Novartis AG (NYSE:NVS) Q1 2019 Earnings Conference Call Transcript

Apr 24, 2019 • 08:00 am ET

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Novartis AG (NYSE:NVS) Q1 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

(Operator Instructions) And your first question comes from the line of Graham Parry of Bank of America.

Analyst
Graham Glyn Charles Parry

Hi. Thanks for taking my questions. So I've got one on Gilenya and then one on Zolgensma. So firstly on Gilenya, could you just remind us where you are in your arbitration negotiations with Mitsubishi in terms of Gilenya royalties? I see they stopped booking their royalties overnight pending the outcome of arbitration. So can you confirm, are you continuing to book royalties in your numbers? And what assumption on royalty post the August composition of matter patent expiry is baked into your guidance currently? And then secondly on Zolgensma, could you give us an update on the label expectations beyond the START and STR1VE populations that you were alluding to on the fourth quarter call? And on the second death, your slide doesn't mention the neurological complications that were referred to in the media statements. So could you elaborate on these, why you think the investigator determined that respiratory infection could possibly be treatment related and the expected timing of autopsy results and DSMB final determination on whether this was a drug-related death or not?

Executive
Vasant Narasimhan

Great. So I'll actually start on the Zolgensma topic on the safety, and then I'll hand to the colleagues to take Gilenya and then also the Zolgensma labeling. So this is a situation where we had a disseminated sepsis. And in sepsis, you typically have neurological complications. And so the neurological complications, to our estimation, related to the sepsis. I think the only question here is the administration of an AAV therapy in the context of an infection lead to an exacerbation of the infection. In this case, I think we have advised all physicians going forward to ensure that there's appropriate steroid administration and ensure that all the supportive care is given. But I think that, one, the read across to the platform technology is not, in our view, appropriate. I mean this is really about when you provide a therapy in the context of a very complex sepsis situation, you can exacerbate the overall care. And so that's why the regulators were unconcerned. That's why the DSMB was unconcerned. We'll complete the autopsy results shortly and, of course, finalize the assessment. But I think the key thing to note is regulators, DSMB, clinical trials all on track, no change and no change for our expectations on timing of approval.

Now with respect to Gilenya, Mitsubishi, I'll give it to Paul. Paul?

Executive
Paul Hudson

Yes. Thank you, Graham, for the question. So just remind everybody that our full year core operating income guidance reflects the current contractual terms with Mitsubishi, so no additional change there.

Executive
Vasant Narasimhan

And then John -- John or Paul in terms of the Zolgensma labeling.

Executive
John Tsai

Yes. In terms of Zolgensma labeling, Graham, as you know, we are studying this in a variety of SMA types, including Type 1, 2 and 3. And we have four studies ongoing. What I would say is that the discussions with