Novartis AG (NOVN) Earnings Call Transcript & Summary

Good afternoon. Welcome to the 39th JPMorgan Healthcare Conference. I'm Richard Vosser, European pharma analyst at JPMorgan. It gives me great pleasure to introduce Vas Narasimhan, CEO of Novartis, for this presentation. Before I hand over to Vas, I'd remind you that if you would like to ask a question during the Q&A portion, and you can use the Q&A function at any time on the associated section of the website, and I'll read your question out at the appropriate time. With that, I'd like to welcome Vas to the conference. Vas, over to you.

Thank you, Richard, and thanks, everyone, for joining today. I'd like to give you an update on our progress on our strategy for Novartis and give you some of the insights on how we progress over the recent years on delivering both on our operational performance but, more importantly, on our longer-term strategy to deliver consistent growth, consistent innovation and be a leading medicines company continuing to reimagine medicine. If you move to Slide 3, we're on a journey to transform our company. We set out a clear strategy in 2018 to focus our company and capital, accelerate certain geographies and strengthen our core therapeutic areas alongside 5 strategic priorities, which I'll walk you through a little bit later in the presentation. When you look at the recent years, we've been successful to date in making progress at transforming the company. We are 100% focused medicines company today. We are achieving record high-engagement scores in terms of our culture. We've developed a leading pipeline. And that consistency in our pipeline, I think, really shows that we have the replacement power and growth power to grow in the medium to long term. We continue to generate solid cost savings. And we're becoming a leader both in data and digital and with respect to ESG, a critical priority for the company. Moving to Slide 4. When you look at how that's translated into operational performance, we've delivered consistent sales growth over the last 3 years, consistent core operating income growth in the last 2 years of really trending towards double-digit core operating income growth; and importantly, consistent margin progression, showing that in innovative medicines as of Q3 2020, we had already reached 36.3% in the 9-month period in terms of our margin, delivering against our goal of getting to the mid-30s in the medium term. And I'll talk a little bit more about our future margin guidance. Moving to Slide 5. We've also tried to do our part with respect to a robust response to the COVID-19 pandemic. First and foremost, we took an associate first approach in how we approach the pandemic. We've prioritized job safety. We prioritized providing our associates a flexibility, a global choice with responsibility program that gives associates the freedom to decide how they want to work even after the pandemic and many efforts to support associate well-being. We also tried to do our part with respect to patients and health care providers and including efforts both to develop therapeutics as well as supporting many of the collaborations that are ongoing. And we also tried to work in supporting society both through donations and other efforts. So taken together, we did our part. We want to be part of the solution and, of course, look forward to hopefully helping the world move beyond this pandemic over the course of the coming year. Now I'd like to turn to our strategy and where have we strategically positioned Novartis. Moving to Slide 6. We focus the company -- here, you see a grid, which looks at the market capitalization on the y-axis of our peer set and whether or not the revenues primarily come from medicines or come from a diverse set of health care businesses. You can see today Novartis is a scaled medicines company focused on medicines, continued exposure to generics through Sandoz. But right now, we've been able to go on this journey of focusing the company through a broad range of transactions and build a company that we believe is well positioned for the future. Now moving to Slide 7. In order to execute that journey, we've done over 80 major transactions and partnerships. And when you look at the list here on top of 80 also divestments and out licensing, a broad range of efforts to focus Novartis on the one hand, but then also to build technology platforms that we think that will enable us to be successful over the longer term. Now moving to Slide 8. What has that resulted in? When you look at Novartis today, we believe we present investors a differentiated profile. We're diversified across both geographies and therapeutic areas. Working across this chart, you can see Novartis today participates in 10 TAs as defined by EvaluatePharma, which gives us exposure to adequate numbers of therapeutic areas to grow a company that's approaching $50 billion in sales. Our top-selling drug only accounts for 8% of our sales, so we have limited binary exposure to any one medicine. We have over 15 blockbusters in our portfolio, and we have exposure to all of the major advanced therapy platform that we believe that will shape our industry in the decade to come: cell therapy, gene therapy, radioligand therapy and, of course, RNA technologies. And lastly, with respect to geographic diversification, we're balanced across geographies without outsized exposure to any one geography, particularly at the moment without outsized exposure to U.S. pricing risk. Now I want to walk you through how we're making progress on each of the 5 priorities that we set out a few years ago. Moving to Slide 9. We have a goal to unleash the power of our people; to create an inspired, curious and unbossed organization. And we track this rigorously through data analytics, through pulsing the organization with a range of surveys to really ensure that we're measuring the progress that we're making. As you can see here with respect to engagement, we continue to trend higher and higher with respect to the pharma benchmark, now approaching the benchmark for the best places to work across any industry. In terms of growth and learning, our efforts with providing learning opportunities through Coursera, LinkedIn Learning and other related tools has enabled us to exceed the benchmark in terms of our associates feeling in terms of our investing in their growth and learning. And lastly, our unbossed philosophy, empowerment -- empowering leaders. You can see our manager effectiveness continues to trend as well above the global benchmark. So across all 3 of these areas, we make important progress in terms of our cultural journey. Now moving to Slide 10. We also continue our development of a leading pipeline, I think, by most measures with respect to our competitive set. In terms of the scale of Novartis' pipeline and 116 projects in Phase I and II, 49 projects in Phase III in registration, over 65 NMEs somewhere in our pipeline. We continue to build a leading portfolio in advanced platform therapies with over 20 projects, which I'll talk about on the next slide, and also continue to pivot to being first-in-class, first in indication wherever we think it makes sense. Taken together, when you look at the EvaluatePharma data, you see that our replacement power for 2020 to '26 ranked second in the industry. Then moving to Slide 11. In 2020, we advanced that innovation agenda. We have multiple major approvals, including Leqvio, our siRNA for hyperlipidemia, which was approved in the EU; Kesimpta, which was approved for MS in the U.S.; and Zolgensma IV, which continues to be approved in multiple jurisdictions around the world. You can see a broad range of major approvals. We also delivered major submissions and continued a steady flow of major readouts. Now moving to Slide 12. In 2021, we expect to continue to have important catalysts, which will continue to show that we are delivering on our innovation agenda. We will provide more updates on specific time lines for some of these catalysts at our full year earnings in a few weeks, but some of the things I want to highlight are approvals for Entresto half after a positive advisory committee meeting that we had in December; the continued advancement of Leqvio and Kesimpta in more geographies; multiple major submissions, assuming positive readouts for medicines such as canakinumab, if positive, as well as Lu-PSMA and MBG; and then a range of major readouts in the late stage portfolio, not listed here is the continued progress we expect to see on our mid- and early late-stage portfolio. Now turning to that topic on Slide 13. At our recent Meet the Management, we highlighted key assets that we think will drive our growth, not only through 2025, but also beyond. Five major life cycle management efforts, one I'd want to highlight is our continued efforts with Kisqali in adjuvant breast cancer. We've expanded that study to give us the best chance possible with the differentiated profile that we have with Kisqali, its strong affinity for CDK4, which we think is really the driver of the efficacy of these medicines. In pharmaceuticals, 5 major projects that we're going to continue to provide updates on iptacopan, our leading factor B inhibitor. You can see some of the other medicines here. We also announced an effort with branaplam in Huntington's disease. And in 5 major oncology assets, including a leading first-in-class SHP2 inhibitor as well as a cRAF inhibitor, amongst others. We will also continue to provide updates on wildcard assets that we have in the portfolio. I think given the breadth and depth of Novartis' innovation engine, we'll always have these kinds of wildcard assets such as LNA and attempt to regrow cartilage in osteoarthritis or our efforts with CSJ and inhaled TSLP for asthma. We're also continuing to advance our strength in our advanced therapy platform program across gene therapy, cell therapies and radioligand therapies. As you can see here on Slide 14, from an R&D standpoint, a broad pipeline in each one of these areas. I think, importantly, we have scaled manufacturing and manufacturing that has cleared regulators around the world to provide these technologies and medicines to patients. You can see in gene therapy with over a million square feet now of capacity; in cell therapy, 3 major facilities and a broadening range of facilities in radioligand therapy. And of course, with our lead asset in each one of these areas, we continue to garner multiple approvals and continue to advance the reimbursement of these technologies. Over the longer term, I believe, we believe, a company like us has to be at the cutting edge of these kinds of technologies, scale them, build a leading position and then become the partner of choice to really scale partners technologies when using these kinds of technology areas. Now moving to Slide 15 in terms of our operational execution in 2020, continue to have very good performance of our growth drivers even in the context of a pandemic. Certainly, the pandemic took its toll in certain therapeutic areas, particularly ophthalmology and in dermatology. But you can see Entresto growing close to 50%, solid growth for Zolgensma, Cosentyx, Promacta. And we continue to work to deliver our major upcoming launches. As you can see here, we have a range of upcoming launches. Organization is fully primed to deliver those launches and deliver those launches in the context of the pandemic that we all face. Now moving to Slide 16. One of the things I've been very happy with is the pace at which we've been able to deliver our Novartis technical operations and Novartis business services transformation. In Novartis technical operations, we've successfully reduced our asset intensity with exiting sites, reducing our warehouse footprint and carving out infrastructure where appropriate to have third parties deliver infrastructure to our facilities. We continue to advance standardization and technology in our sites. We continue to really build leading capacity, not just in cell and gene therapy, but also now in RNA therapeutics as well. In business services, you can see some of the metrics here. Our effort -- our ongoing effort is to get to a fourth generation business services organization, one that we would -- we believe would be competitive with business service organizations across any sector. These are the engines of that margin improvement that you've seen that Novartis has consistently delivered, delivering $2 billion of savings over the recent years. Now moving to Slide 17. As I mentioned earlier, we have been delivering on our margin commitment. And given the momentum we see, both with respect to productivity and cost savings, but also the sales momentum we see in our key growth drivers such as Cosentyx and Entresto, which don't require incremental M&S expense, you can see that we've now upgraded our margin guidance at our Meet the Management meeting in November to reach high 30s in the midterm. Now moving to Slide 18, the last few areas I wanted to touch on. I'm going big on data and digital. This, of course, is critical for companies across any sector. And certainly, in our sector both from an operational standpoint and innovation standpoint and a partnership standpoint, we want to be a leading digital player within biopharmaceuticals. We're scaling our major digital lighthouse efforts. We're continuing to make the company digital through building a large community of data science and artificial intelligence experts. we've launched our biome effort around the world to become a leading partner in the ecosystem, and we are advancing our partnerships with companies such as Microsoft, AWS and Tencent. So moving to Slide 19. One of the things I was very proud about in 2020 is the efforts we made to improve our standing from an ESG perspective, both from a ranking and rating standpoint, where in many of the key indices now, we are ranked at the top of our peer set or relevant peer set in terms of the way we're approaching ESG. But in each one of the areas you see listed here, we've set ourselves bold goals. We track ourselves annually, and we transparently provide those annual goals, and we hold ourselves accountable to deliver against them. Some of the highlights you can see here from a pricing and access standpoint, we issued the first sustainability-linked bond in the industry tied to access to medicine with the goal to increase patient reach by 200% in the relevant markets. We also committed to increasing the reach of our flagship programs by 50%. We've committed to be fully carbon plastic and water neutral by 2030, and we are publishing annual targets to deliver against our march to get to that goal. So this isn't just a long-range goal, this is something operationally we're delivering against. And we continue to invest in providing transparency to investors and providing the best information we can to ESG investors to make the right decisions. So moving to Slide 20. Taken together, we currently look at an analyst outlook -- consensus analyst outlook of a 4% growth rate out to 2025. We expect to consistently be able to deliver top and bottom line growth through this period. You can see we also see a consensus margin expansion up to 37.6% from 33.5% today. We believe we have the productivity levers and the growth drivers in place to deliver the numbers you see on the slide. And hopefully, with the delivery of our pipeline and the over-delivery of our growth drivers, can aspire to do even better. Now moving to Slide 21. In conclusion, I think you've seen, we're executing on our strategy. We're not perfect. We make mistakes. But I think when you take it in total for a company of our scale and the transformation that we're aspiring to undergo, we've delivered very strong operational performance, and we've positioned the company as a focused medicines company with a differentiated profile. We've made progress across all of our 5 strategic priorities. And I think what makes Novartis unique is when you look at all of the pieces together on this slide, when you see a company that has the clarity of where it wants to play in terms of technology, in terms of therapeutic areas, in terms of geography and has an integrated approach across 5 strategic priorities it's delivering against, knowing that these 5 strategic priorities are the key to really deliver long-term sustainable growth for the company but also for society and the patients and physicians that we serve. Thank you very much, and I look forward to taking your questions. Richard?

Thanks, Vas. [Operator Instructions] So there are 3 already. So I'll go through those, first of all.

The first one is asking about your strategy for in-licensing assets. So you highlight -- and maybe I'll broaden that. You highlighted a lot going on in terms of developing the portfolio in Novartis. What can we see going forward? How are you thinking about that as we go into 2021?

Over the recent years, we've had an approach of, of course, continuing the licensing efforts. So we've also had a bolt-on M&A approach. And I think one of the adjustments we're making is we're taking a much more opportunistic view in terms of thinking about bolt-on M&A versus a "programmatic view." We believe we have the assets and R&D capabilities in-house to drive our growth agenda, and now much more our focus on acquisitions of technologies, of earlier-stage companies, of a broad in-licensing efforts across a range of different therapeutic areas with a mind to saying, are there gaps we can fill in terms of mechanism of action or therapeutic area gaps that we need to close or are there technologies that we could bring in-house that either strengthen a portfolio like cell therapy or gene therapy or add something new to the mix. So I think we want to be much more focused and targeted in how we approach BD&L and M&A going forward.

Next question is on SMA and Zolgensma, and the person is asking the percentage of newborn SMA people or patients getting Zolgensma in the U.S. now.

Yes. So I don't know that number off the top of my head. What I can say is that, in general, in states that have newborn screening, Zolgensma tends to have a very high proportion of patients. And what we saw over the recent years is we had a very rapid rise up to 65%, 70% of newborns in a state that had newborn screening. We saw with the pandemic a slowdown in the expansion of newborn screening coverage, of course, very understandably. We're hopeful that in 2021, we'll get up to 90% plus of newborn screening coverage. And we think it stays with newborn screening because of the therapeutic benefit Zolgensma delivers. When given early in the course of the disease, Zolgensma will do very well in states that have those newborn screening programs.

And there's another question from a gentleman that's linked to that, is talking about the clinical hold beyond the type I patients. And he is asking, what does the FDA need to see to remove that clinical? What's the update there?

So with Zolgensma in the intrathecal formulation, we were -- for the benefit of the broader audience, we were placed on clinical hold due to preclinical findings of a very limited DRG or dorsal group ganglion degradation that we saw in monkeys that were in this uncontrolled experiment. So the FDA asked us to conduct a GLP, that said, it was not done under GLP toxicology study, to look at the impact of Zolgensma given intrathecal or AVXS-101 intrathecal on nonhuman primates. That study is ongoing. We would expect to have a data readout from that study in the midpart of 2021. We'll then provide the data to FDA. And assuming it's clear from a preclinical standpoint, we would then be able to progress to an intrathecal study. Now importantly, the FDA has asked us to do a confirmatory intrathecal study, so that would be the next step. Once we're off of clinical hold, we would then move as fast as we can into an intrathecal study. We're in discussions with FDA to understand exactly what their expectations are for that kind of controlled clinical study. I think we've seen more broadly in gene therapies that FDA now is requiring more that -- more often than not that properly controlled late-stage studies are conducted with novel gene therapies.

Makes sense. A question here on Sandoz, which was -- the person is saying, there was little said in the presentation on Sandoz, so they are wondering about the strategic priorities of the division and also about biosimilars. Their question is more biosimilars in the plan, but maybe I'll broaden that and say you've had -- maybe you could talk about the success in Europe and how we should see that moving into the U.S. and then the next steps for biosimilars as well.

Yes. So Sandoz is a critical part of Novartis, and we're absolutely committed to the business and investing for the long term to make the business successful. We've got a great leader -- new leader in who's now been an enrolled for a year, really focusing again on being a core generics player with a leading biosimilars portfolio, leading oral solids, leading injectables portfolio. When you think about where we want to get to with Sandoz, we outlined at our Meet the Management Day, we want to see a Sandoz that can grow consistently in that mid-single-digit range in the medium term and get its margins up to the mid- to high 20s in line with the top end of the peer set. So that's the direction of travel. Now in order to get that, there's 2 really critical portfolios that we'll be focused on. One is biosimilars, as Richard noted. We've been very successful with biosimilars outside of the U.S., number one, in terms of biosimilar sales. And our goal right now is to be, hopefully, at market formation for the next wave of potential biosimilars, both in the Europe, U.S., Japan as well as other critical geographies. Those will really start coming off patents or off potential market formation in 2023, '24 time period. Very much focused there. The other element of the story is to strengthen our in-house engine to get first to file in both injectables and oral solids, particularly in the U.S. market, where I think, historically, we haven't had the performance, we ideally would have wanted. I think if we can get those elements in place and continue the productivity efforts I outlined, we can get to that midterm goal that we've set out for Sandoz.

Excellent. You talked about the SHP2 in your presentation. There's a question here about new growth opportunities in oncology and thinking about potential areas to grow. You also touched on adjuvant for Kisqali as well. So maybe on those and then other opportunities and how we should think about the growth in oncology.

Our oncology portfolio, we believe, is unique in the industry and that we have 4 pillars that we simultaneously pursue. Targeted therapies, where Novartis has a long legacy going back decades, continues to be an area of intense focus for us. Hence, we have molecules such as the SHP2 inhibitor and/or also the cRAF inhibitor I mentioned, amongst others. ABL001 recently had a positive readout. We'll be moving to file that medicine -- a follow-on medicine to Gleevec and moving that into earlier lines. We recently had BYL, another example of a targeted therapy. So I think our track record in targeted therapies is very strong. And you'll see, hopefully, with some more positive proof of concepts the opportunity to expand our portfolio in targeted therapies in the coming year. Second pillar is in cell therapies, where, of course, we were a pioneer with Kymriah. And our focus right now is to move to a next-generation approach with respect to manufacturing in cell therapies with the idea of can we improve the throughput in our manufacturing facilities and also increase the speed and maybe also the efficacy of these products. That's very much in focus, and I expect over the next 18 months for us to continue to advance both in blood cancers, where is the primary area of focus at the moment, but let's see if some of the newer technologies may also lead to positive readouts over time in solid tumors. The third pillar is in immuno-oncology, where we continue to have a few assets. We have our TGF-beta, which we take forward. We have our own in-house PD-1, which we also have in a few clinical trials. And we'll continue to see, can we find an additional immuno-oncology agent, which can deliver incremental single-agent activity and hopefully combination activity. One molecule we would argue is an immuno-oncology debate, Richard, maybe there's already which is secukinumab, which we will have multiple readouts, which is certainly impacting the immune system, not in the way of a checkpoint inhibitor, but tackling the inflammasome. And then lastly, radioligand therapy where we have Lutathera. We have the readout of Lu-PSMA, and we have a major effort ongoing to get multiple other new targets into the clinic. We believe there, we have a leadership position. We have a global supply chain. We have the opportunity with what I would argue as an ADC-like approach to tackle a range of solid tumors. So our goal is to build breadth and depth in each one of those 4 areas.

Makes a ton of sense. One of the launch areas you talked to -- you touched on was, I'm going to have say inclisiran because I still haven't got the name right.

Leqvio.

Leqvio, there we go. So there's a gentleman here asking about the complete response letter in the U.S. And he says, was it simply that the FDA could not expect -- inspect the manufacturing site? Or did they have other concerns? And then maybe I'll broaden and just ask as well, the European launch, how should we think about that? This time last year, we're obviously in San Francisco. And I think the NHS signed a deal on Leqvio, which was really exciting. So how should we think about that moving forward in '21? And maybe what other European countries are thinking along the same lines?

Yes. Thanks for the question. On Leqvio, the -- with respect to the status in the U.S., right now, the only issue we're aware of is closing out of open items with respect to the third-party manufacturing facility. That was a facility that was intended to be inspected last May in person, never happened. We converted it with our partner to a paper-based inspection. And at this point, I think our expectation is it's going to require an in-person inspection. We're working through what would be a reasonable time line. And of course, there's many uncertainties given the pandemic, I guess, one that could realistically happen. We'll try to provide better guidance at our full year earnings as to what is the range of potential outcomes. We're also looking at some alternative backup strategies to try to find a way around this topic. There are, to our knowledge, no other open items with respect to the clinical safety, CMC or other elements with respect to the product. The product, of course, as Richard mentioned, is approved now in Europe. We're looking forward to launching it across Europe, but the key launch for us will be in the mid part of the year in the U.K., where we've been really thrilled to work closely with the NHS on a 3-part program. First part of the program is to launch inclisiran in the ASCVD secondary Leqvio and the secondary prevention of cardiovascular risk reduction with the support of the NHS and a population health-based model, roll this out to the relevant patient population, alongside that work on a set of clinical trials to generate data in the primary prevention setting and also a manufacturing innovation model to try to bring down the cost of producing these kinds of RNA therapeutics. That's a very important model for us because we believe this could be the model we could then replicate in other markets around the world. The idea is to take a population, health-based approach to reducing cardiovascular disease, which, of course, is the leading cause of death and disability around the world and one of the primary, if not the primary, cost driver for most health care systems. So quite excited about that. Lots of work to do. But I think with our partners at the NHS, very excited to take that forward.

I have a question related to the molecular partners deal around the DARPin for COVID treatment. The person is asking, are you still committed to it? Do you think you're too far behind? But maybe you could broaden that and sort of say how this might have a role going forward.

Yes. So we're very excited about the molecular partners -- partnership, and there's a few dimensions for why that's the case. I'll just quickly go through them. One is from a scientific standpoint, the opportunity to hit the spike protein in a series of different epitopes using a DARPin-like molecule, which we believe could have a different profile in terms of its ability to bind the virus, also gives us the opportunity to include more epitopes maybe than what's currently being included by some of the other monoclonal antibody-based therapy. Still early days. Trials are ongoing. But at least scientifically, we think it's very sound. Second, there's the opportunity to move this into a subcutaneous injection. And if we are successful in doing that, having a subcutaneous versus an IV injection could be very attractive in terms of providing this medicine to patients who most need it in a usable way because, of course, with the monoclonal antibody, you're going to need to treat earlier in the disease course. And doing this with an IV formulation is quite challenging, particularly in the community setting. But I'd say, third, the most important element of the story is the molecular partners technology can be made in bacterial fermentation, and this allows us to scale this process quite dramatically. And so the ability to produce very large volumes at hopefully much lower cost could enable us to bring these therapeutics, assuming they have efficacy, safety, et cetera, to much broader populations around the world. And we did this very much with a mind, not only to serve populations in the U.S. and Europe, but very much how can we get these technologies and therapeutics with molecular partners to patients in Africa, Southeast Asia, Latin America so that everyone has equitable access to these kinds of technologies.

Very clear. I've got a question here from someone on Cosentyx and just asking about the split between the dermatological and the rheumatological indications and how you see that evolving and how you see the competitive landscape impacting Cosentyx going forward.

Cosentyx has been, I think, quite remarkable in how it's been able to hold share in dermatology despite many competitive entrants with, Richard, and others rightfully have written much about. But nonetheless, we are able to hold share quite consistently in the U.S., in Europe because I think it's a very complete profile. Not only addresses the skin, but also the nails, scalp, other manifestations and joint of the disease. Overall, I think the sales are trending. I don't know the exact numbers, but my estimate would be around 50-50, moving in that direction for dermatology and rheumatology. And I think the real story for Cosentyx, and we've guided for it to be now over a $5 billion drug over time, is that you're going to see the majority of the sales come from these rheumatology and newer indications. We recently got an approval of non-radiographic axial spondyloarthritis arthropathy. We also have 10 additional either indications or formulations in development. Importantly, hidradenitis suppurativa will read out the back half of this year. So taken together, that gives us the opportunity to move beyond dermatology into all of these other places, where we think we can have a significant impact, and that will become the growth driver. In the meantime, we'll continue to be disciplined, thoughtful in how we rebate in the U.S. so that we don't give up price in dermatology at the cost of all these other indications.

Makes sense. One of the other growth drivers you highlighted was Kesimpta in multiple sclerosis, or at least it's in my mind. I'm not sure you highlighted it. But I have a question here from a person, is asking about your multiple sclerosis strategy given the highly competitive number of drugs on the market for multiple sclerosis.

Our strategy in multiple sclerosis is with our S1P portfolio to focus on patients who would most benefit from an S1P. So with Mayzent, very much a focus on secondary progressive MS. And in Gilenya, you have a proven therapy -- a large number of people already on Gilenya to keep those patients on Gilenya and look for opportunities where Gilenya's profile makes sense to expand. But overall, we think of our S1P portfolio as a group, and we want to continue to expand the position of our S1P portfolio, primarily driven by Mayzent and SPMS. The real opportunity for Novartis is Kesimpta is really moving B-cell therapy to a first line or first-switch medicine, really educating providers that with the multiple sclerosis patients who want to treat with high efficacy therapies is early, saving high-efficacy therapies for later is doing the patients a disservice. And by treating early, you can hopefully stop the march of the disease, stop the progression of the disease, stop the relapses that cause so much pain and suffering. So our focus very much is to go broad with Kesimpta. We're off to a strong start. We see very solid NBRx gains thus far with Kesimpta. Our goal this year will be now to move into a full promotional launch, full consumer activation and hopefully now really drive the medicine to a much higher place.

Excellent. Going back to the SHP2, I have a specific question from a gentleman asking about your strategy for the SHP2 and why you felt confident going into combination with your own KRAS rather than others given that that's further behind.

So we currently have with our SHP2 inhibitor partnership with Mirati, where we have a study ongoing with their G12C inhibitor, and some very nice early data presented by Mirati last -- late last year, which I think showed the power of the combination. So we continue to work in that partnership with Mirati. We continue to also try to work with partnership with other companies, but we also have the opportunity to bring forward our own KRAS into the clinic. And I think that gives us an opportunity that also control the combination, and that's ultimately how this gets played out. Our focus, though, is to try to be first to market with our SHP2 inhibitor. We believe that's where we bring a very differentiated molecule, a very differentiated mechanism. And that also could open up the possibilities with other combinations, even outside of the G12C, where we can combine ship to with other agents.

Question from someone on the ophthalmology franchise. He says, how is the Beovu and Xiidra performance -- sorry, how have Beovu and Xiidra performed relative to your expectations? And how do you view the ophthalmology vertical as a growth driver for Novartis?

Yes. So in ophthalmology, we are the largest ophthalmology pharmaceuticals company in the world. And so this is a place where we have had historical strength, and we want to maintain our strength building across, of course, off of a broad portfolio in front of the eye as well as Lucentis. Now I think with both Beovu and Xiidra, we've had some disappointments. I mean, certainly, Beovu was off to a very strong start on the back of its very strong efficacy message, its ability as a drying agent. The ophthalmologists really care about ability to also get patients to have a longer interval. And with the very rare safety signal, we continue to see solid utilization but limited utilizations, nowhere near our expectations. We had positive readouts in DME in the 2 studies in the second half of last year. We continue to invest fully in our marketing, sales and medical efforts and continue to invest very aggressively to try to work out approaches that might help physicians identify patients who might be at risk for these rare events, screen them out so that they can use the medicine completely, and this is going to be a multiyear effort. But given the overall efficacy of the medicine, we believe it's worthwhile to continue to invest behind it and do our best to try to help patients get better control over their vision. I think with respect to Xiidra, Xiidra, also during the pandemic, we've seen front of the eye medicines pretty substantially disrupted. So Xiidra has just not had an opportunity to really take off. We've invested, I think, fully behind it. We're hopeful now with the right investment profile that we currently have. And hopefully, when the pandemic subsides, we can really get Xiidra to tick up, which is very important for us. We have a dry eye portfolio behind it. We have a SAF312. We have another medicine called ECF. Both of these also would be a perfect fit with a portfolio like Xiidra.

I think we've got maybe a couple of minutes left, and there's one question here on ESG and asking about where ESG fits in the corporate structure. Is it part of the senior management team? I think I know the answer to that, but Vas.

So ESG is a huge portfolio -- a priority for me personally and for the leadership team. So just to give you a sense, we have a executive committee level subcommittee, which I chair, called our Trust and Reputation Committee. We have an extensive range of KPIs, which we track, a subset of which we published in our annual report transparently. When you think about my strategic objective, 20% of my strategic objectives and those of my management team are all linked to ESG in the 5 areas, so that -- which I put up on the slide. And the reason we do that, and we do it based on a materiality analysis of what are the ESG factors that will enable us to be successful as a company and deliver value to society. So this is very much a strategic effort because we believe being a leader in each one of those areas, access to medicines, ethics and integrity, global health, being a global citizen, being a transparent operator, will enable us to be more successful from a business standpoint in the long term. And I think importantly, it has been written about by many thought leaders, ultimately, corporation's goal should be to create tremendous value for society with large, and that's what we want to do.

I think we've run out of time at the end of the session. So I'd like to say thanks, Vas, for a great dialogue. Thanks for all the questions. Awesome, and I hope everyone has a good day. Thanks very much.