sustainable. CEO Vasant Narasimhan clarified that the mid-2025 generic entry for Entresto is a prudent assumption pending outcomes of ongoing litigation or potential settlements. He also detailed that the impact of MFN legislation would range from manageable to 'devastating' depending on its scope and spillover into the private market.

Graham Parry requested more detail on the Entresto dynamics factored into 2025 guidance, including sales progression, the first-half benefit from Medicare donut hole changes, and confidence in preventing a generic launch before mid-July.

Answer

CFO Harry Kirsch confirmed they expect continued growth for Entresto until the assumed mid-year LOE, with some favorability from Medicare Part D changes. CEO Vasant Narasimhan added that Novartis believes its pediatric exclusivity should be respected, upholding the mid-2025 date. He confirmed that to their knowledge, no generic product was shipped during a brief window when a court stay was not in place.

Graham Parry of Bank of America followed up on Kisqali (NATALEE), asking for clarification on whether a manufacturing site inspection is needed for the new process and seeking reassurance on confidence in a broad label, particularly for the node-negative patient population.

Answer

CEO Vasant Narasimhan reiterated that no manufacturing inspection is required, as the changes relate to product handling and suppliers, necessitating only a review of stability data. He affirmed the company's confidence in securing a broad label based on ongoing label discussions with the FDA and stated they are preparing for a launch in late Q3.

Graham Parry inquired about the timelines for Itepekimab data and clarity on its path forward. He also asked for confirmation that there is no path forward for Tolebrutinib in the US and sought comments on other regulators' attitudes to monitoring compared to the US.

Answer

Houman Ashrafian, EVP and Head of Research and Development, stated that Tolebrutinib's approach is straightforward, awaiting regulatory comments from the EU and other regions. For Itepekimab, he indicated that next steps would be determined by imminent interactions with the FDA to establish requirements for a phase three replication study, with commitment to share updates broadly.

Graham Parry asked for timelines on Itepekimab's data and clarity on its path forward. He also inquired about the assumption of no U.S. path forward for Tolebrutinib and sought comments on rest-of-world regulators' attitudes to monitoring compared to the U.S.

Answer

Paul Hudson, CEO, and Thomas Kudsk Larsen, Head of Investor Relations, stated that the next steps for Itepekimab will be determined by imminent interactions with the FDA to establish requirements for a replication study, with shared updates to follow. For Tolebrutinib, they confirmed that the approach is straightforward, awaiting regulatory comments from the rest of the world, specifically the EU, following the decision not to pursue U.S. regulatory submission for PPMS.

Graham Parry of Bank of America pressed for details on the potential impact of a 25% U.S. tariff on transfer prices, mitigation strategies, and the U.S. Dupixent supply chain. He also sought clarification on whether brivekimig is just 'competitive' or potentially 'better' than existing HS treatments.

Answer

CFO François-Xavier Roger reiterated that commenting on a speculative tariff is difficult but noted Sanofi is actively increasing its U.S. manufacturing footprint. Houman Ashrafian (EVP, Head of R&D) clarified that brivekimig has the potential to be competitive and possibly better than existing HS treatments, but more data is needed to confirm.

Graham Parry from Bank of America asked for clarification on Dupixent's Q4 gross-to-net adjustment, guidance assumptions for Beyfortus amid new competition, and the potential label for tolebrutinib in non-relapsing SPMS.

Answer

Executive Brian Foard confirmed the Dupixent Q4 net sales reflected one-off true-ups and fewer business days but reiterated confidence in long-term guidance. Executive Thomas Triomphe stated Beyfortus is expected to grow in 2025 despite competition, citing a strong competitive profile and real-world evidence. Executive Houman Ashrafian confirmed tolebrutinib was submitted for SPMS and noted excitement for the upcoming PPMS readout.

Graham Parry inquired about Beyfortus guidance, specifically if it assumes existing capacity and if the expanded supply is upside. He also asked for clarification on the scale of the new capacity and the timing of its approval, as well as an update on the timeline and decision factors for the separation of the Opella (Consumer Healthcare) business.

Answer

Thomas Triomphe, EVP of Vaccines, confirmed the blockbuster target for Beyfortus in 2024 is on track and that regulatory submissions for expanded capacity have been made, with Q4 sales expected to be higher than Q3. François-Xavier Roger, CFO, stated the Opella transaction is expected in Q4 2024 or Q1 2025 at the earliest, with all options (IPO, spin-off, private sale) being considered in a competitive process focused on maximizing shareholder value.

Graham Parry followed up on tariffs, asking about incremental productivity initiatives. He also requested quantification of Shingrix sales in China and questioned the confidence in Arexvy's boostability given recent data.

Answer

CEO Emma Walmsley clarified that productivity is an ongoing effort, primarily in SG&A, and that R&D investment remains a priority. CSO Tony Wood explained that waning efficacy data for Arexvy supports the need for a booster. CCO Luke Miels reported Q1 Shingrix sales in China were approximately GBP 54 million, with a cautious outlook for H2.

Graham Parry of Bank of America inquired about the 2025 guidance mix, specifically the stability of General Medicines despite prior-year rebate benefits, and asked about 2025 free cash flow expectations and whether the buyback implies increased leverage to fund business development.

Answer

An executive, likely CFO Julie Brown, clarified that the prior year's rebate adjustment was a one-off true-up. Regarding capital, she confirmed leverage would increase from its low 1.2x base due to the buyback but that the company has flexibility. She projected 2025 cash flow to be slightly below 2024's due to the Zantac settlement, but with an upside from operating profit growth.

Graham Parry of Bank of America Corporation pressed for more detail on Arexvy's U.S. market leadership, asking about the expected volume share. He also questioned if the GBP 3 billion peak sales forecast assumes a booster regimen and whether upcoming data could support a booster recommendation in target populations.

Answer

Luke Miels, Chief Commercial Officer, confirmed GSK expects market leadership for Arexvy but declined to provide a specific percentage, noting the final revenue also depends on price. He stated that their forecast does assume a booster is required. Tony Wood, Chief Scientific Officer, advised against making assumptions on vaccine efficacy decline, suggesting it's best to wait for the complete Season 3 data package before drawing conclusions about the need for a booster.

Graham Parry from Bank of America requested specific guidance on financial expenses for 2024, a clarification on the 250 basis point margin impact from inventory provisions in Q2, and commentary on CIDP market dynamics following the approval of a competitor's product, Vyvgart.

Answer

VP of IR Daniel Segarra suggested using Q1 as a reference for projecting financial expenses and confirmed the 250 bps margin impact was specific to Q2. Roland Wandeler, President of BioPharma, stated that the impact from the new FcRn approval in CIDP is expected to be limited, as IG is anticipated to remain the standard of care for first-line therapy, and Grifols remains confident in its Gamunex franchise.

Graham Parry of Bank of America asked if the October Investor Day would provide concrete midterm guidance on sales or EBITDA. He also questioned the level of confidence in the 2024 EBITDA guidance and requested a direct response to the latest short-seller report concerning cash funneled to Scranton via BPC.

Answer

CEO Nacho Abia said the Investor Day agenda is in development but will provide strategic direction, and he expressed high confidence in delivering the 2024 EBITDA guidance of over EUR 1.8 billion. Executive Chairman Thomas Glanzmann dismissed the short-seller report as misleading, stating that all transactions are public and have been verified by both the Spanish regulator and external auditors.