Novartis - Earnings Call - Q4 2024
January 31, 2025
Transcript
Operator (participant)
Good morning and good afternoon, and welcome to the Novartis Q4 2024 results release conference call and live webcast. Please note that during the presentation, all participants will be in a listen-only mode, and the conference is being recorded. After the presentation, there'll be an opportunity to ask questions by pressing star one and one at any time during the conference. Please limit yourself to one question and return to the queue for any follow-ups. A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends. With that, I would like to hand over to Ms. Sloan Simpson, Head of Investor Relations. Please go ahead, Madam.
Sloan Simpson (Head of Investor Relations)
Thank you, Sharon. Good morning and good afternoon, everyone, and welcome to our Q4 and full year 2024 earnings call. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors. These may cause actual results to be materially different from any future results, performance, or achievements expressed or implied by such statements. For a description of some of these factors, please refer to the company's Form 20F and its most recent quarterly results on Form 6K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission. Before we get started, I just want to echo Sharon's comment. For all of our analysts, please limit yourselves to one question at a time, and we'll cycle through the queue as many times as we can. And with that, I will hand across to Vas.
Vas Narasimhan (CEO)
Terrific. Thanks, Sloan, and thanks, everybody, for joining today's call to review our Q4 2024 and full year results, so moving to slide four, as you saw this morning, Novartis delivered one of the strongest performances that we've had in our history in 2024. When you look at Q4, our sales grew 16%, and core operating income grew 29% in constant currency, and on the full year, we had 12% sales growth and 22% core operating income growth, with our margin reaching 38.7%, well on our way to our goal of a 40% plus margin. We also had important pipeline highlights in the quarter, including for Scemblix and Kisqali, which we'll go through in more detail later on in the call.
Overall, we met and exceeded our full year guidance in 2024 and were confident in continued growth in sales and core operating in 2025, as Harry will outline later in the call, so moving to slide five, our priority brands continued to drive robust growth in the quarter. And I think, importantly, that demonstrates we have the replacement power to consistently grow through the end of the decade. Overall, this portfolio of brands grew 38% in constant currencies, and excluding Entresto, grew 41%. So we feel very good about the momentum we have, and this is what gives us confidence in the 5% plus sales guidance out to 2029 and the mid-single digit growth we believe we can deliver in the long term.
Now, moving to slide six, Entresto achieved sales of $7.8 billion on the full year, that's up 31%. When you look at the left side, you can see we had very good growth both in the United States and in our international markets. The total prescriptions for Entresto on the weekly TRx in the U.S. continue to climb. We had plus 41% growth in the United States with 9,000 NBRx's per week. ex-U.S. continued to perform well. And I think, importantly, we see very good performance in heart failure as well as hypertension in China and Japan. Now, when we look at the outlook for Entresto, we've updated the markets that for forecasting purposes, we assume Entresto LOE in mid-2025. As you likely have seen, our combination patent is upheld, and we currently believe we will be able to secure pediatric exclusivity, though we'll continue to monitor the situation closely. That enables us to guide to a mid-2025 LOE.
Outside of the U.S., our RDP protection lasts till November 2026, with protection in Japan till 2030, and we continue to pursue additional options for further protection in these markets. I think when you think about forecasting Entresto for the rest of the decade, it's important to note that the U.S. sales are about 50% of the global sales, but importantly, Europe contributes 20%, and China and Japan total 15% of this brand, so moving to slide seven, Cosentyx topped $6 billion of sales in the full year, growing 25%. This was fueled by our new launches in HS as well as the IV launch. When you look at the fourth quarter, we had U.S. sales up 36%, as mentioned by the key launches. Outside of the United States, we had 7% constant currency growth, driven mainly by volume in our core indications.
Now, when you look at how things are unfolding for the brand, we remain number one, the number one IL-17 in the U.S. dynamic market, and we remained the leading originator biologic in both the EU and China. Now, looking ahead, we plan to accelerate growth through the HS launch with the NBRX leadership we've already established with 60% NBRX share and continuing to secure reimbursement in our key markets. Now, IV has started to see accelerated adoption in the U.S. We have about 1,625 accounts ordering. We saw 22% quarter-on-quarter growth, but it's still early days, and we're working through now really accelerating the IV adoption. Over the course of the year, we expect two phase III readouts in giant cell arteritis and polymyalgia rheumatica, which, if positive, would provide further engines for growth for Cosentyx through the remainder of the decade.
Now, moving to slide eight, Cosentyx grew 49%, reaching $3.2 billion on the full year. It was outpacing both the B-cell and the MS market. We're really pleased by the performance in the U.S. and also very solid performance outside of the United States, growing 42% in the U.S. with TRx growth at 29%. We're outpacing the B-cell segment. We see our NBRX share in the high 20s in the B-cell segment. Outside of the United States, we had 67% constant currency growth, which we're really pleased with. Overall, 70% of the new patients in the United States are first line or first switch. 80% of the U.S. commercial lives have now first line coverage, so we're in a very good position from that standpoint, and we were right now the number one NBRX naive medicine in seven out of the 10 ex-U.S. market.
I think the setup overall for Cosentyx looks really good, very strong performance in the U.S. and ex-U.S., and that gives us confidence in reaching the peak sales guidance that we've set out for this brand. Moving to slide nine, Kisqali grew 49% in the full year, reaching $3 billion in sales. This is a reflection both of the strong performance we're seeing in the metastatic setting and in the early breast cancer setting. As you can see in the middle panel here, we've outlined the total brand NBRx across the market, and you can see the significant increase we've seen in total brand NBRx post the approval in early breast cancer and the positive NCCN guidelines. The brand grew 65% in the U.S. in quarter four. We have metastatic share at 50% now and TRx share at 33% and climbing.
In the EBC setting, the early breast cancer setting, we've already reached 52% NBRx share within three months of launch. And so we are getting very positive feedback from physicians and seeing solid uptake both in node negative and node one patients without risk factors, as well as the overlapping node one and node two plus patient populations. I mentioned the category one NCCN guidelines, which is really positive for the brand. And importantly as well, we announced this morning that we've settled the compound patent litigation with a generic manufacturer, and that supports Kisqali U.S. patent protection until at least Q1 2031. Outside of the United States, we grew 34% in constant currency with a leading share, NBRx share at 42%.
The early breast cancer launch is ongoing now in Europe and other geographies, and that should provide a further driver of growth for Kisqali over the course of this year. We guided to $8 billion plus, and I think the early signals are clearly indicating that we're going to be able to get there and hopefully do better. Now, moving to slide 10, Pluvicto delivered full year sales of $1.4 billion, 42% in constant currencies in the post-taxane setting. Most importantly, we spent a lot of our energy in quarter four laying the foundation for the pre-taxane PSMAfore launch, which we expect in the first half. When you look at the quarter, we grew, you can see 28%. Overall, our performance was absolutely in line with what we guided to in our quarter three conference call. U.S. was up 12%.
We achieved 40% NBRx share within the VISION population. Pluvicto is now available in over 20 countries outside of the United States. And we're confident that we can now accelerate growth with the PSMAfore launch in 2025. The final OS was read out over the course of January with an HR unadjusted hazard ratio of 0.91. And you can see the confidence intervals here. The filing has been submitted to the FDA last year, and the review is ongoing. And so far, there is no adcom plan for this brand. So I think that's really a positive signal, and we'll see now how quickly we can get to launch. We have over 590 sites open for the brand. 350 sites are actively ordering. And every month, every week, we're adding more sites. We're getting more sites to actively order.
We're getting further into community oncology, which will set us up not only for Pluvicto, but our broader RLT pipeline over time, and we expect the initial uptake for PSMAfore to come primarily from the depth we'll get in these existing sites and then grow over time, certainly as we try to reach deeper into the oncology community practices. We're also progressing on our efforts to expand Pluvicto further, as well as our broader RLT expansion. The PSMAfore readout is on track for the second half of this year. We have Pluvicto filings ongoing in China and Japan, and in both of those geographies as well. We've announced manufacturing facilities to support the launch of Pluvicto and, of course, Lutathera.
And we've also now initiated planning for our Actinium PSMA-617 phase III study, the first of two Actinium studies we're now planning to move into phase III on to have continued lifecycle management in prostate cancer with radioligand therapies. Now, moving to slide 11, Leqvio showed a steady trajectory, delivered 114% constant currency full year growth in the quarter, 83% growth versus prior year. We're really pleased that now in the U.S., our growth is outpacing the overall advanced lipid lowering market. We have over 3,000 health systems ordering now Leqvio. That represents 68% of the overall market volume. We have depth that's increasing, and I think we're getting better and better traction with the overall buy and bill comfort levels within cardiology practices. We see demand growth in all relevant channels. Outside of the United States, we've seen robust growth as well.
Leqvio is now registered in over 100 countries. We see solid uptake in markets such as Germany, and in China, our out-of-market growth really makes it one of the top-ranked markets we have outside of the United States. We have an ongoing launch as well now in Japan. So looking ahead, we have a number of clinical stage readouts coming over the course of 2025, which will help, I think, round out the profile of Leqvio as we await the outcomes trials readouts in secondary prevention in 2026 and 2027. Now, moving to slide 12, Scemblix grew 68% for the full year with continued momentum in the third line setting and early progress that we're already seeing in the front line setting. We're a market leader now in the third line CML setting with NBRx share of 49%.
We're three times higher than the nearest competitor, which I think shows how well established now Scemblix is amongst hematologists. Outside of the United States, our leadership is at 66% for NBRx and total patient share in our key markets. And when you look at the earlier line launch, what was critical is that we have already received NCCN category one preferred recommendation in November. And then we also already see now Scemblix is the fastest growing TKI by NBRx share across all lines of therapy. And we're the market leader now in second line NBRx with a share already at 29%. And that's just in the first few months of launch. So assuming we can really drive that continued trajectory, we should see very strong uptake overall for Scemblix in the coming quarters. So we're confident in the global first line opportunity.
We read out the 96-week data recently as well, which reinforces superior efficacy, and I'll say more about that in a moment, and then we also showed some very good data that showed on treatment discontinuation as well that Scemblix provides a clear profile win over nilotinib. Now, going to slide 13. That ASC4FIRST 96-week data reinforces superior efficacy and safety. When you look at the data set here at 96 weeks on the left-hand side of the chart, you can see against all TKIs, we continued to show a significant improvement, a statistically significant improvement in major molecular response. Similarly, versus imatinib, a significant improvement in major molecular response, and while we weren't powered, our point estimate difference against second-gen TKIs continues to improve as well over time.
Now, when you look at the safety profile, we maintain the very excellent safety profile that we had at the earlier time point, whether it was grade three AEs, AEs leading to discontinuation, or AEs leading to dose interruption, an excellent profile for the brand. So overall, we offer here a medicine that has high efficacy, compelling safety, and we believe over time, as there's more and more experience, we'll become the preferred agent in first, second, and third line for CML patients. Now, moving to slide 14. Now, turning to Fabhalta, as you're aware, Fabhalta is now launched in two indications in PNH and IgAN. And while it's early days, I think we see really solid, steady performance for this brand, a 23% volume growth in PNH. Most of the source of business at the moment is switched patients from the established therapies.
We see over 90% of patients staying on therapy continuing after their first refill, very good commercial coverage levels. We're approved now in 40 countries, and so step by step as well, we're progressing the launch in other geographies. The early signs for the IgAN launch as well are very encouraging. We've seen strong access with 67% commercial coverage already to label. We're seeing a number of nephrologists, a sizable number of nephrologists completing REMS certification. And we also see a high interest in our conversations with opinion leaders on the Fabhalta MOA. One other update we have as well for Fabhalta is that the C3G filing was completed in quarter four. We received priority review. The FDA has confirmed no ad comm for C3G, so we're now preparing for a launch in the first half of 2025. So moving to slide 15.
So when you look across the full year, I think we delivered very good innovation momentum across regulatory decisions, submissions, readouts, and phase III starts. Obviously, the critical approvals were delivered upon particularly the Kisqali early breast cancer, the Fabhalta approvals, the filings of Pluvicto, and the approvals for Scemblix. So I think we really are looking forward to maintaining and continuing that momentum in the year to come. One important readout that we did have in quarter four, turning to slide 16, was for the STEER study for OAV101 IT. This is the intrathecal version of Zolgensma that is administered intrathecally at roughly one-tenth the dose of what we see in the IV administration. This was tested in children and young adults over two years of age.
We're really pleased to see that we've met the primary endpoint for an increased versus baseline for the Hammersmith score, HFMSE, which is the gold standard. Not all of the therapies in the space have been tested against the Hammersmith score. So we chose the gold standard, and we demonstrated that we met the primary endpoint of a statistically significant improvement versus a sham or a placebo as requested by FDA, a very favorable safety profile consistent with what we've seen in other settings. We're looking forward to presenting the data at an upcoming medical congress. You can see the study design over on the right. And our goal here will be to try to secure a broad indication across the various age levels and looking forward then to advance this with global regulatory submissions across the various geographies.
A sizable number of patients have not had the opportunity to benefit from Zolgensma in the first six months of life. Now we're really excited now to give those patients a very compelling one-time treatment option that can hopefully stabilize and potentially improve their disease. Now, moving to slide 17, we also completed an exciting deal in our neuroscience pipeline. This is the PTC518. It's a potential first-in-class oral disease-modifying therapy for Huntington's disease. We have a lot of expertise in oral splicing agents. We had a molecule called LMI070, which ultimately did not progress because of peripheral neuropathy signals that we had during the development program. This is a space we know well, and we really believe PTC518 has a very strong profile, as evidenced in the interim readout of their phase II study.
As you know, in Huntington's disease, a very fatal neurodegenerative disease with really no disease-modifying therapies at the moment. Prevalence is 37,000 in the U.S. and 28,000 in the E.U.. So we have an opportunity, hopefully, to make a big difference. We would expect the phase II readout for the study in the first half of 2025, and then moving to pivotal phase III studies thereafter. Now, moving to slide 18. So our goal will be to continue our innovation momentum in 2025. We outlined to meet the management. We have a deep and broad pipeline across our four therapeutic areas, across our key platforms. And our goal now is to advance the next wave of therapies, both in terms of approvals and submissions.
You can see the list here, but also readouts and study initiations, which will really fill up that mid-stage pipeline and then allow us to maintain our growth momentum well into the 2030s and beyond. So moving to slide 19, and to close, I just wanted to remind you of our confidence in our midterm guidance of 5% plus sales growth out to 2029 and a 40% core margin by 2027. We're very comfortable that we can, with our replacement power, outpace the GX impacts that we have to 2029. We have an exciting set of in-market growth drivers, many of which have protection well into the 2030s. We have the pipeline probabilized and are hopefully, with positive clinical data and approvals, that pipeline will become further unprobabilized and medicines like Remibrutinib, OAV, Ianalumab, pelacarsen, and Atrasentan can further drive the growth profile of the company, so an exciting year.
We're really excited by our performance in 2024 and excited about continuing delivering the strong results and strong innovation delivery into 2025. With that, I'll hand it over to Harry.
Harry Kirsch (CFO)
Yeah, thank you, Vas. Good morning and good afternoon, everyone. I'll now talk you through our financials for the fourth quarter and full year in 2024, which, as Vas mentioned, has shown some of the strongest performance in our history. As always, my comments refer to continuing operations and growth rates in constant currencies, unless otherwise noted. Starting on slide 21, giving a bit of context, our results in 2024, which is here on the far right of each of the three charts, was really our first full year as a pure-play innovative medicines company, and we continue to show a strong track record of sales growth with margin expansion.
If you look back over the last five years, we have grown sales at a 7% CAGR and operating income at a 15% CAGR through consistent, strong commercial execution and overall significant progress on operational productivity. This has resulted in core margin expansion of 1,100 basis points in constant currencies, putting us on a clear path to achieve our midterm margin guidance of 40% plus by 2027. I think when you look at this track record, it becomes very clear that we have lifted the company to a whole new level of sales margin and, as we will discuss later, free cash flow. Moving to slide 22. We guided to a low double-digit sales growth for full year 2024, and we achieved 12%, so meeting our guidance.
For core operating income, we delivered 22% growth, exceeding by one notch our guidance, reflecting the strong momentum we have seen in our priority brands, good old and new launches, as well as cost discipline throughout the end of the year, including some productivity gains. On slide 23, you'll see a summary of our financial performance. In the quarter, sales were up 16%, and core operating income increased 29%. Core EPS was $1.98, up 33%. To note, in quarter four, we benefited from some gross-to-net favorability, mainly in the U.S. This added about 3 percentage points of growth to quarter four from gross-to-net true-ups based on invoices for prior quarters in 2024. The underlying growth in quarter four has been a very strong 13%, slightly better than a 12% sales growth for the full year in 2024.
For the full year, core margin expanded 330 basis points versus prior year in constant currencies to reach 38.7%. Core EPS was $7.81, up 24%. And free cash flow grew 24% to $16.3 billion, a record high for Novartis. Now, speaking of free cash flow, let's turn to the next slide. You can see free cash flow generation has really accelerated since we completed our transformation into a pure-play pharma company end of 2023 and also finalized our transformation program, transformation for growth program, which we announced April 22. This has been a focus for us to, of course, ensure that not only operating income increases, but appropriately also free cash flow, so high quality of core earnings and strong free cash flow generation. And in fact, we have generated more cash than we did as combined businesses, be it with Sandoz or a few years back, even with Alcon.
This gives us also ample capacity, of course, to reinvest in the business, pursue bolt-on deals, and return attractively to our shareholders via growing dividends and buybacks. This brings me to my next slide. We continue to execute in line with our shareholder-friendly capital allocation strategy, which balances the priorities I mentioned. We invest over $9 billion in R&D in 2024 and completed more than 30 bolt-on deals over the last two years to strengthen our pipeline, particularly in the area of neuroscience, R&D, and renal. With respect to returning capital to shareholders, we remain committed to consistently growing our dividend in Swiss francs per share and completing our ongoing share buyback, which has about $5.4 billion still to be executed in 2025. Now, on to the next slide, please. To the dividend.
We are really pleased to propose the 28th consecutive dividend increase to CHF 3.50 per share, an increase of 6% in Swiss francs and CHF 0.20 after the prior few years of CHF 0.10 per year. As you know, we did not rebase our dividend for the spin-off of Sandoz nor Alcon. This represents really an attractive, consistent growth over time in line with our commitment to our shareholders. Moving to slide 27. For full year 2025, we expect continued strong sales growth with margin expansion, with sales growing mid- to high-single digit and core operating income growing high-single- to low-double-digit. Embedded in our guidance is the financial planning assumption that the Tasigna, Promacta, and Entresto U.S. generics entry occurs in the middle of 2025. I'll give some more detail on expected half one versus half two dynamics on the next slide.
To complete our full year guidance, please note that we expect core net financial expenses to be around CHF 1 billion and our core tax rate to be around 16%-16.5%. On slide 28, we have shown illustratively how we expect half one and half two dynamics should generics for Entresto, Tasigna, and Promacta enter in the U.S. in mid-2025 as per our financial planning assumption. Overall, we expect continued strong volume growth from priority brands in 2025. In half one, we expect sales to grow low double digit, while we expect, of course, a softer half to due to the impact of the three potential generic entries with low to mid-single-digit sales growth. Likewise, we expect half one core operating income to grow in the high teens versus low- to mid-single-digit growth in half two.
And now finally, let's have a quick look at the currencies, as they always move around. And if late January rates were to prevail for the remainder of 2025, we would expect the full year currency impact to be a -2% on sales and -3 percentage points on core operating income. As a reminder, we always provide an estimated impact of exchange rates on our results on a monthly basis on our website. And with that, I hand back to Vas.
Vas Narasimhan (CEO)
Terrific. Thank you, Harry. So coming to the final slide, and really just in summary, continued strong business momentum in quarter four, one of the best financial performances in the company's history, met and exceeded our full year guidance. We're advancing our pipeline, including new approvals, but importantly, readouts for assets that will fuel our mid to long-term growth and really ensuring we advance the mid-stage pipeline.
I expect to continue strong sales growth with margin expansion in 2025, as Harry outlined, and we remain on track to deliver our midterm guidance of 5% plus sales growth through 2029. With that, Sharon, we can open the line for questions.
Operator (participant)
Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. Please limit yourself to one question and return to the queue for follow-ups. To withdraw your question, please press star one and one again. We will now take the first question. Your first question comes from the line of Florent Cespedes from Bernstein. Please go ahead.
Florent Cespedes (Senior Sell-Side Analyst European BioPharmaceuticals)
Good afternoon. Thank you very much for taking my question. A quick one on the guidance. As the guidance is a little bit better than expected on the top line, but also on the margin. And as Entresto is a very profitable product and you will lose percent and you have generics from the mid of this year, we are just wondering if you could elaborate, Harry, what are the where we should see some pressure and where you will have some growth that will offset the generic impact on the P&L and on the top line. Thank you.
Vas Narasimhan (CEO)
Thanks, Florent. Harry?
Harry Kirsch (CFO)
Yeah, thank you, Florent. I mean, in the end, all starts with the top line, as we all know, in the pharma businesses. So having our mid- to high-single-digit sales growth, given the strength of our growth brands and launches, that is a good starting base. Also, our other products are quite profitable.
Now, of course, profitability does vary by the different brands, but overall, with the mid- to high-single-digit sales growth and our ongoing resource allocation and productivity programs, we are very confident that with that, we will have also some moderate margin increase. So from that standpoint, and I laid out half one, we will be more, obviously. And if these generics would enter, half two would be basically pretty much low- to mid-single-digit, both on top and bottom line. That's fine. But overall, very confident in that sales growth with these assumptions, as well as the underlying volume growth when you look at it, right? 14%, 15% volume, and then it depends a bit. Pricing was quite neutral last year. And then it depends simply on generic assumptions there. But also with a 5%, very confident, the 5% CAGR on the five years.
And then, of course, from 38.7% to 40% plus, it's not that far in 2027. But we have good ongoing productivity. And therefore, especially on SG&A with good resource allocation, and the launches are mostly in areas where we have already strong presence, we would expect SG&A to grow below sales growth, as you have also seen in the prior two years.
Vas Narasimhan (CEO)
Thank you, Florent. Next question.
Operator (participant)
Thank you. Your next question comes from the line of Simon Baker from Redburn Atlantic. Please go ahead.
Simon Baker (Partner and Head of Global Biopharma Research)
Thank you for taking my question. And it's kind of a continuation from Florent's question. Just mindful of the loss of exclusivity potentially for Entresto later in the year. Historically, you've been very, very good at managing gross margin through patent expires. I just wonder, Harry, I know you don't guide on gross margin. If you could just give us any commentary around the resilience of the gross margin in 2025 in light of that event? Thanks so much.
Vas Narasimhan (CEO)
Harry?
Harry Kirsch (CFO)
Yeah, thanks, Simon. So as I mentioned on prior calls and in IR roadshows, the further margin improvement I expect to basically fully come from SG&A as we, with good resource allocation, basically slightly grow SG&A, but significantly below sales growth. The gross margin comes a little bit under pressure as we lose small molecules where we don't pay royalties, with either small molecules where we pay some royalties or larger molecules. But all of that will be more than offset by the SG&A efficiencies. And of course, also our colleagues in manufacturing and supply chain continue to work on very good productivity programs and have cost reduction programs on each of our products in a very impressive way.
Of course, never compromising quality or supply, very high 99.5% plus supply customer service levels. And with that, a little bit pressure on the gross margin because of increasing royalties, but by far compensated from SG&A efficiencies.
Simon Baker (Partner and Head of Global Biopharma Research)
Great. Thanks so much. Thanks, Simon.
Vas Narasimhan (CEO)
Next question.
Operator (participant)
Thank you. Your next question comes from the line of Matthew Weston from UBS. Please go ahead. Hello, Matthew. Are you on mute? Due to no response, I'll move to the next question. One moment, please. Your next question comes from the line of Richard Parkes from BNP Paribas. Please go ahead.
Richard Parkes (Equity Research Analyst)
Hi. Thanks for taking my question. I think I'll take one on the Huntington's program. Obviously, huge unmet medical need, terrible disease. But there have been some other failures in that area in the past. I'm just wondering what makes you more confident in the approach, what you've learned from those past experiences, and to what degree do you think the PIVOT-HD trial will de-risk the probability of success given it's a slowly progressing disease and the study's relatively short? Or will we still be seeing it as a high-risk program? That would be really helpful. Thank you.
Vas Narasimhan (CEO)
Yeah, thanks, Richard. And I think as you're aware, the goal here is to take down mutant Huntington, but at a level where you're not taking it so low that you have adverse consequences from reducing Huntington's too much. I mean, generally speaking, the feeling in the field is you want to reduce mutant Huntington protein by 30%-50%. And then alongside that biomarker, you want to see clinical signs of improvement.
So I think at their interim results, PTC has shown the relevant MHTT lowering. They've seen some signals of clinical efficacy and a very good safety profile without some of the peripheral neuropathies that we saw in our own program. So I think all of that taken together makes the program look like it's headed in the right direction. I think the big question, of course, is does reducing a mutant Huntington at that level lead to a large enough or important enough clinical benefit that would lead to, most importantly, helping patients, but also regulatory approval? I think we'll see how the phase II-B study reads out. Obviously, if it's a very compelling result, it might enable us to take it forward for a filing.
And if not, we would then need to go to a full pivotal study and then really answer the question, does reducing mutant Huntington at that level lead to the clinical benefits that one would hope? So it's been, I think, PTC has developed the product in all the right ways. They've had good dialogue with the regulators. So we're hopeful that we see a good result on the phase II-B study, and then we'll take over and run those phase III studies. And hopefully, we can bring an important first disease-modifying therapy to these patients who badly need it.
Richard Parkes (Equity Research Analyst)
Thank you.
Vas Narasimhan (CEO)
Thanks, Richard. Next question, Operator.
Operator (participant)
Thank you. Your next question comes from the line of Emily Field from Barclays. Please go ahead.
Emily Field (Vice President and Equity Research Analyst)
Hi. Thanks for taking my question. The first one was just a clarification question from the first question that was asked by Florent.
If you could just confirm the contribution of favorable gross-to-net adjustments to sales in Q4 2024. And then I just wanted to ask a question about Pluvicto. I mean, I know the guidance had been not to expect significant sales growth until the additional indication of PSMAfore was added. But was there any particular driver behind the sequential decline in the U.S. quarter over quarter? And would you expect any of the DTC and promotional efforts that you've been putting in place to have an impact on sales ahead of the PSMAfore approval? Thank you.
Vas Narasimhan (CEO)
Yeah, thanks, Emily. So back on the guidance, Harry?
Harry Kirsch (CFO)
Yeah. So I think your question was how the gross-to-net in quarter four impacting the guidance. So let me try, and then you can tell me if it was sufficient.
So we had a growth of 16% in quarter four, as you have seen in constant currency. About three points of that was due to true-ups of gross-to-net for prior quarters of 2024. So underlying 13%. The full year sales by brand in 2024 is basically undistorted. The underlying growth for 2024 is 12%, as you see in the report. So if you want to have a basis, it's best to take the full year 2024 sales, and these are undistorted overall. Now, of course, that has lifted the overall 2024 sales. And we have, of course, computed that, if you will, into our 2025 gross-to-net calculations. And a key element of this is really Medicaid utilization is continuously reducing to pre-pandemic levels. Now, we do not assume that it gets lower and lower.
We basically assume that in 2025, we see what we have seen as the latest for 2024, which is a reasonable assumption, so we never take risky assumptions on gross-to-net. It's obviously a big pot of money, right? Like CHF 16-20 billion in sales, as we have like 50% of our U.S. list prices being gross to net. But from that standpoint, it has lifted this more favorable gross-to-net situation for 2024, our sales level, and from that, we expect to grow mid- to high-single-digit. I hope that clarifies your question.
Vas Narasimhan (CEO)
And then
Emily Field (Vice President and Equity Research Analyst)
Thank you.
Vas Narasimhan (CEO)
Emily, on Pluvicto, when you look at it in Q4, it was really in line with what we had expected. In Q3, we had the benefit of some one-time adjustments in France and Germany.
But then when you all look at where we had guided for Q4, it's roughly almost exactly with where we had expected. Now, I think looking ahead, we are hopeful to see further progress in the VISION population. But I think that will be you know not a rapid increase. I think we've already gotten to 40% NBRx share. And now we'll need to get to steady gains by expanding further and further the number of treating sites for the VISION population. But it is possible, certainly, that the DTC will start to have an impact that we kicked off in quarter three of last year. Usually, it takes six months for DTC to have an impact. So it would be around February, March of this year, we might see some impact on the VISION population. But really, our organization's focus is on the PSMAfore launch.
I think now that we have really compelling rPFS data, we have very compelling data on distant mets. We have now the OS unadjusted for crossover at 0.91. I think everything now is a good setup to go into a population that's three times larger, really ensure the sites that are already using Pluvicto now fully maximize their capacity to get as many patients to benefit from the therapy as possible, and also accelerate our efforts to get even more sites ready in the community. We've launched a number of initiatives. We're launching a few more over the course of the quarter to really simplify and hopefully get clinicians very comfortable, even in the community oncology setting, providing radio-pharmaceuticals or radioligand therapy, and that's where I think we're going to see the next uplift for the brand. Next question, Operator. Thank you.
Operator (participant)
Your next question comes from the line of Matthew Weston, UBS. Please go ahead.
Matthew Weston (Managing Director and Pharmaceutical Research Analyst)
Thank you. I don't know what happened earlier. It's a question for Harry. And it's again about guidance, Harry, but particularly about the impact of Medicare Part D reform on what you've assumed within your growth. So one of the questions we've had a lot this morning from investors is, how can you be so confident given that you have a very large oral oncology portfolio, which is assumed to be used largely in a Medicare Part D population. So what have you assumed in your outlook are the puts and takes around that portfolio from that new reform?
Vas Narasimhan (CEO)
Yeah, thanks, Matthew. I'll actually take that one. Overall, we expect a modest headwind from the Part D reforms. And we fully factored that into our guidance.
The two brands where we see the biggest impact of the reforms primarily paying into the to cover in the catastrophic phase are for Cosentyx and Kisqali. But overall, when we look at it, we factored in the expected modeled headwinds from that. We look at the potential volume uplift, which we don't really put a lot of stake in yet because we'd really like to see how that ultimately unfolds over the course of this year. And we see a modest headwind, which we think we can manage fully. And that's incorporated into our guidance. I think we'll see. I mean, I think in the midterm, the policy should lead to volume uplifts, more patients staying on therapy, which is why the industry wanted the $2,000-out-of-pocket cap.
That would ultimately, of course, improve patient compliance, staying on their medicines, and ultimately positively impact our sales in the coming years. In this first year, I think it's hard to put much credence on that. But beyond that, we feel very comfortable with the modeling that we've did. We think we've taken appropriately conservative assumptions.
Matthew Weston (Managing Director and Pharmaceutical Research Analyst)
Thank you.
Vas Narasimhan (CEO)
Next question, Operator. Thanks, Matthew.
Operator (participant)
Thank you. Your next question comes from the line of Richard Vosser from J.P. Morgan. Please go ahead.
Richard Vosser (Managing Director and Senior Analyst)
Hi. Thanks for taking my question. Question on Kisqali. Looking at the NBRx share in metastatic, it stayed at sort of 50% for a number of quarters and maybe a couple of years now. So I'm just wondering what it takes to change that. You have a superior product. Does the sort of halo effect from adjuvant allow you to get more accounts on board?
Just, can we see that displacement of Ibrance? Just your thoughts. Thanks very much.
Vas Narasimhan (CEO)
Yeah, thanks, Richard. I think the Kisqali shares really started to gain in the first part of last year after we had the early breast cancer readout and led to a lot more confidence overall in the brand as well as the NCCN guidelines further supporting the use of Kisqali. I think now we are hopeful that with the early breast cancer readout and then the opportunity to have a single medicine for all patients within a clinic, that we can drive the overall share, NBRx share, higher than 52%. We do have a cap probably somewhere around 75%-80% just because of some of the payer dynamics and some of the contraindications for Kisqali.
But of course, our goal is to get from that 52% as high as we can to that 75% over the coming years. Of course, we have plenty of time now to do that. And I think we should see steady gains over time on that one. But the biggest focus for us right now is maximizing the opportunity in the node zero and node one patients without risk factors where Kisqali is uniquely labeled and our competitors are not. And our ability to get those patients diagnosed and then ultimately on therapy, it's such a sizable population. And the size of, obviously, the public health benefit we can deliver, that's the core focus for us overall. And then with that, of course, we should see metastatic gains as well.
Richard Vosser (Managing Director and Senior Analyst)
Cool. Thanks.
Vas Narasimhan (CEO)
Next question, Operator.
Operator (participant)
Thank you. Your next question comes from the line of Graham Parry, Bank of America. Please go ahead.
Graham Parry (Senior Pharmaceuticals and Healthcare Analyst)
Great. Thanks for taking my question. It's just on Entresto. Just wanting to get perhaps a little bit more detail on the dynamics that are factored into the guidance for 2025. So what sales progression are you looking at worldwide and in the U.S.? And in the U.S., do you see a benefit in the first half of the year from donut hole discount removal? And to what extent does that offset some of the generic decline you should get in the second half of the year? And on generics, how confident are you can hold off Entresto generics until 16th of July? The court filing seems to suggest that MSN is trying every which way to launch at the moment. And there's only one appeal court stay in place blocking them from doing that.
And are you confident they haven't shipped any products at all in that narrow window where there wasn't actually a stay in place a couple of weeks ago? Thank you.
Vas Narasimhan (CEO)
Yeah, thanks, Graham. On the overall dynamics, Harry?
Harry Kirsch (CFO)
Yeah. Overall, we would expect continued good growth of Entresto until from a forecast assumption standpoint in the middle of the year. Of course, our colleagues in the legal and IP department will do everything to appropriately defend further patents. But that's for now the financial forecast assumption. And so we would see growth on that. And yes, you are right. There's some favorability from the Medicare Part D design on Entresto as it is not a very high-priced specialty product. So very positive dynamics expected until LOE would happen in the U.S.
And then, of course, actually, when we look at the multi-year outlook and forecast, Entresto is one of the products that's really underforecasted versus our model from the consensus due to the fact that Europe, at least end of 2026, Japan, 2030. Then we have a large tail-end product almost on large, even small molecules in emerging markets. So also there, quite a lot of, let's say, remainder of sales because of Japan should be a blockbuster. Then emerging markets, once even end of 2026, Europe would see generic entries.
Vas Narasimhan (CEO)
Thanks, Harry. Of course, we're pursuing all options in Europe and Japan to ensure we maximize the exclusivity for Entresto in those geographies. There's certainly options that might materialize. Now, I think on the U.S. dynamic, to our knowledge and our best understanding, there were no products shipped into the channel in those few hours.
The stay is in place. MSN has requested a reconsideration of the circuit court's stay. Of course, we'll monitor that situation. But we believe it's very clear that the spirit of the law very much is that we did our pediatric exclusivity studies. That pediatric six-month extension on the combination patent, which has been upheld, should be respected. So that's our very clear position. We, of course, continue to litigate out the amorphous complex patents as well as the lawsuit that we have that the FDA should not have approved products with a carve-out on the dosing regimen on the label. Those court cases also continue to go on over the course of these months. We'll see how it unfolds. Our best estimate at the moment is to give you that forecasting guidance of middle of the year.
And if anything changes, either we or, I think, IPD will let you know. Probably IPD sooner than us. But we do the best we can. So thank you very much, Graham. Next question.
Operator (participant)
Thank you. Your next question comes from the line of Etzer Darout from BMO Capital Markets. Please go ahead.
Etzer Darout (Managing Director and Senior Biotechnology Analyst)
Great. Thanks for taking a question. I had a couple of inbound this morning. Just wondering if you had any maybe additional commentary you could provide on the push out of the Horizon phase III and maybe what could be driving the event sort of rate dynamic relative to your initial event rate assumptions. Thank you.
Vas Narasimhan (CEO)
Yeah, thanks, Etzer. So this is an event-driven study. We've been modeling the event rates. I think I've also heard a few questions. There's been no interim analysis. No interim analysis drove this.
This was just event rate modeling on the blinded event rates that we saw. And we expect now to reach the final number of events, which is, I think, always preferable for a cardiovascular study that we need to ensure is adequately powered in the first part of next year. We don't have a good, unnecessary guess. I mean, in general, I would say cardiovascular outcome studies have been trending to lower event rates over time. It's important to note that in these studies, we very rigorously ensure that all patients are at their appropriate treatment levels for LDL lowering to ensure that we can isolate the impact, as FDA asks us, of the Lp(a) lowering therapy. So it could be the background rate. It could be the drug is working. That's always our hope. But we can't be sure of that as well.
So we'll see over the course of next year at the end how the study reads out. But we remain very confident that the drug is doing what it's supposed to do. Mechanism of action is clear. When we look at the profile of the patients that we enrolled, this is the high-risk patient population we wanted to enroll, high levels of Lp(a) that then with the lowering that we are seeing that we expect to see that should lead to the cardiovascular risk reduction that we hope for. So that's the best guidance I can give you at this point in time.
Etzer Darout (Managing Director and Senior Biotechnology Analyst)
Great. Thank you. I appreciate the color.
Vas Narasimhan (CEO)
Next question, Operator.
Operator (participant)
Thank you. Your next question comes from the line of James Quigley from Goldman Sachs. Please go ahead.
James Quigley (Executive Director)
Great. Thank you for taking my question. Going along the guidance, unfortunately.
Harry, would you be able to sort of split the guidance out between volumes, generic impact, and pricing? I mean, presumably, pricing is close to zero or slightly negative. But it'd be super helpful if you could give us an idea of how that breaks down. And then secondly, on the slide where you break out the half one versus half two, obviously, the second half takes a hit because of generics. Where would that land if you didn't have the generic impact? And is low to mid-single digits, say, a sort of sensible exit rate for the second half of your guidance out to the end of 2029? Appreciate that you don't guide on the individual years. But just some color would be useful.
Vas Narasimhan (CEO)
Yeah, thanks, James. Harry?
Harry Kirsch (CFO)
Yeah. Okay. So let's give it a try.
So overall, we expect continued, if not slightly increased volume growth due to our launches and continued very good execution from a volume standpoint. Right? Pricing probably will be a little bit more pressure. Usually, we have in only a year like 1 to 2 percentage points negative. Last year in 2024, we had flat. But there's a little bit of gross to net pressure due to Medicare Part D redesign. But nothing traumatic there. And the key impact will be an increased generic according to these forecast assumptions. Now, for the U.S., we have taken simply analogs for small molecules in the different categories, cardiovascular as well as onco. And that's what you can model yourself. Now, if these three would not happen, I would expect the first half to look like the second half. Unfortunately, there is not an unreasonable assumption they will happen. Right?
So that's why we carefully have modeled this.
James Quigley (Executive Director)
Thank you.
Harry Kirsch (CFO)
All right.
Vas Narasimhan (CEO)
Thanks, James. Next question, Operator.
Operator (participant)
Thank you. Your next question comes from the line of Seamus Fernandez from Guggenheim Securities. Please go ahead.
Seamus Fernandez (Senior Managing Director)
Great. Thanks for the question. So my question is on Ianalumab. You guys have Sjögren's data coming this year, to my understanding, as well as some additional phase II and III data sets. Where are you most excited about the opportunity for Ianalumab? It would strike me that Sjögren's is the highest unmet medical need where even just a positive study would gain substantial utilization. Just trying to get a better understanding of how you're thinking about the market opportunity in Sjögren's and then more broadly for Ianalumab. Thanks so much.
Vas Narasimhan (CEO)
Yeah, thanks, Seamus. We are very excited about Ianalumab's potential, both in hematology and in immunology.
In immunology, clearly, the Sjögren's will be the first key foundational readout. We're studying this in roughly 40% of patients who have systemic manifestations of Sjögren's disease. In the phase II-B study, we demonstrated for the first time significant improvements in the S-dye, which is focused on the systemic manifestations, including improvements in areas such as fatigue and other physician-assessed parameters. And so if we can get a positive readout, we'll try to get as broad a label as we can. And we're also assessing should we also study the medicine over time in those patients, the remaining 60% of patients, a subset of them who primarily have symptom manifestations without the systemic manifestations. So I think there's a significant opportunity in HS.
Then, of course, following up on that, we have the systemic lupus and lupus nephritis studies as well running, and as well as, you know, the phase II-B in Hidradenitis. Alongside that, I think while there are reasonable standards of care in idiopathic thrombocytopenic purpura, ITP, this medicine also has the potential with its mechanism to be an improvement in second-line and first-line ITP. And that we also have a readout in 2025 as well. And so that would also enable us to start the process in hematology. We have worked through ensuring we have different dose levels as well so we can manage the different indications in immunology and hematology from a price standpoint. So taken together, I mean, you have six phase III studies across the board already running for Ianalumab, multiple phase II's.
So assuming that they go our way, this could be a very significant medicine, probably underappreciated overall. Next question, Operator.
Operator (participant)
Thank you. Your next question comes from the line of Naresh Chouhan from Intron Health. Please go ahead.
Naresh Chouhan (Founder)
Hi there. Thanks for taking my question. Just one on OAV, please. So consensus is currently modeling very little, if anything at all, for OAV101. Can you help us think through the bolus opportunity and the speed of ramp-up? We think it could be a blockbuster by 2027. Is that unreasonable? And how do you think about the speed of ramp-up? Thanks.
Vas Narasimhan (CEO)
Yeah. So Naresh, I think it's obviously early days from our standpoint. But certainly, I can use the analog of what we saw with Zolgensma. And certainly, in that case, we did see a very fast ramp and then to the steady state.
Then we stayed at that steady state. I think it was two, three years until we got to the steady state. That's generally what we would expect, I think, in the case of gene therapies. So I think we'll see with OAV, the dynamics are obviously a little bit different because many of these patients will need to be switch patients. But I think when you look at the competitive set that we're going up against, you have a competitor that requires quarterly intrathecal administrations into the spinal cord, which is quite challenging for patients over time. Also, patients often have malformations and deformities that happen in the spine as a result of the repeated injections. Then the other competitor medicine was not tested with the standard of care Hammersmith score, which is the gold standard, which is what we used.
I think our hope is by going to the physician and patient population saying, "Look, you have a one-time gene therapy using the gold standard Hammersmith score, demonstrating statistically significant improvement using that score with a very expected safety profile," that could be very compelling for a large number of patients. That's the approach we're going to take in rolling the medicine out. I'm hopeful that it will surprise people as well because I think there is the opportunity, as we guided, that this could be overall a $3 billion-plus medicine over time. That's very much the goal. I think also, of course, with gene therapies, we have the opportunity to have medicines that don't, at least to our current understanding, be difficult to face real generic erosion. These become medicines that kind of stay in the long run in our portfolio.
So thanks, Naresh. Next question, Operator.
Operator (participant)
Thank you. Your next question comes from the line of Eric Le Berrigaud from Stifel. Please go ahead.
Eric Le Berrigaud (Managing Director on Healthcare Europe)
Yes. Hello. Do you hear me?
Vas Narasimhan (CEO)
Yes. Go ahead, Eric.
Eric Le Berrigaud (Managing Director on Healthcare Europe)
Yes. Good. Hi. Again, on guidance, but this time on the mid-term guidance and trying to put the 2025 guidance in the context of mid-term guidance. Since you implemented this mid-term guidance, you systematically beat and raise. 2023 was much higher. 2024 was much higher. And then we thought that maybe the transition with the significant LOEs in 2025, 2026 would be the reason for the mid-term guidance to be lower than what you achieved. But now in 2025, you're guiding for mid- to high-single-digit, which is, again, higher than the mid-term guidance.
And so if we think that 2026 will very much look like 2025 because it's a 50/50 mid-2025, mid-2026 impact, and then 2027, 2028 should see some rebound with no significant LOE, it becomes hard to understand why the mid-term guidance is not more, well, let's say, higher or, let's say, to articulate things. So maybe something is missing. But could you put that in some context? Or it's just the global policy of underpromise and overdeliver? Thank you.
Vas Narasimhan (CEO)
No, certainly not a global policy. We do our best to give you the midpoint estimate of where we think things will go. And then, of course, if we do better and over the last two years, I think our performance, operating performance, has been outstanding. It's two-plus years now. And I think that's part of the reason you've seen the consistent beats and raises.
I think certainly over the coming years, we'll see. I mean, of course, we'll update over time. I mean, the 2026, we have the full year impact, of course, of these generic entries. And then we'll clear them and then accelerate growth from there. So I don't think we're in a position at this moment to change our mid-term guidance. But obviously, if we consistently perform at a higher level than the 5% mid-term guidance, we'd have to reconsider it. But I think right now our focus is delivering 2025 per plan, getting these launches up on the trajectory, closing the current gap that Cosentyx has, to our view, which I think is roughly 2 points, 24-29. So I think, Eric, you're there, but some of your colleagues are not.
And so I think that getting that gap closed by showing confidence in Kisqali, in Leqvio, in Pluvicto, in Scemblix, in Fabhalta, with the Remibrutinib launch, with some of the pipeline delivery, continuing delivering on Cosentyx. And then, of course, we'll reconsider the mid-term outlook as appropriate. Next question, Operator.
Operator (participant)
Thank you. As a reminder, if you would like to ask a question, please press star one and one on your telephone keypad. Your next question comes from the line of Richard Parkes from BNP Paribas. Please go ahead.
Richard Parkes (Equity Research Analyst)
Hi. Thanks for taking my follow-up. It's just on Cosentyx, the competitive environment. We've now had Bimzelx on the market for a year or so. And I believe they've had some recent formulary wins and obviously launching in the HS indication. So just wondering how that competitive environment is playing out and what you anticipate in your guidance.
Maybe if you could quantify the opportunity for Cosentyx and the new indications that you outlined, GCA and PMR. And then finally, I'd like to thank you for the Lp(a) test at your management day because given mine was borderline, I've now started on a statin. So I appreciate the opportunity. Thank you.
Vas Narasimhan (CEO)
Well, that's great to hear, Richard. I'm glad we could help. On Cosentyx, we had 25% growth this year. So I think that shows the robust growth profile of the brand. In terms of the competitor entries, when you look at our formulary position, it's as we expect. We've had to give the appropriate level of adjustments on our rebates, but we've maintained very good formulary position. We see very good performance in Asian markets such as China, as well as continued good performance in Europe.
In HS specifically, we think our profile of having very good flare resolution, where we showed very compelling data on flare, on pain, I think on itch. So on some of these, I think this really gives us a very compelling data set. And given the long history of safety with Cosentyx, we think a very competitive profile to hopefully maintain that 60% plus NBRx that we have. We believe in HS, Cosentyx could be over a billion dollar medicine globally. Now, for GCA and PMR, our current estimates are 500 million-plus for each one of these. I think the question, of course, we'll have to see. I think originally for HS, we thought this would be 500-750 million. And we delivered that almost in the first year. So I think we're learning as we go, as we get into these new indications.
And as we have a better sense from launching, of course, positive data and then launching, we can, of course, update over time.
Richard Parkes (Equity Research Analyst)
Thank you.
Vas Narasimhan (CEO)
And then I think are there more questions, Operator?
Operator (participant)
We have one more, sir. And your next question comes from Florent Cespedes from Bernstein. Please go ahead.
Florent Cespedes (Senior Sell-Side Analyst European BioPharmaceuticals)
Good afternoon again. Thank you for taking my follow-up question. This time, not on guidance, but on the pipeline for U.S. as pelacarsen is now expected in 2026, and it was supposed to be the big phase III readout. Now, on the list of the products that will readout this year, that will be the phase III, please could you share with us which is or which are the most meaningful one, please?
Vas Narasimhan (CEO)
Yeah, absolutely, Florent. So I think there's a couple of things I'd say. First, Ianalumab is a key readout.
I think we've already highlighted that. I mean, both Sjögren's and second-line ITP, both of these will be, I think, really important for the profile and opportunity in Ianalumab and also hopefully give a read-through of what we might be able to do in lupus, in lupus nephritis, in front-line ITP, among others. In addition, we're going to have the readout of Pluvicto in hormone-sensitive prostate cancer, which will further create a patient population that's as large as the PSMA population. I think that would be another leg to build Pluvicto out to that guidance that we've given of $6 billion-plus over time. In addition, you're going to have, I think, importantly, the Remibrutinib food allergy phase II-B readout, which will then enable us to move rapidly for the next third indication. We hope for Remibrutinib on top of CSU and CIndU.
I would say for Remibrutinib, we expect to file soon. And then we do currently intend to use a priority review voucher. And we do believe that Remibrutinib in CSU is going to be bigger than the markets expect. And I think the opportunity here in the U.S. and around the world to have an oral medicine that can address such a symptomatic disease within two weeks of therapy is something we're quite excited about. So we're very much focused on that launch as well. And then, of course, on slide 33, you see a long list of other things. But I think those would be the big ones that I would highlight that would really move the needle for this year.
Florent Cespedes (Senior Sell-Side Analyst European BioPharmaceuticals)
Thank you very much.
Vas Narasimhan (CEO)
And I think that's it. So thank you all very much for joining. Look forward to seeing you in various settings over the course of the coming quarter and then, again, at the Q1 earnings call. Have a great day.
Operator (participant)
Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.