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Novartis Q1 Revenues Grow 1 Percent Amid Organizational Restructuring, Shifting Growth Drivers

NEW YORK – Novartis on Tuesday reported a 1 percent increase in revenues in the first quarter of 2022, driven in part by oncology sales, including ex-US sales of the firm's breast cancer CDK4/6 inhibitor Kisqali (ribociclib).

For the three months ended March 31, Basel, Switzerland-based Novartis reported $12.53 billion in revenues compared to $12.41 billion in Q1 2021, falling short of analysts' average Q1 revenue estimate of $12.76 billion.

In a conference call to discuss the financial results on Tuesday morning, Novartis CEO Vas Narasimhan said Q1 was a "solid quarter that we can build on over the course of this year."

Revenues in the firm's innovative medicines unit — a division featuring drugs for cancer and other diseases — grew 1 percent, reaching $10.18 billion in Q1 2022 versus $10.10 billion in the prior-year quarter.

Novartis recently introduced the innovative medicines unit as part of a strategic reorganization. The new organizational structure, under which Novartis has also separated US and international commercial operations, is part of an effort to "accelerate growth, strengthen the pipeline, and increase productivity," according to the firm.

Novartis' Kisqali, a treatment for certain hormone receptor (HR)-positive, HER2-negative advanced breast cancer patients, brought in $239 million for the firm, up 23 percent from $195 million during the same period last year. According to Narasimhan, this growth was primarily driven by ex-US drug sales and shows signs of post-pandemic recovery.

The firm is expecting a results readout from the Phase III NATALEE clinical trial evaluating Kisqali in the adjuvant treatment setting in 2023. "The opportunity here is significant," he said, adding that Novartis estimates that the market for Kisqali in the adjuvant breast cancer treatment setting could be worth $7 billion by 2027.

Additionally, Novartis saw 3 percent growth in revenues for its BRAF/MEK inhibitor combination, Tafinlar (dabrafenib) and Mekinist (trametinib), which brought in $403 million in Q1 2022 versus $393 million in Q1 2021.

Narasimhan also highlighted two new precision oncology treatments that the firm launched recently. The STAMP inhibitor Scemblix (asciminib), which the US Food and Drug Administration approved in October 2021 for two advanced chronic myeloid leukemia indications, brought in $25 million for the firm during the first quarter of this year. Novartis is currently enrolling a first-line study to move that drug into the first-line setting.

As for the targeted radiopharmaceutical Pluvicto (177Lu-PSMA-617 or lutetium Lu 177 vipivotide tetraxetan), which the FDA approved at the end of the first quarter for previously treated, metastatic castration-resistant prostate cancer patients whose tumors express PSMA as determined by a gallium-labeled PET imaging agent, Narasimhan said the firm sees "high awareness already" in the 240 specialized treatment centers the firm is targeting for rollout.

Novartis is expecting a European approval for Pluvicto during the second half of this year and is conducting clinical trials to move the therapy into additional indications, including in the earlier-line mCRPC setting and in the hormone-sensitive prostate cancer setting.

Looking ahead, Narasimhan highlighted strong growth potential for its investigational KRAS G12C inhibitor JDQ443, for which the firm recently presented early yet encouraging clinical data in KRAS-mutant non-small cell lung cancer and colorectal cancer.

Although the firm's lymphoma CAR T-cell therapy Kymriah (tisagenlecleucel) has been a growth driver in prior quarters, Novartis did not break out its sales for Q1 2022, suggesting reduced sales. Novartis did report negative data for the agent in second-line diffuse large B-cell lymphoma at the end of 2021. In contrast, Gilead Sciences and Bristol Myers Squibb reported positive data for their CAR T-cell therapies in the same treatment setting.

"The failure of Kymriah in the second-line DLBCL [setting] is beginning to hit demand, and we will see Kymriah have less growth over the coming quarters and years, and potentially even declines, as our two competitors build out their second-line DLBCL programs," Narasimhan said before shifting focus to Novartis' new T-charge platform, which it launched to develop new, more effective and less costly cell therapies.

Novartis' net income in Q1 2022 was $2.22 billion, or $1.00 per share, compared to $1.80 billion in the prior-year quarter, or $.80 per share. The firm's core EPS for the first quarter was $1.46 per share, which matched analysts' average estimate.

For the full year, Novartis is expecting revenues to grow in the mid-single digits.