Novartis shares were down by 4.4% as the market opened, following the announcement on its earnings call of a disappointing $2.1 billion in net profits and $0.92 earnings per share for 4Q20, below most investor estimates.
Taljat David/Shutterstock
Novartis shares were down by 4.4% as the market opened, following the announcement on its earnings call of a disappointing $2.1 billion in net profits and $0.92 earnings per share for 4Q20, below most investor estimates. The company reported net sales of $12.8 billion for the quarter, driven by 6% volume growth, and in particular 2% growth from its pharmaceuticals business unit.
COVID-19 lockdowns have impacted prescription sales, according to the company, particularly in ophthalmology, dermatology and its Sandoz generic medicines units. Low patient traffic to physicians and hospitals has limited patients starting or switching to new medications. The company anticipates continuing pandemic-related effects through the first half of 2021, and minimal impact on the majority of its regulatory submissions through 2025.
The company faced significant regulatory challenges in 2020. Leqvio, a small interfering RNA therapy, was approved by the European Commission in December to treat lower levels of low-density lipoprotein cholesterol (LDL-C) for cardiovascular disease patients with hyperlipidemia.
But the U.S. Food and Drug Administration (FDA) hit the brakes on approval in the U.S. via a complete response letter to Novartis last month, citing problems with a third-party manufacturer’s facility. In its update, Novartis said it expects a response to the FDA’s letter by 3Q21, dependent on the manufacturer. The company noted FDA did not list concerns about safety or efficacy, and said it is moving to add an internal Leqvio manufacturing facility.
Novartis has also been dealing with another regulatory snafu. While the company highlighted $920 million in U.S. sales for Zolgensma, the gene therapy has been on a partial clinical hold in the U.S. since 2019, pending completion of additional preclinical and clinical studies to confirm efficacy and safety in older patients with type 2 spinal muscular atrophy. Novartis AG CEO Vas Narasimhan said animal data is expected later this year, and said additional global approvals are expected in the first half of 2021.
Narasimhan touted Novartis’ “solid” performance despite COVID-19 headwinds.
“Operationally, we grew sales and continued to improve core operating margins for Innovative Medicines,” he said in a statement, and highlighted the U.S. launch of B-cell therapy Kesimpta for relapsing multiple sclerosis, and the European Union launches of Leqvio and Zolgensma, among 26 approvals the company received last year. “Looking ahead, we are confident that the progress we have made on our strategic priorities as a focused medicines company, will result in top and bottom line growth through 2025.”
The growth in Novartis’s pharmaceuticals unit was attributed to sales of Zolgensma, Entresto, and Cosentyx. Entresto was approved in 2019 to treat pediatric heart failure and last month had a positive advisory committee meeting that could lead to an additional approval in heart failure patients with preserved ejection fraction. Cosentyx received FDA approval in 2020 for non-radiographic axial spondyloarthritis.
