Novartis stays focused

No big deals needed, executives insist, but a pipeline purge continues and analysts warn of a growth problem.

Novartis’s pipeline pruning, which commenced last year, stepped up a gear in the opening months of 2023. The group binned around 10% of its clinical-stage projects in the first quarter, it revealed alongside earnings today, as its quest for quality over quantity continues.

Chief executive Vas Narasimhan told analysts that the developer’s ongoing focus on five core therapy areas partly drove the cull; in oncology five tumour types have been made a priority. This slimming down comes amid concern that the Swiss giant’s pipeline will struggle to replace some painful patent expiries, but the chief exec insisted that there was no urgent need to buy in fresh assets.

In terms of deals, the focus remains in the sub-$5bn range, with Novartis “very actively looking” across partnering, licensing and M&A opportunities, he said.

“We want to stay extremely financially disciplined,” he said, adding that there had to be a “clear and compelling case for value creation, given the premiums that are paid. We hope to execute some additional deals in our core therapeutic areas over the coming year. But I think, given our positive readouts, we also don't feel pressured to do that.”

Those readouts include the Natalee trial, testing Kisqali in the adjuvant breast cancer setting, which was toplined as positive last month. Many of the questions on the earnings call were directed at the full readout, which remains under wraps and is expected at Asco, although that has yet to be confirmed.

How Kisqali performed across various subgroups remains crucial to know, although Novartis continues to make very bullish noises about the data. Narasimhan today said that the opportunity in this setting was around $6bn, and some investors seem to agree.

News of the hit has triggered a major recovery in Novartis’s shares, which have surged 25% since, to reach a record high. But concerns about growth remain. Berenberg analysts earlier this week forecast zero sales growth from 2025 onwards as patent expiries offset the contribution from recently launched drugs and the group’s pipeline.

Swinging the axe

If big deals are off the cards, then where is this growth coming from? Novartis continues to plug its key assets, which as well as Kisqali include Pluvicto, a radiopharmaceutical on which crucial data are awaited. Iptacopan is considered the group’s most valuable pipeline candidate, and this project is due to yield several late-stage datasets this year.

The pipeline cull announced today mostly concerned early-stage assets, with solid tumours in particular coming under the axe.

Notable developments include the cessation of pretty much all work on spartalizumab, Novartis’s late-to-the-party PD-1 MAb that it had already all but abandoned in favour of Beigene’s tislelizumab. Spartalizumab now features only once in the current pipeline chart, as part of a phase 1 combination with a CD73 antagonist, NZV930.

Elsewhere, the writing had been on the wall for some time for ensovibep, a darpin project licensed from Molecular Partners. And Intellia had previously revealed that its sickle cell partnership with Novartis had ended.

The group also seems to have exited Nash, with the early-stage asset FIA586 gone. At a pipeline review last year it had highlighted LJN452, an FXR agonist, for licensing out, and while that project no longer appears in its pipeline it apparently remains in a Novartis-sponsored phase 2 trial called Elivate. That study also tests Novartis’s SGLT 1&2 inhibitor licogligflozin, which is also now absent from its pipeline.

Finding growth

These early-stage assets were unlikely to move the needle for Novartis any time soon. Areas highlighted on the call that investors should be monitoring include a phase 2 obesity project, MBL949; proof-of-concept data should emerge later this year.

The BTK inhibitor remibrutinib is also one to watch, with Novartis saying that it has yet to see any liver toxicity issues that have plagued other compounds in this class. Finally, Narasimhan said the group was “very excited” about the potential of Car-T technology in immunology, with a small trial in lupus under way, gathering safety data for regulators before a push into other settings is made.

“This is our top priority for Car-T therapy. We are putting immunology ahead of DLBCL and multiple myeloma; our Car-T teams are working around the clock now to expand as fast as we can given the very powerful case reports that we've seen,” he said.

The Natalee win has probably given Novartis some breathing space. But the assets that remain in its pipeline need to keep delivering, or calls for more deal making will grow louder. 

Gone and probably forgotten: selected projects disappeared from Novartis's pipeline
Project Mechanism Setting
Solid tumours
WNT974 Porcupine inhibitor  Solid tumours
Gevokizumab (from Xoma) IL-1 beta antagonist  1st-line colorectal cancer 
NIZ985 (from Admune) IL15/soluble IL-15Rα dimer  Solid tumours
MAK683  EED inhibitor  Cancers
JEZ567  CD123 CAR-T  Acute myeloid leukaemia
WVT078 BCMA-CD3 bispecific* Multiple myeloma
ADPT03/OTQ923 (from Intellia) BCL11A  Sickle cell anaemia
FIA586  Undisclosed anti-inflammatory mechanism Nash
MHS552 Unclear  Autoimmune
LYS006 ^ Anti-inflammatory  Colitis ulcerative
ADPT06 ^ Unclear Cognitive impairment
HSY244  Unclear  Atrial fibrillation
Global health 
Ensovibep ^ (from Molecular Partners)  Multi-specific darpin  Coronavirus
LKA651 ^ EPO inhibitor  Diabetic eye disease
Note: all phase 1 unless specified with ^. *Mechanism according to internet search, not specified by Novartis. Source: Novartis presentations 

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