Novartis Boosts Forecast Again as New Gene Therapy Shines

(Bloomberg) -- Novartis AG raised its earnings forecast for the third time this year as new drugs including gene therapy Zolgensma got off to a strong start.

Sales of the world’s most expensive drug beat analysts’ estimates with more than 100 children treated since Zolgensma’s May approval. Novartis said plans are in place covering about 90% of commercial patients and about 30% of those on the U.S. Medicaid program.

“There has been strong and high interest in the product across the country,” Chief Executive Officer Vas Narasimhan said on a call with reporters.

Zolgensma, a one-time treatment priced at $2.1 million, is an alternative to Biogen Inc.’s Spinraza for patients with spinal muscular atrophy, a rare muscle disorder. Roughly half of Zolgensma patients have switched from the rival therapy, and Novartis expects a significant increase in the screening of newborns to drive future uptake, Narasimhan said.

The shares fell as much as 1.1% amid wider losses in European stocks, and were little changed at 1:49 p.m. in Zurich.

Newborn Screening

The company has proposed allowing Zolgensma payments to be made over time, but implementing that has been complicated, Narasimhan said. “We have not seen material uptake of installment-based payments at all,” he said.

About 100 children with the condition are diagnosed each quarter of the year, and the company expects to provide Zolgensma to about 90 of them on average, said Dave Lennon, chief executive officer of the AveXis unit that developed the drug. Newborn screening programs will help Novartis identify and treat more newly diagnosed patients, he said.

Most children with spinal muscular atrophy have been able to access Zolgensma through insurance, Lennon said. The company is offering refunds when the drug fails to work, and thus far no child has needed it, he said.

Manufacturing Queries

The drugmaker has received additional questions on Zolgensma manufacturing from regulators in Europe and Japan, Narasimhan said. Novartis now expects a ruling from a key European committee in the first quarter of 2020 and a decision in Japan in the first half of next year.

That’s not related to an ongoing probe of how the company handled data from early studies of Zolgensma in animals, Narasimhan said. Novartis has faced criticism it should have told regulators about the data irregularities before the drug’s U.S. approval, and the U.S. Food and Drug Administration has said civil and criminal penalties are possible.

Profit excluding some items is now expected to increase by a mid- to high-teens percentage this year, the drugmaker said Tuesday. That follows a guidance increase last week at Swiss rival Roche Holding AG.

The drugmaker also lifted its revenue outlook as sales of Piqray, a new breast cancer drug that Novartis is counting on to be a growth driver, beat estimates, along with the company’s top seller, the Cosentyx psoriasis treatment. In a setback, Novartis said early trials for the drug fevipiprant in patients with asthma didn’t meet their main efficacy goal.

--With assistance from Michelle Fay Cortez.

To contact the reporter on this story: James Paton in London at jpaton4@bloomberg.net

To contact the editors responsible for this story: Eric Pfanner at epfanner1@bloomberg.net, John Lauerman

©2019 Bloomberg L.P.