Even though Novartis grew sales and profits in the last quarter of 2023, the magnitude of the increases was not satisfactory to the Swiss pharma's investors.
Novartis’ fourth-quarter sales grew 10% year over year at constant currencies to $11.4 billion. The number missed analysts’ expectations by 1%, according to the team at ODDO BHF. The company’s stock price fell 3% Wednesday morning as of publication.
Among a portfolio of newer medicines, Novartis’ radiotherapy Pluvicto stuck out as a major disappointment. Despite a 53% jump compared with the same period last year, Pluvicto’s $273 million haul in the fourth quarter came in 13% below analysts’ consensus estimate. With full-year sales standing at $980 million, the PSMA-directed therapy barely missed its chance at reaching blockbuster status in its first full year on the market.
Still, Novartis expects “robust quarter-on-quarter growth” for Pluvicto in 2024, CEO Vas Narasimhan said during an investor call Wednesday.
“We see very strong demand signals and growth dynamics in January consistent with our expectation that, as we clear the supply constraints and some of the challenges we saw in quarter four, we will get back to strong robust growth in quarter one 2024,” Narasimhan said.
After a brief period of shortage, Pluvicto has been offered at no constraint since last year’s fourth quarter. Nearly all doses of the radiotherapy were injected on the planned day in the U.S. during the most recent quarter, according to Narasimhan.
“But I think we did not see yet the full replenishment of the base of patients given that we still had supply constraints into the July-August timeline,” Narasimhan said.
The holiday season also played a part in limiting dosing, the CEO added. Besides, during the shortage, doctors had been saving Pluvicto for sicker patients who may not be able to finish the entire treatment course. Now with unconstrained supply, more patients can complete their full doses, Narasimhan explained.
Pluvicto is currently approved for patients with PSMA-positive metastatic castration-resistant prostate cancer following taxane-based chemotherapy. Novartis recently delayed its regulatory filing to move the drug up in the treatment sequence before chemo, pending longer-term patient survival analysis from the phase 3 PSMAfore trial.
Wednesday, the company narrowed its timeline for a potential FDA application to the second half of 2024.
The problem at hand is a preliminary negative trend in overall survival (OS) without adjusting for a high rate of patient crossover in the control arm. Narasimhan didn’t say whether Novartis would still be able to file for approval if the unadjusted OS remained negative at the time of the final readout.
Novartis believes it has a “very compelling case” with Pluvicto, Narasimhan said, adding that the goal now is to get to a “higher resolution” of the OS analysis.
“Overall, as an industry, we’ll learn more with some of the upcoming [advisory committee meetings] from other competitor medicines on how the FDA is thinking about OS crossover and how to manage this,” Narasimhan said. “And I’m hopeful that overall patient benefit is what ultimately rules out over some of the pure statistical considerations given that we’re encouraged to utilize crossover in our studies to be patient-friendly.”
Elsewhere in Novartis’ business, heart drug Entresto remained the top growth driver, with sales up 26% year over year, reaching $1.6 billion in the fourth quarter. The drug’s full-year sales surpassed $6 billion.
Breast cancer drug Kisqali enjoyed 76% year-over-year growth to $610 million in the last three months of 2024. Backed by strong OS data, the drug has snagged 46% of U.S. new-to-brand share in metastatic breast cancer among CDK4/6 inhibitors, the company said.
Novartis in December submitted an FDA application for Kisqali as a post-surgical adjuvant therapy based on the phase 3 NATALEE trial. An approval in early-stage disease would significantly expand the drug’s target patient base.
Besides the speed of Novartis' top-line growth, investors were also disappointed in the company’s bottom-line performance. Its fourth-quarter core earnings per share, at $1.53, fell below analysts’ projections.
Higher selling, general and administrative expenses (SG&A) dragged down Novartis’ profit. But Novartis CFO Harry Kirsch argued that the profit number still came in as the company had forecasted.
Urging investors not to “overreact to short-term consensus thinking,” Kirsch said Novartis had a relatively lower comparator spending levels in fourth-quarter 2022 amid a major restructuring. Now, spending is back to the normal pattern.
“You should have no worries about our cost development for [2024],” Kirsch said. “Our guidance of continued margin improvement in absolutely bulletproof because of our top-line growth, as well as all productivity programs, and everything in 2023 came in as planned.”
For 2024, Novartis expects sales to grow by mid-single-digit percentages and core operating profit to grow at high-single-digit percentages. The company also updated its mid-term projection to now anticipate a 5% compounded annual growth rate between 2023 and 2028.