Zolgensma launch 'on track and fully in line' with expectation, says Novartis CEO

Novartis CEO Vas Narasimhan 2019
Despite gloomy outlooks from analysts, Novartis CEO Vas Narasimhan called the $2.1 million gene therapy Zolgensma “one of the most successful launches from an access standpoint in rare diseases.” (Novartis)

Gene therapy Zolgensma is under the spotlight as Novartis launches what’s known as the world’s most expensive drug. And now, its chief has offered an early glimpse into the rollout.

The Zolgensma launch is “on track and fully in line with what we’ve expected,” Novartis CEO Vas Narasimhan said during a Thursday briefing with reporters as he delved into the company’s second-quarter performance. In fact, the company is so pleased that Narasimhan dubbed it “one of the most successful launches from an access standpoint in rare diseases.”

He didn’t give specific sales numbers, because it’s still early days; the drug was just approved by the FDA in late May. But “nearly all patients who are on label” have received the $2.1 million spinal muscular atrophy (SMA) therapy “after the appropriate steps are taken,” he said.

But the CEO's optimism contradicts with what Bernstein analysts have observed. In a recent note to clients, the analysts said payers’ decisions with Zolgensma are “surprisingly restricted,” and they suspected “payers will only grudgingly expand coverage and penetration into the broader population” even if Novartis turns up more data.

Novartis obviously disagrees. So far, the Swiss drugmaker has reached coverage deals with over 20 commercial plans, covering 40% of lives, the CEO said. In the absence of a medical policy, it’s going through the medical exception process, which is more of an individualized, case-by-case decision-making process by payers. Narasimhan described it as a normal step of any new launch that allows the plans to understand what they will approve.

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To help cover Zolgensma’s full price, Novartis is offering payers such models as pay-for-performance and pay-over-time for up to five years. These contracting options have attracted 17 commercial plans to sign a letter of intent with Novartis, according to Narasimhan, though he cautioned the final terms are not known yet.

Gene therapy is one of three next-gen and new platforms Narasimhan’s Novartis is betting on. Besides Zolgensma, cell therapy and radioactive therapy also have marketed drugs that bear blockbuster hopes from the company.

Novartis CAR-T therapy Kymriah was also once hailed as the next big thing, but it's gaining pace at a slow speed, partially due to a manufacturing specification problem with the FDA. In the second quarter, the drug made just $58 million, which Narasimhan said shows “strong volume demand.” Right now, 19 countries have coverage for at least one of the two indications, with a recent addition from Japan.

Meanwhile Lutathera, a radiotherapy for neuroendocrine tumors, has enjoyed a better start. The drug’s $109 million yield was attributed as a driving force behind Novartis’ 9% total oncology sales growth year over year. But the drug seems to have reached a bottleneck: The second-quarter number was only $3 million more than the previous quarter.

Elsewhere, IL-17A inhibitor Cosentyx and heart drug Entresto are still the star meds. In the second quarter, Entresto sales jumped 81% at constant currencies to reach $421 million, beating analysts’ expectations by 9%. Cosentyx racked up $858 million, up 25% over last year, despite the competitive environment in psoriasis. In U.S. dermatology, Cosentyx has the biggest year-over-year gain in new-to-brand shares compared to its competitors, according to Narasimhan. As for total scripts, it has grown 28% in U.S. dermatology, versus 10% total market expansion; whereas in rheumatology, it boasts 38% growth, versus 14% of the total market, he said.

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Outside of the new drug department, Sandoz turned up what Narasimhan called a “positive surprise” in the second quarter. The generic unit raked in $2.44 billion in the period, 5% above consensus, mainly thanks to a 16% increase from biosimilars.

“That said, I still think it’s going to be a couple of years’ journey to truly get to where we want to be with this business,” Narasimhan said of Sandoz, adding that the U.S. pricing erosion hasn’t really changed much. Novartis is currently revamping the generic unit to make it an autonomous operation within the group.

All told, Novartis’ second-quarter sales increased 4%, standing at $11.8 billion. The company has dialed up its 2019 forecast and is now expecting sales to grow in the mid- to high-single-digit range.