Zolgensma's slowdown unrelated to gene therapy deaths, Novartis CEO says

Novartis’ gene therapy Zolgensma ranks among six drugs that the Swiss pharma counts as major growth drivers with multibillion-dollar peak sales potential. But CEO Vas Narasimhan, M.D., said the spinal muscular atrophy (SMA) therapy’s notable absence from a list of the company’s top performers in the third quarter is unrelated to two recent death events.

Zolgensma sales dropped 13% in the third quarter year over year at constant currencies to $319 million (PDF). The haul came in 20% below Wall Street’s expectations and rewound the drug to the same level of sales it had in early 2021.

“To our best assessment, we don’t see it as related to anything related to” the two children’s deaths Novartis recently reported after Zolgensma treatment, Narasimhan told reporters during a press briefing Tuesday.

Back in August, a report emerged that two children died about five to six weeks after receiving Zolgensma. Both patients died of acute liver failure, a known side effect of the one-time gene therapy.

Instead, Narasimhan said the decline was caused by a temporary slowdown in adding new markets. As Novartis waits for outcomes from reimbursement discussions with about 10 countries, the company saw a “flattening” of the sales trajectory, he explained. Some of the important countries include Brazil, Turkey, India and Saudi Arabia, the CEO mentioned on a separate call with investors.

“We’re hopeful to be able to add additional markets over this Q4 and into next year, which would allow the brand to continue on its growth trajectory,” Narasimhan said.

When Zolgensma enters a market, the drug usually enjoys a spike in uptake as it reaches a pool of existing patients. Afterward, the market switches to what Novartis calls an “incident” population.

That's when Novartis aims to grow the market through increased newborn screening. Currently, Novartis has achieved 98% newborn screening for SMA in the U.S. and 35% in Europe.

For Zolgensma’s current infusion formulation alone, Novartis expects $1.5 billion to $2 billion in peak sales. To reach its “multibillion-dollar” projection, Zolgensma needs to win approvals for an intrathecal formulation, which is currently in clinical testing.

That version would allow the therapy reach older patients up to 18 years old, allowing it to better compete with existing antisense options like Biogen’s Spinraza. Right now, patients as old as 2 are eligible for Zolgensma in the U.S. Patients up to 5 years old can receive the drug in Europe.

Zolgensma is among six commercial products Novartis expects to drive growth. The other five meds—Cosentyx, Entresto, Kisqali, Kesimpta and Leqvio—turned up sales growth in the third quarter, though not all up to analysts’ projections. Altogether, the six meds made up a third of Novartis’ $10.3 billion innovative drugs sales in the third quarter.

As a drugmaker with nearly two-thirds of sales coming out of the U.S., Novartis is being hit by a strong dollar. Group sales stacked up to $12.5 billion in the third quarter, up 4% at constant currencies but down 4% on a reported basis.

If the current exchange rates continue, Novartis expects they will deal a seven-percentage-point blow to its reported sales for 2022 and an eight-percentage-point pressure on core operating income.

Meanwhile, realizing its relatively weak U.S. presence compared with Europe, Novartis recently unveiled a “U.S.-first” strategy, aiming to rise to become a top 5 drugmaker in the U.S. by 2027 from about tenth today.