Novartis appears headed in the right direction now that Sandoz has been spun out, operations have been streamlined and the Swiss company is reporting higher-than-expected sales for several medicines.
Next up is a new board chair, potentially former Bristol Myers Squibb CEO Giovanni Caforio if shareholders accept his nomination.
The pharma’s stock $NVS was up about 3% on Tuesday after the company raised its outlook for the year. That’s a “significant positive surprise” in Novartis’ first-quarter update, Jefferies analyst Peter Welford wrote in a note. At the end of last week, the stock was down about 7% for the year.
Novartis now expects sales to grow in the high single-digit to low double-digit range thanks to better-than-anticipated performances by Entresto, Cosentyx, Leqvio and Kesimpta. However, sales of Kisqali, Pluvicto and Zolgensma came in lower than expected.
A new board chair?
Giovanni CaforioNovartis plans to propose Caforio as its next board chair in 2025. He would be Novartis’ first new chair since 2012, when Joerg Reinhardt took over.
It’s common for pharmaceutical companies based in Europe to have different leaders in the CEO and chair posts — as opposed to the dual-role structure for many drugmakers in the US — but it’s rare for a former pharma CEO to become chair of a peer. Welford expects the transition to be “well-received.”
Novartis expects Caforio to help move the company from a number 10 player to a top five pharma in the US, CFO Harry Kirsch told reporters on Tuesday morning. Caforio could also bring dealmaking chops since he struck one of the largest pharmaceutical M&A deals in industry history when BMS acquired Celgene for $74 billion.
Entresto’s future
Sales of Novartis’ top-selling medicine, the heart failure drug Entresto, came in at $1.87 billion for the quarter, up 36% from $1.39 billion in the first three months of last year. The drug beat TD Cowen analysts’ expectations by $204 million.
Entresto is one of the first 10 medicines up for Medicare price negotiation under the Inflation Reduction Act, and the company expects to get a “better read” on pricing under the IRA in September, which is when the government is set to share the negotiated prices, CEO Vas Narasimhan said in a call with analysts. Kirsch told reporters that Novartis “continues to find this unconstitutional.”
Meanwhile, Novartis doesn’t expect any threats from generic competition for Entresto.
“We have two citizens’ petitions at the FDA on the basis for approval and also the labeling for any potential product with respect to Entresto,” Narasimhan said. “Based on that fact, we don’t expect any generic to launch this year, though we can never exclude of course somebody trying to do something at risk.”
Pipeline adjustments
Novartis scrapped two investigational medicines from its pipeline, a company spokesperson confirmed to Endpoints News.
The drugmaker discontinued development of cancer drug NZV930 and sotuletinib, a CSF1 inhibitor in Phase 2 for ALS. Novartis had been testing NZV930 since at least 2018 and has terminated at least two studies.
It also stopped testing iscalimab in lupus nephritis, a condition that has become a major focus of autoimmune cell therapies.
“We continually assess opportunities within our portfolio to help drive our growth strategy as an innovative medicines company,” the spokesperson said in an email. “This includes active refinement of the R&D portfolio prioritizing high value medicines with transformative potential for patients.”
The cuts are a small adjustment for Novartis, which has the second-most active clinical trials (275) for drugmakers, according to a TD Cowen report published Monday.