Matthew Weston

Matthew Weston of UBS Group AG inquired about the market dynamics of the C5 franchise following the first Soliris biosimilar launch and asked about the expected impact of Volume-Based Procurement (VBP) on Farxiga in China.

Answer

CEO of Alexion, Marc Dunoyer, stated they are not seeing payers force patients back to Soliris biosimilars, with Ultomiris conversion and growth remaining strong. EVP International, Iskra Reic, acknowledged that Farxiga VBP will cause a short-term price-driven reduction but expects broader access and volume growth to create a significant sales tail over time, similar to past products like Crestor. CEO Pascal Soriot added that direct-to-consumer models in China could support this.

Matthew Weston asked for an update on the timing of the AVANZAR trial data readout and questioned whether the company has had interactions with U.S. authorities regarding its use of intellectual property incentive regimes to manage its tax base.

Answer

EVP, Oncology R&D, Susan Galbraith confirmed the AVANZAR trial is on track for results in the second half of the year with no expected delays. On taxes, CEO Pascal Soriot and CFO Aradhana Sarin both affirmed that AstraZeneca pays its fair share of taxes in the U.S. Sarin clarified that the noted IP benefits in the annual report relate to standard government R&D incentives like patent boxes, not profit shifting.

Matthew Weston followed up on collaboration income, asking if a potential milestone payment should be modeled for 2025. He also asked about the impact of Medicare Part D reform on rebates and payer negotiations.

Answer

CFO Aradhana Sarin reiterated that 2024 guidance assumes flat collaboration revenue and the company does not guide for 2025. EVP, Oncology Business Unit, David Fredrickson, stated that Part D contracting is ongoing and emphasized the importance of clinical differentiation. CEO Pascal Soriot added that while the IRA presents headwinds, upcoming changes like a lower out-of-pocket cap should improve patient access.

Matthew Weston asked about Novartis's policy discussions with the White House regarding Medicaid and tariffs, and the company's CapEx plans over the next five years.

Answer

Vasant Narasimhan, CEO of Novartis, stated that the company is in weekly discussions with the administration regarding potential solutions, adhering to the president's four parameters. Harry Kirsch, CFO of Novartis, clarified that the majority of the $23 billion commitment is R&D OpEx, not CapEx, and expects overall CapEx to remain stable at 2.5% to 3% of sales, with free cash flow growing in line with core operating income.

Matthew Weston asked about Novartis's approach to policy deals with the White House regarding Medicaid and tariffs, and requested details on CapEx projections for the next five years, especially concerning U.S. investments.

Answer

CEO Vasant Narasimhan stated that Novartis is in weekly conversations with the U.S. administration to find solutions within the president's four parameters for drug pricing. CFO Harry Kirsch clarified that the majority of the $23 billion U.S. commitment is R&D OpEx, not CapEx, and overall CapEx is not expected to increase significantly, remaining around 2.5%-3% of sales, with free cash flow expected to grow in line with core operating income.

Matthew Weston noted the absence of a slide detailing first-half versus second-half profitability dynamics and asked if this implied a less sharp contrast this year. He also asked if Novartis was comfortable stating it pays a 'fair amount' of tax in the U.S., echoing a competitor's comment.

Answer

CFO Harry Kirsch explained that due to strong Q1 performance and an improved gross-to-net outlook, both halves of the year are now expected to be stronger, with H2 sales growth revised up to mid-single-digits. He also affirmed that Novartis pays its 'fair and proper amount of taxes' in all jurisdictions and is confident in its robust, OECD-compliant tax planning.

Matthew Weston asked about the assumptions for Medicare Part D reform's impact within the 2025 guidance, particularly concerning Novartis's large oral oncology portfolio.

Answer

CEO Vasant Narasimhan stated that Novartis has fully factored in a 'modest headwind' from the Part D reforms into its guidance. He identified Cosentyx and Kisqali as the most impacted brands. While the company has modeled the expected financial headwinds, it has not yet factored in significant potential volume uplifts from the patient out-of-pocket cap, viewing that as a potential midterm benefit.

Matthew Weston asked François-Xavier Roger about the 2027 Regeneron R&D reimbursement step-down (EUR 800M decrease, EUR 300M Amvuttra offset, EUR 500M gap) and potential mitigation levers. He also asked Houman Ashrafian about amlitelimab's differentiation given Lilly's Edglis Q8 week dosing showing limited erosion.

Answer

François-Xavier Roger (CFO) confirmed an EUR 800M R&D reimbursement decrease in 2027, partially offset by EUR 300M Amvuttra royalties, resulting in a EUR 500M gap, but expects BOI to increase in absolute value due to growth leverage. Brian Foard (Head of General Medicines) and Houman Ashrafian (Head of R&D) stated that IL-13s are incomplete therapies, Dupixent benefits from market growth, and amlitelimab, with its novel mechanism and durability, remains encouraging despite competitor dosing.

Matthew Weston asked about the financial impact of the Regeneron R&D reimbursement step-down in 2027, which implies a significant EBIT gap, and whether other levers could mitigate this. He also questioned if Lilly's Edglis Q8 week dosing data limits the differentiation for Sanofi's amlodipine, which aims for Q12 week dosing.

Answer

CFO François-Xavier Roger explained that while the €300 million R&D reimbursement loss in 2026 is offset by Amvudra royalties, the €800 million decrease in 2027 will only be partially offset by €300 million in royalties, creating a ~€500 million gap. He expects BOI to increase in absolute value in 2027. Head of General Medicines Brian Foard noted the AD market's low biopenetration and Dupixent's continued growth, suggesting IL-13s are incomplete therapies. Head of R&D Houman Ashrafian emphasized amlodipine's novel mechanism and durability as key differentiators.

Matthew Weston from UBS Group AG asked what prescribers want from amlitelemab in atopic dermatitis—superior efficacy or similar efficacy with longer dosing intervals. He also asked if potential U.S./EU tariffs were factored into 2025 guidance.

Answer

CFO François Roger clarified that potential tariffs are not in the guidance but would have a limited 2025 impact due to existing U.S. inventory. EVP & Head of R&D Houman Ashrafian stated that in the underpenetrated AD market, an agent with a longer treatment interval and efficacy consistent with the standard of care would be highly valued by physicians.

Matthew Weston questioned the Camlopixant trial timeline, asking what was delaying recruitment despite high unmet need. He also asked if ongoing Blenrep study protocols were being changed to add more US patients following the AdCom.

Answer

Chief Scientific Officer Tony Wood clarified there are no recruitment difficulties with Camlopixant; the timeline reflects a careful study design to enroll more high-frequency coughers and learn from competitor issues, with the trial on track for a mid-2026 readout. He also confirmed GSK is enacting plans for greater US patient representation in future oncology studies.