Novartis AG (NVS) Q3 2021 Earnings Report, Transcript and Summary

Good morning and good afternoon, and welcome to the Novartis Q3, 2021 results release, conference call, and live webcast. Please note that during the presentation, all participants will be in a listen-only mode, and the conference is being recorded. After the presentation, there will be an opportunity to ask questions by [Operator Instructions] at anytime during the conference. A recording of the conference call, including the Q&A session will be available on our website shortly after the call ends. Should anyone need assistance joining the conference call, they may signal the Operator by [Operator Instruction]. With that I would like to hand over to Mr. Samir Shah, Global Head of Investor Relations. Please go ahead, sir.

Thank you very much. And hello, everybody. I would like to thank you for taking the time to participate in the Q3 Novartis conference call. 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 as most recent quarterly results on Form 6-K, that respectively were filed with and furnished to the U.S. Securities and Exchange Commission. And with that, I'll hand the call to Vas.

Thank you, Samir, and thank you for everyone for joining today's conference call. With me in the room, if I could have the slide up with our colleagues. On Slide 3 with me in the room, I have Harry, Marie-France, Susanne, John, Richard, Karen, and of course Samir, who you've just heard from. So turning to Slide 4 and then Slide 5. We wanted to start by taking a step back and really reflecting on how this quarter continues. I think what has been a very strong trend for the Company over the past 4 years, looking at 9 months for each of the years back to 2018. You see, we've consistently demonstrated the ability to grow our sales at 6%, annual CAGR 13% on core operating income and a consistent expansion of our innovative medicines margins. Now looking ahead, we stand behind our belief that we can continue to grow our sales over the coming period at a CAGR of 4% driven by first and foremost, our key growth drivers, which we'll talk more about over the course of this call are strong mid-stage pipeline and the continued investment we have on technology platforms which we think over time will differentiate us and enable us to have a steady flow of innovations to drive growth. Moving to Slide 6. For Q3, we had strong performance across each of our four main value drivers. We'll talk about sales growth throughout the call and Harry and our colleagues Marie-France then will give you more details. We're good productivity, but our core operating margin now reaching 37.8% in IM on the innovation front, I will go through some of the milestones in more detail later on, but I think it was a busy quarter for us with some negatives, but more positives overall on balance, and we continue our journey on the innovation -- on our innovation efforts. And lastly, in ESG, we had our recent ESG Day where we laid out our longer-term ESG strategy, and we continue to have the ambition to not only lead in the biopharmaceutical industry, but also across large companies. And moving to Slide 7. Our key growth drivers in launches had a good momentum in Q3. We're very pleased with the performance. We'll go through some of the brands over the course of the call. But notably, we now have 53% of our sales in the quarter coming from these key growth brands. And that's up 26% versus prior year. And I think that demonstrates that we're a Company that has replacement power that can continue to generate innovations that overcome expiries and drive that consistent growth over time. Moving to Slide 8, we had particularly strong growth on some of our key brands, including Cosentyx growing 18% and Entresto was up 41%, Zolgensma up 49%, Kisqali 27% and Kesimpta continues on its solid and accelerating launch trajectory and Marie-France will go through that in a bit more detail. Moving to slide 9, we'd announced this morning we are raising our peak sales guidance for both Cosentyx and Entresto. So first from a Cosentyx and we'll go through this in more detail a bit later. We've raised our peak sales guidance to 7 billion. This is driven by market growth, geographic expansion, as well as life cycle management opportunities. And we expect this brand to continue to be a strong element of Novartis story through this entire decade. And moving to Entresto, we believe on funds back on to have known, we believe we'll continue to have strong growth driven by market penetration guidelines and geographic expansion. Our peak sales guidance is consistent with our currently stated assumption of an LOE in 2025. However, we do have issued patents and going out to 2027. And additional group of patents that were recently issued out to 2033 and will continue to aggressively defend our IP to maximize the impact to this medicine. And moving to the next slide. I also wanted to say a word on China where we continue our strong growth trajectory, one of the leading multinationals in the market in China. We continue with a double-digit growth in the high-teens, 16% and 18% on the quarter. This is driven by a few factors. 1, the continued positive momentum we have on our growth drivers that have an NRDL inclusion. And we believe we're outperforming other multinational companies for the sales growth of these NRDL listed brands. We also have limited exposure to value to the volume-based pricing. When you look at our commercial foot print, we've been expanding our commercial footprint to reach lower tier cities and hospitals. And lastly, our late-stage pipeline continues to mature. In China, we add some important recent approvals Entresto hypertension, Lucentis an additional indication. And we have 50 additional submissions planned in the next 5 years. So we are confident we are on track to double our China sales from the 2020 based by 2024. Moving to the next slide. Now, turning to Sandoz, in Sandoz we had a mixed quarter. We see in the ex-U.S. dynamics normalizing, but a little more challenging environment in the U.S. So first in Europe, we had a 2% sales growth. This is really driven by both biosimilars as well as retail and a return to gaining market share in our key markets. In the rest of world region, we were up 6% with steady growth across regions. However, in the U.S. we did see a 20% decline and this was driven by price erosion as well as contract terminations in our oral solids business. We also had an impact on core operating income. This is primarily driven by the unfavorable gross margins from the product mix in the U.S. Now, turning to Q4, we do expect performance to normalize in the XQS and it will continue to work to stabilize the U.S. We expect our direct demand business segments to normalize, but at different rates. We continue to expect demand to be in line with what we saw in Q3. And we're hopeful that we'll see a cough -and - cold season that returns to pre -COVID levels. We did have a minor impact as well from a negative impact from losartan in Q3 and we continue to expect to see some of those negative impact s in Q4. Now moving to the next slide, we did announce this morning that we're commencing a strategic review of Sandoz consistent with what we outlined a few years ago. We had stated that we wanted to create a more autonomous Sandoz within Novartis that will give us the optionality to ultimately determine where is Sandoz best owned by Novartis or by our shareholders or another party. And we believe the GX market is attractive. We think Sandoz is well placed to capitalize on its growth drivers over the next decade. And we think Sandoz is also well-placed to really be a leader in the next wave of bio-similars launches. When you take each of those in turn, attractive market $400 billion of sales going to ROE over the coming decade, CAGR of 4%, and Sandoz was a number 1 position in Europe and in bio-similars, as well as the leading position in areas like antibiotics. And a clear strategic focus that Richard and his team have put in place. We have a very strong bio-similars pipeline with that 15 assets in development, aiming for $3 billion of sales by 2025 and 5 billion by 2030. A clear strategy in complex small molecules and ongoing margin improvements primarily through improved cost through our technical operations unit. So we expected conductors this to review over the coming period and we would plan to provide an update on progress, our latest by the end of next year. It is notable that Sandoz is more integrated into Novartis than Alcon was historically. And so there are important considerations will need to work through from an IT and business services standpoints really enable us to make the best decision. Now, moving to Slide 13. From a pipeline standpoint, we had a busy quarter, some approvals, a number of readouts, many readouts that went our way, but also important readouts that didn't go our way. And we acknowledged those and are working to learn from them to continue to improve our pipeline performance. But on balance, we would say we continue to be at the industry benchmarks or better in terms of pipeline success rates by phase. In the submission standpoint, a number of submissions went in and I think importantly, we received 2 designations, priority reviews for both Asciminib and Lu-PSMA-617. Both of those reviews are ongoing and should enable launch in throughout the near term. Moving to Slide 14, going a bit deeper and we've reframed these next 2 slides rather than looking at farm on Alcon to really break it out by business franchise and global franchise of the various businesses. So starting in pharmaceuticals and cardio-renal, where, of course, we build on the strong position we have with Entresto. Leqvio will remain on track form action date in January 1. We have good discussions with FDA are continuing to progress the assessment of our Austrian facility. No issues have been flagged, so we remain on track for that approval. Iptacopan, we continue to have solid progress on this medicine with phase 3 started in IGA C3G, and a typical Hemolytic Uremic Syndrome. We also disclosed in our quarter that both the final readouts for both C3G and IGA nephropathy, which follow these patients for a bit longer continued the trend of improving renal function. [inaudible 00:11:12] continues to perform well in its Phase 3. From an immunology standpoint, we announced today that if Cosentyx had a positive Phase 2 readout versus steroids standard of care for giant cell arthritis. And we've moved now to begin a Phase 3 program. And of course, the?Hydro Adinidis? readouts are continuing as well as the -- on track as well as the other Phase 3 programs. Ligelizumab remains on track for its readouts and we'll talk about remibrutinib. I did want to highlight. We see very good data -- mid-stage data for iron Luma ABB, which is our anti - bac receptor antibody, and we'll be presenting more data in the coming quarters on this medicine, but we're excited about it's potential on a range of autoimmune as well as hematological indications. Turning to neuroscience, the SMA intrathecal, AVXS-101 intrathecal hold has been lifted as we previously disclosed in the Phase 3 now, is initiating with the global Phase 3 program covering to the 18-year-old Branaplam are splicing inhibitor for -- splicing modulator, I should say for Huntington's disease has its Phase 2B, now starting with all the relevant regulatory clearances achieved. And we are -- we would announce and we've announced and I will talk a bit more about Remibrutinib in a moment. Turning to the next slide from an oncology standpoint, here we had a number of events. We'll talk about Kisqali and Canakinumab, Lu-PSMA, we've already mentioned. I did want to fly. We've started now, both our earlier stage studies in the pre-taxing, as well as the hormone-sensitive metastatic settings, and are continuing to evaluate to move -- potentially move this medicine into earlier lines. We did announce as well that JDQ443, which is our in-house KRAS inhibitor, has had good PK, good dose finding. We think it's a very good profile for this medicine and are now moving it into Phase 3 studies in non-small cell, lung cancer, we'll also look potentially of other indications and this enables us to have in our own hands, our own combination of KRAS inhibitor and a shift 2 inhibitor. Our TNO Shp2 inhibitors is now a number of early-stage studies looking at combinations. And we'll hopefully be able to present more data on this in the early part of next year. Turning to a Hematology, our first-line study for Asciminib now has also started. Our PNH for Iptacopan is progressing well. Our Sabatolimab programs remain on track. And importantly now with YCB, our next-generation CD19 CAR-T we've seen very good data in the early phases which we'll present at ASH, along with our multiple myeloma. Next phase CAR-T at therapy and we plan to start the pivotal studies in 2022. Moving to the next slide. I just wanted to say a few words on remibrutinib this I think is really well-designed medicine, we have excellent chemistry at Novartis and our scientists have worked to really create a highly selective, potent, and safe, covalent BTK inhibitor. And when you look at the data and CSU where the first BTK inhibitor., to be able to demonstrate the kind of data that you see on these slides. First, a very good dose response with significant improvements versus placebo and you can see the specifics here are very compelling with no safety signals. Then when you look at the improvements in the relevant as you heard, a carrier score over placebo, you can see across the dose range, we see a clear improvement versus placebo and that improvement was very rapid as early as week 1 and maintained through week 12 the endpoint of the study. Moving to Slide 17. when you look at the complete control that patients on Remibrutinib a BID were able to achieve versus a placebo group, very high respond rates, they were consistently maintained over the course of the study, I think showing the potency of the drug. But in terms of differentiation, particularly in dermatology, as well as in multiple sclerosis, we were really pleased with the safety profile of this medicine, which we think will be critically important. One, there is no dose-dependent increases or treatment interruptions or discontinuations due to LFT elevations. No dose dependent cytopenias or treatment interruptions for low blood cell counts. And no clinically relevant adverse events associated with what has been historically associated with the BTK inhibitor cloud and across the entire dose range tested. So overall we think this is a potential best-in-class profile for CSU, positive benefit risk in those Phase 3 studies are in the midst of starting right now. Moving to Slide 18. And as mentioned, we're now initiating Phase 3 trials with Remibrutinib. We understand that we are behind some of our competitors, but we believe our expertise in conducting large-scale RMS Studies gives us the ability to close the gap. And importantly, we think for neurologists was really important as they have a very safe medicine that is also high efficacy. And we think we can deliver that with remibrutinib. And what will this allow us to do? We've already got the all clear to move ahead into our Phase 3 studies. And what this allows us to do over the longer-term is built on our multiple sclerosis portfolio [inaudible 00:16:15] and now adding eventually, assuming successful Remibrutinib. Moving to Slide 19, you also saw in the quarter?because golly? achieved statistically significant OS in the [inaudible 00:16:29] 2 studies in the third study where it?gets golly? in the metastatic study has demonstrated a significant overall survival benefit. That benefit now out of 5 years, it's really -- we believe the -- should be the preferred treatment option for these patients, given the compelling OS data that's been demonstrated. We plan to submit this OS data into our labeling and the relevant geographies. Moving to Slide 20 and just wanted to say a word as I know there's a lot of interest now in the Adjuvant readout which we expect in 2022, it's on track, fully enrolled. Just to remind you, there's some unique elements of this study. 1, it includes patients at high and intermediate risk, which is a larger patient population, some of our competitor studies. And the way we have designed the study is base enrollment on the prognostic staging from the HACC. A little bit different than the Ki-67 that has gotten a lot of attention; but we believe and with regulatory sign-up, a very relevant prognostic staging to really ensure that we enrich further risk of recurrence in this study. We have a longer treatment duration of 3 years versus 2 years. We lower ed the dose to make sure this is manageable for patients in the Adjuvant settings to, overall, improve the tolerability. So as I said, enrollment complete, it's an event-driven study. We expect delayed '22 readout and feedback from FDA, which we reviewed again, says that the idea of PFS endpoint is acceptable as the primary analysis, provided there is no detriment in OS and we're, of course, taking that into account as we see the various readouts over the course of next year. Moving to Slide 21. Now, I wanted to turn to CANOPY in it. And it will just take a few minutes to explain the data that we released yesterday to make sure it's clear and then both course be happy to take your questions. The CANOPY program is based on the results we saw in CANTOS where we saw 60% to 70% improvements in the incidence and mortality of lung cancer in a cardiovascular trial. This was based on a pretty good understanding of the IL-1 beta, as well as HSCRP are very relevant in the tumor micro-environment for lung cancer as well as in other inflammatory cancers. The CANOPY-2 study was in the second-line there. We didn't see any signals of efficacy overall and there, of course, as you saw at ESMO, the trend was not positive with Canakinumab versus the control arm of chemo. In this study, while we did not meet our primary endpoints of OS and PFS in previously untreated locally advanced metastatic non-small cell lung cancer, in the overall population, we did see a positive trend, though not statistically significant. Importantly, we did see potentially clinically meaningful improvements in both PFS and OS. These improvements in these pre-specified subgroups and biomarker-driven subgroups were nominally statistically significant and the upper bound of the confidence in roll specifically did not include 1. And we saw treatment effects that were meaningful in our view. However, we don't believe at this point in time that this would constitute a filable program. Now what we do believe is these results support the continued study Canakinumab in earlier stages of lung cancer. We believe they also support further evaluation of pro tumor inflammation because the signals we saw were meaningful. On CANOPY-A, the study we believe more closely reflects the cancer study remains a high -risk study to be clear, but nonetheless, we think it's important to complete this study to really understand if there is a possibility to replicate the remarkable fan findings of the cancer study, so important for patients, if we could actually demonstrate that. Now, in addition, we wouldn't want to highlight, as I think there has been confusion about this. In this study, we did not see meaningful differences in the safety profile of the chemomab arm versus the control arm of PD-1 plus chemo. So that kind of give you an overview. We would note as well, we have a number of other Pro-Tumor Inflammation medicines, oral medicines, as well as Eculizumab, which is another anti-IL-1 agent that has regulatory or regulatory or had LOE into the mid-2013 and of course we're evaluating that medicine in a few other cancer settings and we'll evaluate as well, if there is a credible case to do anything further in metastatic non-small cell lung cancer. Then moving to Slide 22. Lastly, before handing it over to Marie-France, we've accelerator ESG efforts, 29 million patients reached a next-generation malarial therapy now entering phase 3 studies, a 10-year commitment to really support addressing health inequities and health disparities in the U.S.. And we've committed to net 0 carbon on top of all of our other environmental commitment using science-based targets to achieve by 2040. Consistent with many of our other large companies, they will be announcing these at COP 26. With that, I will hand it over Marie-France.

Thank you Vas. So moving onto Slide 24 -- Good morning, good afternoon to all. It's my pleasure to share the results of the Pharmaceuticals division for Q3. Sales grew 8% this quarter, driven by a clear focus of our launch drivers, our growth drivers, and supported by the solid execution across geographies. As you can see, the growth drivers and launches have strong momentum We're growing 32% and now they account for 54% of sales. This is 10 points above prior year and in line with our strategy. Looking at year-to-date, you can see us accelerating our momentum and we're on track to have a strong finish to the year. Moving onto Slide 25, Cosentyx grew 22% with solid contribution from both dermatology and rheumatology. In the U.S. we're growing volume with the market. We're holding our leadership position in Europe and in China, we're leveraging our NRDL listing. China is now our third biggest market. We've also strengthened our evidenced base with multiple pediatric indications. Further reinforcing the proven efficacy and safety of Cosentyx. To maintain our momentum in Q4 and beyond, we remain focused on our competitiveness in the field, the flawless execution of our marketing teams, and the activation of 2 key groups of patients, those with PSO PSA comorbidity that needs strong efficacy in both skin and joints. And the axial spon patients who can benefit from all-in-one release. So I'll move on to Slide 26. While Cosentyx has been on the market for 6 years, every year is a launch year. Cosentyx has approved across 5 indications, all of them have low biologic penetration. With its strong value proposition and evidence-base Cosentyx will continue to capture growth. Cosentyx is also the only IL inhibitor with NRDL listing in China. We see strong growth potential in this market. We have an ambitious lifecycle management plan, which is starting to deliver. We've seen positive readouts for giant cell arthritis and our IV formulation in Q3. We also expect data for?Hydroxycarbamide? and Supera, Teva in Q4. Overall we're looking at a potential of 10+ indications in areas of high unmet need and an ambition to double the number of patients on Cosentyx. This gives us confidence that we can grow Cosentyx to at least 7 billion. Moving onto Slide 27. Entresto grew 44% in the quarter, reaching 2.6 billion year-to-date. The ACC and ESC first-line recommendations for Entresto are translating into penetration gains. And the expanded U.S. label is driving NBRX growth and uptake in primary care. In Asia, China continues to deliver strong growth on the back of our NRDL listing. And Japan is gaining traction. Both have acceleration potential based on our recent approvals and hypertension. As we pulled through the U.S. and the EU guideline recommendations and promote the expanded label in the U.S., we're well set up to maintain growth in Q4. On Slide 28, we think about the future story of Entresto. It continues in line with our existing trend. We know that there remains significant patient potential. We have 4 million patients on treatment with Entresto today, yet 70% of eligible patients can still benefit. In the U.S. where we have a broad chronic heart failure label 85% of addressable patients are still on prior standard of care and that makes ACE and ARB our clear competitive focus. With the recent guideline changes, positioning Entresto in first-line, we now have an opportunity to drive broader and earlier adoption of Entresto globally. So overall, we're bullish about the continued growth of Entresto to at least 5 billion. If I move onto Slide 29, Zolgensma had a strong quarter and has just surpassed 1 billion in sales for the year. In the U.S., we're treating over 90% of babies according to our label, due to the high rates of newborn screening. In Europe we had strong uptake in Germany and Italy, and we saw a bolus of sales in the UK following reimbursement. We expect we've seen the bulk of this in Q3, but we have also reached agreement on reimbursement in Russia and a number of smaller EU markets. So if we look ahead, we see 4 key drivers of future growth. New markets with Egypt, Saudi Arabia, Benelux are expected to contribute in Q4, increasing newborn screening so that we can treat patients early on when the benefit of gene therapy is the greatest. Heavier patients or smart study aims to drive confidence in Zolgensma value across the full EU label and intertrigo. Following the alignment of our Phase 3 study design, we're now one step closer to bringing IT to patients aged 2 to 18 and thus, ultimately address the full spectrum of SMA. If I move onto Slide 30, while the multiple sclerosis market has contracted quarter-over-quarter, Cosentyx grew 56%. Importantly, Cosentyx has been a strong driver of the dynamic diesel market with an additional a thousand patients on treatment. Our strategy remains focused on 3 elements. Increasing familiarity. We're maintaining our high share of voice and we've added more than 500 prescribers versus Q2. Driving further clinical differentiation. We just presented 3.5 years of IgG data at ACTRIMS. And we're generating evidence on switching and patient reported outcomes needed to change clinical practice. We're also focusing on customer experience, ensuring fast on-boarding and broad access to make it easy to initiate patients. We continue to see more than 50% of our uptake in first-line for switch. And we know how important this is because this is where we can have the highest impact on progression and long-term outcomes. We see huge potential in this B-cell market, and we're driving the growth in the dynamic segment. We have the right strategy and we're going to take further share as the market rebounds. Moving onto Slide 31. On Leqvio, you must certainly saw that we received nice approval and we're currently working to implement our broad reaching commercial agreement with NHS England. We have also been fully focused on the upcoming U.S. launch. We're working closely with healthcare system to prioritize ASCVD to identify patients, to set up buy-and-bill, and we're also leveraging our Entresto sales force to educate on the unmet need in ASCVD. For customers who may not want buy - and -bill, we're creating a network of alternative injection centers where patients can receive Leqvio. We've signed up more than 1000 centers and expect them to become a significant factor in pulling through our demand early on. We're also ensuring we generate the right evidence needed to succeed in the U.S. market. Based on our engagement, we expect the majority of the 200 prioritize healthcare systems to start treating patients in 2022, the uptake will be skewed to the second half of the year when the majority of the systems should be ready for buy-and-bill and our permanent J-code should be issued. We're working with diligence, We're taking a long-term perspective on what needs to be done to transform how ASCVD is treated to make Leqvio one of the biggest medicines for Novartis. In summary, we continue to execute against our strategy, maximize our growth driver, deliver our launches, and prepare for the next wave of products. The teams are working with a strong sense of urgency and purpose to be more customer-focused so we can bring our innovation to more patients faster. I want to thank the teams around the world for their commitment and show my confidence in the continued momentum for a strong year-end. Now, let me hand it over to Susanne.

Thank you, Marie-France. Moving to Slide 33, the oncology business delivered a solid quarter growing 5% versus prior year with sales of 3.9 billion. Our growth drivers as well as recent launches performed well with 16% growth versus previous year, driven by Jakavi, Promacta Revolade, and Kisqali. Together, these products now contribute to more than half of the overall oncology sales. In the third quarter, we have seen healthcare systems in oncology slowly returning back to normal as patient visits, diagnosis and treatment rates are gradually improving. We are seeing that new patient starts, continue to accumulate, and expected to translate into growth acceleration in segments like recent launches and hospital administer products by the end of the year. Moving to Slide 34 Kisqali delivered strong performance in the third quarter, growing 27% with sales of 230 million. The uptake was mainly driven by continued very strong momentum and patient share gains XUS particularly in Europe. We achieved market-leading position with 40% patient share in pre-menopausal patients in the EU for and UK. This is a toppling in patient share since we reported overall survival results from MONALEESA -7. In the U.S. Kisqali grew 5% versus previous year, driven by increased demand in pre and post-menopausal patients with usage shifting to earlier lines of therapy, which is very encouraging. And as you heard from Vas, we are very excited about the new OS data from MONALEESA-2 that showed the longest overall survival ever reported in advanced breast cancer, achieving a median overall survival of over 5 years. We believe that such impressive results are the evidence of Kisqali 's ability to change tumor biology to enable a better response to endocrine -based therapy. Kisqali is now the only CDK46 inhibitor with proven OS benefit across all 3 Phase III trials of the Mona Lisa program with different endocrine therapy partners, regardless of menopausal status or line of therapy. Therefore, with a lot of confidence in Kisqali we have started a collaboration with SOLTI and initiated a Phase 3 trial, called harmonium to evaluate ribociclib virus plus ribociclib in patients with aggressive HER2-Enriched Intrinsic Subtype of HR positive HER2 advanced breast cancer. As Vas said, we are also very excited about the adjuvant NATALEE study that is exploring Kisqali in both intermediate and high-risk population and this would have the potential to more than tripled patients of the metastatic setting. NATALEE study completed enrollment ahead of schedule in second quarter of this year, and we are looking forward to a readout in 2022. Moving to the next slide, I'm pleased to share with you that our 2 blockbusters in the hematology franchise, Promacta Revolade and Jakavi continued to deliver very strong double-digit performance driven by strong demand across all regions. Promacta Revolade is our thrombopoietin receptor agonists, indicated for use in ITP and severe aplastic anemia. The brand continued to perform very strongly, driven by sustained efficacy, oral convenience, and non - immunosuppressive profile. In the U.S. alone, we have seen 10% increase in new patient starts versus previous year. And expecting that further uptake will be fueled with the expansion of the U.S. indication to include persistent ITP. Ex-U.S. Revolade is also performing strongly driven by increased use in both indications and also additional amount from -- demand from China. Jakavi is our JAK inhibitor and a standard of care in myelofibrosis and polycythemia vera and has also demonstrated impressive growth with significant uptake coming from earlier use in both indication and strong momentum in China. We have completed filings in acute and chronic graft versus host disease in the EU and are actively preparing for launches in 2022. So overall, I'm very pleased with the performance of these 2 important hematological brands and the potential they have in terms of future growth and patient benefit. Moving to Slide 36, I would like to update you on how we are preparing for the upcoming launches of Asciminib and UTC on PSMA 617. Asciminib is our STAMP inhibitor that has the potential to transform the standard of care in CML. In the Phase 3 assemble study, Asciminib nearly doubled the major molecular response rate at 24 weeks compared to bosutinib. Asciminib is well-positioned for launch in third-line CML, as we're preparing to leverage our broad commercial footprint and the established collaboration with the hematology community. We are pleased to see a very high pre-launch awareness of 80% amongst Hematology. We have completed FDA and EMA filing earlier in June. The U.S. FDA has granted 2 breakthrough therapy designations and fast-track designation for Asciminib and is reviewing the file on the real term oncology review. This approval expected early next year. And just to remind you that Asciminib has blockbuster potential in the third line, but we are also seeing opportunity to address the unmet need in first line CML and therefore, has initiated a Phase 3 study of Asciminib versus investigator selected TKI, with final readout expected in 2024. Another exciting asset that we are preparing to launch is our Radioligand therapy Lu-PSMA-617, Lu-PSMA-617, that has demonstrated significant OS and rPFS benefit in advanced metastatic prostate cancer. Our awareness campaign on PSMA and Phenotypic Precision Medicine is progressing well with the awareness among target physicians doubling over the last 12 months. Our focus is on the Top 200 treatment centers and education about process optimization, as well as on treatment side expansion to ensure side readiness at launch. We completed filing this FDA. And in addition to breakthrough therapy designation, also receive priority review with PDUFA date in the first half of 2022. In addition, we have completed filing to FDA for registration of our own gallium PSMA 11 PET kit to further support availability of imaging agents. And submission of both Lu - PSMA and Ga-PSMA PET to the EMA is on track. So we're moving this confidence into earlier lines of therapy and have initiated 2 Phase 3 studies with Lu-PSMA in metastatic hormone-sensitive prostate cancer and in pre - taxane metastatic prostate cancer. So overall, very much looking forward to bringing these 2 assets to market and with that, I hand over to Harry.

Thank you, Susanne. Good morning and good afternoon, everyone. I'm now going to walk you through some of the financials for the third quarter and the first 9 months of the year. And as always, my comments referred to growth rates in constant currencies, unless otherwise noted. So on Slide 38, received a summary of our operational performance for the third quarter, the first 9 months, very solid quarter 3 with strong performance of our innovative medicines division. As we had anticipated, the businesses normalizing post COVID-19 with group sales up 5% and core operating income growth of 9%. Quarter 3, net sales reached 13 billion driven by the Innovative Medicines growth drivers. Core operating income of 4.5 billion was driven by higher sales and productivity programs across the business. Core EPS was up 11% to $1.71 and free cash flow grew very strongly by plus 64% in U.S. dollars to 4.4 billion. Year-to-date performance reflects the slower growth in the first half of the year, mainly due to the impact of COVID in certain parts of our business. We grew top and bottom line 4% and core EPS grew 7% to $4.88. And free cash flow was $10.3 billion growing 23% in U.S. dollars. Next slide, please. On Slide 39, I want to break down our performance by division. And as mentioned, the solid performance of the Company was driven by innovative medicines, which delivered a strong quarter with 7% top line growth, 13% bottom line growth, and a margin of almost 38%. Looking to the first 9 months for the year, Innovative Medicines showed a head equals of 6% on topline and 8% on the bottom line with margins of 37%. I just like to remind you of the seasonality of margins. As you know, the fourth quarter has usually lowest margin due to higher spending phasing. Innovative medicines year-to-date performance was driven by continued strong double-digit growth of the TKI. Vas, and Marie-France, and Susanne mentioned with 3.5 billion sales grow, sales growing 18% for Cosentyx, Entresto with 2.6 billion growing 41%. So GenPower reached already 1 billion in sales, the launch was accelerating. Additionally, the Onco control thrivers continue to do very well. Moving to Sandoz, 9 months performance reflects a heavier impact from COVID than in the other parts of the business. However, in quarter 3, Sandoz have seen some recovery, particularly Ex-U.S. where sales grew 3% driven by both biopharmaceuticals and retail generics. US states were impacted by double-digit price erosion, partnership terminations, as well as higher off-contract sales to the prior year. The U.S. continues to be a challenging business environment for the wider generics market. However, we expect the situation to improve also in the U.S. and the midterm as the impact of COVID-19 lessons in our biosimilar launches begin to deliver. On Slide 40. I just want to highlight the impressive growth. We have seen free cash flow, which is now 10.3 billion for the first 9 months, up 23% compared to the prior year. The main drivers of this have been higher operating income, lower payment from legal matters compared to what we had last year and favorable working capital. Now, turning to our full-year guidance on Slide 41. Overall for Group, we confirmed the current guidance. For sales, we continue to expect low to mid-single-digit growth and for the bottom line, we expect mid-single-digit growth ahead of sales. For Innovative Medicines and Sandoz, we are confirming the top line guidance, but we're fine-tuning our bottom line guidance. We continue to expect Innovative Medicines division sales to grow mid-single digits. Reflecting the strong performance of the division, we have to revise upwards core operating income guidance, which we now expect to grow high single-digit. For Sandoz, we continue to expect sales to decline to low to mid-single-digit range, but we now expect core operating income to decline mid to high teens. The key assumption for the guidance is that we see continuation of the return to normal global healthcare systems and prescription dynamics in the remainder of the year. And in addition, we continue to assume that no generics enter the U.S. market in 2021. Next slide, please. We thought it might be helpful to you to outline our expectations for the fourth quarter. In short, we expect a similar growth in quarter 4 as we had it in quarter 3 with the topline grow in the mid - singl digit range and bottom-line growing high single digits. Taking into account our year-to-date 4% growth both for top and bottom line, this brings us to our full-year guidance of low to mid single digit growth for sales and mid-single digit growth for the core operating income line. Finally, on Slide 43, as currencies are constantly changing, I want to bring to your attention the estimated impact currencies, what happened to our results using the current exchange rates. So if late October rates prevail for the remainder of 2021, the full-year impact of currencies would be a positive 2 points on both sales and core operating income. For quarter 4, it would be -1% point on sales and between 0 and -1% point on core operating income. And as a reminder, we always update these impacts of the currencies on our website on a monthly basis. And with that, I'll hand it over back to Vas.

Thank you, Harry. Moving to Slide 45. We did want to give you an update on some of the events we'll be holding later this year and into next year. Based on feedback from our investors, we've decided to convert our December 2nd event as our capital markets space, we are focused R&D event on Innovative Medicines. Here we'll go over our R&D asset, life-cycle management programs, our mid-stage portfolio in each of our key therapeutic areas, as well as our newer scientists on hand to discuss our technology platforms and other efforts within NIBR. And on May 23rd and 24th, 2022, we'll plan for a meet Novartis management event, which we hope to hold in-person. Moving to Slide 46 and closing solid quarter, strong performance from Innovative Medicines, we've raised our peak sales guidance, and really demonstrating our confidence in the long-term growth of the Company. We remain confident in the pipeline, in the launch brands to fuel our growth not only in the mid-term, but also with our science-based innovation for the longer-term. And we've announced the strategic review of Sandoz, a leading business in generics, operating an attractive market and this is the right moment to really evaluate who is the best owner for that business for the long term. So thank you very much for listening and we'll open the lineup for questions. I would say to each of our questioners, if you could limit yourself to 1 question and then move back into the queue, we could do our best to accommodate everyone's questions. So with Operator, please open the line.

Be reminded, to ask a question [Operator Instructions]. Your first question comes from the line of Graham Parry from Bank of America, please ask your question.

Great. Thanks for taking the question. So it's on NATALEE and your comments on the slide that you 3 re-reviewed the FDA feedback and that invasive disease survival is acceptable as a primary endpoint, provided no detriment to overall survival. That seems contrary to how it's treated [inaudible 00:46:28] where they were asking for more RAC if it occurs are separating. So could you just clarify when was that feedback given and why do you think FDA could treat Kisqali differently from Bosinio (ph). And are you stratifying by cash 67 score as well given the FDA was also interested in -- or -- and your previous by-market population for Tasigna. Thank you.

Thanks, Graham. John?

Thanks for the question, Graham. And we did have discussions with the FDA on our NATALEE trials. We increased the sample size for our NATALEE trial knowing the criteria that we've included for the overall study population. These discussions were recent, I would say that it was within the end of the third quarter where we have these discussions and they gave us very clear feedback that the design and the endpoints actually would be supportive based on the invasive DFS endpoint. Given that obviously the results would be based upon the overall totality of the evidence that's available, as disclosed earlier and shared with you. We have looked at the overall patient population. We've looked at the overall population focused on intermediate and high-risk patients in the study, which is based on the AJCC criteria. That also includes biomarkers and gene-expression test to select the high-risk patient population overall. So what we also know is based on the intermediate risk population, the IDFS rates are similar in this intermediate risk population as in the high-risk population. So based on the overall totality of the background here, we're very confident in our approach.

Maybe just wanted this and I think specifically. We do collect Ki-67 data in the study, but right now that's not part of our statistical analysis plan. And of course we will share that data with the FDA when requested. Thanks Graham. Next question.

Thank you. Your next question comes from the line of Peter Welford from Jefferies, please ask your question.

Thanks for taking my question. Just on the Sandoz strategic review, I wonder if you can give us some insight into perhaps, what internally and there are metrics that you'll tops assessing or looking at during the course of next year and also whether or not there's still VA into both, I guess, for turning this business to growth, but also still potentially put the margins back on a positive trajectory before the business is separated. or if you now believe that the U.S. global solid business is now essentially in terminal decline and that businesses is not a business, you say that it's appropriate to be part of Novartis. Thank you.

Than you, Peter. So I think as always and as we learned through our outbound review as well, we consider a number of factors. One, of course, is the synergies between our Innovative Medicines business and the Sandoz business, as well as the dis-synergies between holding both of these business. We also consider, I think, capital allocation and capital allocation measures to ensure we're optimately allocating capital to maximize shareholder returns. We, of course, want to consider what would enable us to build the best generics Company at aspiration to be able to leading generics Company in the world and which that would best enable that. I mean, those are all the in-broad strokes, the factors. And I think you saw with the Alcon spend that we're adapting and understanding these factors, hopefully making the best decision for our shareholders and the relevant businesses and then taking the relevant actions. Harry, anything you want to add?

I think, Peter, of course, all of the other details, right? The different options, different tax implications, if it would not be retaining the business, all of those you would expect that we would, of course, always consider. But I think all of this will be part of our strategic review. And I think fundamentally, the question comes down to who is the best owner of this very good generic business.

Maybe Richard on the growth profile, Richard?

Yes. Thank you, Vas. I mean, Peter, you comment about the U.S. and we clearly -- that the U.S. business we've had very few launches in terms of oral solids over the last year, 18 months and currently we're washing out a number of the partnership deals as well. The medium long-term that's much more attractive both as we accelerate the number of small molecule launches, but also more importantly, we bring a number of biosimilars to the marketplace over the next 3, 4 years, which should materially change the direction of the business, both in the U.S. It's also worth noting that the European business now is back into growth as is our international business. So broadly, it's starting to normalize post-COVID.

Thanks, Richard. Thanks, Peter, for the question. Next question, Operator.

Thank you. Your next question comes from the line of Andrew Baum from Citi. Please ask your question.

Thank you. Question for John. It relates to Canakinumab. John if I remember in terms of the early supression of the curves, the treatment effect that we saw with Canakinumab was attributed to metastatic disease in these patients. With that in mind, assuming it is a viable mechanism, should we expect a interim analysis to read out positively? And if it doesn't, we should therefore see in the productivity of its success is very low. And then separately, perhaps you could comment on whether even there's any role for this drug given this is an increasingly well-served indication, meaning the adjuvant with geocentric degree. So -- and more indication, more drugs on the way. Thank you.

Andrew, I'll take it up because I was here for the CANTOS study development. So in that result, I think first and foremost, it's important to note that the cancer study had an inclusion criteria of 2 milligrams of product DL of HSCRP. The median was in that kind of 2 to 5 range in the overall study population. Our hypothesis, at the time, was that these were undetected cancers. Cancers were -- they were not detected in the screening either through physical diagnosis or imaging that in the course of the study Canakinumab was able to reduce the incidence of these cancers becoming fulminant and the mortality of these patients. This, we believe, was due to IL-1 beta as role in the tumor micro-environment and IL-1 beta potentially having a role in enabling and blocking IL-1 beta, enabling immune cells to enter the cancer and therefore, potential synergistic effect in the medistatic setting. And in the adjuvant setting that's in the initial stages of a tumor development, that IL-1 Beta plays an important role. So I don't think that an interim read on this is going to be meaningful. I think this study was going to have to go to the end. We believe the positioning of the medicine, is very much that Canakinumab in our view, has a very favorable safety profile given the long experience we have treating children with this medicine, who find it very well tolerated. We didn't see any differences in this first-line setting. And so having the potential, and I would say it's high risk to be clear of an all-comers therapy for the adjuvant setting that does not require any PD-1 screening, could be attractive. Now whether physicians choose an IL-1 Beta therapy or a PD-1 inhibitor that will all have to be figured out, but it's important to note as well the adjuvant canopy study is an all-comers study based on what we knew at the time from the CANTOS study, and is the lowest CRP group of the studies in terms of the median CRP levels and the enrolled patients, most consistent of the CANTOS study. Thank you, Andrew. Next question, operator.

Thank you. Your next question comes from the line of Laura Sutcliffe from UBS, please ask your question.

Hello. Thank you very much. And just on your new Entresto PK of guidance, does that $5 billion number capture the possibility of an LOE earlier than the 2025 anchor date that we've been talking about so far. Thank you.

Marie-France?

Yes. So for our internal forecasting assumptions, we're looking at 2025 and that's how we've forecasted. So far, if you'd like a little bit more detail on why we feel comfortable with the 5 billion plus on Entresto, it's really based on the significant market potential, the further implementation of guidelines and obviously the recent launches in Asia. and that leads us to 5 billion plus mark, but that is assuming for our internal guidance, say 2025 LOE.

Thanks, Marie-France. Next question, Operator.

Your next question comes from the line of Simon Baker from Redburn, please ask your question.

Thanks so much. Question for Susanne on Lu-PSMA. I was wondering if you are pursuing on the diagnostic side at Tc-PSMA imaging kits, because the feedback that we've had from radiology over here, is that there is a huge excitement in the UK about, Lu-PSMA, but there is some concern that each utility beyond large centered because of the need for gallium PSMA screening will make it harder to use more portly. I just wonder if that's feedback you've seen elsewhere. If you're looking at using the much more easy to administer, if not quite so impressive Tc - PSMA kit in order to support on the number of centers that can practically use it. Thanks so much.

So thank you Samir for the question. We have focused on Gallium - PSMA, really to have this ready for launch, and we wanted to make sure that, there is a diagnostic available. You see the other options also focus on gallium and then, I think there is quite a push for a fluoride, PSMA diagnostic. As this is still, I would say across the T7 mark. It's the most used diagnostics. I think tagnisium(Ph) is quite focused in the UK, I didn't hear so much about that ex-UK, and I mean SBR targeting earlier lines of therapy. you have to see that we really have an diagnostic available that is very easily available and that's certainly the fluoride one. So that's what we are focusing on, and probably?tech? is quite focused in the U.S. -- sorry, in the U.K.

Thanks Susanne. And I just wanted to take a step back, I would clarify a comment I made to Graham's question; for NATALEE, we are collecting Ki-67. It's in about 70% to 80% of the total enrolled patients. It's part of the statistical analysis plan, but not a pre-specified stratification factor. So with that, we'll move to the next question.

Your next question comes from the line of Keyur Parekh from Goldman Sachs. Please ask your question.

Hi. Thank you for the question. 1, on Leqvio phase, Marie-France, can you spoke about the confidence in Leqvio launch and the preparedness for that going into 2022, kind of the clarity around what you partnered with NHS in the England still remains very kind of them of a clear, unclear. So just wondering if you can give us a bit more details on how we should think about the rollout of this molecule in the UK. And then just in the same way, I think consensus is looking at about $250 million in revenue for this drug next year. Do you think that appropriately reflects what you see as the launch dynamics for this? Or should we be thinking about something lower or higher than 250 million for Leqvio next year. Thank you.

Marie-France?

All right. So thanks for the question and the opportunity to talk about Leqvio. So on the UK, first of all, we're very happy with the positive, nice approval, and the commitment from the NHS to fund and treat 300,000 ASCVD patients. I think that's provides solid proof that we can get the broad access prior to the outcomes data and based on the back of, obviously, solid evidence around LDL C lowering. So what we're doing right now in the UK, and this is going to be the focus for the next couple of months is really identified patients and work on the care pathways to reach 1200 GP networks. It's early days, but we're doing -- we're having -- we're seeing really great progress around central funding, the digital patient IDs, the incentives for GPs, and the educational programs, and the feedback from lipids specialists and GPS is also been very positive, so we expect a slow ramp in Q4, but you can expect to see some significant ramp up in Q1 of next year for the UK. if I then turn to the U.S. again here, we're focusing on the 200 systems of care. And as we said, we're also looking to build buy-and-bill. The first half of the year is going to be focused on our J-code building up the buy-and-bill infrastructure, going through the P and T reviews, and making sure that we're ready and then you will see that uptake towards the second half of the year. And the number you quoted, we feel extremely comfortable with that number for next year.

Thanks, Marie-France. Next question, operator.

Your next question comes from the line of Seamus Fernandez from Guggenheim Security, please ask your question.

Oh, great. Thanks so much. Just a quick question. I noticed that your G12C agent moved into or is planning to move into Phase 3. Just help us understand the data that prompted the planned advancement of the KRAS G12C (ph) inhibitor. And then just as a follow-on to that, do you think that asset can differentiate meaningfully from other therapies on its own or is the differentiation really keyed to near-term development in combination with your ship 2 inhibitor? Thanks.

Thanks, Seamus, I'm handing that to John. John?

Hey, Seamus thanks for the question. Our KRAS G12C, which is JDQ433 in our program. We have advanced this molecule forward and plan to have Phase 3 and Phase 5 first half of next year. What we've seen is really good PK-PD data and good tolerability by the patients. As we move forward you'll be hearing more about this in the congresses next year. On your specific question about the strategy moving forward and differentiation versus the other KRAS G12C in the potential marketplace and in the marketplace now. We think that the approach for KRAS G12C is really on combinations. What we've seen so far is that you are getting -- the durability is probably not as long as what we would like, and that we're seeing mutations. And with those mutations this will be a combination approach. And these combinations could be a number of factors including, our potential PNO shipped to our pipeline. You'll be hearing about that combination from our pipeline next year also.

Thanks, John. Next question, Operator.

Your next question comes from the line of Sureta Capilla (ph) from Morgan Stanley. Please ask your question.

Thanks for taking my question. If you can help us understand the rationale for taking your BTK inhibitor already breakneck fall within in CSQ, especially when maker lithe math is being trialed in assessing OSA. How are you thinking about positioning of the two assets, relative to one and other, and also to fix it? Thank you.

Thank you for the question. John.

Yes. So remibrutinib, as you probably have seen, is our highly selective and potent covalent oral BTK inhibitor. We did do an extensive Phase 2 program and CSU, which was recently released, and what we saw is really good uptake and the efficacy was extremely strong. Now what we've seen is the efficacy we're seeing both at 4 weeks and at 12 weeks and in addition to that, we saw efficacy barrier early at the one week time point. So really strong efficacy data, turn back on the safety profile, which as we think about BTK inhibitors sometimes are saddled with LFTs, also, cytopenias. And we did not see that in our overall program. So given our approach, we're very comfortable advancing CSU in our Phase III program. Now, one thing we should also note is Ligelizumab. We've seen Phase II results which were equally strong. And the approach that we're taking here is Ligelizumab would be given -- giving patients and opportunity at Q4 with treatment with a subcu injection and then Remibrutinib would be an oral opportunity given the large, massive unmet need and CSU patient population as our over all [indiscernible].

I think Marie-France is going to add a few more points, Marie-France?

So just maybe going back to the size of the market and the unmet needs. So we know there are about 1.3 million CSU patients who are in adequately controlled in the top 11 markets. In fact, these patients are on antihistamines and steroids and really almost considered forgotten or unwanted patients. So we really want to make a difference in the space. Of course, we have potentially strongly differentiated asset which Ligelizumab and an opportunity to increase the biologic penetration. We also have a strong footprint. Not only with dermatologist, but don't forget that we work with XOLAIR in the U.S. and so we have the strong relationships with allergist as well. And then bringing in oral to market would really sort of complete the picture and make it perhaps a attractive first option post antihistamine for CSU patients. So we're very excited about this space. We think we can build on a legacy that we've already built and make a real difference for these patients.

Thanks Marie-France. Next question, operator.

Your next question comes from the line of Jo Walton from Credit Suisse. Please ask your question.

Thank you. I wonder if I could just go back to Sandoz. And if you could give us a little bit more detail on your biosimilar program. If we're going to be trying to value this will have to really think about this, perhaps more detail than we do when we just look at Novartis on its own. Perhaps you could just tell us a little bit about where you think you're going to be particularly successful and give us some help as to see how we're going to 3 billion by your 3 billion sales targets. Thank you.

Thanks, Jo. I'll hand it over to Richard. Richard?

Thank you, Jo. As you know, we don't normally disclose specific details of our programs. What I will say is we intend to launch six bio-similars in both the U.S. and Europe over the next few years which will start rapidly accelerating our business. And currently we have over 15 and expanding number of projects, both in-house development or through partnership deals that we intend to launch in the coming years. So clearly as we go through the process, at whatever time is appropriate, we'll give greater clarity in terms of the makeup of that. But obviously it's relatively sensitive in terms of recent disclosure.

I think the only point I would add is I think Sandoz does its best to cover the major LOE and I think there really is another wave of LOEs in this kind of '24 beyond standpoint and biologics. And with an increasing interest in the U.S. to enable biosimilars to fully participate, I think it's a tremendous opportunity for the Sandoz business. Thanks, Jo. Next question, Operator.

Your next question comes from the line of Richard Buffett from JP Morgan. Please ask your question.

Hi, thanks for taking my question. Just going onto Cosentyx. Obviously, your last -- this year we had some formulary disruption. which you navigated very well. Maybe give us an idea how the discussions have gone for '22 and is that a normalization, have you said that you can see volume rates coming through or managed to win back and again positioning? Thanks very much.

Thanks, Richard. Marie-France?

Thank you, Richard. So you're absolutely right in the U.S., we've seen strong value growth versus previous year due to this access change. What we have seen now in Q3, is quarter-over-quarter volume growth, And that's in line with the market. So we do expect volume growth to be the growth driver in the U.S. for 2022. We also expect our access position to stay stable, And we do believe that most major key pairs will have us on formulary. So ultimately what we need to do in the U.S. next year is really focus on our strengths, which is our existing markets. I talked about the focus on the PSO -- PsA co-morbid patient. There are 2/3 of the patients that have additional manifestations. And we have a really broad body of evidence in this space, the axial SpA patients. And then of course, preparing for IV, which could be a significant opportunity in the U.S. 14% to 18% of these patients are in medical benefit for PSA. And of course our Hidradenitis Suppurativa, 220,000 patients in the U.S. so significant opportunities to prepare for in 2023.

All right. Thanks, Marie-France. Next question, Operator.

You're next question comes from the line of Richard Parkes from Exane BNP Paribas. Please ask your question.

Hi, thanks for taking my question. It's just on business developments and now that, you've been relatively quiet this year. So I'm just wondering if you could talk about your appetite for, M&A based on opportunities out there, and valuations and maybe thoughts on capital allocation, if there were some near-term opportunities. Thinking about buyback and what decision might be made on that. Thank you.

Thanks, Richard. Harry.

Hey Richard, overall, we remain with our capital allocation priorities as we obviously laid out, investment your organic business, growing dividend as you have seen in March, coming in over 7 billion. Then, of course, both on M&A. And in-licensing, the way we did the in-licensing of Tesla [inaudible 01:10:01] for 650 million and we have continuously of course, creating the market and we continue to look opportunistically for board on M&A opportunities that fits our franchisers and existing infrastructures, if you will. But of course they won't happen every year. Therefore that's one of the, up to, and from that standpoint, we got a formula, but we continue to be biologically on that path. And then from a share buyback standpoint, as you know, we always buyback employee parts of patient program as we did this year to never dilute our shareholders. And we finished in the first half a 2.5 billion program that we announced end of last year. So we working along those lines on our capital allocation and no change in our M&A and?BD? strategy.

Thanks, Harry. Next question, Operator.

Next question comes from the line of Naresh Chouhan from Intron Health. Please ask your question.

Hi there. Thanks for taking my question. Just one on Sandoz [inaudible 01:11:10], and the Sandoz more integrated into Novartis and [inaudible 01:11:14]. Could be really helpful if you could quantify the size of dis-synergies and isn't fully separating Sandoz out, to allow us to kind of value any value creation from a separation [inaudible 01:11:27]. Thank you.

Harry?

Yes. Now, that's of course, what is strategic, if you will inform us about, and that's why we take some time to do that very thoughtfully. And there are -- I would say there are 2 components to this. Also, if I compare this to the Alcon situation as we analyzed, and of course no decision made at all. So include all position of retaining, but also in case of the separation, I would say it's probably a bit easier at the moment because Richard and Steffen Lang and our technical operations team and the Sandoz team are focused on making the manufacturing and supply chain as autonomous as possible over the last 2 or 3 years. And that phase has been completed. And within Novartis, so there we are probably ahead of where we were when we announced Alcon. On the other hand, of course, the business has been built over 20 years plus with acquisitions. And system-wide, fully integrated, where Alcon probably was a bit more separate as it was shorter with the Company. So we have a couple of head and tailwinds. But that's why doing such reviews takes that time and we indicate that in a good year, we will give an update if things go a bit faster, become earlier, but this is operation in complex. And of course we have to exactly figure out synergies, dis-synergies, potential stand-up costs, tax considerations, and as well as separation costs.

Thanks, Harry. Thanks, Naresh, for the question. Next question, operator.

Your next question comes from the line of Florent Cespedes from SocGen, please ask your question.

Good afternoon, everyone. Thank you so much for taking my question. A quick one on Asciminib. We're just wondering if you could elaborate a bit on your strategy in the first-line because you are just starting the clinical program, as you will position this products versus the pretty good already existing drugs. Thank you.

Susanne?

Thank you, Florent. As you have heard us, we're quite excited about Asciminib to get this prepared for launch in third line. As you show, we saw remarkable results versus Bosutinib in this setting, which tells us that is mechanism of action is very effective. And we know from medical experts and patients that there is still high need in first line. CML patients really are on a life-long treatment. And we know that if you have a fast and deep molecular response early on, this could -- it even lead to a treatment-free period, and that's what really experts are aiming for. So there is the desire to be even better in first-line. The approach that we take is really to compare it to different TKIs, that's why we allow investigator. Selected TKI so that we have a broad range of compare their products. Then we have to see, the focus certainly is then on the deep molecular response. If we can prove certainly that, that really has significant potential. So that's the strategy we're pursuing for Asciminib and early 9.

Thanks, Susanne. Thanks, Laura. Next question, Operator.

Thank you. Your next question comes from the line that -- line of Tim Anderson from Wolfe Research, please ask your question.

Good afternoon. And thank you for the questions. Mr. Richard Wagner with Wolfe Research on behalf of Tim. Question on Sandoz, please. How does Novartis avoid a situation similar to Pfizer's Upjohn spend? For they direct to a lower multiple business. Now, when analysts didn't sum of the parts analysis, ended up with a figure that base than we suggested this spend was destroying value because the multiple and the Upjohn business was lower than that was put on the parent Pfizer Company as Sandoz spend could end up causing the same thing to occur because generic kidney multiples are pretty much always lower than pharma Company multiples. So how can Novartis mitigate those? Thank you.

Thanks, Richard. So first and foremost, I think we're focused on building a strong business with clear sales growth, outlook, strong margin outlook, they can be a leading global generics player. I'd also note that when you look in the generic sector, you see a wide range of multiples. When you look at specialty generics players, players that are more exposed to Europe or Asia versus players more exposed to the U.S. And so that's all of the work we need to do to really understand what is the best way to maximize value for our shareholders, as well as enable Sandoz to be as successful as possible. And we have a range -- I think of different options. We can look lack and it's very rightly point out, including retaining the business. I don't see it as an analogous situation, especially given that Sandoz is the Number 1 generics player in Europe, the Number 1 global antibiotics player in the industry, and the number 1 bio-similars Company globally; and sales primarily driven by the XUS business. So relatively low U.S. exposure, which in our view is what drives the lower multiples of some of the peers. So that's kind of our perspective at the moment, and we will of course update it as we do the assessment. Thanks a lot, Richard, for the question. Next question, Operator.

Your next question comes from the line of Wimal Kapadia from Bernstein. Please ask your question.

Wimal?

Apologies. It looks like the line has disconnected. So we'll go on to your next question, which comes from the line of Simon Baker from Redburn, please ask your question.

Simon? All right. Next one, Operator.

One moment. It looks like I've opened Simon Baker's line, please go ahead, Mr. Baker.

Hello, can you hear me?

Yeah, we can hear you Simon. Thank you.

Excellent. Excellent. Yes. A quick question for how we're just following up on the subject of the buyback. Could you just remind us what your buyback mandate capacity left is because I noticed that this is the first Q3 for about 8 years when you haven't bought back any stock. So just a reminder on what you are left able to buy would be great. Thank you.

Harry?

Thank you very much, Simon. So all of you have pretty much to think close to our authority from the AGM. But we do usually get a renewal of it. But overall, when you look over the last years, we have consistently done like the those formula again, but roughly, 2.5 billion per year or 5 billion every two years. Again, not a formula, it completely has to do with what opportunities do we have basically on M&A and our board on M&A. And then, of course, so from a capital allocation standpoint, that the first 3 priorities are worked through. And then, of course, in terms of where the share price is, but it's not only a question of share price, of course, also capital allocation priorities. And we just finished one. So from that standpoint at this moment, we have not announced additional ones.

Okay.

Thanks so much.

Next question, Operator?

Thank you. You have a further question from the line of Graham Parry from Bank of America, please ask your question.

Thanks for taking the question. Again, and then this one's on Remibrutinib, just wondered what data, if any, you have on CNS tissue Remibrutinib and if you have any brain penetration with it, any evidence of any effects on microglial cells. So that's something which some of you obviously talks about with remibrutinib. Thanks a lot.

Thanks, Graham. John?

Yes. Thanks, Graham. We have done some pre-clinical studies in this area. We have seen CNS penetration. In this early stage, what we don't know is exactly what the extent of the clinical validation and clinical correlation in the central, when you actually have central activation in these areas. So given that what we're confident of overall and Remibrutinib is that, it's a very clean profile asset. As I've stated earlier, in terms of potency and selectivity. We look forward to sharing some of these pre -clinical data as well as, the overall clinical profile for remibrutinib.

Thanks, John. Next question, operator.

Your next question comes from the line of Emmanuel Papadakis from Deutsche Bank. Please ask your question.

Thank you for taking my question. My question's on back of the queue take cup is on may want, we have access pipeline in neuroscience. It's been, somewhat, slow story since the deal, the numb to set back in?RET? somewhere in today, if you could just give us a bit more color on that. Was that safety or efficacy relate, that'd be very helpful and next steps I think we are anticipating clinical of element free drips and ILS by now, but don't think you've announced anything to-date. And then maybe the second question, if I may. Just the shape of '22 looks pretty similar to '21 for you one and similarly thereafter. So I'm thinking low mid-single-digit sales growth with some margin improvement. Perhaps you could give us some initial thoughts on why that statement might be wrong. Particular heads and tailwinds for next year would be helpful. Thank you.

Thank you, Emmanual. First on our gene therapy pipeline -- first, we have a number of targets that are progressing right now in the clinic. I mean, with the intrathecal now entering into Phase 3, with a number of ophthalmology programs to the recent Opto genetics acquisition. With some of our Neuroscience assets, we've decided to optimize our program to ensure that we really get, I think, the optimal capsid as well as insert combination that will enable us to maximize efficacy. We've done extensive profiling work now, and we think that's the prudent course. It doesn't change our commitment, Tourette syndrome. Friedreich's ataxia; nd behind there we have a number of other programs advancing in monogenic as well as polygenic neurological diseases. So as with this field, we're always learning and this is a case where we learned something more in our pre-clinical work and it's making us just take a pause and optimize the program and then we hope to move back quickly again into the clinic. Clearly, these patients need better therapies. In terms of the shape of '22, it's really, of course, pretty mature for us to comment, but maybe Harry can provide any perspective.

Yes. As always, we have tradition of guiding for next year with our full-year results, end of January. And overall on the margin progression -- on the market progression, if that was part of the question, I would expect basically incremental continued improvement over the next years. So that we do expect basically sales growth, of course, of next year, this must h as laid out with a 4% CAGR roughly and with that the incremental margin improvements. So after we have improved the margin, almost 300 basis points last year, you'll see another margin improvement this year. But of course, last year was also due to the almost inability to partly promote given the pandemic situation. And on top of that, we have now further improved with excellenct productivity programs, resource allocation, and a?normal? of cost consciousness, and changing the way we run the Company in a more efficient way, taking full advantage of virtual opportunities.

Thank you, Emmanuel. Next question, Operator.

Thank you.

Thank you. Your next question comes from the line of Jo Walton from Credit Suisse. Please ask your question.

Thank you. I just wonder if you could talk a little bit more about your enthusiasm in CAR-T. So, the current generation hasn't done so well. Now, you're bringing a new one in. What's going to be so different? And have you sort of solved the problem, whereby older people's blood can actually be more effectively manipulated and just have more successful and perhaps faster treatments? Thank you.

Thanks, Jo. We -- we've -- our teams have done a lot of work and we've learned a lot since 2015 when we've entered this space. But we continue to believe that CAR T therapy -- cell therapies have the transformational benefit when successfully delivered as you've seen in the patient populations are currently licensed and have a tremendous potential. So we invest in a new approach, which we believe can optimize our cost of goods importantly, which enables us to make a much stronger financial return, optimizes our speed of production, which enables us to flexibilize production increased scale. But most importantly, hopefully, can generate more durable and deep responses for these patients so that we get higher ORRs or CRs as our -- as is relevant. And we believe that -- continue to believe that autologous approaches versus allo approaches are the best way to do that. I think our?neighbor? scientists have done an outstanding job and and will at least present the first set of data at ASH and then we'll move forward from there. But I think it's worth remembering, we have a global footprint in cell therapies, a global capability. And we have the ability, given our financial firepower, to stay at the course and really try to be a long-term industry leader. Next question, Operator.

Your next question comes from the line of Stefan Schneider from Global. Please ask your question.

Thank you. What kind of cough cold season is captured in your full-year guidance, and maybe in this context for Quarter 4 year, right. Started to turn up pre-COVID levels in several markets, can you specify that a bit further? So what several wit markets do you think of? Thank you.

Richard, on a cough and cold.

Thank you, Steffen. In our guidance, we've assumed, I guess a more normal cough and cold season in line with previous season. So we've not assumed an exceptional one, but we' ve assumed it did in line with previous years. Clear it's worth noting that the previous cough and cold season with pretty much non-existent, due to social distancing and mask-wearing. But we're seeing that that normalizing a pickup in demand of our anti - infective business, as well as our OTC businesses. Certainly in Europe and in other markets.

Great, thanks, Richard and I believe you have one last question, operator.

Your final question comes from the line of Wimal Kapadia from Bernstein, please ask your question.

Great. Thank you for taking my question. I believe somebody already asked on the microglia for remibrutinib. Can I just ask on Kisqali, please? And just the feedback post - MONALEESA-2 OS benefit. Are you really seeing any increased appetite to use to the drug with the other CDK46 and what is your base assumption for the share that you can now capture in the metastatic setting longer-term? Will they stay to have to change dynamics? Just looking at the volume trends in the U.S. Where do you think that relatively modest expansion is shared so far? So how should we think about the next few years? Thank you.

Thanks, Wimal. Susanne?

Thank you for the questions. I mean, as you rightly say, the MONALEESA-2 data is certainly the biggest segment where we now also could demonstrate OS data. And we really hear feedback from medical experts that these are quite impressive data and confirms that there is something differentiated about Kisqali. So as I said, the last weeks, we see increased demand also in the U.S. And we keep focus and really delivering this message, working on getting this education story through. And we also quite encouraged that now with COVID getting more normalized, that more patients died because that is, of course, certainly, what was kind of hindering that with less patients getting new treatment initiation. There was also less opportunity to grow. So we remain confident in Kisqali. We will focus on educating. And I believe Kisqali is the best differentiated OS or CDK4 with strong OS and, therefore, we believe we have the confidence for Kisqali to remain a significant growth driver.

Thanks Susanne. And then Harry, just one quick correction.

I just looked at our rebating share buyback programs, so we just renewed recently, it's roughly 8.5 billion. So we have room, but again no plans at the moment.

So to be fair enough, billing authorization from the AGM, but no plans at the moment. So with that, we can close the call. Thank you all very much for joining. We look forward to you joining us on December 2nd, our R&D day, we will have our R&D leaders walking through the pipeline giving you relevant details. Hopefully, getting your understanding up and hopefully excitement up on our mid and early stage pipeline. Look forward to that discussion. In the meantime, wish you all very well Thank you, again.

This concludes today's conference call. Thank you for participating. You may now disconnect.