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Swiss pharma giant Novartis AG (NVS - Free Report) reported better-than-expected results for the first quarter of 2024. Core earnings (excluding one-time charges) of $1.80 per share beat the Zacks Consensus Estimate of $1.73 and were up from $1.54 a year ago. The year-over-year growth was driven by an increase in sales.
Revenues of $11.8 billion climbed 10% from the year-ago quarter. On a constant currency basis, sales increased 11%, driven by momentum in Entresto, Kesimpta, Kisqali, Cosentyx, Pluvicto and Leqvio. Sales easily beat the Zacks Consensus Estimate of $11.5 billion.
Shares are trading up in the pre-market following the results announcement. Shares of Novartis have lost 5.8% so far this year against the industry’s growth of 8.7%.
Image Source: Zacks Investment Research
Quarter in Detail
All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
In October 2023, Novartis completed the spin-off of its generic and biosimilar unit, Sandoz, following which the latter became an independent company. The results of the Sandoz division and selected portions of corporate activities attributable to the Sandoz business are reported discontinued operations.
With the successful spin-off of the Sandoz business, Novartis operates as a single global operating segment. It is now concentrating on four core therapeutic areas (cardiovascular, renal-metabolic, immunology, neuroscience and oncology).
Cardiovascular drug Entresto’s sales rose 36% from the year-ago quarter to $1.9 billion on sustained, robust demand-led growth boosted by increased penetration in the United States and Europe following continued adoption of guideline-directed medical therapy in heart failure, as well as in China with increased penetration in hypertension. Entresto’s sales beat both the Zacks Consensus Estimate and our model estimate of $1.66 billion.
Cosentyx’s sales (psoriasis, spondylitis, arthritis) increased 25% to $1.3 billion, beating the Zacks Consensus Estimate of $1.26 billion and our model estimate of $1.28 billion. In October 2023, the FDA approved Cosentyx for treating moderate-to-severe hidradenitis suppurativa (HS) in adults. The federal agency also approved the intravenous formulation (IV) of the drug for the treatment of adults with psoriatic arthritis, ankylosing spondylitis and non-radiographic axial spondyloarthritis.
Cosentyx sales grew mainly in the United States, emerging growth markets and Europe, driven by recent launches (including the HS and the IV formulation in the United States) along with volume growth in core indications.
Kesimpta (multiple sclerosis) sales came in at $637 million, surging 66% on increased demand. However, sales missed the Zacks Consensus Estimate of $640 million and our model estimate of $668 million.
Kisqali’s stellar performance continued, with sales soaring 54% to $627 million The figure missed the Zacks Consensus Estimate of $631 million but beat our estimate of $602 million. Sales grew strongly across all regions, based on increasing recognition of consistently reported overall survival in HR+/HER2- advanced breast cancer.
Strong performances by Jakavi (up 18% to $478 million) and Tafinlar + Mekinist (up 5% to $474 million) also boosted the top line.
Pluvicto raked in sales of $310 million, up 47% year over year on solid growth in the United States and Europe. Novartis received approval for Pluvicto's expanded manufacturing capacity at Millburn, NJ, and demand picked up. Novartis is now focused on initiating new patients. Sales, however, missed the Zacks Consensus Estimate of $325 million and our estimate of $329 million.
Scemblix sales surged 83% to $136 million, driven by its strong launch uptake and demonstrated the high unmet need in later lines of chronic myelogenous leukemia.
Leqvio sales jumped 139% year over year to $151 million on steady growth in demand.
Ilaris sales came in at $356 million, up 14% year over year as sales grew across all regions.
Xolair sales grew 15% year over year to $399 million as sales increased across all regions. Novartis has a collaboration agreement with Roche (RHHBY - Free Report) for Xolair. Novartis and Roche co-promote Xolair in the United States.
Luthathera sales came in at $169 million, up 14%, driven by growth in sales across all regions due to increased demand.
However, Zolgensma sales of $295 million were down 3%. Sales missed the Zacks Consensus Estimate of $304 million and our model estimate of $329 million.
Promacta sales were down 4% to $520 million. Sales missed the Zacks Consensus Estimate of $560 million and our model estimate of $547 million. Tasigna sales were down 13% to $395 million.
Generic competition affected sales, mainly for Gilenya (declined 24% to $175 million).
Core operating income margin was 38.4%, up from 36.2% in the year-ago quarter.
2024 Guidance Raised
Based on its performance across all key growth brands and geographies, Novartis now expects net sales for 2024 to grow in high single to low double-digits (previous guidance: mid-single digits). The guidance assumes no generic competition for Entresto and Promacta in the United States in 2024. Core operating income is now projected to grow in the low double digits to mid-teens (previous guidance: high single digits).
Key Updates
The FDA approved a label expansion of Xolair for the reduction of allergic reactions, including anaphylaxis, that may occur with accidental exposure to one or more foods in adult and pediatric patients aged one year and older with IgE-mediated food allergy.
NVS obtained a positive CHMP opinion for Fabhalta (iptacopan) for the treatment of paroxysmal nocturnal hemoglobinuria (patients. The drug was approved in the United States in December 2023. The FDA also accepted an application for the drug for the treatment of adult patients with IgA nephropathy and granted priority review to the same.
Our Take
Novartis’ performance in the first quarter was impressive. The increase in guidance indicates strong performance across all key brands in the upcoming quarters. The label expansion of Cosentyx for HS and IV formulation drove the growth of the drug.
The company is now focused on strengthening its core pharmaceutical business with strategic acquisitions and deals. In February 2024, Novartis announced that it would acquireMorphoSys AG (MOR - Free Report) to expand its oncology portfolio.
The acquisition will add MorphoSys’s pelabresib (late-stage BET inhibitor for myelofibrosis) and tulmimetostat (early-stage dual EZH2 and EZH1 inhibitor for solid tumors or lymphomas) to NVS’ pipeline. The transaction will close in the second quarter of 2024.
Novartis also entered into an exclusive strategic license agreement with a clinical-stage biotechnology company, Arvinas, Inc. (ARVN - Free Report) , for the worldwide development and commercialization of the latter’s pipeline candidate, ARV-766.
ARV-766 is Arvinas’ second-generation PROTAC androgen receptor (AR) degrader. The candidate is designed to target AR with a different profile than bavdegalutamide, as a potential treatment for men with metastatic castration-resistant prostate cancer.
Image: Bigstock
Novartis (NVS) Q1 Earnings, Sales Beat, Guidance Raised
Swiss pharma giant Novartis AG (NVS - Free Report) reported better-than-expected results for the first quarter of 2024. Core earnings (excluding one-time charges) of $1.80 per share beat the Zacks Consensus Estimate of $1.73 and were up from $1.54 a year ago. The year-over-year growth was driven by an increase in sales.
Revenues of $11.8 billion climbed 10% from the year-ago quarter. On a constant currency basis, sales increased 11%, driven by momentum in Entresto, Kesimpta, Kisqali, Cosentyx, Pluvicto and Leqvio. Sales easily beat the Zacks Consensus Estimate of $11.5 billion.
Shares are trading up in the pre-market following the results announcement.
Shares of Novartis have lost 5.8% so far this year against the industry’s growth of 8.7%.
Image Source: Zacks Investment Research
Quarter in Detail
All growth rates mentioned below are on a year-over-year basis and at constant exchange rates.
In October 2023, Novartis completed the spin-off of its generic and biosimilar unit, Sandoz, following which the latter became an independent company. The results of the Sandoz division and selected portions of corporate activities attributable to the Sandoz business are reported discontinued operations.
With the successful spin-off of the Sandoz business, Novartis operates as a single global operating segment. It is now concentrating on four core therapeutic areas (cardiovascular, renal-metabolic, immunology, neuroscience and oncology).
Cardiovascular drug Entresto’s sales rose 36% from the year-ago quarter to $1.9 billion on sustained, robust demand-led growth boosted by increased penetration in the United States and Europe following continued adoption of guideline-directed medical therapy in heart failure, as well as in China with increased penetration in hypertension. Entresto’s sales beat both the Zacks Consensus Estimate and our model estimate of $1.66 billion.
Cosentyx’s sales (psoriasis, spondylitis, arthritis) increased 25% to $1.3 billion, beating the Zacks Consensus Estimate of $1.26 billion and our model estimate of $1.28 billion. In October 2023, the FDA approved Cosentyx for treating moderate-to-severe hidradenitis suppurativa (HS) in adults. The federal agency also approved the intravenous formulation (IV) of the drug for the treatment of adults with psoriatic arthritis, ankylosing spondylitis and non-radiographic axial spondyloarthritis.
Cosentyx sales grew mainly in the United States, emerging growth markets and Europe, driven by recent launches (including the HS and the IV formulation in the United States) along with volume growth in core indications.
Kesimpta (multiple sclerosis) sales came in at $637 million, surging 66% on increased demand. However, sales missed the Zacks Consensus Estimate of $640 million and our model estimate of $668 million.
Kisqali’s stellar performance continued, with sales soaring 54% to $627 million The figure missed the Zacks Consensus Estimate of $631 million but beat our estimate of $602 million. Sales grew strongly across all regions, based on increasing recognition of consistently reported overall survival in HR+/HER2- advanced breast cancer.
Strong performances by Jakavi (up 18% to $478 million) and Tafinlar + Mekinist (up 5% to $474 million) also boosted the top line.
Pluvicto raked in sales of $310 million, up 47% year over year on solid growth in the United States and Europe. Novartis received approval for Pluvicto's expanded manufacturing capacity at Millburn, NJ, and demand picked up. Novartis is now focused on initiating new patients. Sales, however, missed the Zacks Consensus Estimate of $325 million and our estimate of $329 million.
Scemblix sales surged 83% to $136 million, driven by its strong launch uptake and demonstrated the high unmet need in later lines of chronic myelogenous leukemia.
Leqvio sales jumped 139% year over year to $151 million on steady growth in demand.
Ilaris sales came in at $356 million, up 14% year over year as sales grew across all regions.
Xolair sales grew 15% year over year to $399 million as sales increased across all regions. Novartis has a collaboration agreement with Roche (RHHBY - Free Report) for Xolair. Novartis and Roche co-promote Xolair in the United States.
Luthathera sales came in at $169 million, up 14%, driven by growth in sales across all regions due to increased demand.
However, Zolgensma sales of $295 million were down 3%. Sales missed the Zacks Consensus Estimate of $304 million and our model estimate of $329 million.
Promacta sales were down 4% to $520 million. Sales missed the Zacks Consensus Estimate of $560 million and our model estimate of $547 million. Tasigna sales were down 13% to $395 million.
Generic competition affected sales, mainly for Gilenya (declined 24% to $175 million).
Core operating income margin was 38.4%, up from 36.2% in the year-ago quarter.
2024 Guidance Raised
Based on its performance across all key growth brands and geographies, Novartis now expects net sales for 2024 to grow in high single to low double-digits (previous guidance: mid-single digits). The guidance assumes no generic competition for Entresto and Promacta in the United States in 2024. Core operating income is now projected to grow in the low double digits to mid-teens (previous guidance: high single digits).
Key Updates
The FDA approved a label expansion of Xolair for the reduction of allergic reactions, including anaphylaxis, that may occur with accidental exposure to one or more foods in adult and pediatric patients aged one year and older with IgE-mediated food allergy.
NVS obtained a positive CHMP opinion for Fabhalta (iptacopan) for the treatment of paroxysmal nocturnal hemoglobinuria (patients. The drug was approved in the United States in December 2023. The FDA also accepted an application for the drug for the treatment of adult patients with IgA nephropathy and granted priority review to the same.
Our Take
Novartis’ performance in the first quarter was impressive. The increase in guidance indicates strong performance across all key brands in the upcoming quarters. The label expansion of Cosentyx for HS and IV formulation drove the growth of the drug.
Novartis AG Price, Consensus and EPS Surprise
Novartis AG price-consensus-eps-surprise-chart | Novartis AG Quote
The company is now focused on strengthening its core pharmaceutical business with strategic acquisitions and deals. In February 2024, Novartis announced that it would acquire MorphoSys AG (MOR - Free Report) to expand its oncology portfolio.
The acquisition will add MorphoSys’s pelabresib (late-stage BET inhibitor for myelofibrosis) and tulmimetostat (early-stage dual EZH2 and EZH1 inhibitor for solid tumors or lymphomas) to NVS’ pipeline. The transaction will close in the second quarter of 2024.
Novartis also entered into an exclusive strategic license agreement with a clinical-stage biotechnology company, Arvinas, Inc. (ARVN - Free Report) , for the worldwide development and commercialization of the latter’s pipeline candidate, ARV-766.
ARV-766 is Arvinas’ second-generation PROTAC androgen receptor (AR) degrader. The candidate is designed to target AR with a different profile than bavdegalutamide, as a potential treatment for men with metastatic castration-resistant prostate cancer.
Novartis currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.