Novartis gets lift from $2.1 million gene therapy Zolgensma

By John Miller

ZURICH (Reuters) - Swiss drugmaker Novartis <NOVN.S> boosted its 2019 forecasts on Tuesday after beating third-quarter expectations, a feat helped by the sales debut of gene therapy Zolgensma, the world's most expensive one-time treatment.

CEO Vas Narasimhan's bet on the potential cure for spinal muscular atrophy (SMA) has drawn scrutiny, initially due to its $2.1 million (£1.6 million) price and since August over a data manipulation scandal that has prompted a U.S. Food and Drug Administration (FDA) investigation.

But Zolgensma sales in the third quarter netted Novartis $160 million, half from patients switching from another therapy, Narasimhan said.

"We're very pleased with the uptake," Narasimhan told reporters on a call.

The only other approved drug for the genetic disease SMA is Spinraza from Biogen <BIIB.O>, which reports third-quarter results on Tuesday and is expected to show an impact after Zolgensma sales began following its approval in May.

Novartis reported a 17% rise in third-quarter core net income to $3.2 billion.

Sales rose 13% at constant exchange rates to $12.2 billion, topping the $11.7 billion average in a Refinitiv poll, helped by higher sales of psoriasis medicine Cosentyx and heart drug Entresto.

Novartis said now expects its overall annual sales to grow by a high single-digit percentage, raising a "mid-to-high single-digit" forecast made in July.

Core operating income is forecast to growth by mid- to high-teen percent, up from a previous expectation for low double-digit to mid-teen percentage growth.

TEMPERED EXPECTATIONS

Zuercher Kantonalbank analysts called Zolgensma sales "a strong start".

But Novartis tempered expectations for its approval in Europe and Japan, pushing projections back to 2020 from this year.

Narasimhan said those regulators are focused on manufacturing, not data manipulation, which Novartis has blamed on scientists who it said doctored early study results at AveXis, a company it bought in 2018 for $8.7 billion.

AveXis founder Brian Kaspar, who Novartis fired this year, has denied wrongdoing.

"The written questions have not related specifically to any of the data topics," Narasimhan said regarding European and Japanese regulators.

"They were primarily related to the manufacturing issues, as well as interest in doing additional inspections of our various manufacturing facilities."

Zolgensma is a one-time infusion for patients born with SMA, a rare muscle-wasting hereditary disease that historically killed many victims before their second birthday.

Narasimhan said 99% of young patients who are eligible for Zolgensma have received treatment, either under insurance that cover it or following appeals to payers without specific policies.

"Access has been one of the key drivers," he said.

Despite the data manipulation allegations, the U.S. FDA has said the therapy is safe and effective.

(Reporting by John Miller; editing by Michael Shields and Jason Neely)