Good morning and good afternoon, and welcome to the Novartis Q1 2025 Results Release Conference Call and Live Webcast. 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.

Thank you, Heidi. Good morning and good afternoon, everyone, and welcome to our Q1 2025 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 were filed with and furnished to the U.S. Securities and Exchange Commission. Before we get started, I want to reiterate Heidi's guidance for 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 over to Vas.

Thank you, Sloan. And thanks, everyone, for joining today's conference call. If we could move forward to Slide 4, Novartis delivered double-digit sales growth in the quarter, a really strong start to the year. We had robust margin expansion, and that all supported an upgrade to our full year 2025 guidance, which Harry will go through in more detail. Sales were up 15%, and core operating income was up 27%. Our core margin reached 42.1%, an improvement of 400 basis points. We also had important innovation highlights in the quarter, some of which I'll go through in detail in a moment. Pluvicto, Vanrafia, and Fabhalta all achieved approvals in their relevant indications. We had a global submission for remibrutinib and CSU, and our OAV-101 IT gene therapy for patients with SMA older than 2 years of age had a positive readout, and we're in the process now of filing that globally. So, taking together, a very strong start to the year and going into a little bit more detail starting on Slide 5. We had strong growth momentum from all of our priority brands in the quarter, and I think that really demonstrates the replacement power, which gives us confidence in our midterm guide of 5% plus and also our confidence that we have the levers that we need to continue to grow into the 2030s. You can see strong growth of 32% in constant currency, excluding interest. The portfolio was up 38%. I wanted to go through on each of these key brands, some of the key highlights. So moving to Slide 6. Kisqali grew 56% in constant currency, and that reflects our positioning globally as the preferred CDK4/6 inhibitor in both metastatic and early breast cancer. You can see that the growth was strong both outside of the United States and in the U.S. I'll go through that in a bit more detail in a moment. In the central panel, you can see that our total brand NBRx now is market-leading, trending very strongly, really powered by the early breast cancer launch, which is leading to strong performance both in early breast cancer and metastatic breast cancer. Now turning to each region. In the U.S., we were up 87% in the quarter. We have leading share and metastatic NBRx now at 48%. We're also not tied for TRx leadership, really demonstrating now how those NBRXs are impacting our TRx growth. In early breast cancer, our NBRx grew 65%, and we reached 60% NBRx share, and importantly, we estimate that 56% of that volume is from the population that's exclusive to the Kisqali label. Now outside of the U.S., we're still in the early stages of the early breast cancer launch. We're up 24% in constant currency. We're the metastatic breast cancer leader in 10 of our top countries with a 46% share of our NBRx share and a 35% TRx share, and our early breast cancer indication is now improved in the EU plus 9 other countries. As you know, we have strong guidelines support with Category 1 and CCN guidelines, and we've also achieved very strong guidelines with SSMO. Overall, I'm really pleased with the performance of Kisqali as it continues to grow towards our peak sales guidance of over $8 billion. Moving to Slide 7, Kesimpta grew 43% in constant currency, outpacing both the B-cell and MS market. Our overall sales were robust, both in the U.S. and ex-U.S. markets. In the U.S., we saw 41% TRx growth, outpacing the B-cell and MS markets, as I mentioned. Outside of the U.S., we have leading NBRx share in 8 out of 10 major markets, really reflecting the ease of use of the medicine. We continue to generate further long-term data to support the profile of Kesimpta. Seven-year data was presented at AAN, reinforcing the benefit-risk profile of the medicine. As a reminder, we believe the convenience of at-home self-administration makes Kesimpta the preferred medicine for patients who don't want to have IV administration at a doctor's office. This really positions us well outside the U.S. and in a large segment inside the U.S., where there continues to be robust growth of B-cell therapies, which we plan to participate in. Moving to Slide 8, Pluvicto grew 21% in quarter one, and most importantly for us, we laid the groundwork to continue laying the foundation for our pre-taxing launch with the PSMAfore population. When you look at some of the dynamics for Pluvicto, first with the post-taxing setting, we now have leading NBRx share in the first-line vision population setting, so post-taxing at 40%. I think this demonstrates that we are getting strongly established in this post-taxing population. We're seeing traction in the community setting with 4,000 TRXs, that's 11% above the prior year. We also see encouraging signs that more community practices want to take on radioligand therapy. Outside of the U.S., we see continuous growth driven primarily by European markets, which are increasingly adopting RLT and also with improved pricing that we're seeing in key markets, now with expansion over 20 plus countries. Most importantly for this brand, we received FDA approval in March for the PSMAfore population pre-taxing setting. As a reminder, Pluvicto doubled the median PFS and had a very favorable safety profile versus a daily oral ARPI. The final OS analysis, when unadjusted for crossover, was 0.91, but importantly, crossover adjusted was 0.59, and that's been very well received in the community. We already have NCCN guidelines support for the use of Pluvicto in this setting, and we continue to advance our Pluvicto life cycle management efforts. The PSMA addition readout is on track for the second half of 2025. As a reminder, the PSMA addition incident is similar to that we see in the pre-taxing setting. Now moving to Slide 9, just a little bit more on our preparations for the PSMAfore launch in the U.S. We have a strong foundation in place with 620 sites opened, a large population that we've expanded into a pre-fill syringe that's enabling broad adoption with a national launch. 50% of PSMAfore patients are treated by HCPs who have already prescribed in the vision population. We've also increased our promotional spend. We've doubled our field force and are maintaining a very robust direct-to-consumer advertising campaign. In terms of the launch dynamics, we expect to see it will take about 4 to 7 weeks of lead time for new patients to be treated to get the necessary scans and laboratory tests to be able to receive the medicine. We expect initial uptake to be driven by depth in our established accounts in the vision setting, and over time we expect to expand our reach in the community and urology settings. As mentioned, we also have the favorable NCCN guidelines. I think we are well set up for this to be a second-half story, and really in the next few months, we want to ensure we start to build the momentum that will allow this brand to break through, surpassing the $2 billion mark, and then forward to the $4 billion plus guidance that we've given. Moving to Slide 10, Leqvio grew 72% in the quarter and is on track to achieve blockbuster status. We have a steady upward trend that we're very pleased with. We're seeing solid growth both in the U.S. and ex-U.S. We see a steady climb in monthly TRXs, which are up 70% over the prior year, and that's growth across all of the key channels we're targeting. We're also seeing increasing depth in the priority systems that we're establishing; it's at 51% for the prior year. We've evolved our field operating model to better serve physicians and systems wanting to use Leqvio to manage their patients to goals for cholesterol lowering. Outside of the U.S., we're experiencing robust growth across our key markets, with a 74% increase. I want to highlight the solid pricing and access we've secured in Japan, as well as the continued out-of-pocket expansion we're seeing in China, which bodes well for the future of this medicine in Asia. We know there's a significant runway ahead of us, as only about 2% of secondary prevention patients receive any advanced lipid-lowering therapy, and there are increasing guideline recommendations that recommend these patients receive advanced lipid-lowering therapy. We see a big market opportunity and, step by step, we are on track to fully realize the potential of this medicine. Moving to Slide 11, Scemblix has established itself as a leader in the third line plus setting, and now our focus has switched to really establishing the medicine in earlier lines given our recent approvals. In the third line setting, we're at 54% NBRx share, which is three times higher than the next competitor, reflecting the excellent profile of Scemblix. Outside of the U.S., in key markets, it's 68% in Japan and 47% in Germany for NBRx share and an overall share of 47%. So, we are really well positioned in the third line setting. Our focus has now shifted to driving our performance in our early line approvals. We see continued momentum in the U.S. with a very strong start. We have 54% of commercial lives covered now to label. We're seeing expanding prescriber drafts, which are up 16% versus the prior quarter, and strong uptake in the second line, where we've already achieved 40% share, along with steady progress in first line where we have a 10% NBRx share. As a reminder, we are of course working against generic imatinib and the generic second-generation TKIs, but we feel confident we will step by step continue to take significant share from those medicines. Our early line approvals are on track globally; we already have approval in 10 countries and submission is completed in Europe. Moving to Slide 12 and turning to Cosentyx, Cosentyx grew 18% on the quarter. It was driven by our launches in HS and IV, and also importantly, very good performance in our core indication. In the U.S., we saw strong demand growth of 29%, more than offsetting the expected impact of the Part D redesign. Our NBRx volume is outperforming the market in our core indications, which are 15% versus the market in psoriasis, 12% in spondyloarthropathy, and we also maintain NBRx leadership in HS at 53%, even in the face of a new competitor entry. For the IV formulation, we have 1,900 accounts using the medicine, which is a 13% growth. It's still early stages for the IV launch, but we’re confident that step by step, now that we have the relevant reimbursement and support in place, the IV launch can also accelerate over the years to come. Outside the U.S., we delivered 15% volume growth, mainly in the core indications. We are the leading originator of biologics in Europe and China, and we've achieved HS reimbursement across our key markets. Taken together, we are confident in continued growth. We are on track to get the phase 3 readouts in both GCA and PMR, and we’re also well prepared to launch in those indications when approved. Moving to Slide 13, I wanted to mention our strong performance with Entresto, which is growing at 22%. You can see here on the quarter, reaching over $2.2 billion in global sales. We expect continued growth in the U.S. up until LOE, guiding to a mid-2025 LOE. We can delve into that in more detail on the call. In terms of outside the U.S., we have a very strong guideline position. We have balanced geographic sales, with 50% of our sales occurring outside the U.S. We expect RDP protection in Europe until November 2026 and will continue to pursue other avenues to fully protect the medicine in Europe. In Japan, it's June 2030, with potential additional protections as well; the hypertension indication is performing extremely well in China and Japan, and we’re focused on that driving our growth through the end of the decade. Moving to Slide 14, I wish to address our renal portfolio. We've been building out a strong renal portfolio globally. We have an ongoing launch of Fabhalta and recent FDA approval of Vanrafia. Fabhalta for IgAN has already seen 100% volume growth and a 60% increase in riders versus the prior quarter, reflecting the excitement around the impact the medicine could have for these patients. We have over 90% of patients remaining on treatment at 5 months, with 68% commercial coverage to label. In C3G, while only approved in March, we see positive signs with over 2,000 physicians already REM certified, applicable across both indications. Vanrafia was approved by the FDA in April, which is a once-a-day non-steroidal oral treatment. What excites us about this medicine is the efficacy standpoint. It can be seamlessly added on to existing RAF inhibitors that a patient may be on without any discontinuation needed. Importantly, there are no REMs for the label regarding hepatotoxicity or pregnancy, providing a clean label. Overall, we are driving strong synergies across this portfolio, and our goal is to continue to build out the strength of our renal pipeline to establish ourselves as a long-term leader. Moving to Slide 15, I wanted to discuss the OAV-101 IT gene therapy readout that we had in the quarter. On the left side of the slide, you see the primary endpoint was achieved in patients 2 to 18 years of age, but I want to focus on the patients aged 5 to 18 years, particularly since Zolgensma has been in the market for some time. The treatment effect versus placebo of 2.45 is strong and differentiating versus competition, positioning us well for hopefully gaining both approval and ultimately payer support for this one-time therapy in patients 5 to 18 years. We're excited about the ongoing studies and the overall favorable safety profile we've demonstrated with the medicine, and as mentioned, we are on track for global regulatory submissions over the course of the first half of 2025. Continuing on clinical data, we had long-term data on remibrutinib in CSU, supporting the differentiative profile of the medicine. Strong efficacy was maintained up to 52 weeks, even as the placebo group crossed over onto an active 25 mg b.i.d. You can see we have meaningful improvements in symptom control across all measures, starting as early as week one in a highly symptomatic disease where itch can severely disrupt quality of life and sleep. Patients want something that will impact their disease quickly after initiating therapy. We also observed a favorable safety profile in this data set, including balanced LFTs. In our mid-cycle review, we received no questions from the FDA regarding the liver profile of the medicine, which bodes well for remibrutinib's profile in CSU. We continue to meet our key milestones and had a New England Journal of Medicine publication. We've completed submissions in the U.S., EU, and China, and initiated a head-to-head study versus dupilumab, expecting readouts in 2027, focusing on the speed of onset of action of remibrutinib. We have ongoing Phase III studies in chronic inducible urticaria, targeting a 2026 submission, as well as Phase IIA-B studies ongoing for food allergy with readouts expected in the second half of this year. As you know, we also are exploring a higher dose in neuroscience for relapsing MS and myasthenia gravis. Expecting an FDA decision on CSU in the second half of the year. Moving to Slide 17, we're on track for our innovation milestones this year. I'll keep you updated as we receive readouts, but importantly also on our early and mid-stage pipeline, which we believe will generate the replacement power for strong growth into the next decade. With that, I'll hand it over to Harry.

Yeah, thank you, Vas. Good morning. Good afternoon, everybody. I will now talk you through our financials for the first quarter, which reflect a very strong start to the year. As always, my comments will refer to growth rates in constant currencies, unless otherwise noted. Starting on page 19, net sales grew 15% in quarter 1 versus the prior year, and core operating income grew 27%. Our core margin was 42%, reflecting a 400 basis points improvement driven by excellent sales growth and good cost management. Core earnings per share was $2.28, up 31%, and free cash flow was $3.4 billion. Just a note, close to net favorability, mainly in the U.S., added about 2% points to growth in quarter 1 from growth to net ups based on invoices related to prior quarters in 2024. So, the underlying growth in quarter 1 was still a very strong 13%. On the next slide, just a brief focus on free cash flow, which was up 66% in U.S. dollars; this is, of course, a continued area of focus for us. Our ability to convert excellent operating income growth into significant free cash flow provides ample capacity to reinvest in the business, pursue bolt-on deals, and return capital to shareholders while growing dividends and share buybacks. Speaking of capital allocation, on the next slide, we remain committed to our shareholder-friendly capital allocation strategy, optimizing both investing in the business and returning capital to shareholders. We continue to invest in R&D and CapEx and pursue value-creating bolt-on M&A. For example, we recently announced a $23 billion investment into our U.S. based manufacturing and R&D footprint over the next 5 years, and we also closed the acquisition of Anthos Therapeutics in April. Regarding returning capital to shareholders, we paid $7.8 billion in dividends in March and April of this year and continued our $15 billion share buyback in quarter 1, which still has approximately $2.7 billion left to execute over the coming months. Moving to Slide 22, our continued strong business momentum, combined with the gross to net favorability mainly in the U.S., allowed us to raise our full year guidance to the upper end of the prior provided range for both top and bottom line. We now expect sales to grow at high-single digit, up from mid to high-single digit, and we expect operating income to grow in low-double digits, up from high single-digit to low double-digit. Embedded in our guidance is the continued financial planning assumption that Tasigna, Promacta, and Entresto would have U.S. generic entries occurring in mid-year. For our full-year guidance, please note that we continue to expect core net financial expenses to be around $1 billion and our core tax rate to be in the range of 16% to 16.5%, so no change from what we said at the end of January. On my final slide, I've outlined details regarding the expected currency impact. If April exchange rates were to prevail for the entirety of 2025, we would expect that the full-year currency impact would be neutral on net sales and a negative impact of 2% points on core operating income. As a reminder, we provide an estimated impact of exchange rates on our results on a monthly basis on our website, which I hope is useful, especially during more volatile times. With that, I’ll pass it back to Vas.

Thank you, Harry. In conclusion on Slide 25, we had a strong start to the year, with double-digit sales growth, robust core margin expansion, strong core operating income growth, and significant free cash flow generation. Given this strong start, we've upgraded our guidance for the full year. Importantly, we made significant pipeline progress in quarter 1, with 3 new approvals in the span of 3 weeks, which we believe can generate important growth for the company. We remain confident, even with the uncertainties of the geopolitical environment, in achieving our mid- to long-term growth outlook as outlined previously. With that, I think we can open the line for questions.

We will take our first question from Simon Baker at Redburn Atlantic. Please go ahead, your line is open.

Thank you for taking my questions. Two, if I may, please. Firstly, on the issue of tariffs, as most of your peers have led their quarterly presentations this time with tariffs and the impact and the correlation between where drugs are made and where they're sold, you chose not to, so I just wondered if you could give us some thoughts on the tariff exposure as you see it now and related to that, given it's been a few weeks since it was published, I wonder if you could give us some feedback on your letter with Paul Hudson to the FT. And then, secondly, for Harry on the gross to net, positive impact of 2% points, could you give us any more color on precisely where that was disproportionately landing? I'm assuming it wasn't equally distributed across the portfolio, so a little bit of color at the drug level would be very helpful there. Thanks so much.

Thank you, Simon. On tariffs, I think as Harry noted and we noted earlier today, our guidance fully accounts for any potential tariffs that we've modeled or scenarios that we expect this year and in the medium-term guidance. We've taken appropriate actions in terms of inventory levels and managing our supply chain to enable us to feel comfortable in managing it this year and in the medium term, as you also noted with our $23 billion investment, our goal in the coming years is to have 100% of our key U.S. products fully produced end-to-end in the U.S., and we're on track to do that. We think this is manageable and not something that we need to highlight regarding our financial outlook. Hence, we don't place a lot of emphasis on it. This is something we've been working on since January, and we feel good about where we are. Regarding the letter on Europe appropriately rewarding innovation, we feel there is an opportunity given the deliberations of the European Commission to maintain a competitive environment for the biopharmaceutical industry, hopefully encouraging them to do something more proactive to ensure we have a better environment in Europe. Clearly, prices in Europe have continued to decline, no longer reflecting the innovation that we deliver. The combination of capping market growth, analyzing new indications, and low launch prices has left 30% of medicines not launched in Europe or delayed. That number will continue to grow over time. As an industry, this is a matter we are addressing. We put forward three ideas on how we could potentially address the situation, maybe with additional ideas as well, and we're hopeful the European Commission will consider it. We will stay determined to educate policymakers at the country level and at the commission level to address this situation. Now with respect to gross to net, Harry.

Yeah, thank you, Simon, for the question. Obviously, we continue to monitor. As you know, we receive gross to net information 6 to 9 months late sometimes. We try always to be in the midpoint, based on the latest information we receive. We've got a bit lower Medicaid utilization and a more favorable channel mix resulting in prior period adjustments. I mentioned a 2% point impact, which also informs us about future expectations. Regarding the upgrade, it's not only based on prior periods of gross to net, but also a better revenue deduction outlook for the future, along with continued very strong brand performance, particularly in Kisqali. In terms of the impact, it's relatively broad-based, so I don't want to call out one specific brand. The impact is not distorting growth rates significantly, as it falls within a range of 1% to 4%, so it we don’t need to mention a single product.

Thank you, Simon. And just as a reminder, if colleagues could limit themselves to one question, thank you very much. Next question, operator.

We will take the next question. Your next question comes from the line of Graham Parry from Bank of America. Please go ahead, your line is open.

Great, thanks for taking my question. Following up on tariffs. Your guidance—your midterm guidance focuses on revenue and margin. Obviously, Novartis has one of the lower global tax rates, due to booking profits in Switzerland, around 16.5%. When you talk about factoring this into your guidance, are you also considering potential actions on transfer pricing or IP patent boxes that would impact tax rates?

Okay, Graham. We feel very confident in our tax rates, tax planning, and transfer pricing. All of that is very robust. Our current guidance reflects a tax rate in the 16% to 16.5% range, which already includes the Pillar II, 15% minimum for Switzerland. From that standpoint, we believe our tax rate will remain in that range.

And of course, we monitor the situation. If the U.S. government were to take more extreme actions, we would need to reevaluate; however, based on everything we're hearing, we believe we can manage the policies currently proposed. Next question, operator.

Your next question comes from the line of Emmanuel Papadakis from Deutsche Bank. Please go ahead, your line is open.

Thank you very much for taking my question. I wanted to clarify regarding Pluvicto. Earlier, you mentioned a $4 billion peak sales ambition. However, I recall a $5 billion number last year. Can you confirm that change or was that a typo? Additionally, can you discuss your confidence regarding the H2 PSMAfore inflection? Is it based on confidence that you'll transcend this community referrals bottleneck or is it about expanding the number of sites capable of administering therapy? Any color you can provide would be extremely helpful.

Yes. Thank you, Emmanuel. My apologies; it is still over $5 billion. I misspoke. Regarding Pluvicto, I think within the academic centers and large integrated health centers that are already well set up, we expect rapid uptake. These accounts are familiar with the medicine, they have capacity, they need to staff up, but we believe that is within their reach, and those are the accounts where we expect to see initial rapid uptake of the medicine, driving second-half performance. However, to reach the full potential within the PSMAfore and PSMA addition populations, we need to continue to expand not only the number of centers but also get many of those centers to increase the patient volume they are processing. Out of the centers we've set up, only about half are using Pluvicto at their target rate. We need to improve utilization while expanding site numbers. This will require getting comfortable with the use of the medicine through the rollout of pre-filled syringes, and ensuring referral networks are operational, which are all surmountable challenges. We have made significant progress over the last few quarters, and we are mapping out our geographic expansion to make sure we cover these aspects effectively.

Very helpful, thank you.

Next question, operator.

Your next question comes from the line of Florent Cespedes from Bernstein. Please go ahead, your line is open.

Good afternoon. Thank you for taking my question. Just a quick follow-up on Pluvicto. In the U.S., you mentioned that 50% of the centers are not using Pluvicto at a target rate. What’s the main pushback from the centers? Is it merely about needing more convenience, such as the pre-filled syringe, or are there other barriers? Any additional color would be helpful.

Yes. I think it’s a combination of factors, Florent. One of the challenges is ensuring adequate reimbursement post-treatment and making sure the process works smoothly. Second, we need to continuously educate on the staffing needs ahead of treating patients. Also, establishing effective referral networks is crucial to direct patients to locations where Pluvicto is available. These challenges are surmountable. We have made considerable progress, expanding from roughly 100 or 150 centers a while back to now, multiples higher than that. We are addressing the issues methodically, and once we establish these practices into standard care, they tend to remain. As I reflect on how long it took for chemotherapy to roll out, we understand that these things take time. However, once established, they stick. We are committed to consistent investments over time, given our broader portfolio that we are developing. Next question, operator.

Your next question comes from the line of Peter Verdult from BNP Paribas Exane. Please go ahead, your line is open.

Yes, thanks. I have a question regarding ianalumab in Sjogren's. The physician feedback has been positive; however, we know there are no systemic treatment options available for these patients. Do you believe replicating the Phase II data you presented earlier will be sufficient to excite the community? Additionally, how do you see the commercial opportunity when comparing Sjogren's and ianalumab to something like Cosentyx in HS? Could they potentially have a similar or even larger market size?

Yes, we see ianalumab having significant potential if successful. Given that Sjogren's currently lacks approved systemic therapies, the size of the patient population presents a considerable opportunity to create a major medicine. Although we haven't guided specific numbers yet, we certainly anticipate it being a multibillion-dollar medicine with the Sjogren's indication if we secure approval. That said, this will be a challenge due to the heterogeneous nature of the disease and the complexities surrounding the SI endpoint. We've designed the study to control for placebo effects while ensuring appropriate powering and statistical analysis, including patient-reported outcomes requested by the FDA, which are pivotal for physicians. We are focused on targeting outcomes that will optimize quality of life for patients suffering from systemic manifestations of the disease. If we can show significant improvements in those areas, we anticipate a highly successful outcome. Next question, operator.

Your next question comes from the line of Richard Vosser from JPMorgan. Please go ahead, your line is open.

Hi, thanks for taking my question. I wanted to ask about Scemblix. The growth on prescriptions is impressive, but revenue growth seems a bit below that. Are you offering more rebates to generate first-line volume, or do you anticipate an uptick in Scemblix revenue later this year consistent with the prescription growth?

We've looked into this. One thing we’re seeing is that when we compare our IQVIA data set to our internal data sets, our internal data reflects a 73% TRx growth for Scemblix, which corresponds to a 75% net sales growth, and this is in line with our expectations. We believe IQVIA is showing a higher number, which may stem from how rare disease products flow not just through pharmacies but also through specialty distribution channels. Therefore, we view this difference as largely channel-related rather than an underlying performance issue. Importantly, we are witnessing strong growth in second-line and first-line indications. We have reimbursement in place and have secured NCCN guidelines. We expect continued growth in the first and second lines due to this medicine's significant potential, which we aim to realize fully. Thank you, Richard. Next question, operator.

Your next question comes from the line of James Quigley from Goldman Sachs. Please go ahead, your line is open.

Great, thanks for taking my question. I have a question about Pelacarsen's competitiveness. Last month, Phase II data demonstrated a 94% reduction in Lp(a) at the highest dose with a 180-day administration interval. The Phase II will obviously follow after Horizon, and we need to see that to gauge the competitive landscape. With emerging data for competitors with longer dosing intervals, how does this impact your perception of Pelacarsen's competitiveness and your launch strategy, assuming positive Horizon data? Does this create a need to accelerate development for your own 6-monthly or longer-acting Lp(a) option?

Yes. Thanks, James. We'll certainly keep a watch on the competitive landscape. Primarily, our focus now is on delivering on the Phase III trial and accelerating towards launch, establishing ourselves as a first-in-class therapy while building on our global cardiovascular presence with monthly dosing and aiming to capture a significant patient base. We acknowledge competitors may emerge with quarterly and then potentially 6-month dosing options down the line. Still, we remain confident that Pelacarsen presents a substantial outlook with its current profile. As for the Horizon study, we've enrolled a high-risk patient population, with a median level of Lp(a) around 108, and around 80% of patients above 90%. If the modeled performance aligns with our expectations regarding Lp(a) reductions, we would have a strong chance of success. Additionally, we are actively pursuing multiple avenues to develop less frequently dosed siRNAs or ASOs, potentially achieving annual dosing by the end of the decade or early 2030s. Next question, operator.

Your next question comes from the line of Thibault Boutherin from Morgan Stanley. Please go ahead, your line is open.

Thank you very much. I have a question regarding the new Phase III study you started for Kesimpta and the dosing regimen. Are you extending the injection interval, or exploring higher doses for enhanced efficacy? Given that it's late in the drug's lifecycle, what is the objective here? Could this potentially aid with IP duration?

Yes, thanks, Thibault. This effort aims to investigate increasing the dosing interval of Kesimpta before the end of its lifecycle. Currently, we see competitiveness in Kesimpta due to some competitors not achieving their targets. We want to ensure that Kesimpta continues to be a mainstay for B-cell therapy for an extended period. We have ongoing studies to explore infrequent dosing and other formulations, mindful that we believe there won't be biosimilars in the U.S. until the early 2030s. Hence, we feel there is ample opportunity to develop these alternative formulations. Next question, operator.

Your next question comes from the line of Matthew Weston from UBS. Please go ahead, your line is open.

Thank you. I have a question for Harry, please. Earlier this year, there was a prominent slide on first-half and second-half dynamics, especially regarding profitability, which is absent from today’s slides. Is this because you're expecting a less sharp contrast now, given the launch of Kisqali and continued growth of Kesimpta? Or was it just a decision not to include it?

We wanted to see if you noticed. Kidding aside, thank you, Matthew. The one-time effect of the gross to net from the prior period is reflected this quarter, along with other factors that contribute to our overall full-year upgrade. One of these is that we anticipate better gross to net ongoing. We adjust our assumptions every quarter, learning from the latest data. Additionally, we have factored in the redesign impact of Medicare Part D, which was partially reflected in Q1. Therefore, we project both halves may now see a more favorable performance than initially expected.

Thanks, Harry. Thanks, Matthew. Next question, operator.

Your next question comes from the line of Kerry Holford from Berenberg. Please go ahead, your line is open.

Thank you for taking my question. On Votoplam, are you still on track to release that Phase II data in the first half of this year? Do you see the potential to file and secure approval in Huntington’s disease, or should we assume a Phase II study will be needed?

Yes. Votoplam's Phase II study is ongoing, conducted by PTC. We expect the readout in the first half of this year. Once we have the data, we'll determine whether we can submit based on those results or if we need a pivotal Phase III study. We’re monitoring the evolving expectations from the FDA and competitors closely to make informed decisions. Next question, operator.

Your next question comes from the line of Seamus Christopher Fernandez from Guggenheim. Please go ahead, your line is open.

Hi, thanks for taking my question. I want to ask about value-creating bolt-ons and areas of focus for business development, particularly if you see potential for lifecycle management with your hypertension and heart failure portfolio, especially considering the impending loss of Entresto in the U.S. But robust opportunities for Entresto overseas.

Currently, we don't have anything specific to report. We feel confident about our cardiovascular pipeline, which includes Entresto, Leqvio, Pelacarsen, our kidney portfolio, along with the recent acquisition of Anthos Therapeutics for anti-coagulation. We maintain a broad range of therapies targeting cholesterol, Lp(a) lowering, hypertension, and anti-arrhythmic drugs. We're monitoring opportunities for bolt-ons but have no specific focus on cardiovascular medicines at this time. Next question, operator.

Your next question comes from the line of Steve Scala from TD Securities. Please go ahead, your line is open.

Thank you. Novartis has among the fewest manufacturing plants in the U.S. in the industry, but did announce a $23 billion program to expand its footprint. How much of that build-out will be complete by 2028? Could this pivot be seen as less than ideal if the political landscape in the U.S. changes in 4 years? If so, why didn’t the investment start sooner? Additionally, you mentioned Novartis can manage the plans currently put forward in the U.S. Is this assessment inclusive of the most favored nation legislation?

On that point, we acknowledge that recognition of the need to expand could have happened sooner. This strategic decision to prioritize the U.S. as our major growth market dictates end-to-end production of all key medicines domestically. We aim for robust supply chain stability in the U.S. regardless of political shifts. Several medicines are already produced domestically, and we believe it is feasible to establish the necessary manufacturing plants within the timeframe allotted. Regarding most favored nation, if this policy, which would negatively impact our industry, is enforced in a significant manner, it would necessitate reevaluating our long-term outlook. We advocate against the importation of foreign price controls into the U.S., as it would not serve the interests of patients or the healthcare system. Next question, operator.

Your next question comes from the line of Graham Parry from Bank of America. Please go ahead, your line is open.

Yes, thanks for taking my follow-up. I wanted to clarify your comment on MFN being devastating for the industry. Are you referring to MFN being imposed in both government and commercial settings, or do you see it causing substantial impact primarily across Medicare and Medicaid?

Yes, the impact of MFN largely hinges on its implementation specifics. MFN, limited to Part B drugs, is manageable for Novartis. However, if MFN extends to Medicare Part B and Part D without necessary rebates and discounts, it becomes a challenge. If it were applied to the private market as well, it would be devastating. While Novartis is relatively well-positioned, an effective MFN could damage our ability to invest in R&D and our future medicine pipeline. Next question, operator.

Your next question comes from the line of Florent Cespedes from Bernstein. Please go ahead, your line is open.

Good afternoon, and thank you for taking my follow-up question. A general inquiry regarding the IRA: What are your thoughts on the exclusivity disparity between small molecules and large molecules, with 9 years versus 13 years? Do you see any possibility for a favorable trend on this front?

It was promising to see that in the President's executive order, there was support for extending small molecule exclusivity from 9 to 13 years. This change is a priority for us from a legislative perspective, and we have the means to facilitate this. It is crucial that any reconciliation bill considers this correction. We sense strong bipartisan support exists in the House and Senate to ensure its passage. However, we understand that such efforts are contingent upon final language and must be closely monitored. Overall, the outlook seems positive in this regard. Simultaneously, we continue to advocate for PBM reforms and address the 340B system to enhance its support for patients and clinics, mitigating the abuses currently seen. All right, thank you very much. Thank you for joining today's call. We look forward to keeping you updated on all happenings at Novartis, and we wish you a great day.

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