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Novartis (NVS) Highlights Growth Profile at its R&D Day

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·3 min read
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  • NVS
  • ROG.SW
  • VKTX

Novartis NVS has provided a comprehensive view of its pipeline progress at its R&D Day held on Dec 2, 2021.

With a renewed focus on its core pharmaceutical business, the company is building a pipeline in five core therapeutic areas — cardio-renal, immunology, hepatology & dermatology, neuroscience, oncology and hematology.

Novartis expects sales to witness a 4% compounded annual growth rate through 2026, driven by multi-billion dollar sales from Cosentyx (moderate to severe plaque psoriasis, active psoriatic arthritis, active ankylosing spondylitis), cardiovascular drug Entresto, multiple sclerosis drug Kesimpta, gene therapy Zolgensma, breast cancer drug Kisqali and hypercholesterolemia drug Leqvio.

The company is looking to expand the label of its blockbuster drug Cosentyx in moderate to severe hidradenitis suppurativa (HS), a potential new indication. Two phase III studies (SUNRISE and SUNSHINE) met their primary endpoint, with more patients treated with Cosentyx achieving a HS Clinical Response (HiSCR), compared with placebo, at week 16. The trials are ongoing and are expected to be completed in the second half of 2022 (regulatory filings are planned for 2022).

The company expects to get approval for 20 new drugs by 2026 with a sales potential of more than $1 billion, which should fuel further growth through 2030 and beyond.

Novartis is developing T-Charge as the foundational platform for a wave of potentially transformative CAR-T cell therapies. Lead candidates YTB323 and PHE885 showed 75% complete response in diffuse large B-Cell lymphoma (DLBCL) at three months and 100% best overall response (BOR) in multiple myeloma, respectively.

Concurrently, Novartis announced a global co-development and co-commercialization agreement with UCB for Parkinson’s disease therapies. The agreement covers UCB0599, a potential first-in-class, small molecule, alpha-synuclein misfolding inhibitor currently in phase II. In addition, upon completion of the ongoing phase I program, there is an opt-in to co-develop UCB7853, an anti-alpha-synuclein antibody.

Novartis is also pioneering a shift to advanced technology platforms, including Targeted Protein Degradation, Cell Therapy, Gene Therapy, Radioligand Therapy and xRNA.

The stock has lost 15.3% in the year so far against the industry’s growth of 11.8%.

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Novartis’ third-quarter results were mixed. Most of the key brands continue to maintain momentum. However, the Sandoz business continues to be affected by pricing pressures. Hence, management has commenced a strategic review of Sandoz and might separate the business.

In November, Novartis agreed to sell its 33% stake in Roche RHHBY for $20.7 billion. Novartis has been a shareholder of Roche since May 2001. Novartis will report a gain of approximately $14 billion from the sale of the stake.

At Roche’s Extraordinary General Meeting held recently, shareholders approved the repurchase of the 53.3 million shares held by Novartis.

Zacks Rank & Stocks to Consider

Novartis currently carries a Zacks Rank #3 (Hold). A couple of better-ranked stocks in the healthcare sector are Sarepta Therapeutics, Inc. SRPT and Viking Therapeutics VKTX, both carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Loss per share estimates for Sarepta have narrowed from $6.95 to $4.99 for 2021 and from $4.83 to $3.61 for 2022 in the past 30 days. SRPT delivered an earnings surprise of 11.06%, on average, in the last four quarters.

Loss per share estimates for Viking Therapeutics have narrowed to $3.16 from $3.55 for 2021 and to $3.47 from $3.63 for 2022 in the past 30 days. VKTX delivered an earnings surprise of 2.06%, on average, in the last four quarters.


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Novartis AG (NVS) : Free Stock Analysis Report

Roche Holding AG (RHHBY) : Free Stock Analysis Report

Sarepta Therapeutics, Inc. (SRPT) : Free Stock Analysis Report

Viking Therapeutics, Inc. (VKTX) : Free Stock Analysis Report

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