We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Novartis (NVS) Q3 Earnings In Line, Revenues Beat Estimates
Read MoreHide Full Article
Swiss pharma giant Novartis AG (NVS - Free Report) reported results for third-quarter 2018, wherein revenues beat estimates, driven by strong performance from Cosentyx and Entresto. Earnings came in line with estimates.
Third-quarter 2018 core earnings of $1.31 per share was in line with the Zacks Consensus Estimate and up from $1.29 recorded in the year-ago quarter.
Revenues increased 6% to $12.8 billion as volume growth driven by Cosentyx and Entresto was partially offset by the negative impact of generic competition and pricing. Revenues marginally beat the Zacks Consensus Estimate by 0.06%.
All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
Quarter in Detail
Novartis operates under three segments: Innovative Medicines (Pharmaceuticals), Alcon (Ophthalmology unit) and Sandoz (Generics).
The Innovative Medicines division recorded sales of $8.6 billion, up 9% as both pharmaceuticals and oncology businesses were up 9%. Psoriasis drug Cosentyx continues to gain traction. Cosentyx sales increased to $750 million, up 37%, driven by strong growth in all indications, in the United States and EU. Entresto’s sales more than doubled to $271 million, up 113%, driven by increased worldwide uptake.
Oncology franchise grew 9%, driven by Promacta/Revolade, Tafinlar plus Mekinist, Jakavi and contribution from the Advanced Accelerator Applications (AAA) acquisition. Sales from AAA came in at $105 million, driven by the strong launch of Lutathera ($56 million).
Sales at the Sandoz division were $2.4 billion, down 4% due to price erosion in the United States. Sales in the United States declined due to competitive pressure. Biopharmaceuticals sales grew 21%, mainly driven by launches of Rixathon, the biosimilar version of Rituxan (rituximab); Erelzi, the biosimilar of Enbrel in the EU; and Zarxio (filgrastim) in the United States.
Sales at the Alcon division were $1.8 billion, up 5%. Surgical sales increased 7%, driven by double-digit growth of advanced technology, which includes intraocular lenses (IOLs), and continued growth in consumables and equipment. Vision Care sales grew 3%, driven by double-digit growth of Dailies Total1and Systane.
In September 2018, Novartis announced that it agreed to sell selected portions of its Sandoz US portfolio, specifically the Sandoz US dermatology business and the US oral solids portfolio, to Aurobindo Pharma USA Inc., for $0.9 billion and $0.1 billion of potential earn-outs, respectively.
The divestiture is in accordance with Sandoz’s strategy of focusing on complex generics, value-added medicines and biosimilars to achieve sustainable and profitable growth in the U.S. in the long run. The transaction will be completed in 2019.
Earlier, Novartis announced that it intends to spin-off its ophthalmology division, Alcon, into a separately-traded standalone company to grow as a medicines company solely.
In June 2018, the company also announced a share buyback of up to $5 billion, which will be completed by the end of 2019. During the first nine months of 2018, Novartis repurchased 7.2 million shares for $0.6 billion under this buyback plan.
2018 Outlook Updated
The company expects net sales in 2018 to grow mid-single digit. Innovative Medicines is projected to grow mid to high-single digit. Revenues from Sandoz are expected to decline low-single digit, while Alcon sales are estimated to grow mid-single digit.
Pipeline Update
Novartis’ pipeline candidates’ progress has been encouraging in the year so far. The European Commission approved a label expansion of CAR T therapy, Kymriah, for both relapsed or refractory (r/r) diffuse large B-cell lymphoma (DLBCL) and pediatric acute lymphoblastic leukemia (ALL).
The FDA had earlier approved a label expansion of Kymriah for the treatment of adult patients with r/r large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL, high grade B-cell lymphoma and DLBCL arising from follicular lymphoma.
Regulatory submissions of AVXS-101 have been made in the United States, EU and Japan, for type 1 spinal muscular atrophy (SMA), based on the phase I data and select data from the ongoing phase III study, STR1VE. Novartis plans to launch AVXS-101 by mid-2019.
Multiple Sclerosis (MS) candidate BAF312 was also filed with both the FDA and EMA for secondary progressive MS. Tafinlar + Mekinist was approved in the EU for adjuvant treatment of BRAF V600-mutant melanoma.
Novartis and partner Amgen launched Aimovig in Europe as the first CGRP treatment for migraine. The drug’s uptake has been strong in the United States.
Meanwhile, Luxturna (voretigene neparvovec), an investigational one-time gene therapy to restore vision and prevent blindness in patients with biallelic RPE65 mutations, received a positive CHMP opinion and a tentative approval is expected in the fourth quarter. We remind investors that Novartis licensed ex-U.S. rights for Luxturna from Spark Therapeutics .
However, the FDA issued a complete response letter (CRL) to CZ885 (canakinumab) for cardiovascular risk reduction. Sandoz continues to progress with its generics and biosimilars pipeline. Sandoz’s biosimilar of Humira was approved in Europe. The CHMP gave a positive opinion to Sandoz’s biosimilar of Amgen’s (AMGN - Free Report) Neulasta and a decision is expected in the fourth quarter.
Endocyte Acquisition
Along with the quarterly results, Novartis announced that it will acquire Endocyte to expand expertise in radiopharmaceuticals and transformational therapeutic platforms. The acquisition will add 177Lu-PSMA-617, a potential first-in-class radioligand therapy, to Novartis’ diverse portfolio. The therapy is in phase III development for metastatic castration-resistant prostate cancer (mCRPC).
Our Take
Novartis beat sales estimates in the third quarter on strong performance of Cosentyx and Entresto. The label expansion of oncology drugs also boost the top line.
Novartis’ stock has gained 7.6% in the year so far compared with the industry's 9.0% growth.
Novartis restructured its business and plans to focus on becoming a core drug-focused company, powered by data and digital technologies. The company is looking to solidify its presence in the gene-therapy space. It acquired U.S.-based clinical stage gene therapy company, AveXis, Inc. Novartis also announced that it will acquire Endocyte to further strengthen its pipeline.
However, the generic division, Sandoz continues to face pricing pressure. The division also suffered a blow when the FDA issued a CRL to its generic Advair Diskus.
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Novartis (NVS) Q3 Earnings In Line, Revenues Beat Estimates
Swiss pharma giant Novartis AG (NVS - Free Report) reported results for third-quarter 2018, wherein revenues beat estimates, driven by strong performance from Cosentyx and Entresto. Earnings came in line with estimates.
Third-quarter 2018 core earnings of $1.31 per share was in line with the Zacks Consensus Estimate and up from $1.29 recorded in the year-ago quarter.
Novartis AG Price, Consensus and EPS Surprise
Novartis AG Price, Consensus and EPS Surprise | Novartis AG Quote
Revenues increased 6% to $12.8 billion as volume growth driven by Cosentyx and Entresto was partially offset by the negative impact of generic competition and pricing. Revenues marginally beat the Zacks Consensus Estimate by 0.06%.
All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
Quarter in Detail
Novartis operates under three segments: Innovative Medicines (Pharmaceuticals), Alcon (Ophthalmology unit) and Sandoz (Generics).
The Innovative Medicines division recorded sales of $8.6 billion, up 9% as both pharmaceuticals and oncology businesses were up 9%. Psoriasis drug Cosentyx continues to gain traction. Cosentyx sales increased to $750 million, up 37%, driven by strong growth in all indications, in the United States and EU. Entresto’s sales more than doubled to $271 million, up 113%, driven by increased worldwide uptake.
Oncology franchise grew 9%, driven by Promacta/Revolade, Tafinlar plus Mekinist, Jakavi and contribution from the Advanced Accelerator Applications (AAA) acquisition. Sales from AAA came in at $105 million, driven by the strong launch of Lutathera ($56 million).
Sales at the Sandoz division were $2.4 billion, down 4% due to price erosion in the United States. Sales in the United States declined due to competitive pressure. Biopharmaceuticals sales grew 21%, mainly driven by launches of Rixathon, the biosimilar version of Rituxan (rituximab); Erelzi, the biosimilar of Enbrel in the EU; and Zarxio (filgrastim) in the United States.
Sales at the Alcon division were $1.8 billion, up 5%. Surgical sales increased 7%, driven by double-digit growth of advanced technology, which includes intraocular lenses (IOLs), and continued growth in consumables and equipment. Vision Care sales grew 3%, driven by double-digit growth of Dailies Total1and Systane.
In September 2018, Novartis announced that it agreed to sell selected portions of its Sandoz US portfolio, specifically the Sandoz US dermatology business and the US oral solids portfolio, to Aurobindo Pharma USA Inc., for $0.9 billion and $0.1 billion of potential earn-outs, respectively.
The divestiture is in accordance with Sandoz’s strategy of focusing on complex generics, value-added medicines and biosimilars to achieve sustainable and profitable growth in the U.S. in the long run. The transaction will be completed in 2019.
Earlier, Novartis announced that it intends to spin-off its ophthalmology division, Alcon, into a separately-traded standalone company to grow as a medicines company solely.
In June 2018, the company also announced a share buyback of up to $5 billion, which will be completed by the end of 2019. During the first nine months of 2018, Novartis repurchased 7.2 million shares for $0.6 billion under this buyback plan.
2018 Outlook Updated
The company expects net sales in 2018 to grow mid-single digit. Innovative Medicines is projected to grow mid to high-single digit. Revenues from Sandoz are expected to decline low-single digit, while Alcon sales are estimated to grow mid-single digit.
Pipeline Update
Novartis’ pipeline candidates’ progress has been encouraging in the year so far. The European Commission approved a label expansion of CAR T therapy, Kymriah, for both relapsed or refractory (r/r) diffuse large B-cell lymphoma (DLBCL) and pediatric acute lymphoblastic leukemia (ALL).
The FDA had earlier approved a label expansion of Kymriah for the treatment of adult patients with r/r large B-cell lymphoma after two or more lines of systemic therapy, including DLBCL, high grade B-cell lymphoma and DLBCL arising from follicular lymphoma.
Regulatory submissions of AVXS-101 have been made in the United States, EU and Japan, for type 1 spinal muscular atrophy (SMA), based on the phase I data and select data from the ongoing phase III study, STR1VE. Novartis plans to launch AVXS-101 by mid-2019.
Multiple Sclerosis (MS) candidate BAF312 was also filed with both the FDA and EMA for secondary progressive MS. Tafinlar + Mekinist was approved in the EU for adjuvant treatment of BRAF V600-mutant melanoma.
Novartis and partner Amgen launched Aimovig in Europe as the first CGRP treatment for migraine. The drug’s uptake has been strong in the United States.
Meanwhile, Luxturna (voretigene neparvovec), an investigational one-time gene therapy to restore vision and prevent blindness in patients with biallelic RPE65 mutations, received a positive CHMP opinion and a tentative approval is expected in the fourth quarter. We remind investors that Novartis licensed ex-U.S. rights for Luxturna from Spark Therapeutics .
However, the FDA issued a complete response letter (CRL) to CZ885 (canakinumab) for cardiovascular risk reduction. Sandoz continues to progress with its generics and biosimilars pipeline. Sandoz’s biosimilar of Humira was approved in Europe. The CHMP gave a positive opinion to Sandoz’s biosimilar of Amgen’s (AMGN - Free Report) Neulasta and a decision is expected in the fourth quarter.
Endocyte Acquisition
Along with the quarterly results, Novartis announced that it will acquire Endocyte to expand expertise in radiopharmaceuticals and transformational therapeutic platforms. The acquisition will add 177Lu-PSMA-617, a potential first-in-class radioligand therapy, to Novartis’ diverse portfolio. The therapy is in phase III development for metastatic castration-resistant prostate cancer (mCRPC).
Our Take
Novartis beat sales estimates in the third quarter on strong performance of Cosentyx and Entresto. The label expansion of oncology drugs also boost the top line.
Novartis’ stock has gained 7.6% in the year so far compared with the industry's 9.0% growth.
Novartis restructured its business and plans to focus on becoming a core drug-focused company, powered by data and digital technologies. The company is looking to solidify its presence in the gene-therapy space. It acquired U.S.-based clinical stage gene therapy company, AveXis, Inc. Novartis also announced that it will acquire Endocyte to further strengthen its pipeline.
However, the generic division, Sandoz continues to face pricing pressure. The division also suffered a blow when the FDA issued a CRL to its generic Advair Diskus.
Zacks Rank
Novartis currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>