Novartis AG (NOVN) Earnings Call Transcript & Summary

Good morning and good afternoon, and welcome to the Kesimpta FDA Approval Investor Call. [Operator Instructions] And the conference is being recorded. [Operator Instructions] A recording of the conference, including the Q&A session, are available on our website shortly after the call ends. [Operator Instructions] With that, I would like to hand over to Samir Shah, Global Head, Investor Relations. Please go ahead, sir.

Thank you very much, and good morning and good afternoon, everybody. Welcome to the Kesimpta approval call. First of all, I'd like to say a big thank you for taking the time to participate on a Friday afternoon. We appreciate you're busy, and we appreciate the time that you're actually taking to listen to the presentation. We hope the presentation's of interest to you and we can clarify any of the outstanding issues or questions that you may have. With us on the call, we have Marie-France Tschudin. She, as you know, is the Head of the Pharmaceutical division for Novartis. We also have Norman Putzki, the Head of Global Drug Development for Neuroscience at Novartis; and we have Victor Bulto, who's Head of the Pharma organization in the U.S. and will be responsible for launching in the U.S. Before we start, I'd like to read you the safe harbor statement. The information presented today contains forward-looking statements that involve known and unknown risks, uncertainties and other factors. These may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. For a description of some of these factors, please refer to the company's Form 20-F and its most recent quarterly results on the Form 6-K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission. And with that, I'll now hand across to Marie-France.

So good morning, good afternoon to all of you. First and foremost, I hope you and your loved ones are well and healthy. And I also want to thank you for joining the call today to talk about Kesimpta. So 2020 has been an important year for launch preparation for Novartis. And despite the current environment and the consequences across therapeutic areas, particularly in the dynamic segments, we're really determined to bring Kesimpta to patients as quickly as possible. And the reason for that is we're still seeing far too many compromises in multiple sclerosis treatment today, and too many patients are still on lower-efficacy treatments because of safety trade-offs and administration preferences. Now that we have FDA approval for Kesimpta, we feel we can bring a high-efficacy B-cell therapy to a very broad population of MS patients early in the disease and basically potentially halting their disease progression early on. So as I move on to Slide #5, I would perhaps here just give a little bit of context. So as you know, Novartis has been with the MS community and in neuroscience for decades. We launched Extavia. We also launched Gilenya, which was the first oral DMT. 10 years later, we're still the second most prescribed DMT worldwide. Gilenya is also today the only approved DMT for children and adolescents. We've also launched Mayzent, which has brought to market the first and only product proven to reduce disability progression in an SPMS population. So we know this market. We know the customers. We know the patient community, and we have the infrastructure. And now it's with great pleasure that we bring Kesimpta to market, a high-efficacy B-cell therapy that is targeted and is precisely dosed for MS patients. And all of this in a simple at-home administration to potentially a broad range of patients and physicians. So if I move on to Slide #6 and talk to you a little bit about the patient opportunity. If we look at the U.S. and the EU together, we're talking about close to 1 million patients. If we look at the most common phenotype, which is relapsing MS, we're talking about roughly 700,000 patients. The majority are being treated by one of the disease -- the 15 disease-modifying treatments that are available. But unfortunately, approximately 2/3 of these patients are on low-efficacy orals and BRACEs. So if I move on to Slide #7. If I look at the current therapies today, about 80% of first-line patients are still on lower-efficacy therapies. And you may ask, why is that? The fact is that, oftentimes, treatment today requires a trade-up between efficacy, safety and administration preferences. And what we feel we can do with the right profile is reduce the need for these trade-offs. That is exactly what we think Kesimpta can do. It has significant potential to unlock B-cell therapy in first line and early use. Moving on to Slide #8. If we look at the benefits of higher efficacy early, there's clearly a change in the marketplace today, and the trend is going towards higher efficacy first. The result is clear, better outcomes, better quality of life, and this impacts obviously work and productivity for patients. If we pause and think about the study results of ASCLEPIOS, it showed that patients see the equivalent of one relapse every 9 to 10 patient years. And I just want to emphasize that because it means that we're practically halting disease. Now for MS patients, disability progression starts at diagnosis. It starts early in their disease. And if you're a patient and you could halt your disease or practically halt your disease progression from the start, that's the type of efficacy you would be looking for. If we move on to Slide 9. There is an unmet need. If you consider that 44% of patients are not satisfied with their treatment today and they're making these trade-offs between efficacy, safety and administration preferences, we feel that we can do something about that. This is also reflected in the treatment choices and the regular switches that you see. If you look at dynamic market shares in the U.S. and Europe, about 1/3 of U.S. patients and 44% of European patients are switching. And this is clearly attractive for new entrants. There is definitely a clear need for more efficacious therapies that provide the safety and the convenience that Kesimpta will do. So if I move on to Slide #10. This is exactly what we feel we can offer with this product profile. We can remove those trade-offs, combine the powerful efficacy of B-cell therapy, safety and offer simple at-home self-administration. We don't require an infusion center. There's no need for premedication. There is no additional cost due to infusion, and we're not taking time away from other activities. This is an important value proposition, but it is especially important in the current environment. If I take you on to Slide #11. If we look at our launch preparation, we're on track despite the pandemic. And I'm sure Victor will talk a little bit more about what we're doing in the U.S. in the current environment to address some of the challenges that we see. We now have FDA approval. We're expecting CHMP opinion across -- and other countries, sorry, across EU and Switzerland, Australia, Canada and Japan in first half of the year and China towards the second half of the year. So our launch preparations are in full swing across the globe. And now it's my pleasure to invite Norman to give you a little bit more of an overview on the compelling data that we have with Kesimpta. Norman?

Thank you, Marie-France. Hi, everybody. This is Norman Putzki speaking. We should be on Slide 13 now, please. As Marie-France said, today, almost every other MS patient is still not satisfied with her or his MS treatment. I think that's quite a number. We believe that we can now positively address the needs of many more MS patients with Kesimpta. Even in an environment where patients and HCPs obviously have many choices, the unique profile of Kesimpta stands out. Kesimpta has a selective mode of action targeting B-cells that delivers powerful efficacy with action on the immune systems precisely occurring in the lymph nodes, which really helps maintaining most of the immune functions. And we can literally give this powerful treatment into the hand of patients for flexible once-monthly self-administration at home with the Sensoready pen. I will start off my presentation on the precise mode of action level of Kesimpta in the B-cells before talking about efficacy, safety and the highlights of the actual FDA-granted label. Slide 14. So on Slide 14 here, you're looking at the B-cells that we selectively target with Kesimpta, which are the blue lines. The progress displayed effect of Kesimpta on B-cells in a wide range of patients with low and high categories of body weight. It's quite easy to see that these graphs really show all the same thing, and that is a rapid and profound reduction of B-cells across all these patient groups. The consistency of the effect of that you see here is quite remarkable if you consider the low dose of 20 milligrams only that is self-administered here with a monthly subcut injection. With this low dose, Kesimpta delivers a strong and selective effect on those B-cells across different types of patients here. There's another thing that's actually important on the slide, and that is when the count drops, their lines remain flat over time. So these B-cell counts remain low at all-time points on drug. So the effect is sustained between the monthly set administration. It's interesting from a profile perspective here because this Kesimpta profile is different from the profile that you would see with long-lasting infrequent infusion regimens, where, particularly towards the end of the treatment cycle, you may see partial recurrence of these immune cells, which we actually don't want. And through the selective and sustained effect that we see here, Kesimpta has powerful efficacy on all the key measures of relapsing MS, so that is relapses, lesions on brain imaging and ultimately, disability progression. On Slide 15, we're having a look at the relapse outcomes or clinical attack outcomes that you're all used to. That is the primary outcome measure for the pivotal trials for Kesimpta. So here, Kesimpta demonstrated a reduction of 51% and 59%, respectively, in those trials against an active comparator. So I really want to remind you that these trials are not run against placebo. They were run against teriflunomide, an effective standard-of-care oral treatment. Kesimpta has a powerful effect here that brings the relapse frequency down to an exceptionally low annualized relapse rate of 0.1 during Kesimpta treatment. These MS relapses are really the most obvious signs of MS disease activity, and the excellent outcome here is supported by the near-complete abrogation of acute inflammation that we see on brain imaging on Slide 16. MR imaging is a wonderful tool. It visualizes the actual end-organ damage on the brain due to multiple sclerosis. And in that sense, it's very sensitive and also really meaningful. We can focus on 2 measures during the presentation here, and one is -- and that's on top of the slide, is the active or gadolinium-positive lesions, and the other is the new T2 lesions. The new T2 lesions, they really indicate the silent disease progression and the gad lesions. They are relapses that you only see on MRI essentially. So with respect to the acute lesions here on the upper half of the slide, there's an almost complete abrogation of acute lesions. There's a 94% and 98% reduction with Kesimpta compared to teriflunomide. And below on this slide, you really see the same pattern for the new lesions. Again, the effect is really strong, and there's a more than 80% reduction versus the comparator. To patients, this means that Kesimpta does not only control the clinical attacks, which in multiple sclerosis are really just the tip of the iceberg. But Kesimpta also controls the silent brain inflammation due to MS. Of course, what we also try to accomplish in these trials is to show the impact on actual disability worsening or progression, which is challenging. More often than not, it doesn't work out against an active comparator. With Kesimpta, however, this did work out, and the effect on disability worsening is displayed on Slide 17, and you will see that the effect on disability is strong. So here on Slide 17, looking at the capital markers for confirmed disability worsening, or CDW, for the 2 treatment arms, and Kesimpta is the dot in dark blue. On the left side, you're looking at disability worsening confirmed after 12 weeks. And on the right side, it's confirmed after 24 weeks. And the 24-week criterion is more robust when it comes to the assessment of disability progression or disability worsening. In terms of the risk reduction, we're looking at a 37% risk reduction for the 12-week definition and an even stronger 47% reduction on the more rigid criterion of 24 weeks confirmation. The analysis that we used here on the slide, and I really want to point that out, is exactly -- used exactly the same criterion that was used in the pivotal trials for Ocrevus. I would generally disencourage -- discourage any across-trial comparisons for methodological reasons, but we are aware that some of you find such an approach informative in the past. And so the analysis here should hopefully be quite useful. On Slide 18, we are looking at a criteria that is called no evidence of disease activity. In clinical routine, when you're assessing patients, you're really not just interested in one parameter in isolation, let's say, relapses. So rather than looking at an outcome in isolation, patients are being assessed by taking various outcomes into consideration. And a frequently used compounded measure for this is called NEDA-3 or no evidence of disease activity 3. NEDA-3 is a compounded measure that combines the clinical and MRI outcomes of MS. And if a patient meets this NEDA-3 criterion, this patient has no relapse, and the patient has no MRI activity, and the patient also has no disability worsening. So in such a patient, the disease is really halted. And that is an outcome that nowadays you -- is often aspired in clinical practice for patients with MS. So if you now look at the right-hand side of Slide 18, the results are really very impressive for Kesimpta. During Kesimpta treatment, 9 out of 10 patients have no evidence of disease activity in year 2. So on Kesimpta, these patients have no relapses, no MRI activity and no disability worsening. And it is 9 out of 10 patients in who this criterion was achieved and the disease was halted based on this really rigorous measure. It's interesting that this favorable outcome during Kesimpta treatment actually increases over time. So when you look at the middle graph on the slide that is for the first year, from left to right, you can see that the results are actually getting better. And the long-term outcome here for 9 out of 10 patients is really very compelling. And of course, that's very important for MS as a chronic condition that requires long-term treatment, if not life-long treatment. So now how about safety? While we see striking superiority here and powerful efficacy of Kesimpta clearly, it's compelling that at the same time, we're looking at a safety profile that is favorable and quite similar to the active comparator, the oral standard-of-care treatment, teriflunomide, and that's what we are displaying here on Slide 19. We really don't need to look at all the details here on the slide. But what we are essentially showing here is the adverse event profile separately for the 2 trials. The display separately is -- makes it easier to identify any patterns and see consistency of the data. And on this table, overall, there are no striking differences for any adverse event that we have assessed. With some MS treatments, there are concerns regarding infections, so maybe we have a look at that first. There's infections overall and then have serious infections a little bit further down on the table. And the number shows similar frequencies and no systematic differences across the trial. In addition, we neither found qualitative differences or patterns for specific types of infections. We saw systemic injection reactions on both Kesimpta and the placebo injections in the trial. In one trial was more frequent somewhat with Kesimpta but not in the other one. You may want to note that, and that is -- I think is an important feature that there was no imbalance on malignancies with our B-cell therapy. So finally, there is one more aspect from a lab perspective that I wanted to address here, too, and this will take us back to the starting point of my presentation, which was around the selective mode of action of Kesimpta. On the next slide, Slide 20, you will see the lab findings for immunoglobulins. For the entire class of B-cell therapies, the impact of immunoglobulins is important and significant because immunoglobulins are a product of some of the B-cells that we target, and immunoglobulins are important particularly in the long run to fight infections. We actually found further evidence here for the distinct mode of action of Kesimpta and for the selective effect of Kesimpta in the immune system. And that's displayed here on Slide 20. So you're looking at the IgG on the left and IgM on the right side, and the dark blue bar is Kesimpta. So on the left, first, for IgG, you see that noteworthy decreases were actually more frequent with the comparator, and no impact on IgG levels in the long term was seen with Kesimpta, a very important finding for us staying on drug and the ability to find infections in the long term. On IgM, on the right-hand side of the slide, there were only about 10% of patients who meet noteworthy lower levels, so a really small group. In addition, we could not relate lower immunoglobulin levels to an increased risk of infections. So altogether, these outcomes are very reassuring. They do underline the selectivity of the effects, the precise mode of action and the -- overall, the favorable benefit/risk profile of the low dose of Kesimpta. Now on Slide 21, this is an overview of the highlights of the label that the FDA granted for Kesimpta with the approval. So I want to highlight a couple of things. We got a broad label for relapsing forms of MS, and that includes clinically isolated syndrome, CIS; relapsing-remitting MS; and active secondary progressive MS. The dose is low. It's only 20 milligrams in 0.4 milliliters for a once-monthly self-administration. The label, of course, features all the highly significant findings on the clinical and imaging outcomes relevant for patients and HCPs. There's no black box warning. A similar proportion of the infections were seen in both the treatment groups, and we saw excellent tolerability of the self-administered injection. Treatment initiation is easy. It does not require a visit to a clinic or institution. It can be done at home once a routine blood test is available. Overall, Kesimpta demonstrated a superior benefit/risk profile for patients. And we believe it comes with a strong value proposal for patients, for HCPs, for stakeholders, all stakeholders taking care of MS patients. Victor, I think you will elaborate further on that aspect.

Yes. Thank you very much, and good afternoon, everyone. Indeed, if we move to Slide #23. As per the profile that Norman has just outlined, we believe that Kesimpta has the potential to become the first choice for RMS patients and treating physicians in the U.S. First and foremost, because of its powerful efficacy, as Norman mentioned, patients treated with Kesimpta experienced on average only 1 relapse every 10 patient years. Relapses continue to be a key metric that people living with MS and treating physicians want to address. And then the 9 out of 10 patients having no evidence of disease activity in year 2 in that post-hoc analysis really shows the comprehensive impact that Kesimpta can have in the overall disease. That is -- on top of that, we see targeted and precise regimen with a favorable safety and convenience profile. And on top of that, we see the flexibility that comes with an improved convenience, right? And that at-home self-administration, we believe, unlocks the potential for the first-line use with a more readily available B-cell treatment. That also means for patients improved productivity, right? It does eliminate the need for appointments, travel and time away from home and work for the infusions. And as you can imagine, that is particularly relevant during these COVID times, and that's why we're very pleased to be able to bring this new option for patients during this pandemic. Now when it comes to payers, Kesimpta brings favorable economics and also budget predictability. Kesimpta is one of the lowest-cost branded DMTs in the U.S. And on top of that, and importantly, it has no added real-world costs and also markups associated with infusions, which actually brings that predictability for payers. Now if we move to Slide 24 to go into -- and zoom in into the U.S. market, we see that the high-efficacy therapies have been increasing market share substantially over the last years. But as of today, there's still around 60% of the patients who are not treated with a high-efficacy therapy. And we believe that's where a substantial opportunity for Kesimpta lies to help all these patients. We believe that the compromise of safety, convenience and access has held back greater adoption. And we are convinced that B-cell therapies in Kesimpta are expected to drive further expansion of this high-efficacy share for the benefit of patients. Now if we move to Slide 25 and we zoom in and see what is the utilization of different drugs in different lines of therapy, we will see that the potential to improve the outcomes for patients on lower-efficacy therapies, particularly in those first- and second-line therapy. You see that the vast majority of high-efficacy therapies are used and reserved for third line and then that the 85% of the population who is in first or second line are still treated mostly with BRACEs and first-line orals. And we believe that, as Marie-France said in the beginning, the early high-efficacy approach can really lead to better outcomes. But today, it's limited by compromises, right, like compromises on safety, on type of administration and infrastructure requirements for infusions. And that's why we're really excited to be able to bring Kesimpta to the market and help this broad patient population. Now talking about patients. We've also looked at patient preferences, and there is an increasing awareness of the benefits -- we see in Slide 26, increased awareness of the benefits of the high-efficacy therapy to reduce progression and to do that early and also a preference for at-home administration and maximum independence. And again, of course, that heightened since the COVID outbreak. Now what Kesimpta brings is both fast and simple initiation for patients and HCPs in their offices and also flexible at-home self-administration. For initiation, simple blood test recommended, no premedication required. And like other subcutaneous therapies, the first administration under the HCP guidance. These drugs, as usual for specialty drugs administered at home, will be shipped to patient's home for convenience as well. And then once at home, it's once-monthly at-home self-administration, takes literally 3 to 4 seconds to administer. And it's the same auto-injector we've been broadly using with Cosentyx, and we know the level of satisfaction that patients have with it. Now if we move to Slide 27. The other key factor in this launch for us in the U.S. is really patient initiation, right? And we have a depth of experience in this space in MS with initiating patients with Gilenya and with Mayzent. And arguably, Kesimpta is a much simpler drug to get patients initiated. And -- but despite that, we put all those learnings to make sure that we have a seamless experience for both HCPs, their offices and also patients. And we've done that across 3 axes. One is flexibility. The other one is predictability, and the third one being speed. When it comes to flexibility, what we know is that every practice is different, every patient is different, and they have different preferences. And that's why we will enable full electronic initiation, either broad SP network or hub for patient initiation. And when it comes to predictability, very clearly, they want to know where are they in each step of the first initiation and the payer approval status. And we will provide that with purposeful touch points with different modalities, depending on their priority -- or their preference, sorry. And in terms of speed, also keeping it simple, right? We have streamlined and parallel-pathed first initiation steps. And I'll pause here for a second for an important point as well. We will be launching with a bridge program for commercially insured patients. What that means is that physicians and patients, when they decide it's appropriate, will be able to start the drug right before even starting all the process for reimbursement for commercially insured patients, right? And we do that because we want to support our strategic choice of really going for a broad early population. And what that means is that for the first months, we will be focusing on that. And we may see a substantial proportion of the drug shipped to patients being free, and that's by design and that's part of the strategy. Finally, we will also support that easy initiation with in-office samples. Now talking about broad access, if we go to Slide 28. We priced Kesimpta very competitively to, on the one hand, reflect its unique value but also to ensure broad access, right? And as you see, Kesimpta is one of the lowest-cost branded DMTs available in the U.S. So we have 2 charts here on Slide 28. On the left, you'll see the branded self-administered annual maintenance WAC price. And you see how Kesimpta is one of the lowest despite that value and that high efficacy that it delivers. And then if you compare it, of course, with infusions, we've put a different scale because that's a different reimbursement system, as you know. And Kesimpta, and as the other self-administered drugs, does not have added real-world costs and markups, right? We don't have the costs associated with the visits, with the premedication, but also the markups associated with these infusions that are high or very high and are variable, depending on the centers, but that also includes substantial unpredictability for payers. Now in a nutshell, and Marie-France mentioned this, of course, we're launching into a special environment, right, into a COVID world. And on the one hand, of course, we believe the unmet need for a drug like Kesimpta is heightened because of the current circumstances, and therefore, very excited to bring this drug immediately to patients in the U.S. Now on the other hand, of course, we know that we're launching into a different environment and uncharted territory in many ways. But over the last 2 years at Novartis, we've embarked on a digital transformation journey that has set us up with a strong foundation for the last 4 or 5 months. The team has done a phenomenal job on top -- based on that foundation to enable us for success across 3 axes, again, HCPs, patients and also the patient support service. So for HCPs, the key challenge may be that the face-to-face engagement may be limited for a while. And that's why we've deployed an adaptive digital and field force engagement. So we have amplified the nonpersonal promotion channels well beyond the typical e-mail and website but through novel social media platforms. We have an AI engine developed in-house that enables rapid adaptation of the content and the promotional mix by HCP to make sure that each HCP receives information where they want to digest it. And for example, each HCP, we have assigned a digital affinity score to understand what is the best way to digitally interact with them. Now when it comes to patients, it's also a matter of dynamic and customized content, right? We also have developed in-house advanced analytics to identify patients at the key decision-making windows. And we will be delivering tailored content, educational content that is relevant for them at their point in the MS journey. And finally, on the patient support service, we will also be able to initiate patients, addressing different offices, preferences, including this full electronic initiation. So in a nutshell, despite the environment, despite COVID, we're very excited to bring Kesimpta to patients. We believe its powerful and sustained efficacy that can be delivered from the flexibility and safety of their homes is a unique value proposition in this time. And the team is ready and excited to bring this to patients. And with that, I'll pass it over for -- to Marie-France for the concluding remarks.

So you've heard from Norman and Victor, and as a conclusion, we believe that Kesimpta has the potential to be first choice for all of our customers and stakeholders. So by that, I mean physicians, payers and patients. First of all, we're delivering powerful efficacy. And that's key, and it's going to be more and more key as time goes on. We heard about the fact that patients treated with Kesimpta experienced on average of 1 relapse every 10 patient years, and that's really game changing. We also know that 9 out of 10 patients had no evidence of NEDA-3 in the year 2 post-hoc analysis. We've also got a broad label, and this confirms the high efficacy and the favorable safety and tolerability profile that we want to bring to patients. It's an at-home self-administration. You heard about the Sensoready pen, which is particularly relevant in this current environment. And third, we're very keen to ensure broad access. B-cell therapy is available, but it's been available in infusion centers and to a limited number of patients. Now for patients, we have a flexible once-monthly at-home administration. For physicians, we want to unlock the first-line use in a broader group of patients and in a more convenient environment. And for payers, with no real added costs and markups associated with infusions, we feel that we have a strong value proposition. So we're ready to launch. We're pioneering an adaptive, hybrid approach in the U.S., and we'll take those learnings for our future launches across the globe. So that...

Great. Thank you very much -- sorry. Thank you very much for...

So I think we're open for questions.

Yes. Operator, we're open for questions, please.

Your first question came from the line of Elizabeth Walton from Crédit Suisse.

I have 3. Firstly, on the market dynamics. Earlier, you mentioned in the slide that you show about 1/3 of patients in the U.S. and 44% of patients in Europe are switching therapies. Perhaps you can help us understand the switching dynamics in a little bit more detail. How frequently are individuals switching therapy? It seems to us patients taking interferons, for example, are likely to have been on them for many years. So is it the same proportion of patients are switching and never satisfied? Any comments there? And then on your commercial execution, I have 2 questions. Firstly, on the structure of your sales force. Perhaps you could comment on how it's structured, particularly as it relates to Mayzent and Kesimpta. And are they going to be competing for the same patients? And secondly, at a payer level, are you able to offer payers an overall volume discount that covers your 3 MS therapies: Gilenya, Mayzent and Kesimpta?

Thank you very much, Elizabeth. And perhaps it's best if Victor answers both sets of questions on switching dynamics as well as the commercial execution questions.

Yes. No, thank you very much. Look, on market dynamics, the 1/3 of the patients switching means in a given year, 1 in 3 patients either start new therapies or switch therapies, right? It's also the naive population that, as I showed in one of the slides, is a substantial portion of the market as well. The main reasons for switching are either lack of efficacy, lack of safety or lack of convenience, right? So it's a combination of all those 3. And that's why with Kesimpta, we have a unique profile that we think can help patients early on before they start accumulating disability, before they start accumulating relapses so we can really bring this powerful and sustained efficacy to patients early on. Now in terms of the structure of the sales force, we will have different teams promoting Mayzent and promoting Kesimpta, right? And we don't see those as competing profiles because, actually, Mayzent is the only drug that has proven to delay disability progression in secondary progressive patients who are advanced, we're talking EDSS of 5 and more, and repositioning us for the broad label we were granted by FDA to help those patients who are starting to show the first signs of progression, right? And here, in contrast with Kesimpta, is really that early population, right, either naive or first switch that need powerful efficacy right from the get-go. Now in terms of the payer dynamics, what I can tell you is that we had very fruitful discussions with payers early on that we feel strongly about achieving broad and fast access in this space. We have strong experience doing the same for Gilenya and Mayzent. And therefore, we feel strongly about the access we will be achieving. So that we can support this strategy, right, of helping patients, we need access for unrestricted or first switch positions, and we are confident that we are on a good track to achieve that.

Thank you very much, Victor.

The next question is from Graham Parry from Bank of America.

So just continuing actually on the commercial side of things. So to what extent did the PDUFA delay mean that you've missed some contracts for contracting window for 2021? And to what extent do you expect to be on both commercial and Part D formularies this year, 2021? Or may some Part Ds need -- actually have to wait till 2022 given that they tend to run on an annual contracting cycle? Secondly, given the bridging patient coupons, sampling programs initially, what proportion of this year's volumes do you think would actually be paid for? And when do you think this would become a profitable drug to Novartis? And then finally, just to what extent do you think the cost of infusion with Ocrevus is an issue for payers? And do you think that's one of your cost advantages for Kesimpta?

Thank you very much, Graham. And perhaps, sorry to go back to Victor for all 3 questions as they all relate to commercial in the U.S. Would you mind covering them, Victor? So first of all...

Yes -- sorry. Sorry, go ahead.

Go ahead. No, go ahead. Go ahead, Victor.

No. Thank you very much, Graham, for the questions. Look, I can bundle the first 2 ones in terms of access and bridging and sampling. So in terms of window, we don't think we've missed a window here. We're having ongoing discussions for both commercial and Part D. As you know, 70% of the patients in this space are commercial, and that's where we have a strong focus right now. And we will continue to work with payers as we speak. Now in the meanwhile, that's why we also have a strong and aggressive bridging sampling program, right, because we want to make sure that, that is not a barrier for adoption for whenever there's an appropriate patient. Now I won't comment on specific percentages, but I can tell you that it will be a substantial portion in the first months of free versus paid drug. And that's, again, by design and as part of the strategy. And then we will see as time evolves, particularly next year, that transitioning into paid drug and, overall, turning and delivering the full potential of Kesimpta in the longer term. Now when it comes to the cost of infusion for payers, it is something they're concerned about given its variability, right? As we know, these infusion costs vary significantly. They're high or very high, depending on the infusion center. And it is an increasing concern, right? As you know, those are part of 2 different benefits: medical versus pharmacy. And there's ongoing discussions with payers. But overall, we believe, based on the discussions we've had, that the combination of this powerful and sustained efficacy with that cost predictability and the fact that it's one of the lowest-cost DMTs is an enticing one for payers. And therefore, we feel strongly about the access we will be gaining.

The next question came from the line of Steve Scala from Cowen.

I have 2 questions. What percent of patients did not receive ofatumumab at home in the clinical trials but instead had to go to a provider's office to get the drug? And how much do you think that, that will increase in the community setting, which is obviously less controlled than regulated? And then secondly, a recent publication in the Journal of Medical Economics states that Ocrevus' annual real-world cost is $75,000 a year. So that's all in. So I'm wondering, does Novartis think the attributes of ofatumumab justify the premium that Novartis is charging? So those are the 2 questions.

Great. Thank you very much. And so the first question is for Norman on the percentage of patients with home -- managed in the home -- at home in the clinical trials. And the second question, I'll put back to Victor. Norman?

Thank you for -- thank you, Samir. Thank you for the question. In the clinical program, we had about 70% of patients who received the subcut injections at home. I would think that outside the regulations of a clinical trial protocol where visits were rather frequent, so typically 3 months during the trial. In the real world, I suspect the number of patients who inject at home will be higher.

Thank you. And Victor, with respect to the medical costs?

Yes. So let me start by, irrespective of the medical costs here, we continue to see that despite the currently available options, including other B-cell therapies, there continues to be 60% of the market who is not served with high-efficacy therapy. So I wanted to anchor there to start first, and that's where we believe Kesimpta can bring significant value. When it comes to the additional costs, look, there's different numbers floating out there. And of course, it depends and it's highly variable by infusion center, right? And there's extremes for sure. The reality is that the costs are higher than at what price for infusions, from higher to substantially higher. And where -- in the self-administered side, as you know, in the pharmacy benefit, actually, what price is the least price are normally affected by discounts, right, and discounts to actually gain broader access for patients. So we strongly believe that the value proposition that Kesimpta brings with the powerful and sustained efficacy and that flexibility for the administration at home is a strong one for people living with MS, for treating physicians and also for payers.

Great. Thank you, Victor.

The next question came from the line of Keyur Parekh from Goldman Sachs.

I've got 3, if I may. The first one is, would be very keen to your thoughts on how big you think the anti-CD20 market as a whole could be as a proportion of MS patients treated either in the U.S. or across kind of on a global basis. So on a 3- to 5-year view, do you think 40%, 50% of patients might be on anti-CD20 therapy? Or do you think that might be a lot lower? The second question is as we think about the exclusivity for this molecule, given the initial approval was in 2009, I was just wondering if you might be able to remind us how long do you expect the U.S. exclusivity for this to be. And kind of what are the patterns supporting that? And then lastly, as we think about the need for monitoring on the immunoglobulin levels, how do you expect that to work in the real-world practice? Do patients kind of do it at home? Do you think patients will kind of have to go into the normal GP clinics for this? And kind of who will bear the cost of that?

Great. Thank you very much. So maybe I can take one of the questions, Keyur, which you asked about exclusivity in the U.S. It's still 2031. And that's with the current patent which we have with respect to the U.S. With respect to the total market and what proportion could be anti-CD market for relapsing MS patients, perhaps Marie-France could take that. And the last one, actually, as to what proportion of patients could we do the monitoring at home, I'll ask Victor to do that because he's worked through all of this during the launch preparations in the U.S. So for the first question, Marie-France, please?

Yes. So I believe that when you look at the direction in which the market is going today and when you -- when we talk to physicians about what they're increasingly looking for and what they're increasingly comfortable with, it is exactly that therapy, that efficacy that they're looking for. And what we also know is that the B-cell therapies are, by far, providing that level of efficacy. So currently, we've seen Ocrevus being incredibly successful in the marketplace because they offer a value proposition which is strong when it relates to efficacy. What we believe is that with Kesimpta, we basically offer a therapy that eliminates some of the further trade-offs that some physicians and patients have to make. So the belief is that the B-cell therapies will be a cornerstone of therapy for first line and for switch, again, looking at the immense population of patients that is still on low-efficacy therapies. So to answer your question, B-cell therapies has to be the cornerstone, and Kesimpta has to play a major role on that given the efficacy, the safety and the at-home administration, which is incredibly simple.

Thank you, Marie-France. And then Victor for the monitoring possibilities for monitoring at home.

Yes. Let me start by just clarifying that it's not monitoring required for the initiation of this drug, right, contrary to what happens with other therapies. I mean what the label states that it needs to be administered under the guidance of an HCP. And we expect that to happen at the selection of the HCPs, right? This is exactly the wording that is in other subcutaneous -- the drugs delivered by an auto-injector. It's the same wording we have with Cosentyx. So we don't see that being a challenge at all.

Thank you, Victor. So in other words, we will be able to monitor patients at home. Great. Thank you.

The next question from Tim Anderson from Wolfe Research.

A couple of questions. Doesn't every branded MS drug in the U.S., old and new, suddenly have a new pricing and market access issue now that Tecfidera generics will begin to show up? I would imagine that impact will be greatest on orals, of which you have a couple, but it also seems like could have a ripple effect on injectables and infusions, too, that commonly sit downstream of orals if more step edits are put in place. And can I get the team's view of the BTK inhibitor class for MS? They have the potential to be high-efficacy oral therapies, at least based on early, small data sets. What are your views of this mechanism? And what do you think the potential liabilities or weaknesses are, if any?

Great. Victor, on -- perhaps could take the question on the impact of a potential Tecfidera generic. And I'll ask Norman to talk a little bit about what his knowledge is with respect to the BTK inhibitors. Victor?

Yes. Thank you. Yes. No, thank you very much for the question. The potential introduction of a Tecfidera generic can, indeed, as you said, have impact on products sitting downstream from [ TAG ], right? And here, our priority is really to bring this powerful efficacy to the early lines of therapies to naive patients or first-switch patients, and that's where our discussions with payers are occurring. So we see the 2 drugs from completely different classes and completely different profiles. And as such, we are confident that we will be able to serve a broad population in early lines of therapies.

Thank you. And Norman, the question on the BTK inhibitor.

Thank you, Samir. Thanks for the question. It's a great question on the future landscape for MS treatments really. I think from our perspective, the B-cell treatments will somewhat dominate this -- the future of treatment paradigm. And when you look at Kesimpta, for example, it's a powerful treatment. It's self-administered, and it meets all requirements to really lead this -- be leading for the treatment of relapsing MS. The relapse reduction is really profound. We talked about the MRI effects, almost an abrogation. So I think it's hard to imagine that a future treatment option for relapsing disease could beat the B-cell class or Kesimpta as the only self-administered treatment in the class. As you said, the current data for the BTK inhibitors are somewhat limited, I think have been moderately effective, I would say, in the respective Phase II trials. They don't seem to be as effective as ofatumumab, Kesimpta. I think -- I'm confident when I compare these results to our results to say that now. So I don't think that we should fear future market entries of BTK inhibition.

Thank you. Thank you, Norman.

The next question came from the line of James Quigley from Morgan Stanley.

So I've got a couple. First of all, of the switches and the new patients, can you tell us what proportion of those are going on high-efficacy therapies, particularly if you have a breakdown between antibodies and the other high-efficacy therapies? Secondly, on the shift to first line, so it's not really a new concept that the high-efficacy therapies get better outcomes. We sort of heard that back into the 2015 ECTRIMS. So is there something else that's really driving the sort of the limited penetration in earlier lines? Is it more of MS doctors are a bit more cautious and they'd like to start on the new therapy with the later patients, and then it could be a couple of years before you really see penetration in first line? And how would you potentially overcome that? And then a quick follow-up on Keyur's question. So on Keyur's question, it was on the reduction in immunoglobulins and monitoring there. So how does that work in the real world? Does the patient have to go into the hospital to have it monitored? The label says to monitor at the beginning, during and after discontinuation of treatment. So how often would that actually happen in the real world?

Okay. Great. Thank you very much. For the first 2 questions, I think, about high efficacy and the percentage of patients, switchers versus new patients, as well as the second one about why has high-efficacy therapies not taken up as much, noting what had happened in 2015 with ECTRIMS, perhaps Victor would be the best person because, just for people who are not familiar with Victor's background, he did, many, many years ago, launch Gilenya in Spain as well. So he was aware of what's going on in the marketplace. So Victor, if you could take the first 2 questions. And with respect to immunoglobulin monitoring, perhaps Norman could take that. So Victor?

Yes. Thank you very much, Samir. Thanks, James, for the questions. As -- we saw the vast majority of patients in this market are naive, are first line, right? And then you have around 33% of the patients who are currently on a second line. And as you can see -- I mean, as of today, only 16% of those patients in the second line are being treated with a high-efficacy therapy, right? So you see that the vast majority of switches still occur from a BRACE or a first-line oral to a BRACE and a first-line oral. And that is actually tied to your second question on why do we still see -- and actually, the overall metric is that do we still see 60% of the patients not being treated with a high-efficacy therapy. And we strongly believe that it's because there's still the ongoing trade-off that has been historical in this market, where treating physicians and patients had always to make a trade-off, right? Initially, it was a trade-off between efficacy -- high efficacy and safety or vice versa, right? Do I start with a safe drug and then improve -- go to a high-efficacy therapy? And now today, on top of that, the one with convenience. So we believe we can break that dynamic and continue to expand the B-cell class but actually bringing Kesimpta to market that we like to think breaks all these trade-offs and does allow for a high-efficacy therapy to be used comfortably in early lines of therapy.

Great. And Norman, the question about immunoglobulin monitoring.

Yes. Thank you. So for the immunoglobulins, it's routine blood test that is already applied to many patients on disease-modifying treatments and certainly for those who are on B-cell drugs. So I think it's nothing out of the extraordinary to actually do -- very simple to do that. I think in the real world, I would expect that this is something that GP or appropriate doctors can do and wouldn't be the MS specialist clinic taking care of that given the fact that the patients are self-administering and they don't have to be seen in any institutions or in any clinic. When you look at the actual label, there's no specific recommendation. So the wording is -- leaves a lot of decision there to the HCPs and the patients when to actually do the test. And so in that sense, I think it's positive and absolutely manageable in clinical routine. And then lastly, when you look at the actual data, that data actually also doesn't promote frequent testing really because on the IgGs, for example, which are really important for the long-term ability to fight infections, we did not see any decrease at all. And then there's only a small fraction of patients who have IgM decreases. So from a clinical perspective, the data is by no means any alarm, very reassuring will not prompt any more frequent testing.

Great. Thank you very much.

The last question came from line of Graham Parry from Bank of America.

One follow-up question. Apologies to go off-topic, but a question for Marie-France, actually, just on the exclusion of Cosentyx from the Express Scripts national formulary. Just wondering what percentage of Cosentyx is going through that formulary. How much do you think you can retain with patient assistance, couponing, et cetera? And do you think you can offset some of that lost volume with exclusivity wins in other formularies, if that's the route the market is going down there?

So perhaps I'll start, and then I'll hand it over to Victor as well. So we know this is a very competitive environment, and we're always balancing revenue with access. And as we go through these negotiations, that is something that we absolutely take into account and are working with our local teams and obviously with payers. So these are really well-thought-out decisions that are taken, and that obviously affects our business and our access. So we do take them extremely seriously. Again, it's always a balancing act. We know this is a very competitive market space. You will continue to see this type of news going forward for all of the medicines that are in this category. But perhaps, Victor, you want to specifically make a comment on ESI.

Yes. No, thank you. I'll start by saying that Cosentyx has continued to exhibit market leadership in immunology, including access leadership as key part of our strategy. And this will not change with this decision. Specifically, ESI's current decision to place Cosentyx on the exclusion list on its national preferred formulary is only limited to a portion of the total ESI business. And as Marie-France stated, this was a carefully thought-through decision, one that we feel comfortable with. And we feel comfortable about our ability to continue to pull through Cosentyx next year.

Great. Thank you very much, everybody. And for all of the people who actually participated on the call, have a great weekend. Thank you for taking the time to listen to us. And for our speakers, a big thank you as well. Enjoy your weekend.

Thank you, everyone.