Good morning and good afternoon, and welcome to the Novartis Q3 2024 Results Release Conference Call and Live Webcast. During the presentation, all participants will be in a listen-only mode, and the conference is being recorded. A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends. Now, I would like to hand over to Ms. Sloan Simpson, Head of Investor Relations. Please go ahead.

Thank you so much. Good morning and good afternoon, everyone. Thank you for joining our Q3 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 20-F and its most recent quarterly results on Form 6-K that, respectively, were filed with and furnished to the U.S. Securities and Exchange Commission. And with that, I will hand across to Vas.

Thank you, Sloan, and thanks, everyone, for joining today's webcast. So, we'll dive right in. I have Harry Kirsch on the line with me as well, as always. So, moving to slide four, you saw this morning that Novartis delivered strong operational performance in quarter three really continuing now what's been two years of very strong operating performance for the company. Sales grew 10%, core operating income was up 20% in constant currency. In the quarter, our core margin went all the way up now to 40.1%. And we also had important innovation highlights, which we'll talk about a bit more over the course of the call; Kisqali's FDA approval and CHMP positive opinion in hormone receptor positive HER2 negative stage II and III early breast cancer, our Fabhalta accelerated approval in IgA nephropathy, Pluvicto had its filing accepted for the PSMAfore population in metastatic castrate-resistant prostate cancer, and then we expect the Scemblix approval in the coming weeks, we received FDA Priority Review for first-line CML, and lastly and importantly, we had our third guidance raise for the year, raising both our top and bottom line guidance, and Harry will go through that in more detail. So, moving to slide five, our quarter three growth again reflected strong performance across our key growth drivers. You see 34% constant currency growth, which we expect to continue, and helped drive our 5% guide out to 2028, and also enable us to continue that strong margin expansion that you've seen. And let's go through each one of these brands in more detail. So, moving to slide six, Entresto's sales continued to climb, as they have now for multiple years, increasing 26% in quarter three. It's the 10th year now of continued momentum on this brand, which I think really shows our ability to create large and lasting cardiovascular medicines; 25% TRx growth, 20% NBRx growth, 500,000 TRx per month. Ex-U.S., we're growing 26%. So, we're confident in the growth up to the LoE. We have strong guideline positions in the U.S. and EU. We continue to see very strong performance in hypertension in China. In Japan, we don't expect an LoE in Japan until 2031, at the earliest. And we continue to see protection for our business in China. For forecasting purposes, we maintain our guidance of the LoE for Entresto in the United States for mid-2025. And in the EU, regulatory data protection would expire in November of 2026. So, moving to slide seven, Cosentyx grew 28%, and this was primarily driven by the strong performance we've had in our new launches in HS and in the IV formulation. You can see 28% growth overall, but driven by very strong performance in the United States of 38%, outside the U.S. 16% in constant currencies. We remain the number one IL-17 in the U.S. dynamic market. And we're the leading originator biologic now in the EU and in China. In HS, we've achieved dynamic market leadership with over 60% NBRx share, in Germany, where it was 50%, and we increasingly secured reimbursement in our key market. So, we see the opportunity to continue to grow dynamically in HS. We think we have an outstanding data profile even versus the incoming competitors. And we also see an opportunity for a market that's going to continue to expand. A market that's probably $3 billion-plus today, but has the potential to be a $5 billion-plus market over time or even larger depending on how patients continue to see their physician. In the IV, we had accelerated adoption in the U.S., with over 1,250 now ordering, that's a 52% growth. I think we'll continue to see more sales delivery in IV now that we have the permanent J-code, but that, of course, will take time, and we look forward to delivering that. We have two important LCM opportunities that we'll lead out in 2025 in polymyalgia rheumatica, as well as in giant cell arteritis, both sizable indications that could give us even further opportunity to well exceed Cosentyx's $7 billion peak sales forecast. So, moving to slide eight, Kesimpta continued to see strong demand globally, and it's a unique profile that this medicine provides for patients and physicians, so 28% growth. But when you strip out the one-time RD adjustment that we had from the European market, last year, our sales growth was 56% in constant currencies. We now have over 100,000 patients treated worldwide with either naïve or first switch. The U.S., our growth in TRx volume growth was 38% versus prior-year, gaining 3.7% share. Ex-U.S., we had strong underlying growth excluding the one-time RD adjustment from last year. We also presented some important new data at ECTRIMS in the ALITHIOS trial, 90% of first line Kesimpta patients had no disability progression independent of relapse activity up to six years. And we had an additional study that demonstrated no new active lesions 12 months after switching from an anti-CD20 IV therapy. So, we remain confident in the continued momentum on this brand. We're annualizing now well above $3 billion, and have the opportunity, I think, to well exceed our $4 billion peak sales guidance to date. To our knowledge, there are no Kesimpta biosimilars currently in clinical development, which should give us a long runway looking forward for this medicine. And moving to slide nine, Kisqali continued to cement its leadership in metastatic breast cancer, and launched, importantly, in early breast cancer, as I mentioned. Perhaps most importantly, we achieved a Category 1 NCCN guideline recommendation for the full Kisqali population. Overall growth in the quarter was 43%. U.S. was up 50%, it's really gaining widespread adoption, our NBRx share at 48%. We're now second in TRx share overall. We have 7,000 physicians now actively prescribing Kisqali, and I think reflecting our strong guideline position. Outside of the U.S., 36% constant currency growth as the preferred CDK4/6 inhibitor in the class, we have the leading share of 43% in those international markets. We were the fastest growing CDK4/6 in Europe. Now, as I mentioned, the FDA approved Kisqali with a broad label fully in line with the NATALEE population, CHMP has issued a positive opinion, and we're looking forward to European Commission approval to allow us to launch in Europe. The Kisqali, if you go back to slide nine, the Category 1 guideline recommendation for the full study population, I believe, gives us the opportunity now to really fully realize the potential of this medicine, including in node negative patients. And the early feedback we're getting from the market is very strong. The early scripts we're seeing show a very strong trend and we look forward to now building upon that as we get broad access for this medicine. We would expect access in the early breast cancer setting in the range of 90%, which is what we have for Kisqali in the metastatic setting. Now, moving to slide 10, as a reminder, Kisqali showed really strong deepening benefit in the update that we showed at ESMO. When you look at the graph on the left across the intention to treat population as well as Stage 2 and Stage 3 patients as well as a node negative disease and a really strong four year IDFS absolute benefit, benefit that's consistent, consistent also across secondary endpoints, we have a trend of improved OS, which we expect to continue to deepen over time. No new safety signals were identified. So, overall, we think we now have really the perfect positioning that we would want for Kisqali to succeed in the long run. As a reminder, the early breast cancer indication doubles the number of patients that are eligible for Kisqali versus the metastatic indication. And we estimate it is a 3x larger population than is currently labeled for the competitor product in the class in early breast cancer. Now, moving to slide 11, Pluvicto continued what we would characterize the steady performance in the post-taxane setting. Our focus at the moment is really laying the foundation for the PSMAfore launch in 2025, which would triple the number of patients eligible for Pluvicto. We saw 50% growth in the quarter. When you adjust for the one-time price adjustment in Europe, our sales growth grew 36%. Just to provide more context, that was true volume growth that we had in earlier quarters. As is always the case in certain European markets, our prices get adjusted over time. So, that was the reason for the uplift we saw in Europe. Overall, we would expect quarter four to be broadly in line with quarter three excluding the RD adjustment. And I think for us now it's really about preparing the market for Pluvicto PSMAfore opportunity. Our U.S. field force has now expanded. We've launched a DTC to drive HCP and patient awareness. We now have 530 treatment sites in the U.S., which we feel like covers the key geographic areas. We will continue to expand that over time quite significantly, but we feel comfortable that we have capacity now to fully support the Pluvicto PSMAfore launch and we'll expand deeper into the community setting step-by-step. Our ex-U.S. launch is progressing well with good pricing and reimbursement discussions and so we feel very good about where we are to prepare for that launch next year. Now, in terms of new indications and geographies, the PSMAfore filing was accepted by FDA. We're preparing for a launch in the first-half of 2025. In China, both the post-taxane and in Japan, the pre-and-post taxane submissions have happened. We're in the midst of building up manufacturing facilities in both of those markets as we expect them to be sizable opportunities. The PSMAddition and PSMA DC studies are progressing according to plan. And we've also begun construction of two additional facilities in the U.S. to support our expanding RLT portfolio, which now includes multiple additional programs that have entered the clinic, including assets such as a B7-H3, Actinium RLT, as well as a HER2 RLT and a Folate RLT, all of which now either have first patient first visit or will soon have first patient first visit, giving us a broad portfolio that we need to now prepare for. Moving to slide 12, now, Leqvio continued its strong growth trend with accelerating adoption outside of the U.S. and we're very pleased by both the solid U.S. performance, but that acceleration that we're seeing in our international markets. We are experiencing growth that surpasses the overall advanced lipid-lowering market, with 4,600 facilities having ordered Leqvio, marking a significant increase compared to last year. Demand is rising across all channels, and our targeting strategy in the U.S. is effectively focused on patients and physicians treated in the post-event setting, where there is a greater likelihood of adding another lipid-lowering therapy. Internationally, we are reimbursed in 39 countries and commercially available in 73. We are seeing steady and robust uptake, especially in markets like Japan, where our recent launch has exceeded expectations. Additionally, we announced the results of the V-MONO trial, which showed that Leqvio monotherapy outperformed both placebo and ezetimibe in reducing LDL-C levels. We are considering how to further expand Leqvio into monotherapy or frontline indications based on the specific regions. So, moving to slide 13, Scemblix grew 72% in quarter 3. As you know, it has really become the preferred option for third line CML. It's the market leader in NBRx and TRx across geographies with 26% TRx share growth. It's driven by 18% quarter-over-quarter demand. Outside of the U.S., we see a very strong sales trajectory for the product with growing total market share and growing prescriber base. And that's critical for us to continue to build that strong base in third line, because as we approach the first line launch, those physicians get more and more comfortable with the overall profile of Scemblix. So, as I mentioned, we have FDA priority review. We do expect the approval in the coming weeks. We're fully prepared for launch. We're also fully prepared to obtain rapid market access to really ensure a rapid launch in the U.S. and eventually around the world. And outside of the U.S., China and Japan submissions have now been completed. And we're also on track for a European submission in 2025. Moving to slide 14, Fabhalta is still in the early stages, but we are encouraged by its performance in PNH, a rare disease with few patients cycling through treatment. Building this brand will take time, but it is the only oral monotherapy that provides control over both extravascular and intravascular hemolysis. We are seeing strong overall launch performance, with high compliance and continuation rates for the medication. Our coverage to label exceeds 70%, and we now have a new-to-brand prescription rate of over 30%. Internationally, we are also observing promising early success, having engaged over a thousand healthcare providers in the first three months post-launch. Utilization is evident among both new and switching patients, and we have recently launched in Japan and the U.K., along with obtaining early access in France. Although it is still early, we believe that, step by step, this is a crucial building block as we aim to develop Fabhalta across multiple indications into a medicine that could surpass $3 billion in revenue over time. Moving to slide 15, Fabhalta has received accelerated approval in the U.S. as the first and only complement inhibitor for IgA nephropathy, based on the positive interim results of the APPLAUSE Phase III study, which will continue to the confirmatory endpoint of eGFR at 24 months, with completion expected in 2025. We are getting very positive feedback from healthcare professionals regarding its efficacy and safety, along with their understanding of the complement pathway's role in this disease. We're also noticing early signs of significant utilization, as over a thousand healthcare professionals are now REM certified. We are working to ensure broad and timely access to this medicine through our portfolio. Importantly, we are seeing substantial traction in the market for patients experiencing persistent proteinuria and glomerular inflammation, allowing us to maintain the price of Fabhalta in line with the PNH indication, which will be crucial for its future indications, including C3G. And if we go to the next slide, slide 16, we released results over the weekend of the 12 months of APPEAR-C3G data at ASN. On the left-hand side, you see the sustained proteinuria reduction over 12 months. And that, that was replicated in the placebo arm after switch to iptacopan. So, that was a very positive and something the regulators had asked us for. But importantly as well, we're seeing stabilization of the eGFR slope versus the historic slope decline, and that's been maintained now for 12 months. So, we're seeing the important outcome measure as well, very positive data. So, we have ongoing health authority reviews in the EU and other countries. And, we expect to make this submission now in the U.S. before the end of the year. So, moving to slide 17, overall we had good progress on our innovation milestones. We did suffer a few setbacks with XXB. We will terminate this program. We saw a safety signal in heart failure. And overall, the hypertension blood pressure reduction, we saw on top of standard of care was not sufficient to meet the CPP we think we need to achieve for this medicine. So, we'll be stepping back and focusing on our siRNAs for hypertension as well as other assets we have in our cardiovascular portfolio. So, with that, let me hand it over to Harry.

Yes, thank you, Vas. Good morning, and good afternoon, everyone. I will now talk you through our financials for the third quarter and the first nine months, which were very strong. As always, my comments refer to continuing operations and growth rates and constant currencies unless otherwise noted. On slide 19, it's a pleasure to present results like those that we have on slide 19. I think you'll hopefully agree with that. Quarter three, net sales grew 10%, cooperating income was up 20%. Our core margin, as Vas already mentioned, 40.1%, which reflects a 340 basis point improvement versus prior year. Core EPS was $2.06, also up 20%, and free cash flow was basically $6 billion, the highest we have ever achieved in any one quarter. For nine months, net sales grew 11%, and core operating income was also up 20% when the core margin increased to 39.4% in the first nine months, demonstrating continued good or very good progress towards achieving our midterm margin guidance of 40% plus by 2027. Core EPS was $5.83, up 21%. And the free cash flow in the first nine months grew 15% to $12.6 billion. Now, on to the next slide, please. Our continued strong business momentum together with operating efficiencies, despite the many launches we are fully funding and of course the R&D pipeline, allowed us to once again raise our full-year guidance on both top and bottom line, which you will see on slide 20. We now expect sales to grow low double-digit from high-single to low double-digit previously. And we expect core operating income to grow the high teens from mid to high teens previously. Embedded in our guidance is the key assumption that there will be no Tasigna, Promacta, or Entresto U.S. generic entries in 2024. And we also expanded a bit so that you could start with the modeling for next year. And we make an assumption that these generic entries in U.S. will happen in the middle of 2025 for forecasting purposes, and to complete our full-year guidance with always the other two components from Co-op Inc. down to basic Core EPS. Please note that we expect core net financial expenses to be around $0.7 billion for the full-year. And our core tax rate continues to be around 16.2%. Moving to slide 21, we remain committed to our shareholder-friendly capital allocation strategy to invest in the business whilst also returning attractive shareholder returns. In the first nine months, we executed multiple bolt-on M&A and BD&L deals, particularly to strengthen our RLT platform, our regional pipeline and AI capabilities. In addition to having invested, of course, in our internal R&D engine. In terms of returning capital to shareholders, we paid our growing annual dividend offset per share in Swiss franc, this time $7.6 billion in March of this year. And we also continued our 15 billion share buyback which has approximately 8 billion left to be executed by the end of 2025. Now, onto my final slide, already where we have outlined details regarding the expected currency impacts. In quarter three, FX had a mild negative 1% point impact on net sales and negative 3% points on cooperating income, of course, driven by $1 strength, but also, of course, on the bottom line due to our Swiss franc cost base. If late-October rates were to prevail for the remainder of 2024 then we would expect the full-year currency impact to be again around 1% negative on net sales and negative 3% to 4 percentage points on core operating income. As we already start to look forward into 2025, again, to inform your modeling assumptions. We expect a negative 1% point impact on net sales, and negative 2 percentage points on core operating income, again if currencies stay, for next year, where they are right now. Of course, as we all know, currencies move every minute. And so, we will, given it's hard to predict this from outside of the company, each month, in the middle of the month, we will give you an update which is posted on the website, so you always have that element of the forecast as well. And so, thank you for your interest, of course. And it's back to you, Vas.

Thank you, Harry. Moving to slide 24, in summary, we see continued strong business momentum in the quarter. The numbers reflect this with 10% and 20% growth. We have raised our full-year 2024 guidance for the third time, demonstrating the underlying momentum from our growth drivers and new launches. We are successfully advancing our pipeline, building off 10 Phase III readouts, including positive results and indication expansions for Kisqali, Fabhalta, and the submission of Pluvicto PSMAfore. We are well on track to accomplish our midterm guidance of 5% sales growth from 2023 to 2028 and achieve over 40% core operating income margin by 2027. For my last point, we will be hosting Meet Novartis Management on November 20 and 21 in London. This will be a great opportunity for investors to meet our leadership teams, especially the TA leaders in R&D. We will also provide an update on our midterm guidance from 2023 to 2028 and our sales guidance from 2024 to 2029. Additionally, we will share the peak sales outlook for many of our brands, which continue to show strong momentum. With that, operator, we can open the line for questions.

Thank you. Your first question comes from Richard Vosser at J.P. Morgan. Please go ahead.

Hi, thanks for taking my question. It's a question on the impact of coverage gap reform on the business in '25, and particularly thinking about the impact on Cosentyx and Entresto. Can you give us any color on how that's panning out, that would be great? Thanks very much.

Yes, thanks, Richard. And I also want to add, we should have one question. Thank you for adhering to that already, Richard, with one question per person. And then we'll cycle through the list as many times as we can. So, in terms of the coverage gap reform, there's going to be pushes and pulls which we'll have to understand better over the course of 2025. On the positive side, we'll see how demand generation increase with the 20% out-of-pocket cap, especially depending on how many patients sign up for this moving. You could see those impacts happening relatively early in the year, but that's something we'll have to see how it ultimately plays out on the positive side. In terms of headwinds, certainly our cost sharing within the system will go up, and that's something we'll have to manage. But on the flipside, our patient support programs also should be adjusted down given the number of patients who would no longer qualify given adjustments, given the IRA being in place. So, net-net, we see this as neutral, so slightly negative, but that's already factored in to the guidance that we've given for the long-run, so that's already in the 5% out to '28. So, no material impact on how we look at the business. And I think we're going to learn more over the course of the year. Thanks, Richard. Next question, operator?

Thank you. Your next question comes from the line of Emily Field from Barclays. Please go ahead.

Hi, thanks for taking the question. I'll ask one on Pluvicto. I was just wondering when you'd expect some of these new promotional efforts to have an impact on Pluvicto patient growth in the U.S. in the vision population, or should we more expect sales to really start to grow again once PSMAfore is launched? I believe, earlier in the year, you said that that launch would be inflection in sales. So, any color you can provide would be helpful. Thank you.

Yes, thanks, Emily. So, we know, in terms of the timeline for those investments, we started the DTC in September. We got the full sales force out really in the August-September timeframe. So, usually takes six months before you see any impact for those expansions and investments. So, I think for us right now, we want to maintain the vision population. We always guided to vision to be about a $2 billion peak sales globally. So, in the U.S., we're already annualizing in that kind of $1.2 billion to $1.4 billion range. We expect, as we bring China, Japan and other markets onboard, we can reach that $2 billion over time. But the real inflection for this medicine is the tripling of the patient population with PSMAfore, and then a further large addition of additional patients with the HSPC PSMAddition studies. So, we've got to make sure that we have adequate capacity, which we feel pretty good about in terms of bed capacity. A lot of our work now is getting the referral systems in place to ensure that community oncology understand how they can refer or when to refer to be able to get Pluvicto, and get those patients also then back to community oncology. Also making sure that large academic centers are prepared for what we expect will be a surge of patients on the approval of PSMAfore. So, all of that work is very much in focus. But I wouldn't expect a significant inflection point before we get PSMAfore fully launched. Next question, operator?

Thank you. Your next question comes from the line of Florent Cespedes from Bernstein. Please go ahead.

Good afternoon. Thank you very much for taking my question. A quick one on 2025, I know it's early days and you won't provide any guidance, but could you remind us which are the main tailwinds and headwinds for next year, and how will you see this challenging year given the generics are expected to be launched mid-2025? Thank you.

Yes, thanks, Florent. While we don't provide guidance until January, I can say we're confident in our ability to grow both our top and bottom lines, and we will share more details in January. Considering the positive factors we have, the new indications and launches are significant. Cosentyx continues to perform strongly in HS and IV. We now have Kisqali for early breast cancer with a broad label and fitting NCCN guidelines. We're just starting with the launch of iptacopan in PNH and IgAN, and we expect it to gain momentum over the next year. The launch of Scemblix for first-line treatment in CML will also help us expand that product substantially. Additionally, Kesimpta is maintaining a steady and strong pace, as is Kisqali in metastatic breast cancer, and Entresto continues to perform well outside of the U.S. The major challenges we anticipate are the loss of exclusivities for products like Tasigna, Promacta, and Entresto, which we expect around the middle of next year. This is subject to the outcomes of ongoing litigations and approvals. This is our current forecast for those products. However, we see continued opportunities for strong margins and free cash flow, and we feel optimistic about the business. We believe we can manage these challenges. As we've noted, we've incorporated potential patent losses into our long-term guidance of over 5% growth through 2028, and we are prepared to navigate this while continuing to grow the company effectively. Next question, operator?

Thank you very much.

Thank you, Florent.

Your next question comes from the line of Simon Baker from Redburn Atlantic. Please go ahead.

Thank you for taking my question. One on Cosentyx and HS, if I may, you've seen a very, very fast adoption in HS, which is testament to the superiority of Cosentyx over previous treatment options. But there were quite a few behind Cosentyx coming into HS. So, I just wondered if you could update us on your thoughts on the competitive dynamics there. How long do you expect that preeminence of Cosentyx to persist, bearing in mind what is coming behind over the next 12 to 18 months? Thanks so much.

Thank you for the question, Simon. We continue to anticipate that Cosentyx will exceed $1 billion in HS sales. Our confidence is supported by the strong endorsement from dermatologists who are familiar with the medicine due to its long market history and successful application. However, there seems to be some misunderstanding in the market regarding the comparison of Cosentyx to IL-17 AS in psoriasis versus HS. Notably, in HS, the HiSCR50 results are quite comparable. While cross-sell comparisons can be tricky for the patient demographic, the similarities are evident. Our study showed that 60% of patients were free from flares, with a significant 50% reduction in pain. I encourage investors to review this data in the context of competitor offerings, as it highlights our strong clinical and account positioning, supported by our extensive experience in the market. We believe that HS represents a considerable opportunity for the medication, particularly as we navigate a growing market with the potential for new patients. It is essential for everyone to grasp the critical differences between psoriasis and HS data.

Thank you. Your next question comes from the line of Graham Parry, Bank of America. Please go ahead.

Great, thanks. Question on Pluvicto, so the flat fourth quarter guide implies no growth ex-U.S. as well as in the U.S. So, I understand U.S. centers are pretty fully penetrated in the Vision population, but why no growth ex-U.S.? And on PSMAfore, just wonder why you didn't use a priority review voucher or attempt to accelerate the review there in any way? Thank you.

Yes, thanks Graham. So, on Pluvicto, so I think ex-U.S. right now, we do continue to see growth generation. But of course, with the pricing dynamics as we continue to work to secure the final pricing, we don't expect that to translate yet into revenues. And then, I think China and Japan will be absolutely critical to really get the ex-U.S. going. In Europe, we're primarily focused in Germany and France, and we have ongoing negotiations in those markets regarding the pricing situation. So, I think that's why we want to be realistic and say, in addition to that dynamic, we also have the holiday period in the U.S. We know from prior years that for Pluvicto, Thanksgiving, and the Christmas holidays is not a time that patients want to initiate therapy because post dose, they can't be around families, be around children. At least that's the current guideline. Whether biologically sensible or not is irrelevant, that's the current guidance. So, that leads to a few weeks that we lose in quarter four always. So, taken all of that together, we think it's reasonably prudent to provide a guidance that will be in line that of the adjustment. Now, in terms of Pluvicto PSMAfore, we chose not to use a Priority Review Voucher purely because we had discussions with the FDA. The FDA view was given that we'll provide the 100% OS during the review period, they wanted flexibility for the timing to review that data. Now, hopefully, given that data continues to trend positive, that assuming that holds and that we have a very compelling package, we hope that we can get an approval on a faster timeline than the typical PDUFA timelines. But in consultation with the FDA, that was their request since we didn't use the voucher.

Thank you. Your next question comes from the line of Matthew Weston, UBS. Please go ahead.

Thank you very much. My question is about payer dynamics in 2025 as well. Vas, I'm just aware that you have a very strong position in immunology and commercial PBMs have lost a significant amount of rebates from Humira over the course of this year. I wonder whether we should expect a particularly strong and dynamic rebate environment at the beginning of 2025 and we should be prepared for that as we look at the forecast into next year. If I can cheekily sneak a second, it's just can you remind us factually when do you anticipate Kisqali ex-U.S. patent expiry?

Thank you, Matthew. So, first on Cosentyx and the overall immunology dynamic, we've completed largely our payer negotiations and we're really pleased with the broad access we've been able to maintain for Cosentyx. And I would say while we do see increased rebates, it's modest and not substantial. So, we've been able to keep that as a single digit increase overall across the portfolio. So, we shouldn't expect while, of course, that is a headwind, we do expect overall the opportunities in HS and IB alongside the opportunities that we have with additional launches as well as the overall momentum we have globally. Globally Cosentyx should continue to grow in the double-digit range. And so, that's our current expectations for Cosentyx. Now in terms of Kisqali LOE, it is August 2032 is our current estimate in Europe.

Thank you very much.

Next question, operator?

Thank you. Your next question comes from the line of James Quigley from Goldman Sachs. Please go ahead.

Great. Thank you for taking my questions. I've got a quick one on Xolair. So, Roche is seeing strong uptake in the U. S. for the food allergy indication. Does Novartis plan to use data from the ALITHIOS trial to potentially file for the indication in the Novartis territories? And what will you think about the potential opportunity here? Obviously, there's a bit of discontinuity in tislelizumab in this indication as well. So, does that leave a potential clear run for you and Xolair in ex-U.S. markets? Thank you.

Yes. So, James, I'd have to come back to you. I don't actually know off the top of my head on what our plans are on Xolair for ex-U.S. food allergy. Obviously, in the U.S., we have our existing contractual obligations with Roche Genentech. In general, my first instinct to say is, if Food Allergy ex-U.S. is challenging given the overall payer dynamics, particularly in Europe. But let us come back to you, because I don't want to make that a definitive statement without knowing for sure. We do continue to develop remibrutinib as an oral option, in food allergy, and we're going to see how that data pans out because we think, the option of giving patients the twice a day oral therapy for food allergy could be quite attractive. So, that development program is continuing on track.

Thank you. Your next question comes from the line of Peter Welford from Jefferies. Please go ahead.

Hello. My question is on the broader cardiovascular portfolio now at Novartis, particularly focusing on the pipeline. I mean, obviously, we're aware of pelacarsen, which I wonder if you can confirm, we're still expecting the Phase III readout there next year. But obviously, following the news on XXP, when you now look at the late-stage cardiovascular portfolio outside of nephrology, I guess, how do you now think about the need perhaps in Novartis to bolster that, or are you comfortable given the long life that we see still with Leqvio ahead, despite the loss of Entresto in the U.S., you will basically just build the cardiovascular pipeline largely internally and through the early-stage Phase I preclinical programs that you have? Thank you.

Yes. Thanks, Peter. So, obviously disappointing with XXP, but overall we feel confident given where we see Leqvio's continued expansion and the adjustments we've anyway made to the field force, we think we're right sized for Leqvio. Pelacarsen is on track, it's event-driven, so we'll have to continue to track the events, but we currently guide to a 2025 readout. And then, behind that right now, we're really focused on accelerating our siRNA portfolio. Those siRNAs could either be in as mono indications or in combination with Leqvio, so we're exploring a range, and we have now couple in Phase II, or one that's even a bit later than that. So, we'll be providing updates on those over time. But certainly, siRNAs in hypertension, siRNAs against, HMG-CoA, which could be then used in combination or independent of Leqvio, as well as other earlier Phase I siRNAs are all advancing. So, we continue to want to build out a broad siRNA portfolio and then also look as appropriate for combinations with Leqvio. The other two elements of our story, I think, on cardiovascular. One is a portfolio of agents in arrhythmia, high risk, very high risk, but we're relatively on our own in arrhythmia. And so, we have a few agents now in Phase I or proof-of-concept studies. So, we'll certainly see how those ultimately play out. And then, we have obviously, as all companies do, a broad preclinical portfolio, but including preclinical efforts on novel targets in obesity as well, as in other areas of cardiovascular risk reduction, particularly around nephrology. So, we'll see how those advance as well. So, obviously, we'll always look externally, but there's no urgency to plug any gaps at this point.

Thank you. Your next question comes from the line of Etzer Darout from BMO Capital Markets. Please go ahead.

Great. Thanks for taking the question. Had a question on Pelacarsen readout next year for LP(a). And apologies if you've commented on this in the past, just curious, there's literature on the impact of LP(a) GLP-1 levels, but curious as to the reverse. And I guess given the increasing use of GLP-1s broadly, just curious if GLP-1 use matters in this study and if so, how you're accounting for its use in the trial? Thank you.

Yes, absolutely. So, I think GLP-1s are noted to have, I think, modest reductions of Lp(a). I mean the focus of this study is on patients that are much higher on the range of Lp(a) so the top quartile and the top decile, which we believe you need to have pretty substantial knockdown 70% to 90% of the Lp(a) levels 90% plus ideally that would then enable you to have the hopeful hope for at least the genetically validated efficacy benefit. So, we don't believe GLP-1s alone or PCSK9s alone, PCSK9s also not done Lp(a), are going to be sufficient for this patient population that is at a very high risk of cardiovascular events due to their Lp(a) levels. In terms of background, I don't know offhand how many patients were on a GLP-1 at baseline, but with all of these trials, we always have, of course, patients who are on standard of care for their various comorbidities. And then, of course, we would do subgroup analyses based on the various patient populations. Those would not be powered, of course, and would be post-hoc. But as always, we generate those force plots to demonstrate how different patient groups responded to the medicine. So, that's what I would expect would happen in this case.

Thank you. Your next question comes from the line of Kerry Holford from Berenberg. Please go ahead.

Thank you for taking my question. Just going back to the theme of M&A, given your strong balance sheet and a growing patent expiry burden, just interested to hear you talk about your appetite for more M&A in future here. I wonder if you can comment specifically on your degree of interest in obesity, you referenced it, just send back with regard to your early-stage internal pipeline, but interest in potentially bolstering that externally. And tied to this, I think somewhat disappointing that we should see an impairment so soon after the morphosis deal closure. So, my question then is how can investors gain confidence in your future M&A choices? Any commentary you would have there? Thank you.

Yes, thanks, Kerry. Overall, we have sufficient resources. As Harry mentioned, we take a balanced approach to capital allocation, investing in the business, increasing dividends in Swiss francs, and continuing share buybacks with enough capacity to do so as needed. We've also been very active in pursuing deals, particularly in the sub $1 billion asset range. While many of these may not be widely recognized, we've developed a comprehensive array of assets across our key therapeutic and technology areas to address either mechanism of action or technology gaps, which we believe are essential for succeeding in our four main therapeutic areas or three key technology platforms. A great example being the various deals we've done in RLT, including Mariana Oncology, to build out a strong actinium profile, or even the deal we announced, I think, yesterday with Monte Rosa Therapeutics, which gives us a strong opportunity within the world of molecular glues for immunology. I think to guard your specific question on obesity, no change. We think GLP-1, GIP, et cetera are well served by the current incumbents, and we expect a flood of companies from China and elsewhere to attempt to enter these spaces. And so, we don't see an opportunity to really build a differentiated profile, especially given what will likely be a very intense payer rebate environment in the U.S., as well as genericization of first-line GLP or older GLP-1 agents over the coming years. So, we don't think that's a game to play in as a fast follower, late follower, rather focus on novel assets. And I think, overall, when we look at our I mean, our M&A track record, we've done it very carefully and we systematically look at it. We see our overall success rate in line with the overall sector. There are companies that are worse than us. There are a few that are a little bit better than us. But of course, if you look at the GSK Oncology acquisitions, if you look at Kesimpta, if you look at building out a strong RLT portfolio, I expected with AveXis ultimately showing the positive impact of our intrathecal readout later this year, or early next year in the two to 18-year-old patients, well, that will also be a strong, strong payback. So, we'll obviously whenever you do clinical stage deals like we did with pelabresib, you will have updated clinical data. I think that's normal in this business. I would expect sophisticated investors not to read too much into one-offs, but rather look at the overall portfolio of how a company does and executes M&A.

Thank you. Your next question comes to the line of Seamus Fernandez from Guggenheim Securities. Please go ahead.

Thanks so much for the question. So, really just one question to follow up on business development and areas of interest, the dynamics in immunology are obviously heating up, accelerating across by specifics, long-acting assets, and overall asset development. I wanted to just ask, I guess, a bit of a blended question, not two, but what the effort with Generate is really seeking to execute, and if there's an awareness or when we might have the targets potentially disclosed in that collaboration, and how you're thinking about immunology writ large from a BD perspective, simply because we know that Generate is also doing quite a bit there along those lines? Thanks.

Yes, thanks, Seamus. So, I'll divide my commentary into first AI and then separately into specific immunology. So, with Novartis, our primary collaboration is with Isomorphic Labs, where we partner with the Nobel Prize winning team there to really work on novel targets to generate hits and leads that we can take then further into development. So, that's a collaboration that's ongoing for small molecules and potentially could expand over time into other areas of drug development. And then, with Generate, we focus on biologics. We have not disclosed the targets that we're working on, but generally speaking, it would be difficult to drug targets or we want novel biologics with novel formats, as you mentioned, bispecifics, trispecifics, et cetera. So, that's the focus of the Generate Bio collaboration. And then, we're going to learn and see how it goes as we continue to use AI to hopefully speed up our research and early development process, we could expand into additional targets with both of those collaborations over time. But I think it's early days, and I think we need to see the results of those efforts, the first efforts, and then, of course, progress step-by-step. I think more broadly in immunology in-house, on top of Remibrutinib and VAY, both of which will have readouts over the course of 2025-2026, which would allow us to, I think, build two more very substantial medicines to continue to build off of the success of Cosentyx. We have a number of bispecifics and trispecific programs that are in Phase I, Phase II. And then, of course, we have YTB now in either Phase I or Phase II development for immune reset. That's our rapid CAR-T therapy. I think now enrolling in six or seven indications, continuing to look to expand across immunology as well as in neuroscience indications. And so, I think, our BD and M&A efforts are either to bolster the areas I just mentioned by specifics or cell therapies, or to look at novel targets like Monte Rosa that we recently have done. Those are the things I think we're broadly looking at, but I would say we do believe you need to move now into more specialty immunology, more targeted immunology, going into the mass market with a number of biosimilars coming out at the end of the decade and high rebate pressure. You need to really find places where you can have a differentiated offering in the United States, particularly given that payer dynamic.

Thank you. Your next question comes from the line of Rajesh Kumar from HSBC. Please go ahead.

Hi, good afternoon. Thanks for taking my question. On capital allocation, can you help us understand how you think between a choice of doing deals versus buying back shares? At what share price or multiples would doing a deal become the only good use of capital? Your share price isn't quite strong if we leave today aside, but if we look at the earnings momentum, et cetera, at what point would you stop share buybacks and deploy more capital towards deal making?

Yes. Thanks, Rajesh. I'll give it to Harry. Harry?

Yes. Thank you, Vas. Thank you, Rajesh. I mean, it's of course a question that has never had an absolute answer, right? Obviously, we believe that our share price has much more potential. If I just look at our five-year growth rate outlook, or even consensus is not there yet at 5%, slowly creeping up every few months. Now I think consensus just makes it to 4%. Of course, we keep that dynamically. In terms of balance sheet and cash flow, which we call the firepower so nicely, right? But anyway, we have such a nice capacity that we have the situation, we can do all M&A bolt-on deals that we come up with. And by the way, it's not so easy to come up with good ones, right? Given the premiums one has to pay and the high conviction we have to have to have a great deal for our shareholders also in terms of returns. But we can do both. We can do a bolt-on M&A, right? Our net debt is even below one time EBITDA. At the moment we're $16 billion, right, EBITDA as higher $18 billion - $19 billion and growing. And so, we have that luxury situation. On the one hand, we keep doing, I would say continuous good share buyback at attractive level. As you may know, Switzerland has an interesting situation. I think it's unique in the world that we can only do over time, right? Roughly, $10 billion a year max. And on the other hand, do all the bolt-on M&A to continue to further strengthen our 48 pipelines. And again, obviously we believe that our share price has significant upside potential. And that's why we continue to do both for the foreseeable future.

Thank you. Your next question comes from the line of Steve Scala from TD Cowen. Please go ahead.

Thank you very much. No generics of Entresto and Promacta were already assumed in the 2024 guidance. So, Tasigna is the only update. What amount of the guidance raise is attributable to no generics of Tasigna? And, it sounds like the extension to 2025 for all three is due to litigation for Tasigna and Promacta in addition to Entresto. And not slower generic progress and/or settlement, is that correct? Thank you.

Yes, Steve, I can take the second part. And I'll give it to Harry on the contribution of Tasigna to the overall performance. Overall, I mean, we're not going to comment on specific legal cases. But, I think it's a combination of our litigation, our settlements, and our kind of competitive intelligence as to where various players are in their approvals that gives us our current forecasting estimate of middle of next year. But that's not a definitive date. It's really going to depend on a number of factors. As you know, we have three litigations ongoing with respect to Entresto, with respect to the approval with FDA, the combination patent where we're appealing the decision. And, the first instance hearings on the co-crystal patents. So, that's all unfolding. And then, Promacta and Tasigna, is not something we've disclosed. But, we continue to estimate a mid 2025. And, we'll see how the actual market develops. Harry, in terms of the Tasigna contribution?

Yes, thank you. Steve still has some contribution. I mentioned on the Q2 call that if there’s no generic entry, we would likely be at the higher end of our guidance, which has now happened. We don’t expect any generics, although there is a small entry for Teslar in the U.S., affecting only one account and representing 10% of the business. This has minimal impact on the model this year for Sandostatin LAR. There’s also a contribution from Tasigna. We experienced net favorability in the third quarter, previously guiding to high single digits, but we came in at 10%. This contributed to offsetting prior year favorability from one-time events. Overall, our business model shows 14% volume growth, with two points of generic impact and one point of negative pricing, leading to 11% year-to-date net sales growth. This is the model we will follow operationally into Q4 and next year. If the generic component increases slightly and pricing is impacted, it will be offset by volume changes in the U.S. Therefore, there is a slight contribution to reaching the high end of guidance. We are currently experiencing excellent business momentum, and next year’s dynamics will depend on when these generic impacts occur. However, the underlying growth of our portfolio is strong, which is why we are confident in our expectation of over 5% compound annual growth rate from 2023 to 2028.

Great. Thank you, Harry. And, I think we have a few more questions. So, operator, we'll continue down the line.

Thank you. Your next question comes from the line of Emmanuel Papadakis from Deutsche Bank. Please go ahead.

I'm trying my luck and squeezing 1.5. The half is a follow on collaborative just to understand what has changed versus as Harry noted your high conviction at the time of completing that transaction? And the one is on Kisqali, if I may. Next year, it looks like it's going to be particularly important to offset some of the potential headwinds you may face. Could you just talk about the realism of consensus or conservatism of consensus expectations of $4 billion? Is it really realistic to expect you to add another $1 billion of sales? And are you expecting a gradual increase in the pace of prescription adoption or some inflection post NCCN et cetera?

Yes, thanks, Emmanuel. On collaborative, it's nothing new. I think the data was presented in ESMO and other settings. This is a medicine that had a safety imbalance that we think has to get fully resolved prior to being able to use the data for any kind of filing. We need to follow these patients longer to see how the two arms perform. There is an indication that OS is going on a positive direction. However, early, we need to, I think, see this unfold, I think for a longer period of time and also determine what additional trials will be required given that safety signal to have a positive benefit-risk. So, that's what we're monitoring and we'll continue to monitor these things I think happened in clinical development that safety signals emerge and then you have to deal with them. So, that's, I think, normal course of business in our industry. With respect to Kisqali, I don't think we're prepared here to give peak additional peak sales guidance, but we will update our peak sales guidance for Kisqali given in Meet the Management. I think it's pretty clear you can all annualize right now the metastatic indication and where that's heading. So, that already, I think is really strong momentum in that area. And then, now that we have the broad label, including node negative patients, as well as the NCCN guidelines and node negative patients, as well as the positive overall label at CHMP, I think we clearly are very optimistic for the overall size of this medicine and we'll provide that update at Meet the Management. I think one more or two, three more. Next question, operator?

Thank you. Your next question comes from Richard Vosser from J.P. Morgan. Please go ahead.

Hi, thanks for taking my follow-up. Just one on Kesimpta, just a competitor is rolling out their subcutaneous formulation. Just thoughts on how that's impacting, are you seeing any impact at the moment? Thanks very much.

Yes. Thank you, Richard. To date, we have not experienced any impacts. We maintain steady overall market share with a slight increase in NBRx share. Our main focus now is to capture a larger portion of the growth in the B-Cell class, which has been our priority as it continues to increase by over 60%, especially among first-line and first-switch MS patients. Most of the impacts we hear about are mainly related to a competitor’s product within the IV class of these medications. Given that their treatment requires healthcare professional involvement, including various pretreatments, post-dose monitoring, and a pump for subcutaneous administration, it is not seen as comparable to Kesimpta, which can be injected in seconds to minutes and is quite straightforward for patients to administer at home. Therefore, we have not noticed any impact thus far. However, we must remain vigilant, and our teams are fully prepared to advocate for our value proposition. Outside of the U.S., we do not see any negative effects. We feel confident about the structure of those markets, as there is a preference for the convenience of Kesimpta, which helps get patients out of medical facilities. This has allowed us to maintain strong momentum outside the United States as well. Next question?

Thank you. Your next question comes from the line of Graham Parry, Bank of America. Please go ahead.

Great, thanks for taking follow-up. So, it's just on the Kisqali challenge from MSN, just thoughts on timelines of ruling from the Delaware Court on that. And if MSN was actually successful in invalidating the patent, just your expected timelines for resolution of an appeal, and just correct me if I'm wrong, but are you sort of past the stage of settlement here, or is that would still be could that still be an option? Thanks.

Yes, there are no updates. The ruling could come at any time, and we will continue to keep an eye on that. We are ready to promptly follow through with the necessary injunctions and appeals, though that process may take some time. Additionally, we still need to obtain approval, which involves several steps. We believe there are significant aspects to highlight in relation to this situation. Overall, I think we are in a good position. We will have to wait and see how the ruling unfolds. It's hard to predict, but without knowing the exact timing of the court's appeal hearings, we would estimate '26 and beyond. However, we need to consider the timing of the ruling, appeals, and hearings to provide more detailed information on that. Next question, operator?

Thank you. We will now take our final question for today and the final question comes from the line of Matthew Weston from UBS. Please go ahead.

Thank you, Vas. It's a question about politics and siRNA. So, clearly siRNA as a mode of action is very important to Novartis. I believe you're very active in the legislation to try and get an amendment to IRA to extend the life from nine years to 13 years in terms of government pricing action. Can you give us any update as to where that legislation is, please?

Yes, absolutely, Matthew. So, I'll take the opportunity, given that nice broad question, and thank you, Matthew, for your third question today, to provide, I think, a broader perspective as well. So, first on the IRA, which of course is a top priority for the industry, there's a broader desire to, and I think important for public health and of course pipelines and oncology, neuroscience, cardiovascular disease, indication expansion, to get the 9 to 13 small molecule versus large molecule aberration corrected and there is legislation tabled currently in Congress to try to get that broad correction to happen. I believe now there's bipartisan support in the House for that broad correction. Alongside that, there's a number of limited fixes that are being proposed by various factors. And one of those is the Mini Act, which targets correcting for genetically-targeted therapies, such as siRNAs, ASOs, et cetera, and trying to get their definition more in line with what was done in 21st century cures. That also has bipartisan support in the Senate and the House, and a relatively low pay-for, so that's also out there as well. Actually, a minimal pay-for, I should say. I think now it's much more moving through the election period, moving through obviously the establishment of a new session, and then trying to get those bills, whichever combination of the various bills that are out there, there's also efforts to correct the rare disease, multiple indication for single indication situation, similar definition, et cetera, and finding a right context to get those bills put in place as well as trying to get the broad fix overall for IRAs. So, I think all of those efforts are ongoing. In a completely separate track are the various litigations that are ongoing to repeal the IRA. We have one, other companies have them, the industry overall has one. So, we'll see how that also plays out. I think it will be in the two to three-year period, we get more understanding of all of those various pieces. We continue to of course push for PBM reform in as broad a way as we can and then also to get hopefully a more sensible 340B environment, which is I think a significant issue for the overall industry starting with transparency of who are the patients and what are the centers getting this money and how is it used for. Those are I think the three big priorities for us as a company and overall for the industry from a legislative standpoint as we move to a new Congress and a new president. So, thank you all very, very much. I really appreciate all the great questions and interest. I hope we'll see all of you at Meet the Management in London, and in the meantime, wishing you all a very nice autumn. Take care.

Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.