Novartis AG (NYSE:NVS) Q4 2023 Earnings Call Transcript

Novartis AG (NYSE:NVS) Q4 2023 Earnings Call Transcript January 31, 2024

Novartis AG misses on earnings expectations. Reported EPS is $1.53 EPS, expectations were $1.67. Novartis AG isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Operator: Good morning, and good afternoon, and welcome to the Novartis Q4 2023 Results Release Conference Call and Live Webcast. Please note, that during the presentation all participants will be in a listen-only mode and the conference is being recorded. [Operator Instructions] Please limit yourselves to one question and return to the queue for any follow-up. 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 Mr. Samir Shah, Global Head of Investor Relations. Please go ahead, sir.

Samir Shah: Thank you very much, and good morning, and good afternoon, everybody. Thank you again for listening to our full year results and Q4 results. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors. These may cause the 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’ll hand it across to Vas.

Vas Narasimhan: Thank you, Samir, and thanks everyone for joining today’s call. I know it’s a busy day with many companies reading out, but we hope to provide you some insights into our Q4 2023 results and also some perspectives on the outlook for Novartis in 2024 and beyond. If we move to the first slide, Slide 4. As you saw in our earnings release this morning, we delivered a strong full year performance with margin expansion and strong innovation momentum with 10 positive Phase III readouts over the course of 2023. As a reminder, our full year guidance at the start of the year was quite a bit lower than where we ended up and we had multiple earnings upgrades over the course of the year demonstrating, I think, the strong business momentum we have at the company.

Q4 sales, up 10%. Core operating income was up 13%. And on the full year, we were up 10% on sales and core operating income, up 18%, all in constant currencies. And Harry will go through this in more detail in a few moments. We also had the successful spin-off of Sandoz as a really value creating event for Novartis and our shareholders. We provided our updated 2024 guidance where we expect to grow mid-single digit and core operating expected to grow high single digit. And we’ve chosen to be prudent with this guidance at this point in time. And then looking to our midterm guidance, which I’ll also go through in more detail, we’ve extended our midterm guidance of 5% constant currency CAGR growth to 2023 to 2028 and continue to hold to our core operating income margin guidance of 40% plus by 2027.

So moving to Slide 5. This year was a really critical year for the company, because we completed the transformation of Novartis, we believe really laying a strong foundation for our future growth. Since 2014, we have spun-off both Alcon and Sandoz in shareholder-friendly ways. We have exited our OTC stake, also in a shareholder-friendly approach, and creating a new OTC company with GSK. And also importantly exited our Roche stake, completing a $15 billion share buyback and then continuing $15 billion share buyback which is ongoing currently and we expect to complete by mid-2025. That leaves us as a pure play innovative medicines company with a margin of 36% on its way to the 40% plus. Strong free cash flow and a strong innovation engine which we think positions us well for the long run.

So moving to Slide 6. When you look at Q4, most importantly with the underlying growth of our key growth drivers, which grew 40% overall on the quarter and that growth rate we expect to continue. That underlying growth is what gives us confidence that we can grow mid-single digits in the coming years. And then continue that growth in 2028 and beyond in the mid-single digit plus range. A combination of these growth drivers, as well as strong pipeline productivity puts us, I think, in a strong position to be a consistent [grower[ (ph) over the next decade. And moving to Slide 7. And I want to just walk through each of the brands to give you some perspectives and then look forward to taking your questions. So first, Entresto delivered 31% growth with sales reaching $6 billion and we’re well on track to reach our peak sales goal of $7 billion plus.

This growth was both in the U.S. and ex-U.S. geographies. You can see – on our weekly TRX, we continue to reach record highs. We had constant currency growth of 27% and 26% in U.S. and ex-U.S. and China and Japan contributed strongly with strong performance with their hypertension — ongoing hypertension launches. So going — looking forward, we expect continued growth for this brand. We maintain our guidance on for forecasting purposes that in Entresto, LOE would not occur until 2025 and we also maintain our guidance on EU regulatory data protection to November 2026. So moving to Slide 8. Now Cosentyx reached $5 billion in 2023 and we expect to see at least mid to high single-digit growth in 2024 on our way to our guidance of $7 billion peak sales.

Going a little deeper into this performance, we saw 17% growth in the U.S. and 26% outside the US. This was in part in the U.S. due to revenue deduction adjustments we had in the prior year leading to a lower base. But we are seeing very good momentum on our IV and hidradenitis launches in the U.S. and hidradenitis in Europe, which gives us confidence that Cosentyx can be a dynamic rower over the coming years. We’ll continue to keep you updated on how these launches progress over the coming quarters, and then we also will keep you updated as well on the three ongoing Phase III studies we are progressing in giant cell arteritis, PMR and rotator cuff tendinopathy. So moving to Slide 9. Kesimpta sales in the full year doubled to $2.2 billion. We remain on track to reach our $4 billion peak sales guidance.

Strong growth in the U.S., but also now increasing growth in Europe and in the ex-U.S. markets. We currently see 85,000 patients treated with Kesimpta today. Our U.S. growth is 48% in constant currencies, ex-U.S. at 193% and we have NBRx leadership now in seven out of 10 major markets outside of the United States. I think everyone knows well the compelling profile we have in terms of efficacy and convenience, as well as the easy Sensoready pen that patients can benefit from with Kesimpta. We have five years of efficacy, safety and tolerability and we’ll look forward to continuing to expand this brand both in terms of the growth of the B-cell class in MS, but also increasing our NBRx share within the B-cell class as a key growth driver. Moving to Slide 10.

Now, Kisqali reached $2.1 billion in the metastatic breast cancer setting, and we maintain our $4 billion peak sales guidance in the metastatic breast cancer setting alone. You can see this growth, again, was driven by both the U.S. and our international business. Our rolling NBRx share in the metastatic setting is now up to 46% and we see continued strong growth in the metastatic setting. This is driven by the statistically significant OS we have now across three pivotal studies, the NCCN Category 1 designation, and the median OS of five years we’ve demonstrated across those three pivotal trials. We can confirm that we have filed in the EU, U.S., and China, the adjuvant indication across intermediate and high risk breast cancer and we will look forward to keeping you up to speed as we progress towards, hopefully those approvals and launches over the course of this year.

Now moving to Slide 11. Pluvicto, full year sales closed out near blockbuster status at $980 million. Importantly now we see unconstrained supply for this brand, we maintain our multi-million dollar peak sales guidance for the current indication. And I can say we see very strong demand signals and growth dynamics in January. Consistent with our expectation, but as we clear the supply constraints and some of the challenges we saw in quarter four, we will get back to strong robust growth in quarter one 2024 and what we would expect is robust quarter-on-quarter growth over the course of this year. Some more details in terms of treatment size we have over 300 U.S sites now that are active in regularly ordering. Fully unconstrained supply were 99.9% now doses injected on planned day with capacity of 250,000 radioligand therapy doses expected in 2024 with the approval now of our Indianapolis site.

We have a network expansion ongoing to prepare for launches in Asia with announced investments in both China and Japan. And as I already noted, we expect robust quarter-on-quarter growth over the course of 2024. Our PSMAfore expected U.S. submission is second half 2024, and we’ll keep you updated as we progress towards that. And we also remain on track on both our PSMA addition and PSMA localized oligometastatic disease trials to move Pluvicto into earlier lines of therapy. Now moving to Slide 12. Scemblix had a strong year and strong quarter, moving up now to $125 million in quarter four 2023. This is in the third line setting where we have leading third line market share, NBRx share of 43%, TRX share of 22%. I think as you all well know there’s high on mid need in the third line setting and over 50% of hematologists really want improvements and quality of life and a better management of side effects.

And Scemblix really delivers that. Now we have four years a follow-up that really demonstrate differentiated profile in terms of efficacy, as well as a very clear and strong safety profile. So the global rollout in the third line setting is ongoing. We have approval in over 60 markets, we have access granted now in over 25 markets and very positive feedback from payers on the clinical benefit. Now moving to Slide 13, we read out earlier this month the ask for first trial which met both its primary endpoints with clinically meaningful and statically significant results in the frontline setting for Scemblix. As a reminder, this study had Scemblix compared to investigator choice TKI. We estimate 50% of the patients were on imatinib and 50% of the patients were on second-gen TKI, nilotinib or dasatinib or bosutinib.

Both primary endpoints were met. We showed superior major molecular response rates at week 48 for standard of care, and we also had a very favorable safety and tolerability profile with fewer AEs, treatment discontinuations, and no new safety signals observed. So we’re very excited about this data. Importantly, MMR is a good predictor, a reasonable predictor of important endpoints such as PFS, OS, and EFS. So this data will be presented at an upcoming medical congress. We’re moving rapidly towards a submission in the first half of 2024, and we’ll look forward to sharing this full data set and really providing our conviction that Scemblix can be a multibillion-dollar medicine for Novartis. Now moving to Slide 14. Now, Leqvio continued its steady expansion in the U.S. as well as across regions.

You can see here we delivered $123 million on the quarter, growth in both our international and our U.S. business. On the U.S. side, we have 3,500 facilities now ordering Leqvio, which is a 13% growth for its quarter three. 55% of that business now is coming from in-office buy-and-bill, and we expect to continue to drive growth on this brand by driving depth in our key accounts, as well as expanding the buy-and-bill acquisition channel. Ex-U.S., our rollout also continues well with 29 countries with public reimbursement, 39 countries with private coverage. And we see very positive, solid early signals in China in the self-pay market, which we expect to continue over the course of 2024, ahead of a proposed NRDL listing in 2025. In terms of the outcome trials, we remain on track for our secondary prevention outcome studies in 2026, and we also continue to enroll our primary prevention studies as well.

And moving to Slide 15, Fabhalta now is launched in the United States, and we see, I think, very positive early launch signals, but we do expect a modest ramp for this brand, given the dynamics within the PNH market. As a reminder, we have very compelling data for this medicine, including improvements in hemoglobin transfusion avoidance, IVH, intravascular and extravascular hemolysis control, and a very clean safety profile. Our populations in our label are adults with PNH, both naive and switch patients, which was our target label for this medicine. And as an oral therapy, we think we really provide a unique offering for patients with PNH. There is a REMS requirement, but this is similar to other complement inhibitors. Right now, as we look at our launch, our focus very much is coming out of ASH, getting patients up on our patient support program, getting our REMS up and running.

Our first patients have already been initiated, and what we’re hearing is positive HCP sentiment, interest from patients and payer groups. And our goal will be initially to focus on newly diagnosed patients, as well as patients who are not currently under full control for their hemolysis with their existing therapies. Over time, we would want to certainly expand this market. We estimate half of patients with PNH are currently not on therapy. And with an oral agent, we have the possibility, we hope over time to get more patients on therapy to avoid any of the subsequent sequelae associated with PNH. And moving to Slide 16. As noted, in 2023 we had 10 positive Phase III readouts with significant sales potential. You see them listed here. A lot of this data will be presented over the course of 2024, so you’ll have a better understanding of the potential of these medicines, whether it’s medicines like remibrutinib.

We’ve already seen the Lutathera NETTER-2 data, which I think is really outstanding, and hopefully some of you saw that potential after Lutathera frontline setting. Of course, the data for Atrasentan and Iptacopan, and the Scemblix data, which I’ve already mentioned. So moving to Slide 17. I just want to say a word of some of the top line readouts we had in quarter four. Iptacopan had another — it’s third Phase III readout with a positive — positive Phase III readout with clinically meaningful, and statistically significant proteinuria reduction in patients with C3G, Glomerulopathy. You see here on the left the Phase II data, which we’ve previously disclosed. In Phase III, we had a study design versus placebo, looking at month six before patients crossed over to Iptacopan on both arms.

We saw this really important proteinuria reduction and safety profile consistent with what we’ve seen in previous data, and we’re currently engaged with regulatory agencies with a goal for submissions in 2024. And moving to Slide 18, over the course of the year, we had positive readouts both on Iptacopan and our newly acquired Atrasentan in IgA nephropathy, clinically meaningful results here as well. Both of these programs have been reviewed with the FDA, and we’re on track for submissions of these medicines that would really allow us to have, I think, a robust portfolio of medicines to bring to nephrologists in IgA nephropathy, and then in the future, C3G, as we continue to try to build out a nephrology presence around the world. Zigakibart, our Anti-APRIL antibody, also acquired in the Chinook acquisition, is also on track in its Phase III study.

So moving to Slide 19. Now we expect our innovation momentum to continue in 2024. This will be a year of data readouts, full data readouts and submissions, primarily for the company. We expect a few Phase III starts, but importantly, as I mentioned, key data readouts and submissions will keep you posted on as we progress. And when you look at Slide 20, this is where — why we have confidence as well that we’ll have a steady stream of innovation to drive the company’s growth beyond 2028. With the number of exciting, I think, assets we have for 2024, 2025, as well as in the 2026, 2028 timeframe, this will create a steady flow of replacement power and innovation, enabling us to drive that mid-single digit growth rate beyond. Now moving to Slide 21.

Over the course of the year, we also signed 15 strategic deals, exits, as well as acquisitions totaling over $6 billion. I do want to emphasize our core approach in M&A remains as bolt-on acquisitions in the sub $5 billion space. Deals such as Chinook, but also many smaller deals you can see across the full landscape here, very much focused on technologies like xRNA, gene therapy, and RLT, as well as our key therapeutic areas, such as Chinook, amongst others. We also continue to invest in artificial intelligence on top of our collaborations with Microsoft and Palantir. We’ve also signed an agreement now with Isomorphic Labs of Google’s DeepMind, which really allows us, I think, to be partnered with some of the most preeminent AI researchers in the world to speed up our drug discovery and drug development.

Now moving to Slide 22. We did also today extend and update our midterm guidance. You’ll remember at R&D Day, we had noted 2022 to 2027, 5% CAGR. And today, given the momentum we’re seeing on our growth drivers and the strong pipeline performance we’re seeing, we’re extending that 5% growth guidance to 2023 to 2028. Now, of course, up until 2028, we do have some Gx impact, which I’m sure we can discuss further in the Q&A. But the momentum we’re seeing in our in-market growth drivers across our base business, across each of the brands, which I’ve already discussed, as well as the positive data we’ve seen in Fabhalta, Scemblix, remibrutinib and Atrasentan, gives us confidence now that we can continue that 5% growth up to 2028. And as we’ve already guided mid-single digits beyond that.

So moving to Slide 23. I want to close with just a word on ESG, which remains very much a part of the Novartis strategy and Novartis approach. We focus on innovation and access to medicine, human capital in terms of our work on DE&I and culture, as well as ensuring that we’re amongst the leaders in environmental sustainability and ethical standards. When you look at our performance, now we’re number one in Sustainalytics and the leaders group in MSCI, and also amongst the leaders in important other benchmarks, such as access to medicine and CDP. We plan to continue that, of course, in 2024. And so with that, on Slide 24, I’ll hand it over to Harry.

Harry Kirsch: Yes, thank you very much, Vas. Good morning, and good afternoon, everybody. I’m now going to walk you through some of the financials for the fourth quarter and full year, as well as provide you with our 2024 guidance. As always, my comments refer to growth rates in constant currencies, unless I would otherwise note that. Also, throughout the presentation, I’m only going to talk about continuing operations. And just as a reminder, that continuing operations include retained business activities of Novartis, comprising of our innovative medicines business and the continued corporate activities. Discontinued operations include Sandoz and selected portions of corporate activities attributable to Sandoz business, as well as certain expenses related to the spin-off.

Next slide, please. This chart shows you the restated comparable numbers post the Sandoz spin-off. I know history doesn’t tell the future, but track record is important. And as you can see, since 2018, top line sales growth has been 7% in average, bottom line even 14% CAGR. And this has resulted in a core margin increase of 990 basis points in constant currency to 36%. So, very clear path also from a margin standpoint to our 40% in 2027. This strong performance has continued in 2023, where we met or even slightly exceeded our upgraded full year guidance. On the next slide, just a little comparison here. On the 2023, shows the top line growth of 10%. We guided to grow basically high single digits last one, but we upgraded three times through the year.

And we started with low to mid-single digit. Really a testimony to the excellence business momentum that even strengthened throughout the year. And then cooperating income at 18%. And again, here we were able to upgrade three times and could even slightly exceed the guidance we gave in October of mid to high teens. On Slide 27, a bit more detail about the 2023 performance, which we will go through by quarter and full year. In the quarter top line growth was 10%, core operating income grew 13%. As outlooked in October, quarter four of 2022 was a very high profit quarter to be compared to, given that we were in the middle of our restructuring then. And that’s why we guided to full year to where we were, already assuming that quarter four bottom line growth would be a little bit less than the nine month bottom line growth.

But still, resulting in a marginal improvement of 1 percentage point and core EPS at $1.53. And so, a good quarter. For full year, top line grew 10%. And for core operating income, we delivered 18%, leading to a 2.4% point margin increase. Core EPS was $6.47. And the full year cash flow was even more than $13 billion, another significant growth also on the cash flow side. As outlooked, therefore, we were over our guidance and strong full year results with also a strong quarter in absolutes. But of course, comparison base was a bit higher. Now Slide 28. So we’re continuing to create significant and sustainable shareholder value. As you know, we are highly cash-generative business. And our strong cash flow allows us to optimize both, investing in the business, as well as returning capital to shareholders.

In terms of investing in the business, of course, R&D is the key focus, in addition to launch and pre-launch investments. And from a business development M&A perspective, it is value-creative bolt-ons in our core therapeutic areas. In terms of returning capital to our shareholders, the focus has been on a consistent growing annual dividend in Swiss francs, which has not been rebased post the Alcon nor the Sandoz spin-off. And with regards to share buybacks, we continue, of course, our most recent share buyback of up to $15 billion announced in July 2023, with up to $12.7 billion to be executed still by the end of 2025. Now, we got some questions as we paused share buyback for a few weeks in January, as we had to adjust our trading plan. Just to ensure everybody is clear, we will restart during the next days.

And it’s our full intention to complete that share buyback, as mentioned, by the end of 2025. Besides all of that, we have, of course, also created shareholder value through numerous strategic actions, like divesting the consumer, health care joint venture stake, spinning off Alcon, and divesting the Roche stake at CHF356, and, of course, importantly, and most recently, the successful completion of the spin-off of Sandoz on October 4th last year. If you go to the next slide, please. Now, talking about the successful spin-off of Sandoz, on the day of the spin-off, subsequently, both Novartis, as well as Sandoz share price, and the implied market capitalization have increased quite significantly. Since the day of the spin-off, October 4th, until yesterday, just to have the exact numbers from last night’s closing, Novartis market cap has increased by over 11% and Sandoz over 28%.

So in total, as a result of the spin-off, and, of course, subsequent market movements, a combined value of over $28 billion has been created for shareholders continuing to hold Novartis and Sandoz share. Again, as a reminder, we are not rebasing our dividend post the Sandoz spin. Speaking of the dividend, let’s go to the next page. Yes, we are pleased to propose a 27th consecutive dividend increase to CHF3.30 per share, in US dollars, even $3.92. And this is based on the CHF3.20 last year. So an increase of 3% in Swiss francs and 12% in US dollars, with a dividend yield reaching close to 4%. And it’s fully in line with our policy of increasing our dividend every year in Swiss francs per share without rebasing it post the Sandoz spin. Now moving to 2024.

Our full year guidance is for sales to grow mid-single digit and core operating income to grow high single digit. In terms of the drivers of core operating income for 2024, pushes and pulls are similar to 2023. And we fully expect our positive business momentum to continue. However, this prudent guidance assumes that there will be a higher generic impact in 2024 versus 2023. I’m sure we will discuss this later on in the Q&A. For forecasting purposes, we assume no U.S. Entresto generic entry in 2024. And to complete our full year 2024 guidance, please note that we expect core net financial expenses to be around $0.6 billion to $0.7 billion, and the core tax rate to be around 16% to 16.5%. Now on to my final slide. There we go. Currencies. Yes.

So we have outlined some details regarding the currency impact. And as you can see, currencies had a negative 2 points impact on net sales in both quarter four and the full year, as well as negative 8 points impact on core operating income for quarter four and negative seven points for the full year, driven by the strong Swiss franc. There was a special effect on core income in quarter four at about 2 points due to the mid-December Argentina devaluation. And then we had to catch up basically to hyperflation accounting instructions, IFRS guidelines, the full effect in quarter four. So it’s 2 points worsening due to the Argentina in quarter four. If late January rates prevail for 2024, we expect the full year impact of currencies to be less than 2023.

And on top line would be a negative 1%. And on the bottom line would be a negative 3% point currency impact. And as a reminder, we do update this every month on our website as it is hard to forecast from the outside, but you get a monthly update on it. And with that, I hand back to Vas.

Vas Narasimhan: Great. Thank you, Harry. So in conclusion, if we go to Slide 34, we had a very strong 2023 multiple guidance increases, double digit growth for sales and core operating. I think really reflecting that our focus strategy as a pure play in a native medicines company is the right one and really delivering strong operational performance. We met or exceeded our strategic operational and innovation targets, including the successful Sandoz spin-off, 10 positive Phase III readouts, all with significant sales potential. And we’re confident for 2024 and in the midterm where we now guide to 5% constant currency sales, 2023 to 2028 and a 40% plus margin in 2027, all building, of course, on the longer term goal to maintain that mid-single digit sales growth, 2028 and beyond. So with that, we can open the line for questions. As the operator mentioned, we’ll limit to one question per analyst, and then we’ll come back through the list again. Thank you very much.

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Q&A Session

Operator: Thank you. [Operator Instructions] We will now go to our first question. And your first question comes from the line of Matthew Weston, UBS. Please go ahead. Q – Matthew Weston Thank you very much. It’s Matt Weston from UBS. My one question is around the growth in SG&A that we saw in 4Q, and what it means for 2024 guidance. So there was a significant step up in commercial spending. Vas, you mentioned in your opening remarks that you felt that 2024 guidance was prudent. Is the 4Q step up bringing forward or front loading launch spend given the exciting opportunities you have in 2024? Or is that level a good indicator of the cost acceleration we should expect for the full year? Any help, gratefully received.

Vas Narasimhan: Thanks, Matthew. I’ll hand it over to Harry. Harry?

Harry Kirsch: Hello, Matthew. Good to have you around. I think, quarter four came exactly in as we forecasted for the year and outlined our full year guidance in October. So I think we have to keep this a bit in perspective and not overreact to short-term consensus thinking. Because in the end, we increased our function cost in the full year like 3% in constant current. With a growth of 10% on the top line. I tried to explain, maybe I was not very successful in October, that quarter four of 2022 was very low spent quarter, because we’re in the middle of a big restructuring. Now quarter four spent is as usual seasonality of higher spent levels for the three quarters. In 2022 that was a bit muted. We are back to that normal pattern.

So you should have no worries about our cost development for 2024. Our guidance of continued margin improvement is absolutely basically bulletproof, because of our top line growth as well as our productivity programs and everything in 2023 came in as planned.

Matthew Weston: Many thanks indeed.

Vas Narasimhan: Thank you Matthew. Next question operator.

Operator: Thank you. Your next question comes from the line of Andrew Baum from Citi. Please go ahead.

Andrew Baum: Hi. I’m not sure if [Dave] (ph) is on the call, but someone might like to take this question relating to your cardiovascular outcome trials. I’ve previously asked about why not unblind the ORION-4, particularly given the pressures from the IRA and the nine years prior to price negotiation. I’d ask the same question about Horizon. These are very high risk secondary prevention patients. We know that it’s highly atherogenic particle and again you’ve got the same issue for nine years. So is there any possibility of either of these trials being unblinded before the publicly stated dates? And maybe you could also opine on whether the bipartisan efforts to try and reclassify advanced therapies for 13 years rather than nine year exclusivity is going to start to move. It’s obviously very relevant to you given like [indiscernible] etc? Many thanks.

Vas Narasimhan: Yes, thank you, Andrew. So right now there’s no plans to adjust our thought process on waiting for these studies to run to completion. I think as Dave outlined in the R&D Day, we continue to believe by having a longer follow up we’re more likely to deliver very differentiated cardiovascular risk reduction in ORION-4. And I think with respect to Horizon, our powering calculations and the approach that we’ve taken both with very high risk [indiscernible] patients as well as the kind of medium risk patients requires us to follow these patients out through 2025. That said, we’re very cognizant of your points, and we do this debate and discuss that especially in light of the IRA. I think a few things we’re doing first on the policy front, there is bipartisan support for an amendment on, I think, the 9 to 13 on so-called genetically targeted therapies.

However I think it will still be sometime and likely not during this year given it’s an election year for that to really move forward. But we’re hopeful that we can progress that over the coming years to enable that to move to 9 to 13 along with our broader policy goal as industry to move 9 to 13 across all small molecules. We also continue to invest in life cycle management for our entire siRNA portfolio. We struck at least a few deals now that really target annual dosing for siRNA’s most recently with a company called Atlantic Therapeutics. And there we have multiple targets now that we’re pursuing to try to move to annual dosing and/or combinations with other targets that would allow us to life cycle manage in the event that we need to ahead of that nine year time frame.

So those are the approaches we’re taking, but we obviously take your feedback seriously and we’ll continue to evaluate accordingly. Next question, operator.

Operator: Thank you. Your next question comes from the line of Florent Cespedes from Societe Generale. Please go ahead.

Florent Cespedes: Good afternoon. Thank you very much for taking my question. A quick one on your midterm guidance. You have updated this guidance, but now starting from a higher base from 2023. I was just wondering if there is anything new versus the last update last year. And if you see, let’s say, new drivers that would help to achieve this midterm guidance. Thank you.

Vas Narasimhan: Yes, thank you, Florent. I think a few things. So first in terms of the growth drivers and what we overall saw in the quarter, in quarter four and on the full year, you see very dynamic growth for Kesimpta for Kisqali. I think strong growth for Lutathera and Scemblix. And we also saw the return of, as I mentioned, strong demand signals for Pluvicto. All of which gave us confidence in those brands outlook towards our peak sales guidance. In addition, we have now the approval of Iptacopan and the Iptacopan positive — positive data across PNH, C3G and IgAN, which gives us more conviction that this medicine will be a multi-billion dollar medicine as well. So that I think all was on the positive side from an inline brand.

And then importantly with the Scemblix first line data where we saw I think really what we believe will be potentially practice changing data. This has an opportunity now as well to be a multi-billion dollar medicine. So taking all of that together that growth momentum for our inline brands and strong pipeline performance gave us more conviction in that long term guide. I would also note, of course, Kisqali now is also filed for medium and high risk women with early breast cancer. So I think all gives us positive signals and momentum to continue that 5% plus guidance up to 2028.

Florent Cespedes: Thank you very much.

Vas Narasimhan: Next question operator.

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