Post on 14-Feb-2017
transcript
Disclaimer
This presentation contains forward-looking statements that can be identified by terminology such as such as “potential,” “expected,” “will,” “planned,” or similar expressions, or by express or implied
discussions regarding potential new products, potential new indications for existing products, or regarding potential future revenues from any such products; potential shareholder returns or credit
ratings; or regarding the potential outcome of the announced review of options being undertaken to maximize shareholder value of the Alcon Division; or regarding the potential financial or other
impact on Novartis or any of our divisions of the significant reorganizations of recent years, including the creation of the Pharmaceuticals and Oncology business units to form the Innovative
Medicines Division, the creation of the Global Drug Development organization and Novartis Operations (including Novartis Technical Operations and Novartis Business Services), the transfer of the
Ophthalmic Pharmaceuticals products of our Alcon Division to the Innovative Medicines Division, the transfer of selected mature, non-promoted pharmaceutical products from the Innovative
Medicines Division to the Sandoz Division, and the transactions with GSK, Lilly and CSL; or regarding the potential impact of the share buyback plan; or regarding potential future sales or earnings
of the Novartis Group or any of its divisions; or by discussions of strategy, plans, expectations or intentions. You should not place undue reliance on these statements. Such forward looking
statements are based on the current beliefs and expectations of management regarding future events, and are subject to significant known and unknown risks and uncertainties. Should one or
more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward looking statements. There
can be no guarantee that any new products will be approved for sale in any market, or that any new indications will be approved for any existing products in any market, or that any approvals which
are obtained will be obtained at any particular time, or that any such products will achieve any particular revenue levels. Nor can there be any guarantee that the review of options being undertaken
to maximize shareholder value of the Alcon Division will reach any particular results, or at any particular time. Neither can there be any guarantee that Novartis will be able to realize any of the
potential strategic benefits, synergies or opportunities as a result of the significant reorganizations of recent years, including the creation of the Pharmaceuticals and Oncology business units to
form the Innovative Medicines Division, the creation of the Global Drug Development organization and Novartis Operations (including Novartis Technical Operations and Novartis Business
Services), the transfer of the Ophthalmic Pharmaceuticals products of our Alcon Division to the Innovative Medicines Division, the transfer of selected mature, non-promoted pharmaceutical
products from the Innovative Medicines Division to the Sandoz Division, and the transactions with GSK, Lilly and CSL. Neither can there be any guarantee that shareholders will achieve any
particular level of shareholder returns. Nor can there be any guarantee that the Group, or any of its divisions, will be commercially successful in the future, or achieve any particular credit rating or
financial results. In particular, management’s expectations could be affected by, among other things: regulatory actions or delays or government regulation generally; the potential that the strategic
benefits, synergies or opportunities expected from the significant reorganizations of recent years, including the creation of the Pharmaceuticals and Oncology business units to form the Innovative
Medicines Division, the creation of the Global Drug Development organization and Novartis Operations (including Novartis Technical Operations and Novartis Business Services), the transfer of the
Ophthalmic Pharmaceuticals products of our Alcon Division to the Innovative Medicines Division, the transfer of selected mature, non-promoted pharmaceutical products from the Innovative
Medicines Division to the Sandoz Division, and the transactions with GSK, Lilly and CSL may not be realized or may take longer to realize than expected; the inherent uncertainties involved in
predicting shareholder returns or credit ratings; the uncertainties inherent in the research and development of new healthcare products, including clinical trial results and additional analysis of
existing clinical data; our ability to obtain or maintain proprietary intellectual property protection, including the ultimate extent of the impact on Novartis of the loss of patent protection and exclusivity
on key products which commenced in prior years and will continue this year; safety, quality or manufacturing issues; global trends toward health care cost containment, including ongoing pricing
and reimbursement pressures, such as from increased publicity on pharmaceuticals pricing, including in certain large markets; uncertainties regarding actual or potential legal proceedings,
including, among others, actual or potential product liability litigation, litigation and investigations regarding sales and marketing practices, intellectual property disputes and government
investigations generally; general economic and industry conditions, including uncertainties regarding the effects of the persistently weak economic and financial environment in many countries;
uncertainties regarding future global exchange rates; uncertainties regarding future demand for our products; and uncertainties regarding potential significant breaches of data security or data
privacy, or disruptions of our information technology systems; and other risks and factors referred to in Novartis AG’s current Form 20-F on file with the US Securities and Exchange Commission.
Novartis is providing the information in this presentation as of this date and does not undertake any obligation to update any forward-looking statements as a result of new information, future events
or otherwise.
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 2
1. Group review Joseph Jimenez, Chief Executive Officer
2. Financial review Harry Kirsch, Chief Financial Officer
3. R&D Jay Bradner, President NIBR & Vas Narasimhan, Global Head
Drug Development & CMO
4. Q&A All presenters
Agenda
3
Last year we established 5 objectives for 2016
Deliver strong
Financial Results
Strengthen
Innovation
Improve
Alcon Performance
Capture
Cross-Divisional Synergies
Build a
High-Performing Organization
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 5
We broadly delivered on these, with some areas
for improvement
Deliver strong
Financial Results
Strengthen
Innovation
Improve
Alcon
Performance
Capture
Cross-Divisional
Synergies
Build a
High-Performing
Organization
Sales broadly in line despite Glivec® loss of exclusivity in US
Breakthrough innovations: LEE011, BAF312, AMG 334, Biosimilars
Alcon improved, but did not return to growth: Vision Care returned to
growth, but Surgical taking longer
Major organizational changes implemented without disruption
Launches: Strong Cosentyx® launch; Entresto® uptake slower than expected
NBS-managed costs decreased, scaling up 5 Global Service Centers
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 6
Sales broadly in line due to strong performance
of Growth Products
Continuing operations1
(in USD bn) 2016 % USD % cc1
Net Sales 48.5 -2 0
Core Operating Income1 13.0 -6 -2
Operating Income1 8.3 -8 -3
Net Income 6.7 -5 +1
Core EPS (USD)1 4.75 -5 -2
EPS (USD) 2.82 -3 +2
Free Cash Flow1 9.5 +2
Change vs. PY
1. Continuing operations are defined on page 41 of the Condensed Financial Report. Constant currencies (cc), core results, and free cash flow are non-IFRS measures. An explanation of these measures can be found on page 50 of the
Condensed Financial Report.
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 7
Pipeline: 2016 was a strong year for innovation
1. SPMS: Secondary progressive multiple sclerosis 2. In collaboration with Amgen; Novartis has AMG 334 rights outside of US, Canada and Japan 3. Clinicaltrials.gov. QVA149 vs. Salmeterol/ Fluticasone, 52-week Exacerbation Study
(FLAME). NCT01782326. Seretide® is a registered trademark of GlaxoSmithKline
BAF312 Positive Ph III: Reduction of disability progression in SPMS1
Ultibro®
Breezhaler® FLAME data: Demonstrates superiority over Seretide®3
LEE011 Positive Ph III data: Filed in the US and EU
AMG 3342 Positive Ph III & Ph II: In episodic and chronic migraine
Rituximab EMA submission accepted: Demonstrated bioequivalence
Erelzi® US approval: Unanimous vote by Arthritis Advisory Committee
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 8
Alcon: Vision Care turning but Surgical taking
longer
Surgical Vision
Care
• Continued strong global growth of
Dailies Total1®
• Contact lens share positively
impacted in US, EU
• Introduced new innovation e.g.,
Dailies Total1 Multifocal®
• Continued solid growth of cataract
consumables and vitreoretinal
• Weaker performance of IOLs and
equipment
• Introduced new innovations:
CyPass® and NGENUITY®
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 9
Integrating manufacturing and drug development
across divisions: Seeing early benefits
Improved
transparency 1
Better resource
allocation 2
More
collaboration 3
• Manufacturing: Integration
around technology platforms
• Drug development:
Integration of global functions
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 10
The demand for healthcare is growing...
... older
~1 in 3 Over 50 years old
... larger
+1bn By 2030
... sicker
Chronic diseases
>70% of all deaths
Source: United Nations, “World Population to Increase by One Billion by 2025,” 2013 Source: World Health Organization, “The Global Burden of Disease: Updated Projections,” 2015
The population is getting …
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 12
...creating opportunities in key diseases
Source: WHO, OECD
Expected high growth areas (2025)
Neuroscience Ophthalmology
Cardio-
Metabolic Oncology
• Heart disease and cancer alone
expected to cause 50% of all deaths
• More than 2bn people expected to
suffer from presbyopia and ~18m
cases of cataracts expected in US
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 13
However, the same forces creating this demand,
are putting pressure on the industry
• Increased pressure on
pricing and access
• Increasing attention to
Real World Evidence
If unchecked, healthcare spending
forecast to double by 2030
2x
Source: Business Monitor International, Harvard Business Review and CMS (Centers for Medicare and Medicaid Services)
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 14
To win in this environment, we are rethinking all
aspects of our business
We are “Reimagining Medicine”
How we innovate 1 How we sell 2 How we operate 3
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 15
Novartis is positioned well for the future with
growth drivers expected to more than offset
Generics
2020 Sandoz
and Alcon
Gx impact Onco Growth
Drivers
Pharma
Growth Drivers
2017
Mainly:
New Onco
LEE011
Jakavi®
Mainly:
Cosentyx®
Entresto®
Biosimilars
& Alcon
growth
Mainly:
Gilenya® US
Afinitor®
Ophtha
Glivec®
Illustrative Sales FY 2017–2020 (in cc)
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 17
... without including other key pipeline assets
with blockbuster potential
AMG 334 (erenumab)
RLX030 (serelaxin)
ACZ885 (Ilaris®)
QVM149 (indacaterol, glycopyrronium, mometasone)
QAW039 (fevipiprant)
OMB157 (ofatumumab)
BAF312 (siponimod)
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 18
Less exposed to Pricing or IP risks
Balanced
global presence
35% sales in US Gx, Biosimilars
Balanced
portfolio
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 19
Today, we are announcing two actions
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 20
Alcon Review Options to maximize shareholder value of the Alcon Division
under consideration
Share Buyback We are initiating share buyback of up to USD 5 billion for 2017
These actions demonstrate our commitment to maximizing
shareholder value and confidence in our future growth trajectory
2017 priorities
Strengthen R&D
Ensure world-class
commercial execution
Transform Alcon into an agile
medical device company
Create a stronger company
for the future
Deliver financial targets
2
3
4
5
1
• Regulatory decisions: LEE011, PKC412, Biosimilars
• Submissions: CTL019, AMG 334
• Trial readouts: RLX030, ACZ885, RTH258
• Sales broadly in line with prior year
• Core Operating Income broadly in line with prior year or
decline low single digits1
• Accelerate sales: Cosentyx®, Entresto®
• Successfully launch new approvals: potentially LEE011,
Biosimilars rituximab and etanercept, PKC412
• Return Alcon to top-line growth
• Strengthen innovation and commercial execution
• Embed new operating model & capture synergies
• Strengthen quality, compliance and develop the best talent
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 21
1. Barring unforeseen events
1. Group review Joseph Jimenez, Chief Executive Officer
2. Financial review Harry Kirsch, Chief Financial Officer
3. R&D Jay Bradner, President NIBR & Vas Narasimhan, Global Head
Drug Development & CMO
4. Q&A All presenters
Agenda
22
2016 actuals in line with our guidance
Actual
vs. PY (in cc)
Full Year Guidance, Q2 2016 – reconfirmed in Q3 2016 (in cc)
“Sales are expected to be broadly in line with prior year” +0%
-2% “Core operating income is expected to be broadly
in line with prior year or decline low single digits”
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 23
Summary of Q4 2016 and FY financial results
1. An explanation of continuing operations can be found on page 41 of the Condensed Interim Financial Report. Core results, constant currencies and free cash flow are non-IFRS measures. Further details regarding non-IFRS measures can
be found starting on page 50 of the Condensed Interim Financial Report
Q4
Continuing Operations1
(in USD m) 2016 % USD % cc
Net Sales 12 322 -2 0
Core Operating Income 3 013 -1 1
Operating Income 1 455 -13 -9
Net Income 936 -11 0
Core EPS (USD) 1.12 -2 1
EPS (USD) 0.40 -9 2
Free Cash Flow 2 976 1
Change vs. PY FY
2016 % USD % cc
48 518 -2 0
12 987 -6 -2
8 268 -8 -3
6 698 -5 1
4.75 -5 -2
2.82 -3 2
9 455 2
Change vs. PY
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 24
Q4 2016
Net sales
change vs. PY
Core operating
income
change vs. PY Core ROS
Core margin
change vs. PY
(in % cc) (in % cc) (%) (% pts cc)
Innovative Medicines -1 4 29.1 1.2
Sandoz 3 4 20.0 0.1
Alcon 0 -36 11.3 -6.3
Q4 continuing operations 0 1 24.5 0.2
Q4 Core margin slightly improved with Innovative
Medicines offsetting Alcon
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 25
12M free cash flow was USD 9.5bn
Key drivers vs. PY:
+ Working capital
+ Lower CapEx
+ OTC/JV dividend
− Lower OpInc
+0.2
12M 2016
9.5
12M 2015
9.3
Continuing operations free cash flow (USD bn)
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 26
Novartis follows a capital allocation framework
focused on shareholder value
1. Investments in organic business
2. Growing annual dividend in CHF
3. Value-creating bolt-on1
4. Share buybacks
Create
sustainable
shareholder
value
Novartis
priorities
1. Includes M&A and BD&L
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 27
Novartis reinvests substantially back into the
business
Key M&S investment in current
growth drivers
Key R&D investment in the pipeline
LEE011 (ribociclib)
AMG 334 (erenumab)
BAF312 (siponimod)
RLX030 (serelaxin)
OMB157 (ofatumumab)
Rest of pipeline +200 projects
1. Investments in organic business
Biosimilars
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 28
2.7
0
2.7
5
2.7
0
2.7
5
0.00
0.50
1.00
1.50
2.00
2.50
3.00
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
CHF USD
Novartis proposes the 20th consecutive dividend
increase to the AGM: 2.75 CHF / share
1. Proposal to shareholders at the 2017 Annual General Meeting, taking place on February 28, 2017 2. Converted at historic exchange rates on the dividend payment date as per Bloomberg; assumes an exchange rate of USD / CHF of
1.0001 as of January 23, 2017 for 2016
Proposed1 dividend
growth 2016 vs. 2015:
1.9% in CHF; 1.9% in
USD
2. Growing annual dividend
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 29
Novartis executed various value-creating bolt-on
transactions to support growth
1. Subject to customary closing conditions 2. Regulatory approval is required to exercise the option
Evaluation criteria
Strategic priorities
IRR and value creation
Financial discipline
3. Value-creating bolt-on
Infliximab
(Europe)
2
Ofatumumab 1
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 30
Initiating a share buyback of up to USD 5 bn in
2017 reinforcing confidence in growth prospects
• Initiating a share buyback1 of up to USD 5 billion, reinforcing confidence in growth
prospects
• Novartis aims to execute this buyback in 2017
• Novartis envisages to finance the buyback through new debt, actively using its
strong balance sheet
• Attractive funding rates reflecting historically low interest rates
1. Under the existing authority of the seventh share buyback program granted by the AGM in February 2016
4. Share buybacks
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 31
Expected key drivers of 2017 performance
1. NBS = Novartis Business Services; NTO = Novartis Technical Operations; GDD = Global Drug Development
• Pharmaceuticals growth
products (including
Cosentyx® and Entresto®)
• New oncology assets,
Jakavi® and LEE011
• Expected biopharmaceuticals
sales acceleration
• Capture NBS, NTO and
GDD1 cross divisional
synergies
• Generics (mainly Glivec®)
• Launch investments
• Alcon growth plan
investments
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 32
2017 Full Year Guidance
• In 2017, we expect continued genericization of Glivec® to impact results
• Group net sales expected to be broadly in line with PY
• IM Division broadly in line
• Sandoz low single digit growth
• Alcon broadly in line to low single digit growth
• Group core operating income expected to be broadly in line with PY to
low single digit decline
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 33
Barring unforeseen events (in cc)
1. Group review Joseph Jimenez, Chief Executive Officer
2. Financial review Harry Kirsch, Chief Financial Officer
3. R&D Jay Bradner, President NIBR & Vas Narasimhan, Global
Head Drug Development & CMO
4. Q&A All presenters
Agenda
34
A new era for R&D at Novartis
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 35
NIBR 2.0 - A Strategy for the Next Generation of Discovery
Innovate the New Science of
Therapeutics
Deliver Medicines First for
Those Who Need Them Most
Open our
Framework
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 36
% F
eta
l H
em
og
lob
in
Induction of fetal hemoglobin in
Gene-edited human blood stem cells
0
10
20
30
40
Control
Target Gene
Region 2 Region 3 Region 1
Source: NIBR in-house data
Investigational. Efficacy & safety not yet established
Target protein
degraded
E3 complex
Drug
Target A
24 hrs treatment of cancer cells
Target B
Target C
Source: NIBR in-house data
Investigational. Efficacy & safety not yet established
A relatively small number of patients currently
respond to immuno-oncology therapy options
Even among responders, a significant number
need to discontinue therapy due to adverse
events
Data emerging over the next 12-18 months
from Novartis and competitor trials will inform
the most impactful paths forward
We aim for a leadership position in oncology
by leveraging our broad immuno-oncology
and targeted therapy portfolios
Immuno-Oncology: Opportunities and Challenges
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 50
Immune Priming
STING
TIM-3
cMET
Porcupine
T-Cell Modulation
IL-15
GITR
IAP
TEC
mTOR
Tumor Environment
PD-1
PD-L1
LAG-3
TIM-3
TGF-β
IL-17
IL-1
CSF-1
CSF-1R
A2A adenosine
receptor
HDAC
MEK
T-cell Engineering
CART
CD19
BCMA
CD123
EGFRvIII
Mesothelin
Bi-specific Ab
CD123
CD20
The Novartis Immuno-Oncology Pipeline
Focused on Major Mechanisms of Immune Escape
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 51
Pediatric ALL filing on CTL019
expected in early 2017
DLBCL filing of CTL019 expected in H2
2017
Integration of the Cell & Gene Therapy
Unit into broader Novartis organization
Increased investment at NIBR in CART
manufacturing science
Cell-based Immunotherapy Anticipated to Reach
Regulatory Consideration in 2017
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 52
Strong pipeline focused on second
generation immuno-therapy
Rapidly progressing 18 checkpoint
and additional novel targets
20 exploratory immuno-oncology
studies expected by early 2017
Strong track record of R&D Excellence
Deep pipeline
200+ projects in the
clinic
90+ NMEs in the clinic
High Innovation Power
7 FDA Fast Track
designations in 2016
13 FDA Breakthrough
Therapy designations in
the last 5 years
Leading success rate
29 approvals1 in the last
5 years
1. Includes only first approvals for a compound in an indication in any major region/country
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 54
Creating an efficient and agile organization
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 55
1. Rigorous portfolio prioritization
2. Measuring performance
3. Driving operational efficiencies
4. Leveraging new technology & capabilities
5. Investing in our people
Priorities
5 priorities
• Higher return on
investment
• Leading cost efficiency
• 20% sustainable R&D
spend in Innovative
Medicines
Oncology
Broad and deep late stage pipeline
| Novartis R&D Update | January 25, 2017 | Novartis Media Presentation 56
Cardio-Metabolic
BYL719+fulv.
CTL019 Ped. ALL+ DLBCL
INC2802 NSCLC
Jakavi®2 (Multiple)
LEE0113 (Multiple)
PKC412 (Multiple)
SEG101 Sickle cell disease
Signifor® LAR Cushing’s disease
Tafinlar®+Mekinist® BRAF V600+ NSCLC
Tafinlar®+Mekinist® BRAF V600+ melanoma (adjuvant)
Tasigna® CML treatment free remission
Zykadia® ALK+ NSCLC (brain metastases)
Ophthalmology
RTH258 (Multiple)
Lucentis® ROP
UNR844 (Presbyopia)
Respiratory
QAW039 Asthma
QMF149 Asthma
QVM149 Asthma
Biosimilars Neuroscience Immunology & Dermatology
Adalimumab
Epoetin-alfa
Infliximab
Pegfilgrastim
Rituximab
Etanercept
AMG 334 Migraine
BAF312 SPMS
EMA401 Neuropathic Pain
FTY720 Pediatric MS
OMB157 Relapsing MS
CNP520 Alzheimer’s disease
CAD106 Alzheimer’s disease
BYM338 Multiple
Cosentyx® (Multiple)
Ilaris® Periodic fever syndr.
LJN452 NASH
VAY736 Prim. Sjoegren’s syndr.
Emricasan1 NASH
ZPL389 Atopic dermatitis
RLX030 Acute heart failure
ACZ885 CV risk reduction
Entresto® (Multiple)
LIK066 Weight loss
In addition, ~100 projects (70+ NMEs) in exploratory clinical studies
1 Option to license in 2 licenced in from Incyte 3 "LEE011 was developed by the Novartis Institutes for BioMedical Research (NIBR) under a research collaboration with Astex Pharmaceuticals
Selected key assets
Progressing development of 13 potential
blockbusters1 at Novartis
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 57
Therapeutic area Molecule Indication MoA Exp. pivotal
trial readout
Exp. order
of entry
Potential target
population
Onco Oncology
LEE011 (ribociclib) HR+ HER2- advanced breast cancer CDK4/6 inhibitor ✓ 2 ~0.2m (US, EU)4
CTL019 (CART-T) r/r B-Cell ALL, DLBCL CART-T Q2 20176 1 ~0.05m (US, EU)
SEG101 (crizanlizumab) Sickle cell pain crises Anti-P-selectin 2020 1 ~0.3m (US, EU, BRA)
CM Cardio-metabolic
RLX030 (serelaxin) Acute heart failure Relaxin receptor agonist Q2 2017 1 ~1.2m (US, EU5)
LCZ696 (Entresto®) Heart failure with preserved EF ARNI 2019 1 ~4.2m (US, EU5)
ACZ885 (canakinumab) CV risk reduction Anti-IL1β H2 2017 1 ~4m (G7)
NS Neuroscience
OMB157 (ofatumumab) Relapsing multiple sclerosis CD20 2019 2 ~0.6m (US, EU5)
BAF312 (siponimod)2 Secondary progressive multiple sclerosis S1P receptor modulator ✓ 1 ~0.3m (US, EU5)
AMG 334 (erenumab)3 Prophylaxis of migraine CGRP receptor antagonist ✓ 1 ~2.3m (EU5)
I&D Immunology&
Dermatology AIN457 (Cosentyx®) Non-radiographic axial SpA Anti-IL17A 2018 1 ~1.1m (US, EU5)
Resp Respiratory QVM149 (indacaterol,
glycopyrronium, mometasone) Asthma LABA + LAMA + ICS 2018 1 ~7.0m (EU5+JP)
QAW039 (fevipiprant) Asthma CRTh2 antagonist 2019 1 ~4.0m (G7)
Oph Ophthalmology RTH258 (brolucizumab) Neovascular AMD Anti-VEGF (scFv) H1 2017 3 ~0.9m (US, EU, JP)5
Bios Biosimilars Multiple Multiple Multiple Ongoing Varying Varying
1. Blockbuster potential refers to specified indication 2. Next steps to be evaluated in consultations with health authorities 3. In collaboration with Amgen; Novartis has AMG 334 rights outside of US, Canada and Japan 4. Kantar Health; Novartis analyses 5. Rudnicka et al. Am. J. Ophthalmol. 2015 Jul; 160(1):85-93.e3; Brown et al. Can J Ophthalmol. 2005 Jun;40(3):277-87; – Yasuda M et al. Ophthalmology. 2009 Nov;116(11):2135-40. doi: 10.1016/j.ophtha.2009.04.017. Epub 2009 Sep 10; Novartis analyses 6. Ped. r/r B-cell ALL positive trial readout achieved in 2016; Note: sources for epidemiology information can be found in the respective sections
Expected key 2017 milestones
1. Depends on outcome of consultations with health authorities 2. If results from Phase III trials are supportive 3. BS=Biosimilar Note: more detailed overview of expected newsflow can be found in the appendix
H1 2017 H2 2017
Regulatory
decisions
LEE011 HR+/HER2- adv. BC (US) LEE011 HR+/HER2- adv. BC (EU)
PKC412 AML and ASM (US) PKC412 AML and ASM (EU)
Tafinlar®+ Mekinist® BRAF+ NSCLC LA-EP2006 Pegfilgrastim BS3 (EU)
GP2015 Etanercept BS3 (EU) GP2013 Rituximab BS3 (EU)
Submissions AMG 334 Migraine GP2013 Non-Hodgkin’s Lymphoma (US)
CTL019 Ped. ALL (US) RLX030 Acute heart failure2
BAF312 Secondary progressive
MS1 ACZ885 CV risk reduction2
GP2017 Adalimumab BS3 (EU) CTL019 DLBCL2 (US)
GP1111 Infliximab BS3 (EU) GP2017 Adalimumab BS3 (US)
Major trial
readouts
RLX030 RELAX-AHF-2 (AHF) CTL019 JULIET (DLBCL)
ACZ885 CANTOS (CVRR) RTH258 HARRIER, HAWK
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 58
Locally Assessed Progression-free Survival in Patients
With De Novo Advanced Breast Cancer1
Progression-free Survival in Patients With Visceral
Metastases2
LEE011: Promising new treatment for breast cancer
[1] O'Shaughnessy J., presented at San Antonio Breast Cancer Symposium (SABCS), December 9, 2016, San Antonio, Texas (abstract # P4-22-05)
[2] Burris H., presented at San Antonio Breast Cancer Symposium (SABCS), December 9, 2016, San Antonio, Texas (abstract # P4-22-16)
Hazard ratio (95% CI): 0.448 (0.267-0.750) Hazard ratio (95% CI): 0.535 (0.385-0.742)
LEE011 + letrozole showed superior PFS vs. letrozole in pre-
defined subgroups
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 59
RLX030 for Acute Heart Failure addresses a
significant unmet need
| Novartis R&D Update | January 25, 2017 | Novartis Media Presentation 60
Acute Heart Failure Incidence
• High mortality: ~10% in hospital, ~15% in 6 months, 20% in 1 year and 50% in 5 years
• No approved therapies with outcomes benefits
• Targets relaxin receptor to stimulate vasodilation in a range of tissues
• RELAX-AHF-2 trial fully enrolled (6,610 patients) and on track to read out in Q2 2017
− Primary endpoints: CV death through Day 180 and
worsening heart failure at Day 5
20
17
es
tim
ate
s f
or
nu
mb
er
of
AH
F e
ve
nts
(U
S &
EU
5)
/ m
illi
on
1.00.7 0.6
1.4
0.8
0.6
0.0
0.5
1.0
1.5
2.0
2.5
1.2
SBP≥125mmHg All AHF events eGFR≥25mL/
min/1.73m2
EU5
US
Source: Decision Resources Patient Base 2016; estimates for SBP and eGFR based on patient population studied in RELAX-AHF-2 trial – potentially eligible population pending final label
Abbreviations: AHF=acute heart failure; CV=cardiovascular; eGFR=estimated glomerular filtration rate; SBP=systolic blood pressure
RLX030 potential first-in-class therapy
2.5
3.4
Migraine: Disabling condition without effective
therapies – AMG 334* could be first new therapy
| Novartis R&D Update | January 25, 2017 | Novartis Media Presentation 61
• Migraine is sixth highest cause worldwide of
years lost due to disability4
• Major prophylactic anti-migraine drugs are
repurposed with incomplete efficacy5
• Most prescribed drugs produce adverse
effects resulting in limited adherence6
1. Patients in EU top 5; Decision Resources Group; Novartis analysis 2. Chronic Migraine: 15+ migraine headache days per month 3. Episodic Migraine: 4-14 migraine headache days per month 4. Global Burden of Disease Study 2013
5. Major prophylactic anti-migraine drugs include beta-blockers, tricyclic anti-depressants, anti-epileptic drugs; Pringsheim T. et al. CMAJ 2010 6. Hepp Z. et al. Cephalalgia 2015; 35: 478-88 CGRP=calcitonin gene related peptide
* Development in collaboration with Amgen; Novartis has AMG 334 rights outside of US, Canada and Japan
Migraine prevalence and target patients1 Unmet need: No new therapies in a decade
2
3
Million patients (EU5)
0.9
2.9
4.0
1.4
2.02.5
4.2
Prevalence Diagnosed Acute (treated) Prophylaxis
(treated)
9.4 Chronic
Episodic
Steady flow of future potential significant
innovations - Pipeline Watch List
| Novartis R&D Update | January 25, 2017 | Novartis Media Presentation 62
Therapeutic area Molecule Indication Phase Mechanism of Action
Onco
Oncology 15 IO assets incl. combos Multiple Phase Ib/II Anti-PD1 + multiple others
ABL001 CML Phase II Allosteric BCR-ABL inhibitor
BYL719 Breast Cancer Phase III PI3k inhibitor
INC280 NSCLC Phase Ib/II cMET inhibitor
Jakavi® steroid refractory acute GVHD Phase III JAK1/2 inhibitor
CM
Cardio-metabolic APO(a)-LRx1 High risk CVRR Phase II Lipoprotein(a) inhibitor
APOCIII-LRx1 High risk CVRR Phase II Apolipoprotein-CIII inhibitor
LHW090 Resistant hypertension Phase II NEP inhibitor
LIK066 Weight loss Phase II SGLT1/2 inhibitor
MAA868 Stroke prevention Phase I/II Anti-thrombotic
NS
Neuroscience BYM338 Sarcopenia hip fracture Phase II Activin type-2 receptor
CNP520 Alzheimer’s Phase III BACE inhibitor
EMA401 Neuropathic Pain Phase II Angiotensin II Type-2 Receptor antagonist
I&D
Immunology-Dermatology CJM112 Multiple immune disorders Phase II High-affinity anti-IL17A
Emricasan1 NASH/Cirrhosis Phase II Oral pan-caspase inhibitor
LJN452 Non-Alcoholic Steatohepatitis Phase II FxR agonist
VAY736 Sjoegren’s syndrome Phase II Anti-BAFF-R
ZPL389 Atopic dermatitis Phase II H4 receptor antagonist
Resp
Respiratory ACZ885 Sarcoidosis Phase II Anti-IL1
CJM112 Asthma Phase II High-affinity anti-IL17A
QBW251 Cystic fibrosis/COPD Phase II CFTR potentiator
Oph Ophthalmology UNR844 Presbyopia Phase II Prodrug to metabolize DHLA
1 Option to license in
Pioneering breakthrough approaches in multiple
disease areas
Obesity Liver Disease Alzheimer’s
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 63
1. Secondary prevention of cardiovascular events
2. Tuberous sclerosis complex
3. Diffuse large B-cell lymphoma
4. Multiple sclerosis
5. Severe aplastic anemia
6. Chronic myeloid leukemia
7. Non-small cell lung cancer
8. Neovascular age-related macular degeneration
9. Non-Hodgkin’s lymphoma
10. Non-radiographic axial spondyloarthritis
11. Multi-drug resistant
12. Breast cancer
Over 60 projects planned for filing 2017 to 2021
| Novartis R&D Update | January 25, 2017 | Novartis Media Presentation 64
a) In collaboration with Amgen; Novartis
has AMG 334 rights outside of US,
Canada and Japan.
b) Submitted in EU (positive CHMP
opinion).
c) Submitted in EU.
d) Ongoing health authority consultations
to agree on path forward.
e) Encore Vision transaction closed in
January 2017.
f) Ziarco Group transaction closed in
January 2017.
New molecule
New indication
New formulation
Biosimilars
13. Retinopathy of prematurity
14. Secondary progressive multiple sclerosis
15. Preserved ejection fraction
16. Graft-versus-host disease
17. Relapsing multiple sclerosis
18. Chronic spontaneous urticaria / chronic idiopathic urticaria
19. Psoriatic arthritis head-to-head study versus adalimumab
20. Diabetic macular edema
21. Non-alcoholic steatohepatitis
22. Ankylosing spondylitis head-to-head study versus adalimumab
23. Acute myeloid leukemia
Combination abbreviations:
fulv fulvestrant
tmx tamoxifen
gsn goserelin
NSAI Non-steroidal
aromatase inhibitor
Pegfilgrastim (EU) LA-EP2006
KAE609 Malaria
CAD106 Alzheimer’s disease
LIK066 Weight loss
CJM112 Immune disorders
ABL001 CML6 3rd line
EMA401
Neuropathic pain
CNP520 Alzheimer’s disease
BYM338 Hip fracture
QGE031 CSU/CIU18
BYM338 Sarcopenia
PIM447 Hematologic tumors
VAY736 Primary Sjoegren’s syndrome
Entresto®
Post-acute myocardial infarction
QAW039 Atopic dermatitis
Tafinlar® + Mekinist®
BRAF V600+ Colorectal cancer
RTH258
DME20
Jakavi®
Early myelofibrosis
Afinitor®/Votubia®b TSC2 seizures
CTL019 Pediatric acute lymphoblastic leukemia
Tasigna®c CML6 treatment free remission
LCI699 Cushing’s disease
BAF312d SPMS14
QAW039 Asthma
Entresto®
Heart failure (PEF)15
Lucentis®
ROP13
INC280 NSCLC7
KAF156 Malaria
QVM149 Asthma
QMF149 Asthma
LEE011+ fulv HR+, HER2 (-) postmenopausal
adv. BC12 1st/2nd line
LEE011+ tmx + gsn/or NSAI + gsn HR+, HER2 (-) premenopausal
adv. BC12 1st line
Zykadia® ALK+ adv. NSCLC7
(Brain metastases)
Cosentyx®
nrAxSpA10
BYL719 + fulv HR+, HER2 (-) postmenopausal
adv. BC12 2nd line
OMB157
RMS17
ACZ885 Sec. prev. CV events1
RLX030 Acute heart failure
CTL019 DLBCL3
Arzerra®
NHL9 (refractory)
Tafinlar® + Mekinist® BRAF V600+ Melanoma (adjuvant)
RTH258 nAMD8
2021 2019 2018 2017 2020
Jakavi®
GVHD16
FTY720 Pediatric MS4
LJN452 NASH21
Adalimumab (US/EU) GP2017
Epoetin-alfa (US) HX575
Infliximab (EU) GP1111
Rituximab (US) GP2013
QBW251 Cystic fibrosis
AMG 334a
Migraine
LEE011 HR+, HER2 (-) BC12 (adjuvant)
Cosentyx®
PsA H2H19
Cosentyx®
AS H2H22
LAM320 MDR11 tuberculosis
Promacta®/Revolade® SAA5 1st line
ZPL389f
Atopic dermatitis
PKC412
AML23 (FLT3 wild type)
UNR844e
Presbyopia
SEG101 Sickle cell disease
Pegfilgrastim (US) LA-EP2006
Infliximab (US) GP2018
INC280 NSCLC7 (EGFRm)
We are poised to deliver the next wave of
breakthrough medicines for patients
Group-wide portfolio management World-class talent Cutting-edge Technology
No
vart
is s
tren
gth
Unmet need
| Novartis Q4 and FY 2016 Results | January 25, 2017 | Novartis Media Presentation 65
1. Group review Joseph Jimenez, Chief Executive Officer
2. Financial review Harry Kirsch, Chief Financial Officer
3. R&D Jay Bradner, President NIBR & Vas Narasimhan, Global Head
Drug Development & CMO
4. Q&A All presenters
Agenda
66