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Novartis CEO focused on future coronaviruses, will not return to vaccines

Vas Narasimhan, who ran Novartis AG's vaccine business for a decade before it was swapped with GlaxoSmithKline PLC in 2015, said the Swiss pharmaceutical group will not move back into vaccines and instead has embarked on a major research effort against current and future coronaviruses.

Speaking after the Basel, Switzerland-based company reported second-quarter results, Narasimhan said Novartis is deploying its expertise in antiviral drug discovery and development to find treatments for the current pandemic and future coronaviruses that may emerge. Novartis has pivotal studies ongoing in more than 20 medicines, as well as multiple research programs to look for pan-coronavirus inhibitors, he said.

SNL Image
Novartis CEO Vas Narasimhan
Source: Novartis

"We chose to focus on drugs and medicines," the CEO said on a July 21 conference call with reporters. "My own experience in vaccines teaches me that it's difficult to, de novo, build scale and expertise to be able to develop large scale vaccines successfully, without the deep expertise the three or four top manufacturers have. There's no plan for us to enter vaccines."

Novartis reported second-quarter sales of $11.35 billion, in line with estimates from Jefferies but shy of consensus at $11.78 billion. Sales of its Innovative Medicines division came in at $9.19 billion, compared with Jefferies' $9.08 billion forecast and consensus at $9.41 billion. Sales of Cosentyx for psoriatic arthritis at $944 million were lower than Goldman Sachs' $971 million estimate for the second quarter. Narasimhan said that while Cosentyx was impacted by the slowdown in dermatology as a result of COVID-19, there was no impact on its market share either in dermatology, psoriatic arthritis or ankylosing spondylitis.

Gene therapy treatment Zolgensma for spinal muscular atrophy beat JP Morgan estimates of $200 million for the quarter, coming in at $205 million, driven by newly diagnosed babies and its recent European launch. "In terms of Zolgensma, [we see] really good signals from the European market, broadly," the CEO said. "We are having strong uptake with early access programs that enable us to bring access to patients while we negotiate the final pricing."

While COVID-19 weighed heaviest on the ophthalmology and dermatology businesses, therapies requiring hospital stays were also impacted, notably Novartis' nuclear medicines for cancer, known as the radioligand therapy business. Lutathera sales were 7% below UBS forecasts for the quarter, but Narasimhan said he expects to continue to see strong uptake in Europe, as well as expansion into secondary centers in the U.S. "We're quite excited about the technology and its ability to be applied across solid tumors, but there was certainly an impact in quarter two," he said.

But Kymriah, the first chimeric antigen receptor T cell therapy to be approved by regulators, beat Goldman Sachs' $45 million forecast, posting a 103% rise in sales to $118 million. The CAR-T cell therapy harnesses the body's own immune system to kill cancer cells in a complex process that involves collecting some of the patient's white blood cells through a specialized blood filtration system and re-engineering them before infusing them back into the patient.

Narasimhan said the impact of COVID-19 was offset by a much better manufacturing performance thanks to recently opened centers in France and Switzerland, which increased the overall capacity for Kymriah to meet demand. "With Kymriah, we've never really been in a demand-constrained situation, it's been a supply-constrained situation so as we've been able to expand supply, you're seeing better performance. And so we're very pleased with the underlying dynamics."