Eight Things To Know From Novartis' Third Quarter Call

The company's $2.1bn acquisition of Endocyte and expansion into radiopharmaceuticals dominated some of the call, but with the launches of drugs like Cosentyx, Kymriah, Kisqali and Aimovig underway, there was a lot for Novartis' management team to address.

News of Novartis AG' $2.1bn acquisition of Endocyte Inc., and the company's corresponding expansion into radiopharmaceuticals, dominated much of the discussion during the drug maker's third quarter earnings call Oct. 18. But the company's plate is chock full, with several high-profile drug launches underway.

The company provided updates on a number of commercial-stage drugs, including Cosentyx (secukinumab), Kymriah (tisagenlecleucel), Kisqali (ribociclib) and Aimovig (erenumab), as well as announcing regulatory news on its late-stage pipeline candidates, the gene therapy AVXS-101 and canakinumab for cardiovascular risk reduction. Here are eight takeaways beyond the Endocyte deal from the conference call:

Cosentyx Sales Booming:

The company's big near-term growth driver, Cosentyx appears to be on solid footing. Sales of the IL-17A inhibitor for psoriasis and psoriatic arthritis grew 37% in the quarter to $750m, despite competition from Johnson & Johnson's IL-23 blocker Tremfya (guselkumab). The psoriasis category is particularly competitive and successful contracting negotiations with payers for 2019 will be critical. "We're a significantly larger asset than we were this time last year when we went into this, and so we have more leverage," Pharmaceuticals CEO Paul Hudson said. "I'm comfortable with the outlook for us as we transition into next year.” 

Kymriah Manufacturing Hit Sales:

Sales of Novartis' chimeric antigen receptor T-cell (CAR-T) therapy Kymriah were $20m, held back by an ongoing manufacturing issue first reported during the Q2 call. (Also see "Cosentyx Carries Novartis Sales But Kymriah Manufacturing Gives Cause For Concern" - Scrip, 18 Jul, 2018.) Oncology CEO Liz Barrett said the sales were above expectations, given the manufacturing setback. "It's hard to tell where we would be if we didn't have the challenges, but I think that what we've seen is that centers have continued to order Kymriah despite this," she said. Novartis announced investments in the production of cell and gene therapies in Stein, Switzerland and a collaboration with Cellular Biomedicine Group to manufacture and supply Kymriah in China as it looks to resolve the situation.

Aimovig Launch Off And Running:

The launch of the new CGRP inhibitor Aimovig for migraine, partnered with Amgen Inc., is getting off the ground in a fiercely competitive field. Novartis and Amgen had a very small lead in the market with Aimovig behind competitors Teva Pharmaceutical Industries Ltd. (Ajovy) and Eli Lilly & Co. (Emgality) and focused heavily on free trials initially. The company isn't providing any update on conversion to commercial product yet. "We wanted to make sure patients got to try it. It wasn't about coverage or commercial insurance. It was about trial," Hudson said. The companies secured formulary access and a value-based reimbursement deal for Aimovig with Express Scripts Holding Co., which announced it will also cover Emgality but exclude Ajovy.

Kisqali Sales Underwhelm:

Sales of the CDK4/6 inhibitor Kisqali were $72m, not a standout performance for a drug competing in a big breast cancer category one year post-launch. Pfizer Inc.'s first-in-class drug Ibrance (palbociclib) generated more than $3bn in 2017. Both drugs, along with Lilly's Verzenio (abemaciclib) are approved for hormone receptor-positive (HR+), human epidermal growth factor receptor (HER2-) advanced or metastatic breast cancer, but so far, Pfizer has held onto its strong lead. (Also see "CDK4/6 Inhibitor Market Snapshot: New Drugs Jockey For A Piece Of The Multi-Billion Dollar Pie" - Scrip, 19 Jun, 2018.)

A CRL For Canakinumab:

Novartis announced that it received a complete response letter from the US FDA related to a supplementary biologics license application for canakinumab for cardiovascular risk reduction. The commercial future of the drug, already marketed as Ilaris for rare disease indications, was uncertain in CV disease after clinical trial data showed only a modest benefit in a broad group of patients, but the company had been hoping to target it to a subgroup of patients with high levels of inflammation. (Also see "Novartis Aims Canakinumab At Targeted CV Patients" - Scrip, 13 Nov, 2017.) "We presented our case to the FDA. The FDA has asked additional questions and has requested additional data with respect to the responder population, and we're evaluating now what would be the appropriate next steps," CEO Vasant Narasimhan said.

All Eyes On Gene Therapy:

There is a big potential launch opportunity on the horizon for Novartis, and it could be the company's first wholly-owned gene therapy: AVXS-101 for the pediatric rare disease spinal muscular atrophy (SMA). The company announced it had filed the intravenous therapy in the US, EU and Japan for Type 1 SMA based on early Phase I data and is hoping to launch in the middle of 2019. The company said it is on track to meet the demand if and when it is approved, and as it works towards developing the gene therapy for other types of SMA. The I.V. formulation has been tested in infants 9 months and under; an intrathecal formulation is in development for older children. The drug would compete against Biogen Inc.'s blockbuster Spinraza, which is not a one-time treatment. Novartis spent $8.7bn on the acquisition of AveXis Inc. to gain the drug, so there is a lot riding on a successful launch. (Also see "Novartis Goes Big On Gene Therapy With $8.7bn AveXis Acquisition" - Scrip, 9 Apr, 2018.) The company partnered with Spark Therapeutics Inc. to launch the gene therapy Luxturna for inherited blindness outside the US. (Also see "Novartis’s Luxturna Deal Expands Gene Therapy Ambitions" - Scrip, 25 Jan, 2018.)

Generic Price Erosion Persists For Sandoz:

US generic drugs have been under pressure. The trend continued for Sandoz in the third quarter, with sales of $2.4bn, down 6%, driven by an 8% price erosion decline, mainly in the US, though partially offset by volume growth of 4%. What Sandoz terms biopharmaceutical sales (largely biosimilars and complex generics) grew 21%, however, driven by Rixathon (rituximab) and Erelzi (etanercept) in Europe and Zarxio (filgrastim) in the US. "When you think about how we are going to drive Sandoz moving forward, a lot of it is about executing a strategy of transformation and shifting the focus to complex generics and biosimilars," Narasimhan said. "We are well on our way to do that in the United States."

Generic Advair Launch On Track For 2019:

Sandoz said it believes it will be able to get a generic version of GlaxoSmithKline PLC's asthma blockbuster Advair (fluticasone/salmeterol) to market in late 2019. Sandoz received a CRL from the FDA for its generic back in February and it's racing with others, most notably Mylan NV, to get to market. (Also see "Three Strikes For Generic Advair With An FDA CRL For Sandoz" - Scrip, 8 Feb, 2018.) Mylan received a CRL initially too but responded in July and is expecting action from FDA sometime in October.