Novartis AG Q1 FY2026 earnings call

• Delivered strong start to year across priority brands and launches. - Growth drivers up 34% in constant currency. - Core offing down 14% due to sales decline and R&D investments. - Pipeline highlights including Rapsodo progress, Unalamab breakthrough therapy designation, etc. - Maintaining full-year sales and core operating guidance. - Discussing details of each key brand's performance, like Kiskali's growth in different markets, Kasimta's performance in US and ex-US, etc. - Mentioning pipeline readouts and acquisitions in the second half.

Growth drivers were up 34% in constant currency. Base business was largely stable but had significant GX erosions. Core offing was down 14% due to sales decline and increased R&D investments. Kiskali grew 55%, with strong performance in early and metastatic breast cancer, and strong ex-US growth. Kasimta had 26% growth, with strong performance in US and ex-US. Fluvicto continued strong rollout, with 76% US sales growth and 48% ex-US growth. Lyfio had strong quarter, with 31% US growth and 106% ex-US growth. Semblix was up 79%, with strong performance in US and ex-US. Cosentix had broadly stable quarter, impacted by one-time effects. Renal portfolio: Fabhalta sales up 103%, Venrafia had steady uptake. Rapsido CSU launched strong in US, with plans for ex-US rollout. Remibrutinib had phase two results for food allergy. Avidity acquisition added late-stage medicines for neuromuscular disease.

• Reaffirming full year 2026 guidance, expecting low single-digit sales growth and low single-digit decline in core operating income. - H1 growth impacted by tough prior year base, with Q2 sales expected to decline low single-digit and core-op expected to decline high single-digit to low double-digit. - H2 expected to have strong growth of priority brands and launches, with sales growth of mid-single-digit and core-op in growth of mid-to-high single-digit. - Positive plus 2% impact on full year sales and positive 1% on full year core operating income if exchange rates remain at late April levels.

Q: Peter Fedult from BNP Paribas asked about HS, current volume price dynamics for Cosentix, target clinical profile for Rapsido in HS, and positioning of both assets.

A: Vaz responded about Cosentix volume growth, remibrutinib phase two data, and positioning depending on data set.

Q: Satya and Jane from Bank of America followed up on HS, target efficacy profile relative to existing biologics and size of HS vs MS indication.

A: Vaz said it depends on phase three study design and data profile.

Q: Richard Foster from J.P. Morgan asked about China, slower international growth in some products and LECVEO's peak in China.

A: Vaz said China business can be in high single digit to low double digit growth range and Lectio has aspiration to be a billion-dollar medicine.

Q: Simon Baker from Rothschild asked about updated confidence on timing and outcome of Pellicast and Horizon study.

A: Vaz said no new info, expected readout in early second half.

Q: Matthew Weston from UBS asked about Rapsido and EU pricing discussions.

A: Vaz said Rapsido only has MFN impact for Medicaid, engaging with European governments but progress not as hoped.

Q: James Gordon from Barclays asked about hormonal breast cancer and pressure on CDK4 use.

A: Vaz said physicians will want to use combination therapies and it will take time to replace established therapies.

Q: Michael Leusten from Jefferies asked about Avidity, data from Dyn Therapeutics and decision to pursue VST.

A: Vaz said avidity acquisition is right decision with compelling profile.

Q: Graham Parry from Citigroup asked about remabrutinib in MS, comparing data and blinded safety data.

A: Vaz said no comment on ARR data but blinded safety data is clean.

Q: Thibaut Botherin from Morgan Stanley asked about Rapsido stocking and dynamic for rest of year.

A: Vaz said stocking in line with historical, steady increase in initial months.

Q: James Quigley from Goldman Sachs asked about Del Dizaran in DM1, clinically meaningful impact and differentiation.

A: Vaz said well-understood endpoint and looking at additional functional outcomes.

Q: Florence from OdoBHF asked about multiple readouts in H2 that could raise mid-term to long-term growth outlook.

A: Vaz mentioned remy brudenib, unalamab, paula carson, dii 235, etc.

Q: Kerry Holford from Barenberg asked about PluVicto, European filing withdrawal and impact on peak sales forecast.

A: Vaz said no impact on peak sales forecast, waiting on OS data for hormone sensitive setting.

Q: Steve Scaler from TD Securities asked about delaying Cosentix LOE, co-formulation, etc.

A: Vaz said ongoing efforts to defend IP and lifecycle manage medicines.

Q: Naresh Chauhan from Intron Health asked about Cosentix margin impact and optimizing profitability.

A: Mukul said margin impact factored into guidance.

Q: Seamus Fernandez from Guggenheim Securities asked about IL-15 in vitiligo and atopic dermatitis market size.

A: Vaz said IL-15 has potential in multiple immunology indications.

Q: Matthew Weston from UBS followed up on Rapsido and CNS indication MFN considerations.

A: Vaz said current assumption is remibrutinib indications susceptible to Medicaid MFN element.

Q: Michael Leuchten from Jefferies asked about gross margin pressure, scale factor and R&D spend.

A: Mukul said margin decrease from R&D spend and GX impact, R&D spend from acquisitions.

Q: Thibaut Barthelin from Morgan Stanley asked about voter plan and FDA discussion on phase two.

A: Vaz said results confirm phase three design, still in discussions with partner.

Q: Graham Parry from Citigroup asked about Cosentix gross to net adjustments and peak sales.

A: Vaz said Cosentix in positive growth territory, mid single digit range globally.

Q: James Quigley from Goldman Sachs asked about remoributinib food allergy data and 75 milligram dose.

A: Vaz said modeling shows 75 milligram dose has full target engagement.

Q: Steve Scaler from TD Securities asked about MFN mention on slide 25.

A: Vaz said MFN fully factored in guidance, confident in modeling MFN impact.