Novartis AG (NOVN) Earnings Call Transcript & Summary

Yes. There's an awful lot of research, of course, in CAR-T, and I don't know what the numbers are, but I'm sure it's in the hundreds of ongoing trials. And we know, even in the gene therapy space, there's thousands of INDs sitting at the FDA. But at the end of the day, there's a big difference between having basic research and being able to manufacture at scale and be able to supply the world with CAR-T therapy. And so yes, there's a couple of players in the marketplace, and we're all finding what our particular niche looks like and how we work with centers around the world. We've been spending a lot of energy on trying to optimize the manufacturing process. We've grown our manufacturing capacity by over 70% in 2020, and we now have a manufacturing footprint that we can serve the entire world with very acceptable turnaround times. And what really is exciting for us in CAR-T is we're already looking ahead to kind of next generation where -- and new platforms where we could get the cost of goods significantly down, maybe as much as five or tenfold, get the turnaround times down to a matter of a few days as opposed to a few weeks. And that's really where we're putting a lot of our energy, because we believe that the concept of a curative -- or potentially curative therapy is really where we need to continue to move in all of these hematological malignancies. So that's -- and we'll -- we've got some ongoing programs in this space, and we'll be -- hopefully, we'll be in a place where we can even share some data perhaps sometime next year in some of our next-gen platforms.

That's great. What are the main bottlenecks still in ramping up penetration for cell therapy? And do you expect some of these hurdles will change over the next couple of years?

Yes. I mean, I can talk about it a little bit more from kind of an R&D perspective as opposed to a commercial perspective. And again, one of the areas we've been focused on is just being able to have supply. And the ability to have, from the center's perspective, predictability in when a patient can use CAR-T therapy, because, of course, they have to bridge patients. And so what we've -- that's why we've spent so much energy on trying to improve our manufacturing capacity as well as having a good footprint. And one of the things that we've learned from an R&D perspective is that this is a tough space, right? If I look back at my own career of almost 30 years doing regulatory, CAR-T, chemistry manufacturing controls is about as challenging as it gets, right? And even in the post-approval world, after initial approval, there's an awful lot of work that ourselves, and I'm sure our competitors are doing, to continue to improve CAR-T manufacturing. But it's nothing like improving manufacturing for a small molecule or even a biologic, where you make a tweak, you submit it, and now everything is fine. We're talking about adding clinical data and all sorts of things. And so we've spent a tremendous amount of energy trying to improve the process and be able to move this forward. And I think we finally saw some of that success come last year. And so that has been one of our bottlenecks in kind of ramping up outreach, is to be able to actually confidently say we have supply and predictability for the centers. And we think we're now in a place where we can do that.

Is this a scalable platform in terms of number of products? So as you move to your next-generation products, can what you've learned, more easily each new next-generation product, you'll able to leverage all the scale and manufacturing?

Yes. I mean, again, I can't think of another area where you capitalize on your learnings more than ever, and everything we're doing is applicable to kind of the next generation as well. I mean, everything is scalable, but scalable can also have its own challenges. What we're actually trying to find a way is to be able to scale bigger, but more simply: to allow higher throughput, faster turnaround times and, again, a big focus on trying to reduce cost of goods, getting away from all manual processes or mostly manual processes into more automated processing. So all of that is -- it's really a continuous learning, unlike, I think, than you've ever seen before, in particular in the CAR-T space.

What's your perspective on the role or place of bispecifics versus cell therapy, especially against some of the same targets and heme malignancies?

Yes. And I think, over time, it would be interesting to kind of see where that whole space goes. I mean, again, the bispecifics certainly have their place, but that's more kind of a long-term treatment, not necessarily a curative treatment. And I think one of the reasons we remain so bullish on CAR-T is that if you look at the autologous approach and actually being able to offer this concept of a potential, if not a cure, that there are patients that, that is where they want to be. We have some patients on Kymriah who are on it now 6 or 7 years and remain cancer-free after their single infusion. And so we think that, that continues to be the right place to go and why we continue to invest in this and the next-gen platforms.

Moving on to some other oncology assets. You have 2 major readouts this year in non-small cell lung cancer with canakinumab, Ilaris, in frontline, and second line and frontline combining with pembrolizumab in chemo, and in second line combining with docetaxel. I think this is maybe a little bit under the radar probably, but I'm pretty excited about it. And I wonder if you could tell me why you're confident in these combinations in targeting IL-1 beta for inhibition in metastatic disease.

Sure. Yes. I mean, I think as we look at our readouts this year, these are the 3 readouts that I'm the most excited about. Anxious is probably not the right word, anxious more in excitement. These clearly are kind of some of the bigger bets that we've made, but they're grounded in what I would say is really good science. Obviously, we're not able to do a Phase II program, so we did jump right to Phase III, but it's grounded in some of the great data we had that came out of our CANTOS trial several years ago, which was being developed for cardiovascular indications, where we saw a totally surprising finding of a 77% improvement in mortality in lung cancer. And it was very deep in that trial, so we were -- felt obligated to take that forward. There's also some really good preclinical science on the potential role of the IL-1 pathway in lung cancer, which is why we place significant bets. So the readout of these trials, they'll be landmark, whether they're positive or negative, in really trying to define the IL-1 beta pathway and its role in oncogenesis and chemotherapy for lung cancer. But we remain really excited and optimistic about the opportunity. It clearly will change the practice of medicine if it's positive. So we'll see. We get the second-line readout in the first half and the first-line readout in the second half of the year, with adjuvant coming a little bit later. So we'll see where we end up, but exciting for us to see these come in.

Yes. I got a question from an investor that is in regards to your prostate cancer drug, the radiolabeled PSMA-617. When do you expect the launch? And are there any plans to take that molecule beyond prostate, say, breast, lung or renal cancers?

Sure. So right now, the trial they're referring to is the VISION trial, which is looking at later-stage prostate cancer, which has a -- not a very good prognosis. And we expect the data readout to be the first half of this year. And assuming it's positive, we could see a submission in the second half of the year. So if you do the math, you could see a potential approval in 2022, if all goes well. And so this is another one of the opportunities we have, of one of the more exciting readouts that we're going to have in 2021. So again, another one that we're all waiting quite anxiously for, to see if it has an effect. I'm not deeply into the oncology space in my day-to-day, but we do have a whole variety of radioligand programs. We think this is a -- as a platform, has a lot of opportunity to be able to deliver a very directed payload to the cancer cells using the radioligand platform. And so we do have a whole robust development program around radioligand therapy and have even gone beyond our AAA acquisition in even leveraging the technology in some of our earlier compounds coming out of our research organization as well, some of which we haven't talked about publicly yet. So -- but we look at this as a really important platform for future drug development.

Maybe on the medical side of radioligands, we've seen other really good radiotherapies that never got a lot of medical uptake. Let's say, the radiolabeled CD20, I can't remember the name of that therapy right now. And I wonder what's different about sort of your interaction with regulators and the medical community this time, that you think you'll be successful where previous iterations have had a hard time getting uptake?

Yes. I don't have a lot of experience personally with the previous iterations, because it just hasn't been in my own wheelhouse over the last couple of years. But what I think is unique and exciting here is that it's based off of an entire platform, and we're actually able -- we don't have to rely on hospitals and centers to make it locally. We can actually deliver it, ready to go, to the institutions for delivery. So again, I apologize. I don't have the insight into the previous compounds, so.

Are there any other exciting pipeline assets that investors should be watching in oncology, and more broadly across Novartis?

Yes. I mean, I think, certainly, in the oncology space, a couple of the compounds we've recently been highlighting. One is TNO155, which is our SHP2 inhibitor, first-in-class agent, probably used in combo with TKIs. We have 5 ongoing or planned trials in solid tumors: lung, colorectal and a few others. We've got some really strong preclinical evidence looking at the synergy of these agents, and so this is one that we're really excited about and really looking at carefully. We hope that, theoretically, because it's a little bit downstream of PD-1, that we may have an opportunity to overcome some resistance in some of these mechanisms. But we'll have to see where the data plays out, but that's one that we're really excited about. The other is a compound called LXH254, which is a low molecular weight B/C-RAF inhibitor, again, looking at melanoma and non-small cell lung. Again, the opportunity to possibly be able to take out KRAS and B/RAF-mutant strains in melanoma. So again, one we're really focused on. The other one, maybe just to highlight outside of oncology is our Lp(a) program that has gotten a lot of press. And a lot of stuff that we're looking at, iptacopan -- excuse me, asciminib -- sorry, not -- one that we actually call our -- for Lp(a) looking at lowering lipids and cholesterol. A huge program, 10,000-plus patients. Those trials are starting shortly. And we think that could have a tremendous impact in this inherited familial disease that largely goes undiagnosed until people have some sort of an untoward event, an MI or something else. So that's one we're really excited about. The other, as I was saying, iptacopan , as we call LNP, in a variety of renal cancers. Renal disease is another area that is -- has a huge high unmet need, and we're moving forward in 3 important indications in renal disease. We have a lot of excitement coming from both the experts in the field as well as the regulatory agencies, as, again, probably the next frontier of unmet need that we can actually capture. So -- and we've got a lot of other stuff happening too, Daina, but those are some of the highlights that I think are worth talking about, so.

That's great. Maybe switching gears a little bit. I've been impressed at Novartis in leading, I'd say, the organization and use of internal and external data to improve both your science and operations. And maybe 2 questions on this. How have these efforts impacted regulatory affairs?

Yes. It's a great question. So this concept of real-world evidence, which I actually don't like those 3 words together because they mean so much depending upon what you're talking about. But clearly using what I call data outside of clinical trials that's relevant, whether it's from health records or anecdotal or any and all of the above, is finally coming into a little bit of maturity, actually. 3, 4, 5 years ago, everybody kept saying, "Oh, we're going to be able to register a brand-new chemical entity on real-world evidence," which doesn't even make sense. But I think the world is now, including the regulators who are starting to embrace the concept of real-world evidence for historical controls, we've got a couple of examples of where, in, for example, cystic fibrosis, where they've been able to leverage some additional mutant strains based on real-world evidence. So we've had a couple of good examples, but we actually see the agencies opening up, the more they become comfortable with what it is. And what's underlying all of this really is about data cleanliness and data reliability. It's not about the concept. But when you get out into these health records and health databases, it's how do you compare one institution versus another? How clean is the data? Can it be leveraged against some sort of a GxP, GCP standard, and that's really what's been the holdup. I don't think it's the concept. It's the cleanliness of the data and the ability to use the data. And I think there's been a lot of energy in the last couple of years to try to work through some of those issues. We're far from sorting it out. But everybody is at the table, including the agencies, of how we can do that. And we've got some, I would say, pilot examples where we're working through some of those things in some historical control arms and in studies. Even earlier -- it was earlier this week or last week -- even some senior folks in the CAR-T space talking about -- at FDA publicly talking about using historical controls in CAR-T trials, because it's very difficult to do control arms, for example. So I think we're not quite there yet, but it feels like there's an inflection point that's happened, where we're going to see some good real use examples in the coming years.

Do you think -- maybe one more question on this. Will this be something that companies or pockets will develop on your own? So we'll see, I don't know, Novartis and Amgen doing a lot, or Novartis and Roche doing a lot? Or is there going to be something industry-wide that sort of builds this capability for everybody?

Yes. My sense, just trying to crystal ball this, is it's probably going to be more driven around disease states as opposed to industry or companies, because especially if you start talking about rare diseases or specific oncology indications, for example, it's going to be about where is the data and how accessible is the data, and then how do we leverage that, do we pull it in. I mean, maybe COVID is a good example, where there's been lots of discussion among companies brokered by third parties of how do we share data and learn from each other, and that's more around an indication or a therapeutic, as opposed to a company going off and doing their own thing. And I would imagine just logically, that seems to be where it would make the most sense. And I could see us going in areas where you have the highest unmet need, like Alzheimer's and some of these others, where there's more power in working together than working individually. But I think, again, that's another story that we're going to start to see some of those chapters be written in the coming years.

That's great. Thank you so much. I think we're out of time. We really appreciate the half an hour and all of your insights.

Thanks, Daina. My pleasure. Thank you for having us join. Appreciate it.