Novartis Stock

Hi, everyone, and welcome to our Q3 earnings call. Let me briefly read the safe harbor statement before we can begin. 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 and its 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 over to Vas.

Thank you, Isabella, and thanks, everybody, for joining today's call. If we could move to Slide 4. So in the quarter -- although one second, we're just getting our slides moving here. In the quarter, Novartis delivered sales growth and core margin expansion, and that supported an upgrade to our full year 2026 bottom line guidance. You can see sales were up 4% in constant currency. Core op inc was up 10%. Mukul will go into the numbers in more detail, but we also had a good margin performance in the quarter.

A number of important pipeline milestones, notably, of course, as you all know, the remibrutinib data, but also Rhapsido received FDA approval, Pluvicto also with important approvals in the U.S. and China for HSPC. Pelabresib was also filed in Europe and del-zota received FDA priority review for DMD 44. Overall, this allowed us to increase our guidance, and we'll go through that in a bit more detail on the call.

So moving to the next slide. Priority brands continue to perform well in the quarter. They were up 29%, very strong performance across Kisqali, Kesimpta, Scemblix and Leqvio, a solid quarter from Cosentyx. Pluvicto, we're still in the midst of launching in HSPC. So we haven't seen that pick up yet, and we'll talk more about that in a bit. And Rhapsido also with a very strong performance as well in the quarter.

So moving to Slide 6. Kisqali grew 37%, and it continued to outperform the CDK4/6 market. You can see that our eBC shares, both in U.S. and Germany are very stable and at a very healthy level. Turning to the U.S. first, 38% growth in the quarter, $3 billion year-to-date. We are the leader in eBC, and our NBRx share was up 3 points versus prior quarter. 53% of the patients now on Kisqali are from the exclusive population.

In metastatic, we're continuing to grow our NBRx share in first line, which is now at 55%. And we continue to grow our prescriber base as well. It was up 12% versus prior year and up 44% in early breast cancer. Outside of the U.S., we had 35% constant currency growth, continued leadership in metastatic breast cancer. Our growth is accelerating now in many of our key markets with the early breast cancer launch now approved in 84 countries and reimbursed in 43 countries. And I think some of the benchmarks that demonstrate the performance, Germany, 80% eBC share, U.K., 77%; and China, relatively recently after the launch already reaching 55%.

We also released a few weeks -- last weekend, the NATALEE 6-year data, which showed a clinically meaningful overall survival with a hazard ratio of 0.809. And we expect that data to continue to support our growth in the adjuvant setting. I think notably, having that OS data and showing that CDK4/6 combined with endocrine therapy in those node 0 and node 1 patients gives us a strong case to have physicians provide patients with CDK4/6 inhibitors like Kisqali.

Kesimpta grew 22%, fueled by strong demand. U.S. growth was up 21% in the quarter. Our TRx growth is outpacing the market. We were up 3 points overall in the MS market to 16% share. We were up 4.5 points in the B-cell class getting to 27% share. We see a continued trend to prescribing the medicine earlier and earlier lines of therapy. 77% of our NBRx is now are first line or first switch. Outside of the U.S., also very solid performance. We have 80% of EU4 patients are from a first-line first switch, and we see strong growth across Europe as well. We continue to generate evidence to demonstrate Kesimpta's activity in various lines of patients as well in longer-term follow-up. So I think that just allows us to continue to support this medicine and its very strong performance.

Moving to Slide 8. Pluvicto grew 20% in constant currencies. It was driven more by the ex U.S. momentum as well as by U.S. pre-taxane growth. The U.S. was up 9% in the quarter. That's primarily driven by the mCRPC pre-taxane setting with use predominantly after the first ARPI. The first-line NBRx share is up at 15% now, and we expect further share gains over time, and that remains our top priority to continue to drive that early utilization in the mCRPC setting.

We are in the very early days of the PSMAddition launch, and I'll cover that in a little bit further detail on the next slide. Outside of the U.S., we see great performance, 68% growth. We see accelerating adoption in Europe in many of our key markets, Canada and Japan as well as early momentum in China. Japan became the fastest market to reach 1,000 patients, supported by ongoing site expansion and also we are building a facility there. China, we had the approval of the PSMAddition indication in August, and we expect that to support growth as well.

Now moving to Slide 9. Turning to the PSMAddition launch. I think first, it's important to highlight we have strong foundations in place for the brand, 2/3 of hormone-sensitive prostate cancer patients are managed by physicians who are already using Pluvicto or are connected to established referral pathways. We see broad treatment capacity with 9 out of 10 patients within 30 miles of a site. And we also see -- we are also continuing to address the nonclinical barriers. You can see in the images of both the availability of an infusion and the scaled availability of the prefilled syringe.

It's important to note, we expect about 5 to 10 weeks of lead time for new patients to be treated, a combination of doing the testing required as well as the scheduling. We do expect the fastest uptake in high tumor burden patients and as well as the de novo patient segments where there is unmet need versus the current standard of care. We also expect continued expansion in the community, particularly in urology.

Overall, I'd say we're encouraged by the early uptake indicators. But we do think through quarter 4, we will see some uptake. And also important to note, we will hit the holiday, Thanksgiving and Christmas. So we really think next year is when we'll see further acceleration with the HSPC launch.

Leqvio continued to perform extremely well, up 63% in the quarter, and this is demand around the world. In the U.S., we're up 60%, outgrowing the advanced lipid lowering market. Our monthly TRx growth growing well ahead of the market and our main competitor. And I think that's in part driven by Leqvio's persistency and the high compliance rates we're seeing. We see very strong performance in Medicare, which is a good indicator of our performance in buy-and-bill where we're up to now 22% share. We also see increasing depth in our key health care systems, and we really focus on patients post event where there's a high propensity to want to get patients to their LDL goal. And then we also had our U.S. label updated with a cardiovascular outcome statement, and we're on track for the ORION-4 and V2P readouts that are expected in quarter 4 and in 2027, respectively.

Outside of the U.S., 65% growth. China growth continues post NRDL, and we've noted previously very strong growth in China as well as sustained growth in Europe. And then we're continuing to expand the Leqvio evidence base. V-CHALLENGE was presented, which showed LDL-C lowering better is superior to bempedoic acid.

Moving to Slide 11. Scemblix was up 67%, driven by strong U.S. momentum. And in the U.S., we continue to see very strong performance in first line. We have reached 33% share. And so you can see we're edging towards market leadership. We're really at market leadership now. And we're maintaining leadership as well in later lines where we expect continued shift in the treatment mix from second, third line towards first line. So very pleased with the U.S. performance. Outside of the U.S. as well, we're building off a very strong third-line leadership where we have 77% share across key markets.

The early line indication is now approved in 69 countries outside of the U.S. Japan has sustained first-line NBRx leadership at 56% share and Germany already at 33% share. So very excited about the trajectory of Scemblix as we move forward. Now Cosentyx had a solid quarter, up 9% in constant currencies. I think when you net out some of the gross to net, we're in the mid-single-digit growth range. So I think that's very solid performance with growth in both HS and the SpA indications. In the U.S., you can see our HS share is very stable in the high 40s. The SpA business is remaining resilient. So you can see as well on the bottom panel here, our share is steady at 14%.

Outside of the U.S., continued growth in Europe and most emerging markets, stable in China. And we expect continued indication expansion as we move towards the end of the life cycle for Cosentyx. PMR, polymyalgia rheumatica that was approved by the European Commission. We expect the FDA decision in quarter 4. And the HS IV was added to the label as well in October.

Now Rhapsido has had really strong launch momentum. You see that in quarter 3. And we also had the additional approval of symptomatic dermographism, which covers about 2/3 of patients with chronic inducible urticaria. And let's start with CSU. We continue to see the launch trajectory in the U.S. on a steady, strong pace, over 6,000 subscribers split between allergists and dermatologists, over 15,000 patients treated.

Our NBRx share is about 26%, and that's up about 3 points versus prior quarter. We've been very disciplined with the contracting. So that performance is in the context of about 50% access to label. We do expect further access expansion over quarter 4 and into 2027. And of course, as that access expands, we expect continued acceleration on the sales. Outside of the U.S., we're now launched in 7 markets, and we're steadily getting reimbursement step-by-step market by market. We do see strong early uptake in Germany and China. When you turn to inducible urticaria, as a reminder, symptomatic dermographism, this is the first ever approved treatment for this condition.

There's about 100,000 U.S. CIndU patients who are uncontrolled on antihistamines out of about 500,000 patients total and 2/3 of those with SD. We have 100% overlap with the CSU prescribers, so that should enable us to get to a very efficient launch. And we're already rapidly working towards filing the medicine across all 3 subtypes around the globe. So we're upgrading our peak sales guidance for Rhapsido in CSU and CIndU combined to over $4 billion.

And moving to the next slide. We had some important readouts in the quarter, which you're well aware of. Remibrutinib, hopefully, many of you heard the call on Friday, so you know well. So I won't belabor, but we'll go a little bit and further review on the next slide, but we were really pleased with the results. We show that we achieved disease control with outstanding consistent safety and the FDA submission is on track for quarter 4 with a priority review voucher.

Del-desiran, we had the -- didn't meet the endpoint in HARBOR, but we did have the evidence of clinical activity in the secondary exploratory analyses. We'll present that data at an upcoming medical congress. We're doing a lot of work now to prepare the next steps and engage with health authorities to chart out the next -- right steps for the development of the medicine. We did take a partial impairment charge of $1.9 billion, primarily driven by the time line shifting out by the additional clinical work that needs to be completed.

And then lastly, pelacarsen, the Phase III HORIZON study did not meet its primary endpoint. We will have that full data set presented at AHA and published in a major medical journal. And I think that will provide further insights into that data. Further development of DII-235, our once annual siRNA for Lp(a) is still under consideration. All of that taken together, we reaffirmed our 5% to 6% constant currency sales guidance for '25 to '30 and our mid-single-digit constant currency long-term growth outlook. We've done all the modeling. We feel very comfortable with those numbers.

Now turning to REMODEL, remibrutinib, we were really pleased with this data, delivered comprehensive disease control. You can see here on the left, all the data that was reviewed, including the 6-month PIRA, so independent of relapse progression impact is reduced by 30%. Very favorable safety profile, robust, consistent, no liver signals, no infection imbalances, 50 -- nearly 50% fewer discontinuations due to AEs, immunomodulation without B-cell depletion.

And as we all know, in multiple sclerosis with so many options, it starts with safety. And if you can't demonstrate a clear, clean safety profile, understandably neurologists will look for other options. So we think having that safety profile and then showing disease control is why we're so excited about the medicine. So the filings are ongoing, as I already mentioned.

And if you go to Slide 16, as a quick review for anyone who's not on the call, we see an opportunity in the naive population. So that's about 30% of that naive population, we think, would be open to take a medicine like remibrutinib. In the oral switch population, 40% to 100% of patients over time could prefer remibrutinib given its excellent safety profile and comprehensive disease control. We expect over time, as patients are fully controlled under anti-CD20s, patients who might want to be switched to an oral medicine, about 45% of those patients in the U.S.

And then the other segment, which is some of the older injectable medicines, over time, we hope to be able to address 100% of that patient population. Outside of the U.S., we estimate about -- around 38% is addressable. All of that taken together gives us confidence in a $4 billion-plus medicine with a further upside with the non-relapsing SPMS population. And as well, we will read out data in 2 years on the Ocrevus switch data, which could provide further momentum to these forecasts.

Now going to Slide 17. I won't go through the slide in detail, but just to highlight, we have multiple readouts coming out in 2026 and a strong catalyst path for 2027. We can cover it on the call with your questions, but all of the milestones that we have for the remainder of this year as well as next year are on track.

So moving to Slide 18. And with that, I'll hand it over to Mukul.

Thank you very much, Vas, and good morning, good afternoon, everyone. I will now share more details on the financials for the quarter. And as a reminder, my comments, as always, refer to growth rates in constant currencies, unless otherwise noted. Moving to Slide 19. So in the third quarter, net sales grew 4% to $14.5 billion, while core operating income grew 10% to $6 billion, mainly driven by our growth drivers as well as continued productivity in our business. Quarter 3 core operating income margin was at 41.6% of net sales. This is an increase of 2 percentage points versus prior year, and this is mainly driven by gross margin improvements as well as continued productivity initiatives, primarily in our SG&A business -- SG&A part of our business. Core EPS grew 8% to $2.46.

On a reported basis, in quarter 3, operating income was negatively impact -- was $1.8 billion, which is a decline of 61%, mainly due to higher R&D expenses. The higher R&D spend includes a $1.9 billion partial impairment of del-desiran. This impairment follows the Phase III HARBOR readout in DM1, and it reflects our updated assessment of the value of the asset as we evaluate the full data set and engage with the health authorities on the future development path for the product.

Net income for the period was at $1.2 billion, which was a decline of 71%, mainly due to lower operating income and higher interest income. And free cash flow for the period was at $5.1 billion, which is below prior year, primarily due to lower net cash flow coming out of our operating activities. For the first 9 months of the year, net sales were flat and core operating income declined 2%. Core operating income for the 9-month period was a decline of 0.8 percentage points and free cash flow for the same period was at $14 billion.

Moving to Slide 20, please. We remain committed to our shareholder-friendly capital allocation strategy, balancing disciplined growth investments in the business with meaningful capital distribution back to our shareholders. In quarter 3, we completed the acquisitions of Myricx Bio, adding to our early-stage oncology pipeline. We also exercised our option to acquire Sironax' blood-brain barrier delivery platform.

And at the same time, we continue to invest in our internal R&D programs. On capital distribution front, in the first 9 months of the year, we have now repurchased $2.8 billion worth of our shares under the current up to $10 billion share buyback program. Please note, we still have $4.9 billion of the program still to be executed.

Slide 21. Moving to guidance. So given our very strong bottom line performance in the quarter, we are raising our full year 2026 guidance for core operating income. We now expect for the full year 2026 core operating income to be in line to growing low single digit. For reference, this is an upgrade from the previous guidance of core operating income of low single-digit decline for the full year. At the same time, we are maintaining our full year guidance on net sales, expecting to grow net sales at low single digits for the year.

For 2026, we also continue to expect core net financial results to be an expense of $1.7 billion and the core tax rate to be around 16.5%. This is in line with our previous guidance for them. Moving to Slide 22. So beginning of the year, we talked about 2026 as a year of 2 halves. And with this quarter reading out, we're pretty much sticking to that outlook. As a reminder, in H1, net sales declined 2%, core operating income declined 7%. Both were impacted by the U.S. Entresto generic erosion. With a strong Q3 delivery, we now expect a stronger H2 performance.

For H2, we expect net sales growing mid- to high single digit and core operating income growing high single to low double digit. After stepping up in Q3, quarterly sales growth is expected to accelerate further in Q4 as we move beyond the impact of the U.S. Entresto generic erosion. On the core margin, we do expect a decline in Q4 versus Q3. This reflects a typical year-end phasing of our spend, also higher royalties as growth drivers scale up would play a part.

And finally, we will also see the impact of lower other income as a result of the Xolair biosimilars in the U.S. As a reminder, for 2027, we will provide our full year guidance with the Q4 results in February next year. Moving to Slide 23. If exchange rates remain at late October levels, we expect a positive 1 percentage point impact on the full year net sales and a positive 1 percentage point impact on our full year core operating income. If these rates also prevail in 2027, we would expect a negative 1 percentage point impact on top line and no impact on core operating income. As a reminder, we publish updated FX estimates monthly on our website.

And that concludes my remarks, and I will hand it back to Vas.

Great. Thank you, Mukul. So turning to Slide 25. We delivered strong growth in the quarter, driven by our priority brands and launches, which really shows the replacement power of the business. We've been able to successfully navigate the Entresto, Tasigna, Promacta expiry in the U.S., demonstrating we grew through the year. We will grow through the year, which I think really shows the power of the company.

We advanced the pipeline with positive readouts for our RMS and for Rhapsido as well as Pluvicto label expansion. We're upgrading our full year guidance for core operating income, and we remain on track to deliver our midterm guidance of 5% to 6% sales in 2025 to 2030 and our long-term growth outlook.

If you go to Slide 26, we're excited to also host hopefully, many of you at Meet Novartis Management where we'll provide an update on our midterm guidance from 2026 to 2031 as well as our long-term growth outlook. We'll update our peak sales potential for key growth drivers. We'll also focus on our mid- and late-stage pipeline assets, which we believe will support our long-term growth. We'll have, as usual, breakout sessions by therapeutic area, and we'll also have a panel session on AI in R&D. So we look forward to seeing you there.

And with that, we can open the line for questions.

[Operator Instructions] The first question today comes from the line of Sachin Jain from Bank of America.

Maybe I'll just kick off this one, it's usually helpful to hear pushes and pulls the '27 growth. So a number of launches next year, perhaps some color on what you're most excited about. Limited LOE, it seems into next year. So just to wrap the question, is the implied 4Q sales growth rate, the best proxy for how to think about '27?

Yes. Thanks, Sachin. I think overall, when you look at next year, as you say, we have less generic headwinds. We will be navigating the Entresto Europe headwinds, which will just navigate country by country. And so I think that's important to factor in there. But we do expect continued dynamic growth from our key growth drivers, brands like Kisqali, Kesimpta, Leqvio, Pluvicto, HSPC, of course, remibrutinib and CSU and CIndU showing acceleration.

We'll also have Scemblix, and then, of course, we'll also expect the ianalumab launch as well. So a number of things that will provide us the opportunity to have a strong 2027. I mean I think it's important to note in quarter 4, we are lapping a number of gross to net dynamics in the previous year. So I think it would be best for us to provide more detailed guidance as always in January. But I'd say, overall, we do expect to get back to where we were, dynamic growth in 2027.

Your next question comes from the line of James Gordon from Barclays.

James Gordon from Barclays. So I noted the comment on the Ocrevus to remi switching study and the focus on switching on Friday's call. But can you just talk about assuming the approval, what do you think the initial rationale for switching would be? And then what do you hope the trial will show? Because with the caveats of cross-trial comparison, the percentage of naive patients might make a difference. Ocrevus does look a bit more effective in terms of relapses and disability. But is that just due to different patients? So what's a good outcome on the trial? And what would that show?

Yes, absolutely. So I mean, I think it's important to note, obviously, we have to run to complete the study. But our expectation is that once an anti-CD20 manages the inflammation, particularly in controlling from an MRI standpoint, the overall inflammatory burden on the patient, that remibrutinib's ability to manage -- achieve disease control, particularly when you look at the disability progression and the PIRA without complete depletion of B-cell antibodies, which has advantages for patients or patients who no longer want injectable therapies.

So the idea would be to show patients once they're under control with the anti-CD20 that we can maintain control with MRI as well as other measures. And I think that would give you the opportunity to kind of treat and then maintain with remi. We're certainly also evaluating to do additional studies, again, with all of the anti-CD20s just to demonstrate that remi can control regardless of the anti-CD20.

And I think when you have patients that have been on anti-CD20s for 5 to 8 years, there is a desire for many patients, and we put our estimates in our forecast to get control through a safe oral medicine. But we're also equally excited by new starts in patients who don't want to start one on an anti-CD20, switching oral patients who are not feeling like there -- or physicians who are not comfortable with the level of control or also switching older injectable patients on to remi. So we think we have many opportunities to grow the brand.

Your next question comes from the line of Simon Baker from Rothschild & Co & Redburn.

It's [ Mike ] on for Simon. Thank you very much for the commentary on the SG&A line in 3Q. And I appreciate the seasonality in 4Q, but I'm just wondering what the durability is of that cost reduction and how we should think about that line going forward?

Mukul?

Yes. Thanks for the question. So productivity remains a very, very strong key pillar of how we run the company. If you look at SG&A for the quarter, we've actually seen SG&A 7% lower in Q3 versus previous year, while the company from a top line perspective has shown a growth of 4%. So this will, as we have previously said, this focus on driving the company forward while looking at productivity, SG&A productivity in particular, as means for us to get to those profit margins of 40% plus by 2029 latest would remain a focal point for the company.

We've also -- historically, we've said we are spending upwards of $11 billion every year on third-party spend. And this is a year, the last couple of years, I think the extreme focus on those cost categories, which includes things like agency cost, travel cost, consulting or professional services costs and trying to get some of these categories, we know have been significantly impacted by use of technology, use of AI and to get both from a demand as well as cost perspective, our fair share of the benefits that these categories are deriving is leading us to this productivity advantage, which is very durable as we look forward from an outlook perspective for the company.

Your next question comes from the line of Florent Cespedes from ODDO BHF.

Florent Cespedes from ODDO BHF. A question related to Leqvio. Now the ORION-4 results are expected by the end of this year. Could you come back on why it is earlier, is it event driven? And also, could you remind us what kind of profile for this product? And if the results are positive, is it fair to assume an acceleration of the sales next year for this product?

Yes. Thanks, Florent. So we have 2 studies. We have the ORION-4 and then we have the VICTORION-2 PREVENT. Both are looking at outcomes. ORION-4 focused primarily in the U.K. The VICTORION-2 PREVENT is a global study. We expect VICTORION-2 PREVENT to read out next year. I think both studies were designed in such a way to really look at if you look at the fixed time, so following up over a fixed time point, but holding for much longer than the competitor PCSK9, could you demonstrate a greater CVRR than the high teens that the other PCSK9 demonstrated.

So we'll see how that works. It's important to note ORION-4 was partially conducted during the pandemic. So I think that's something we're going to have to see how that data plays out. Nonetheless, we would expect both of these studies, given the cholesterol lowering for Leqvio, so LDL lowering is so clear to ultimately read out positive. And I think it would support the continued growth of Leqvio.

We've guided to be a $4 billion-plus medicine, very strong and dynamic growth around the globe. You're seeing that in the U.S., you're seeing that in China. And we're certainly looking at the peak sales potential of the medicine longer term. So I think certainly, the outcome studies would support that. We also have V1P, which is the primary prevention outcomes trial, which we would expect to read out in 2029. So a number of things, I think, that can support -- a number of readouts that can support the longer-term growth of Leqvio.

Your next question comes from the line of Graham Parry from Citigroup.

So you now have 2 quarters in a row with margins above 40%. I think the guide has been suggesting to return to above 40% by 2029. So can you maybe just talk to how we could see that progressing into next year? Could you see 40% earlier than 2029 and maybe even into next year? And then if I could just throw in a quick follow-up on the Pluvicto, are you seeing any potential impact of the draft proposed new DG-8070 guidelines for patient relief after radioligand therapy and any impact on the ability of sites to administer radioligand therapies in general?

Thanks, Graham. So on the margin, Mukul?

Yes. Thanks for the question, Graham. So we remain confident on our commitment to get to 40% margin by 2029. And the main drivers of getting -- for us to get back to that would be continued momentum on the top line as well as continued productivity movements. And as I've previously answered, I think most of it would come from SG&A as a percentage of sales. Now what we have to understand is, as Vas mentioned previously, I think during this time, we'd also have to deal with Entresto ex U.S. genericization as well as the U.S. Xolair biosimilar competition coming and hence, impacting other revenue, which is essentially pretty much $1 on other revenue all comes down to the bottom line.

So I think, give or take, we're talking of between 2% to 2.5% percentage of erosion to deal with from this other revenue perspective. So I think, yes, we've had a fantastic performance year-to-date, I think, year-to-date numbers of 40.1% from a margin perspective, but we do expect Q4 to be lower as it has always been with the spend going up in Q4. And then from there on, I think we would see continued investment in R&D, continued productivity measures, especially on the SG&A line, erosion on the margin as a result of other revenue wiping off or other revenue because of Xolair biosimilar wiping out and then we're getting back to 40% latest by 2029.

And then, Graham, on the Pluvicto, we don't see an impact from this regulation. I mean we did provide input. So we don't see any changes in site behavior from what we can tell. Certainly, we're working with the authorities to continue to educate them on the appropriate standards for radiation exposure and manage that appropriately.

But we don't see that. And if anything, we're having ongoing programs to look at Pluvicto readministration in multiple settings. So it could be given an HSPC and an mCRPC to give physicians more confidence that they could use Pluvicto and not have to reserve it for patients who are further progressing. So I will keep you, of course, posted if we see anything different. But at the moment, no impact from those regulations.

Your next question comes from the line of Kerry Holford from Berenberg.

I wonder, Vas, if you could give us a little bit more insight into the plans post-HARBOR, will you run another Phase III? Are you considering different endpoints and update on the time lines there? Also on the impairment, noting it was only around 1/4 of the total carrying value, perhaps the price up was not larger, so you did mention the delay to launch. Was that the key reason for the write-down? And should we assume there's been minimal change to your probability assumptions, your peak assumptions for that product?

Yes. Thanks, Kerry. So with del-desiran, it's early days. I think it's hard for us to, I think, give you too much color. What we're doing is a deep analysis of the trial data and really trying to learn as much as we can. We have an ongoing open-label extension, which is also providing us further insights and using that to further understand the profile of the medicine. And I think that will inform our approach for the next steps in development.

So I think once we have clarity and really alignment with regulators, we'll provide updates on what that next study will look like. We still assume we'll need to do another Phase III study to ultimately bring the medicine to patients. In terms of the math for the write-off, you have to do an additional study, of course, Phase III program, the time lines are the time lines. We assume a similar probability of success.

We, of course, make various assumptions, the scenario assumptions with respect to competition and that's how we arrive at the number. I would note that we also -- when we have accelerations, it may not always be the case, we marked up assets as well. So I mean, I think this is -- I wouldn't read too much into these numbers. I think it's more important that we just keep working as fast as we can to get the medicine forward to patients, and that's what we're focused on.

Your next question comes from the line of Steve Scala from TD Cowen.

On the second quarter call, Novartis said that ianalumab was on track for a Q3 approval. So we're now 1/3 of the way through Q4 and no news. On the second quarter call, the company also referred to data FDA was requesting, so real-time requests at least as of that point. So curious on the reason for the delay and what is the outlook?

Yes. Thanks, Steve. So we're in ongoing label discussions with FDA and providing them the analyses that they're requesting to finalize their review as well as to support them on their approach to labeling. We do expect an action by the end of the year. So I'd say everything is on track, and we're providing that information on a real-time basis, and we'll look forward to giving you an update, but we do expect the action before the end of the year.

Your next question comes from the line of James Quigley from Goldman Sachs.

On Pluvicto, you flagged the speed of uptake for PSMAddition, which is helpful. But for the past 4 quarters or so in the U.S., sales have been flat. So is PSMAfore -- is the PSMAfore indication sort of fully penetrated from a revenue perspective in the U.S.? And how should we think about the impact here with respect to PSMAdditions? Should we expect a similar pattern with a step-up in Q4 or the first half and then to plateau relatively quickly and then ex U.S. will drive most of the growth?

So interested on how you think that's going to play out, particularly with respect to Europe following the withdrawal of the application for PSMAddition. And also a very, very quick follow-up on Steve's question on ianalumab. How do you expect the market to develop given the positive data from a competitor? I know we haven't seen the ESSDAI benefit but how are you thinking about the potential scenarios around that?

Yes. Thanks, Steve. So on Pluvicto, I think there's a couple of dynamics. We see most of the demand, as I noted, in the mCRPC setting. And we continue to work to get physicians not to cycle ARPIs and then ultimately to -- ARPIs, excuse me, and to use Pluvicto for the first ARPI where it is indicated. So that's something we're working through. And I think we do very well after multiple rounds of cycling, and we're trying to get earlier and earlier in the treatment paradigm. And we do think there's a lot more opportunity in the mCRPC, but it does take time to change those physician behaviors, particularly in the community.

So we do want to see continued growth in mCRPC. And then on top of that, HSPC as well, we do expect there to be steady uptake. I do think that it's important to note that this is going to take time to develop. There are certain patient groups that -- the physicians are particularly interested. So I mentioned high burden patients or patients who are de novo. I think over time, as physicians get more comfortable in the community urology setting, we'll hopefully see broader use for Pluvicto in that setting, and that could then also take us up to further sales momentum.

As you also note, I would say, particularly, we're excited about the growth we see in Japan and China, where we see a lot of dynamic growth on the outlook for the brand and could be quite substantial. We also do see very solid performance in certain European markets, markets like France and to some extent, some of our other European markets. The reason, of course, we always think through our indications in Europe is just because of some of the pricing considerations. And sometimes it's not unfortunately the best move to add additional indications depending on what the various reimbursement agencies' perspectives are on the trial.

So we have to make those decisions in real time. But all of that taken together, no change in our peak sales outlook for Pluvicto. We think this is just the nature of -- you see a ramp initially and then you have a slower climb as you try to change behavior in the physician offices.

Now with respect to Sjogren's, I mean, very hard to comment. I mean, of course, we don't know the competitors' data in detail. And of course, they ran a different program. So I think we need to also understand their data as well in the high symptom burden patients. We're running a separate study in the high symptom burden patients, we ran duplicate studies in the systemic patients, replicate studies.

So I think the profiles of the studies are a little bit different. And so I think we'll have to see. Also, the mechanisms are very different, tissue B-cell depletion with ianalumab and CD40 ligand is targeting a different pathway. So I think there also could be nuances as to which patients respond, all to be determined, but hard to know until we see the full data set.

Your next question comes from the line of Chuong Huynh from RBC.

Just on your slide on the Meet the Management, you've noted this focus on mid-stage and late-stage pipeline assets to support growth. I don't want you to give too much away here, but can you frame which 3 or 4 Phase II assets do you believe to be the next assets for the next decade? And at the event, will you help with guidelines for peak sales time lines, anything to really help us start thinking about these for our forecast?

Yes. I think I don't want to get into -- so I want you guys to actually come. So I won't get into all the details. But I think we have a number of programs, first advancing in Phase III or expanding programs that we've not talked a lot about. I think certainly, abelacimab is high in our mind in trying to describe not only the pivotal study, but also the full spectrum of indications that we'll have pursuing for abelacimab. It's a drug we're very excited about.

Programs like Actinium PSMA, pelabresib, we haven't spoken a lot about, but we're advancing Pelabresib. Of course, looking provide further updates on some of the programs we acquired from Avidity. And then there's going to be additional mid-stage programs that we've not previously gone into. I don't want to get into it here on the call, but I think our goal would be in each one of the therapeutic areas to identify, let's call it, 1 to 3 assets that we want to get you guys to start thinking about. We'll provide you at least some perspective on how we think about it. Peak sales, we tend to reserve to indicate drugs where we actually have an approval in at least one indication and -- but we will provide updates on peak sales for our growth drivers as well as recent launches as well.

Our next question comes from the line of Thibault Boutherin from Morgan Stanley.

Just on the cardiovascular pipeline, the Lp(a) siRNA follow-on drug DII235, you mentioned is under assessment. What incremental data are you waiting for to make a decision? Are you waiting for competitor data on Lp(a) following the lack of signal that we've seen in Pelacarsen? And similar for pacibekitug IL-6 in ASCVD, we obviously have disappointing data from ziltivekimab in ASCVD and CKD, so what could be the path forward here for the IL-6?

Yes. Thanks a lot for the question. I think on Lp(a), we don't need to wait for necessarily competitor readouts. I think we have a lot of insights based on the study, and you all will see that from Dr. Nissen at AHA. And so I think we have a good understanding. And I think we're just trying to evaluate what -- is there a patient segment where we think that the medicine could make sense and how best to then ultimately run those -- run that study.

And I think that assessment is just ongoing. And so I don't want to supersede his presentation and the publication of the data, but I think we still have a lot of things to think through as we learn from that very large robust data set from the HORIZON trial.

I think your point on pacibekitug is well taken. I mean we are carefully assessing given the readouts that we've seen from our competitor, what is a reasonable development path, we're still working through that and trying to identify is there a patient group, and we focus on the ACS patients, so patients who are post an acute coronary event. Is there a trial design? Is it something where we believe we have conviction to think that there's a reasonable probability of success.

I think given what we've seen, I mean, anything we do would have to be considered a high-risk, high-reward approach, but that we're willing, of course, to take those bets in cardiovascular as appropriate. But that's still something we're working through. I mean we can discuss that further in Meet the Management. We still have to, I think, do some more analysis and thinking to finalize that Phase III program.

Your next question comes from the line of Matthew Weston from UBS.

Vas, you raised the remi peak for CSU and CIndU to $4 billion plus, but you said wait for the CMD for other peak increases. I'm just curious as to why the 2-tier timing. Is it because you wanted to reinforce the overall potential of remi, given maybe the market expected more for MS? I'm just interested.

Yes, Matthew, nothing too -- I think our thinking is not too sophisticated here, $4 billion for CSU and CIndU, $4 billion for the current MS readout, that's not including non-relapsing SPMS, that indeed equals $8 billion plus. And I think once we see the HS readouts, that would help us then I think, inform kind of the overall number that we want to head to. I mean we acknowledge we have food allergy as well.

We have chronic pruritus of unknown origin. We have rosacea. As you know, our standard is usually not to include peak sales for drugs that have not actually read out positive in the Phase III study. So any remi peak sales we give has to be based on indications that have read out positive. And so HS would then inform, I think, our thinking on the overall remi peak sales. And then if we ultimately were to be successful in food allergy, we would revisit the peak sales and then CPUO and rosacea. Does that make sense?

Yes, it does.

Your next question comes from the line of Peter Verdult from BNP Paribas.

Peter Verdult, BNP Paribas. Apologies for any background noise, traveling back from ESMO. But just one for you, guys. When we think about the key debate in the market, the mid-aspiration of growth beyond 2030 and what could help drive that from the pipeline. One asset we haven't talked about is rap-cel. So I just wanted to check in, is there anything incremental to say on those autoimmune studies that were paused over the summer getting restarted? I know when we saw you in September, you were talking about patients and docs clamoring to get these trials restarted, but are regulators moving at the same speed? Is there anything you can say there?

Yes. Thanks, Peter. I think we're still working through that safety assessment. And we have to obviously now, because we're on hold, prepare a full package and ultimately engage with regulators. So I don't have a specific time line. I mean all I can say is we're very committed. I mean we've seen the efficacy and it is impressive in almost every indication that we've taken the medicine into.

And I think now we just need to figure out exactly what is the right approach to mitigate this particular safety issue that we've identified at the IEC-HS. And so I think that will take us a few more months is probably the best guess I have at this point, and then we hope to get those studies started up again next year.

I think on the market debate, I mean, I think to your earlier part of the question, our plan certainly and Meet the Management at least outlined for you how we see, at least from where we sit today in 2026, how that first part of the 2030s will unfold, where you've got the LOEs, but then what we see from our in-line brands that have protection into the 2030s what we have from the new launches that we have coming online, what we see from the pipeline and help you guys bridge to why we're where we're at in the mid-2030s, 2035, 2036 versus the few calls there are right now for the consensus.

Your next question comes from the line of Michael Leuchten from Jefferies.

Vas, if I could please go back to ianalumab in Sjogren's. Just wondering if I could push that a little bit further on the inconsistency that we had in the data around regulatory ESSDAI and clinical ESSDAI and there was also subgroups of the endpoints that worked better than others. When you talk to label discussions with the FDA, is it about the definition of the endpoint and where the benefit is? Or is it about defining patient populations that should be the target population?

Yes. I think it's not about the endpoint. The endpoint results are robust. This is about how best to describe the benefits, which patients derive the greatest benefit, I think, is the best way to put it. And we're providing the necessary data to do that in the way they see best within the label. And that's probably as much as we know as well, but we're providing all that information as we continue to try to finalize the label with the agency.

Your next question comes from the line of Richard Vosser from JPMorgan.

A quick question on -- going back to remi and HS. We've obviously seen in the last week or so the lutikizumab data, which came in a little bit on the underwhelming side. So just that latest thinking on remi and HS, what types of patients have you got in the trial? I think there was differences in the -- between the 2 doses in Phase II. So just latest thoughts there.

Yes. Thanks, Richard. I think we obviously saw that data. And as you know, in immunology study, particularly in a situation like this where the placebo group can move around quite a bit, we'll have to see. I think our hope is that if we can show efficacy in the HiSCR75, also 50, but really the 75 in the range of biologics as a highly safe oral drug, especially if we can show that, that persists over time, this could be a very attractive medicine.

And then, of course, the upside would be we can demonstrate what we showed in the Phase II data where we had at least cross-trial comparison superiority to the biologics. There's a lot of this will come down to how the placebo group behaves. And we think we've done all of the right things to manage that, but that is the kind of wildcard in this whole situation. And so we'll have to see, but we have the 2 readouts sequentially, and then we'll provide that update. Hopefully -- I think we should hopefully get this done before Meet the Management.

Your next question comes from the line of Rajesh Kumar from HSBC.

Just thinking through 2027, I know you're going to provide guidance in January. But if we think of the mechanics of it, gross margin-wise, should we sort of assume that to be the trough here? And then we had a very strong performance of SG&A seasonally should reverse in fourth quarter a bit. But on a run rate basis, does $14 billion order of magnitude for '27 looks like a sensible ballpark number, which consensus currently is modeling?

Yes, go ahead, Mukul.

So Rajesh, I mean, you were talking about your estimates for next year. I think this is -- as we've previously said, I think we would wait for Q4 to give our estimates. But from a midterm perspective, I think we stand 25%, 35%, 36%. We've historically said that this will not be a linear growth path. There will be years like 2026, which will be more impacted because of genericization. And then there will be years like '27 where we will have less generic impact, but we would wait for end of the year to provide the necessary guidance for next year.

No, I appreciate that. The question -- the implicit question was that the SG&A we have seen the reduction we have seen in third quarter. Were there any structural elements there that we need to factor in when we are thinking about the future, like AI-driven productivity or certain cost reductions, which means for future, you won't have those costs or all of it is at the moment, cost containment as you go through the LOE phase?

Yes. I think, Rajesh. Okay, sorry, I got it now. So on SG&A as a percentage of sales, I think we've historically said that, that's the place where our margin improvement over the next 4 years is going to come. So as we spoke about getting to 40% by 2029, we've actually said that, that margin improvement will come from SG&A. And if I look at Q3, I think one -- taking one quarter and saying that's the estimate now for the next 3 years, I think it's annualizing it for the full year is not the right thing. But from a -- if we needed a data point to say, how do we get to that 40% margin by 2029 through SG&A, then I think here is a good data point that we have that we are absolutely on the right path, as I said.

Your next question comes from the line of Urban Fritsche from ZKB.

Just a question on capital allocation. You have been stepping up share buybacks quite a bit after del-desiran failure. So what's your thinking going forward with those share buybacks? Will they stay on that level, also taking into account that your shares have been nicely rebounded? And how should we -- how do you think about having those gaps open now from the recent failures and filling those versus share buybacks? That's my question.

So maybe on the first part of the question on the pace of the buybacks, Mukul.

Yes. So as you know, I think we -- share buyback is a clear pillar of our overall capital allocation priority, and this will not change going forward. You also know that we do the share buybacks on the secondary line here in Switzerland, which are -- clearly, we have certain constraints in terms of the amount of volumes that can go.

We do the share buyback through an independent partner and independent bank who does it. And we modulate how much we buy depending on market conditions. So this is what we have done in the past, and we would continue to do so. Absolutely right that as the share price took an inordinate significant reduction, we actually increased the pace, but we have to -- I think going forward, we would continue to modulate it up or down, and we remain committed to doing -- getting to that $10 billion share buyback program by end of 2027.

And then I think on the broader capital allocation point versus M&A, there's no change in our thinking. I mean we grow the dividend in Swiss francs every year as we have now done for almost 30 years. We are -- for 30 years, we are committed to investing in the core business. We do primarily bolt-on M&A under $2 billion, very selectively doing larger deals when we see something that's very compelling. And then with excess capital, we're committed to also returning capital to shareholders via the share buyback program. So all 4 pillars are things that are priorities for us. We do them in balance and no change based on any of the recent events.

Your next question comes from the line of Seamus Fernandez from Guggenheim.

So my question is actually on your approach in kidney disease. Vas, I was just hoping, you have a number of assets in the space across IgAN and other immunologic disorders on the kidney disease side of things. But just wanted to get a better sense of how you see Novartis' presence in kidney disease evolving from here, just given the intensifying competitive landscape in particular.

Yes. Thanks, Seamus. So I think clearly, the anti-APRILs have changed the landscape. I mean I think the data has been clear and compelling and really demonstrated that they are the standard of care. And so I think now we continue to believe Vanrafia will be a blockbuster medicine. We also continue to believe Fabhalta across all of its various indications will get to the $3 billion sales we've outlined for that medicine.

But I do think we've had to think carefully now on how to position these medicines in the context of the anti-APRILs. So I think zigakibart, of course, will have the readout next year. That will be an important milestone for us and then to determine how best to kind of position these medicines in the context of potentially having 4 different anti-APRILs in the market. And so that's kind of how we're looking at IgAN. I would say outside of the U.S., the story is very different in places like Japan and China, where we have very strong positions.

We're seeing significant opportunities for our IgAN portfolio also in certain other markets around the globe. So this will literally be geographically tailored for IgAN. We remain committed to adult polycystic kidney disease. We have farabursen, we're continuing to advance that in the clinic. We also have ongoing efforts for other rare renal diseases. And so that -- those generally are early stage, and that continues to be a focus area as well. So that's kind of how we're thinking about it. But we're in a state of flux at the moment as we kind of think through how best to position Vanrafia and Fabhalta in the context of the anti-APRILs.

[Operator Instructions] The next question comes from the line of Steve Scala from TD Cowen.

Regarding Kisqali, what portion of growth is attributed to the adjuvant setting? And what is the risk that Roche's giredestrant captures a majority of that growth? Is Novartis' defense solely based on having achieved OS and the duration of experience with Kisqali? I mean that's a good argument, but it didn't work for Lilly with Verzenio when you were launching Kisqali.

Yes. I think, Steve, we have very solid growth across all lines. I don't -- we can get you the exact number, but I think metastatic continues to be an area where we're strong with our NBRx share, as I mentioned, in the first-line setting. About -- as I mentioned, over half of the patients are coming from the node 0, node 1, where we're alone and then the other half for -- in the early breast cancer setting from the overlapping population with our competitor.

The way we think about it is we have a couple of things going for us. One, as you know, we have a very long history here in the market. And we do believe that physicians trust endocrine therapy that they had established for many years, maybe more than is currently being assumed in the market. And so I think that's not an insignificant task. We've learned that in many parts of different therapeutic areas to displace established therapies that are safe and effective is not always a straightforward task.

Second, with Kisqali plus endocrine therapy, you do have a long history and you have OS data now, which we think is something that we can use to significant effect, especially when you look at the overall benefits here for patients. This is something that's proven. You have the OS as well. And then lastly, we continue to work to generate data with Kisqali and the appropriate oral SERD to show that you could also use these in combination as well.

And we're, of course, thinking about that for our CDK2 and CDK2/4, CDK4 portfolio as well to make sure we have those combination data. So we think when you look from here, '27, '28, '29, 2030, we'll be able to manage this and achieve our $10 billion peak sales. And you yourselves can see where Kisqali already is. And then I would say outside of the U.S. should not be forgotten. I mean we do extremely well. You saw our very high shares outside of the U.S. given our strength ex U.S. we're not MFN constrained. We're not constrained by any of these other dynamics. China NRDL is obviously helping us quite a bit as well. So taken together, we feel very comfortable with the peak sales guidance on Kisqali.

Your next question comes from the line of Graham Parry from Citigroup.

Justing rolling Entresto European generics, I think regulatory data protection expires next month. But I think there were some SPC rulings on your SPCs to 2028 that might provide some protection in additional countries. So maybe you could just help us understand sort of timing of the expected launches across different European territories and if they differ at all?

Yes. So I mean, right now, you are correct, Graham, SPC expires next month. We don't currently expect any impacts in quarter 4. And then I think we're continuing to now work through the various cases in individual countries. I think each country has a different dynamic. And so I think it's really going to be -- it's really a country-by-country situation where we do have to make the filing for an injunction and then, of course, then goes through the various legal.

But we are absolutely committed to defending our patents in every one of these markets, and we believe we have a case to be made. And so we're actually doing our best to extend based on those valid patents Entresto's protection across Europe. But for a variety of reasons, I don't want to get into individual countries at this point in time. And then, of course, when we have clarity, we'll, of course, can pull that into any updates that we give in the various quarters.

Our next question comes from the line of Thibault Boutherin from Morgan Stanley.

Just a quick question on Kesimpta and the multiple sclerosis landscape in the U.S. Your main competitor has been increasing competition from BRIUMVI in the U.S. market. I know it's exactly the same channel, but can you comment if you noticed any shift in competitive intensity in the U.S.? Any color here because you seem to paint a different pictures for Kesimpta in the U.S.

Yes. Thanks for the question. I think for Kesimpta, what we do see is the market has split into physicians who are more oriented towards buy-and-bill, and there is a competitive dynamic there. And as you're aware, in the self-administration market, we've been able to go on our own, which is why our market share high 20s for the B-cell class and then continues to grow overall. We are working very hard to get the readout for the Q2 month Kesimpta next year, and we're on track for that and then continue to look at other life cycle management options.

And of course, we have remibrutinib as well now coming as well in MS. But we don't see impacts from the injectable competitor or the various at-home infusions and pumps, et cetera, for Kesimpta right now. We are watching closely the potential launch of a subcu from one of the competitors. But I think also there, it will be very important to look at safety profile. Can you get around the injection site reactions and any sort of premedication.

Kesimpta is a very, very comfortable for neurologists to use. So we're not expecting that to disrupt the Kesimpta peak sales outlook. And so I think overall, we're very pleased. And then again, outside of the U.S., Kesimpta performs extremely well. In many markets, we have 80% plus share for Kesimpta. So I think that just demonstrates that the brand is performing extremely well.

Your next question comes from the line of Sachin Jain from Bank of America.

Thanks for follow-on. Just actually an update on votoplam and FSHD, timing of the FDA meetings and how those interactions are going?

Yes. Thanks, Sachin. So we do expect the votoplam engagement in the coming months. And I think then appropriate updates will happen based on the 2-year follow-up data, and I think particularly focused on the intermediate advanced patients -- to the intermediate disease patients. With FSHD, we are expecting the FDA meeting again before the end of the year. And I think we're doing our best to make the case that -- for an accelerated approval filing based on the data package we have, which we think is compelling.

But of course, this is first-in-class medicine, a disease that's never had a therapy before, and we are, of course, going to have that discussion with FDA. I will also add in that before the end of the year, we also expect pelabresib potential accelerated approval discussion based on MANIFEST-2. We're running MANIFEST-3 right now. So that would give us confirmation that we -- if the FDA agrees, which we still have to see, we'll be able to file this medicine as well. So pelabresib would be a nice uplift as well and something we're quite excited about.

And then lastly, since it's not been asked, we did pass the abelacimab interim result. It was a very, very high bar. And we -- ultimately, the study will continue, but without any changes. So we feel really good about that and excited now to get that study to completion. And as I mentioned, we already have a program. I think I've mentioned in other settings that we are planning a study to start next year in secondary stroke prevention and also evaluating additional clinical trials for abelacimab, which we can discuss further at Meet the Management.

Your next question comes from the line of Richard Vosser from JPMorgan.

Just wanted to go back to the Xolair erosion. I think your partner was suggesting that Xolair might not go down next year. So I just wanted some clarification or clarity on the profit share agreement and how you're thinking about that going into '27?

Yes. Thanks, Richard. So Richard, I think we can work with the assumptions that we have right now in the market. We know that there is biosimilar right now in the market. There is potential for further biosimilars to come. And I think as we go into the next couple of years, as there will be more biosimilar activity, Xolair sales will go down, and hence, the profit contribution that we have that comes to us in terms of other revenue will go down, which essentially that other revenue comes into our core operating income, that puts this pressure that we will have.

Now you're absolutely right that if the amount of biosimilar impact next year is limited, then we would also have -- that impact that we would have on the margin would also be limited for us. But I think we'd have to see how this pans out in terms of biosimilar activity. But what is very clear is that we would see pressure on the margin in the next couple of years as a result of Xolair biosimilars in the U.S. Does that answer the question?

Yes, it does.

We will now take our last question for today, and the question comes from the line of Rajesh Kumar from HSBC.

So just in terms of your comment about share buyback, I know it's a core pillar of how you add value. What would you need to see in an acquisition opportunity for you to rethink that capital allocation decision to buy or do business development would be worth more than share buyback? I mean what would change your mind?

Yes. I think it's -- for us, given the free cash flow that we generate and our core operating income outlook, a 5-year plan, we don't see this as a trade-off at all. I mean we can do the M&A deals that we find attractive and maintain share buybacks. And since we're not contemplating deals that are so large that we'd have to compromise our share buybacks, we don't see this as a trade-off. Actually, we think it's something that can all work.

And then we, of course, have to pay things based on a number of factors, financing costs, debt load, et cetera. But I think overall, this is not a trade-off. This is a balanced approach that we plan to maintain over time.

Very good. So thank you, everybody, for joining. We always appreciate it. Always excellent questions and we hope we got to almost all of your questions. We'll look forward to seeing everybody at Meet Novartis Management, where you'll get to interact as always, with our R&D teams, our commercial teams. We think it's a great event. We always look forward to it and always appreciate all of your participation. So thank you very much, and we'll see you in a few weeks.

Good morning and good afternoon, and welcome to Novartis Conference Call and Live Webcast. [Operator Instructions] A recording of the conference call, including the Q&A session, will be available on our website after the call ends.

With that, I would like to hand over to Mr. [ Anish O'Dardi ], Executive Director, IR. Please go ahead, sir.

Thank you, Dylan. Good evening, and welcome to our conference call on Remibrutinib in MS . I'll first read our safe harbor statements.

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 and its most recent quarterly results Form 6-K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission.

Before we get started, I would also like to remind our analysts to please limit yourself to one question at a time and we'll cycle through the queue as [indiscernible]. And with that, I'll pass it over to Nazem.

Thank you, Anish. Good evening, everyone. My name is Nazem Atassi. I'm Global Head of Neuroscience Development Unit Novartis We. Are calling from MS Toronto. I'm delighted to be here in the room with Victor Bulto, from Novartis President, U.S. for Novartis and Professor Heinz Wiendl. Professor Director of Department of Neurology and Neurophysiology at University of Feinberg. Next slide.

The agenda, I'll start by giving an introduction about remibrutinib, and then Dr. Wiendl will walk us through the results of the REMODEL-1/-2 trial. After that, Victor will go over the commercial opportunity in MS and beyond for remibrutinib. Next slide.

Novartis has a long legacy in multiple sclerosis. And this is a history that transformed MS care over the past 2 decades, starting with that Extavia, Gilenya, Mayzent and Kesimpta. And today, we have remibrutinib results presented at MS Toronto and with simultaneous publication at the Lancet. Remibrutinib is the next chapter in the MS legacy for Novartis and the focus of today's presentation.

Slide #7. Remibrutinib is a BTKI inhibitor with a pipeline in a pill potential. As you can see on the slide, it is in multiple indications, including approved indications, such as chronic spontaneous urticaria and chronic induced urticaria in the U.S. In addition to and SPMS, which is the focus -- RMS is the focus of today's discussion, in addition to a number of late-phase development in immunology and dermatology.

Next slide, Slide 8. The promise of BTK inhibition is in addressing both the relapses and the disability progression without chronic B-cell depletion. Remibrutinib has dual mechanism of action. It targets B-cell in the periphery with adaptive immunity to reduce acute inflammation and relapses. It also targets microglia with innate immunity in the CNS to reduce chronic neurodegeneration and disability progression. Remibrutinib is very different than B-cell [ declare ] such as anti-CD20s. As opposed to anti-CD20, it modulates B-cells without depleting them. It also targets not only B-cells, but also microglia in the CNS. It has -- it's a covalent binder with short half-life, which allows for fast start or stop if needed to. And it has, as you will see, a safety profile that is favorable.

Next slide. Slide #9. Remibrutinib is unique. It was designed to deliver the potential of BTK inhibition. It is a covalent reversible binder for sustained inhibition of BTK beyond the PK exposure. It is also CNS penetrant reaching levels above microglial IC50 in the CNS. It is highly selective compared to other BTKI inhibitors. It allows for need complete BTK occupancy and high potency versus other BTK inhibitors tested in vitro. It has optimal PK and PD were short half-life. And as you can see in the middle, it has distinct chemistry compared to other BTKI.

Slide #10. This is published data showing remibrutinib selectivity as a highly selective compound tested in vitro, leading to fewer off-target effects and a differentiated benefit risk profile. As you can see, compared to other BTKI's, it has -- it achieved 100% BTK inhibition without off-target effects on other kinds.

Next slide, Slide 11. And as I mentioned, remibrutinib is approved in other indications. We have extensive clinical data that reinforces its proven and robust favorable safety profile. The comprehensive evidence of favorable safety profile includes not only the remibrutinib trial data that you will see today, but also includes more than 4,500 participants across 40 different studies with dosages up to 600 milligrams that took this drug. There is no liver safety signal, including no high law cases in any of these programs or patients.

In the [indiscernible] REMIX-1/2 Phase III trials, the safety profile of remibrutinib was comparable to placebo. That includes adverse events, infections, liver enzyme abnormalities were less than 2% in each of the arms, the placebo arm and in the treatment arm. And in terms of discontinuation rates, low discontinuation rate to less than 3% in both arms. We also have more than 10,000 patients that were treated with remibrutinib for CSU commercially with no liver safety signals reported. That translated to 2 FDA approvals for remibrutinib with a clean label, no black box warning, no contraindication and no requirements for routine lab monitoring.

And with that, I'll turn it over to Dr. Wiendl to walk us through REMODEL-1/-2 results in RMS. So Dr. Wiendl.

Yes. Thanks, Nazem. Yes, my name is Heinz Wiendl. I'm a neurologist participating in the remodel steering committee. And I'm presenting the data that has been released in full transparency today. So this is the trial design, and this is a trial design that is rather classical remibrutinib is tested against teriflunomide as an active comparator. Remibrutinib is given in the MS indication with twice a day 100-milligram teriflunomide is given with 14-milligram. The trial has been done in a double-blind, double-dummy fashion. So that means patients have to take 3 pills and the trial design was an event-driven trial designs. That means that participants were actually in variable duration within the trial and the trial endpoints were powered on events. The inclusion was the diagnosis of relapsing MS, and patients had to have signs of activity based on either relapses or the presence of gadolinium-enhancing lesions on MRI.

This is the list of the prespecified endpoints. So this trial was basically designed to show a superiority of remibrutinib against teriflunomide based on relapses. So reduction of relapse is calculated by the annualized relapse rate. We know in contemporary trials in [ macro sclerosis ] that the number of relapses in general, but particularly also on the comparator arms is going lower and lower, which makes the key secondary endpoint, such as MRI even more relevant. Why is that? MRI is 10x more sensitive than relapses, clinical relapses. That means a very objective measure of what a drug is doing in regard to suppressing [ focalesion ] development or gadolinium announcing lesion development can be objectively measured on MRI.

The visibility progression is then the next secondary endpoint. And in difference to the shown endpoint on the left side, I'm on Slide #14. They have been done not independently in the both trials. There were 2 trials. One was REMODEL-1 and the other REMODEL-2, it was done on pooled trials to increase the likelihood of the number of events. I will explain later what the difference is between the 3 months confirmed disability progression, which is CDP and the 6-months confirmed disability progression. And then there is a combination endpoint, which is called NEDA, no evidence of disease activity. And then there is a biological marker of neurodegeneration, which is neurofilament light.

There is then a other endpoint, which is secondary, which we will show is progression independent of relapse activity over 6 months. And of course, safety and tolerability, very importantly as endpoints in addition.

So Slide #15 shows you the baseline characteristics and to run you through this graph and the table. First of all, you have to note that the balance between REMODEL-1 and REMODEL-2 looks very good. That means there is no major differences in age or sex ratio or in time since diagnosis, et cetera. This is a typical trial in relaxing MS population with rather mild affection of those patients, which you can see as measured by the expanded disability status score. And what you also can see on the basis of the previous relapses. So it's not a typical to see this number of relapses and a rather mild affection of the EDSS score, which goes from 0 to 10, but it's a very typical relapsing and mass population nowadays.

On average, those patients had approximately 6 years since first MS symptoms and approximately 4 years since diagnosis. So this is Slide #16 that shows you our primary end point. And remibrutinib demonstrated a strong relapse control, translating to approximately 1 relapse every 13 years. So the independent analysis show in REMODEL-1, a 35% relative reduction of relapse rates and then REMODEL-2, it's 31.2%. If you translate that, how often a relapse then occurs is as written in the title, approximately 1 relapse every 13 year, which is a quite robust disease control.

Next slide shows you the MRI outcome measures. And I was mentioning already that they are have to be looked at with equal attention despite being secondary outcomes because they are more sensitive to changes and therefore also to differences between the 2 arms. And here, remibrutinib reduced new enlarging T2 lesions on an annualized rate by 65.3% or 70.3% in the 2 trials. And when you look at contrast enhancing lesions, you are seeing a reduction of 66% and 66% in both trials.

When you look at the absolute numbers, you will realize there is virtually no more gadolinium-enhancing lesion, so it's 0.08 or 0.07. So all in all, this is a very significant reduction on MRI. And why am I emphasizing this. I mean we've seen -- now a couple of BTK inhibitors. And the first ones we've seen, they basically did not really have a superior effect on MRI efficacy parameters in contrast to teriflunomide. And when you look at also comparative data fenebrutinib, which is another compound that has been kept in relapsing and mass population. These reductions are in the same ballpark region suppressing new T2 lesions and gad-enhancing lesions. So when you look at the MRI, this is a quite impressive effect.

Next slide. So this is now the combined analysis of the disability end point. You've heard from Nazem that this compound is expected to work in the body, both in the periphery, but has also the potential to penetrate into the central nervous system. We do have data that there is CNS measurable dosages. And therefore, we assume that it penetrates into the CNS when you calculate, you would assume that the dosages that reach the central nervous system have the potential to inhibit myeloid cells there. And that is the explanation why an endpoint that is mostly dominated by not the relapses, but also a relapsed independent or relapse dependent visibility progression could depend on how well the effects in the CNS compartment are played out.

And when you read this 3 months and 6 months confirmed disability progression graphs, you see there is a difference that is already starting quite early and that actually is statistically a difference of 20% risk reduction of 3-month conformability progression which is typically not significant at the 6-month confirmability progression is statistically significant, but the pattern looks the same in both graphs.

If you have a look at what is different in 3 months versus 6 months means, it's actually the robustness of the measure. So European health authorities, they only accept basically the 6-month confirmed visibility progression because they say it's less contaminated. You definitely have more events with 3 months confirmed disability progression, but it is also contaminated by transient worsening that might be picked up. And therefore, the more robust measure is in the community, the 6 months confirmed disability progression.

If you count this the other way around, so if you look here that only 7.7% had a visibility progression confirmed after 6 months, the rest is stable. But that means over 92% of the patients remain free of this progression. This means they are stable on the visibility scores. This is all in all, a quite remarkable difference that can be shown with the compound. And we also did not see that in all of the other BTK inhibitor trials that we have seen so far.

When you combine all even that show you some sort of instability of the disease means either clinical relapses or change in the disability score or the occurrence of new lesions, we call that evidence of disease activity. And the opposite is called no evidence of disease activity. And these 3 parameters make up this acronym NEDA and it's NEDA-3. This is a prespecified point that you can calculate, and that has been done by counting MRIs after a so-called rebaselining after month 3. What you see is you're increasing the number of NEDA patients up to 55%, which is highly significant and the [indiscernible] ratio of 2.81%.

We have also data on a biological marker that is meanwhile measurable in peripheral blood, and it's called neurofilament glide. The neurofilament glide is spilling out of the brain when there is subacute damage. So it's mostly as a consequence of focal activity. And it has established itself. Meanwhile, as a marker to get an additional support for what the drug is doing in suppressing inflammation and reducing brain damage. And what we do see is a reduction in this market as geometric mean over time, remibrutinib reducing 9% and 7% in the 2 trials.

Not part of the prespecified endpoint, but very often and relevantly opt for is a parameter we call PIRA. PIRA stands for Progression Independent of Relapse Activity, which means that you do not want to have a contamination by so-called focal disability or focal biology, which in essence means you're eliminating the clinical relapses and you have to find ways to eliminate this. And this is then called PIRA. So you basically calculate how a drug effect disability accrual in the absence of any relapses. This has been done with a strict actually definition of PIRA, there are more definitions than you will see.

On this graph, we are at Slide 22 that you see the same pattern, basically, a separation of curves with an impact on PIRA that is pretty much looking like the CDP curves that we have seen previously. We're showing that because the community meanwhile, ask for this. And it is an indication that a drug or a compound or an intervention is doing something that has rather little or in the best case, nothing to do with inflammatory activity outside of the central nerve system. That's something obviously in, we call it nonfocal disease biology.

So I'm moving to Slide 23 and coming to the important safety profile. So this is the major categories we are looking at comparing remibrutinib and teriflunomide in the pooled analysis, thousands in each arm. And what you do see immediately is that there is no major differences even that you have to acknowledge that there is less percentage of discontinuations due to adverse events, which already speaks towards a good safety and the tolerability. We have seen 2 deaths in the trial, both in the remibrutinib arm. One was a carbon monoxide poisoning happening at day 3 and another one was a suicide at month 12 in a patient that had a previous psychiatric illness, and both are considered not related to the investigator drug.

The other section is infections. This is something, of course, any immunological therapy is to be looked at with caution. And you do see really no difference in either direction and a class effect that is also listed here that is known from the class of BTK inhibitors and which is known also from the dermatological indications where remibrutinib is approved bleeding events. Those bleeding events are predominantly minor, and they are actually skin manifestations that are transient and reversible. And in very few cases, lead to discontinuation of the drug. They actually resolve even when you continue the drug.

I think you're all aware that one major red flag in this discussion around BTK inhibitors is liver toxicity. And this is particularly carefully looked at also, of course, in comparison to teriflunomide. And what you do see here is much less elevation of the most sensitive liver enzyme ALT in different, let's say, altitude. And the combination of certain liver enzyme elevation over 3 tons upper limit of normal with total bilirubin is called [ High Law ], which is actually considered a very yes, very clear red flag for liver toxicity. We didn't see any cases of [ high law ] and also the rates of liver enzyme elevation are comparably much lower than in teriflunomide, which is known to have a bit of a liver signal and also requires little monitoring in the approved condition every month for the first 6 months.

By the way, this is also what has been done in this trial. So for the first, let's say, 2/3 of the patient at teriflunomide liver monitoring was applied. So every month, but when the signal in the trial programs from the BTK inhibitors came out, the monitoring requirements were intensified. So the monitoring was then shifted to every 2 weeks which didn't really change the picture. And what you see in the elevation is basically the background noise of any liver enzyme elevation that you would see in placebo-controlled trials.

So all in all, you can summarize that this trial is pretty clean in terms of showing a significant reduction in the primary endpoint relapses which translates to a disease control, showing up 1 relapse every 13 years. For me, very important, the MRI activity reduction by 65% to 70% with basically very few [ gallalinium ] and housing lesions that ever occurred under the trial product, remibrutinib. We do see a population of more than 92% that are free from visibility progression. You do increase the likelihood of no evidence of disease activity by times 3 and we also show a 6-month reduction of progression independent of relapse activity by approximately 30%. This all in combination with a very robust and favorable safety profile, particularly as a standout no liver safety signals.

We do not yet have. This is a question I got today with my presentation at the late-breaking news, together with the publication from colleagues we do not yet have data for how immunoglobulins develop over time and how B-cell levels develop over time, but it's not expected that this drug is really meaningfully depleting B-cells, definitely not in the way that antibodies would do it.

Well, thank you very much, Professor Wiendl for this comprehensive review. Before we move to the next slide, I just wanted to pause on the next steps. We have global regulatory filings ongoing with the U.S. expected by the end of the year with a priority review voucher.

So now moving on to Slide 27. we are going to move to the next section where we will cover how we are planning to maximize remibrutinib opportunity in multiple sclerosis. So here in Slide 27, based on this unique profile that Professor Wiendl described in the previous section, we believe that remibrutinib has a broad potential to address patient needs across the RMS treatment landscape. In this chart, we outlined the main patient segments that have the potential to benefit from this treatment. And as you can see, there are 3 main patient segments in this market. The naive patients, patients currently on an oral treatment and patients currently treated with an anti-CD20 like [indiscernible]. And in the coming slides, we will go in depth into each segment, focusing first on the U.S. market to then describe the U.S. opportunity.

So moving on to Slide 28. The first segment represents naive patients, which are about 40,000 patients in the U.S. who are newly diagnosed with [indiscernible] MS. The majority of these patients start on an anti-CD20, but about 30% of naive patients in the U.S. are not prescribed around [ 320 ], citing the safety trade-offs and/or route of administration preferences. And as you can see in this chart, about 15% start on an overall treatment with the rest typically starting on injectables other than anti-CD20.

For this patient population, remibrutinib offers a comprehensive disease control with a robust favorable safety profile in an oral without the burden of frequent injections or infusion center visits as we see it, it's a safe treatment to start early and stay on for the long term.

Now moving on to Slide 29. This next segment is characterized by patients that are currently treated with an oral therapy. It's about 60,000 patients in the U.S., and these patients tend to have a strong preference for an oral treatment and/or safety concerns related to long-term B-cell depletion. 20% of oral patients actually switch treatment each year, and up to 40% are at risk of treatment failure due to efficacy or intolerance. So for these patients, remibrutinib is a differentiated oral option outperforming teriflunomide on comprehensive disease control and safety with 50% fewer discontinuations due to adverse events. Our initial focus during the launch will be on the 40% of oral patients who are switching or continuing despite port treatment outcomes with the opportunity to expand over time to the entire oral population. We also expect, over time, growing safety focus to support a higher switch rate.

Now moving on to Slide 30. This is the third segment and the largest one with approximately 140,000 patients currently treated with an anti-CD20. Only 10% of these patients are switching each year but we believe that with a new treatment option, up to 45% are eligible to sequence to another treatment like remibrutinib. As patients age and accumulate treatment exposure concerns around infection risk and long-term B-cell depletion become more relevant. And also, there are patients who are progressing on anti-CD20 and I want to switch to an oral that offers clinical benefit in terms of PIRA, as Professor Wiendl explained.

Remibrutinib offers for these patients comprehensive disease control and a robust favorable safety profile we have the need for chronic B-cell depletion. And just to note that we are currently enrolling the Phase IIIb RESHAPE study, which is expected to provide further evidence to informed post anti-CD20 switch.

Now moving on to Slide 31. Last but certainly not least, the ex U.S. opportunity also represents a significant one for remibrutinib as orals remain a sizable market, as you can see on the chart, there's about 440,000 patients treated and the top 7 x U.S. markets. And about 60% of mild to moderate naive patients in EU5 steroid orals anti-CD20 is the fastest-growing class, creating an increasing [ Postans ] opportunity as well. And in these geographies, remibrutinib offers high efficacy or option with a comprehensive disease control and favorable safety without the need for chronic B-cell depletion. Now it's also important to note that we have very strong ex U.S. commercial capabilities in multiple sclerosis to maximize this opportunity where Kesimpta leads in NBRx share in 7 out of top 10 markets.

Now moving on to Slide 33. To further build remibrutinib's potential, we have several studies underway and on planning phase that I wanted to review to support switching in RMS and expansion into SPMS. So beyond the REMODEL trials that we just presented, we are now in recruiting phase for the RESHAPE trial, which is a Phase IIIb study that looks at patients switching from ocrelizumab. This study has the potential to build further evidence to establish remibrutinib as the oral option after anti-CD20s without the need for chronic B-cell depletion. The earliest readout is expected in 2028. It's a noninferiority trial versus ocrelizumab with new enlarging T2 lesions as primary endpoint and a key single endpoint of no evidence of disease activity.

We're also currently recruiting the REMASTER trial, which is a Phase III study in nonrelapsing SPMS and we are studying the potential to slow disability progression, 6 months CDP. The readout for this trial is expected in 2031 with that primary endpoint of 6 months confirmed disability. Finally, we are also planning additional studies in other settings and after other therapies to inform and support switching.

Now moving to Slide 33. I want to bring it all together now to show you that remibrutinib has the potential to be a $4 billion-plus medicine and in relapsing multiple sclerosis with potential further upside from nonrelapsing SPMS. In the cheart below, we have shaded in orange the populations who have the potential to most benefit from remibrutinib and as you can see, it's north of 50% of the RMS population over time. And then also, we have included an additional 85,000 nonrelapsing SPMS has potential further upside if the REMASTER study shows a benefit in this population.

So now moving on to Slide 34. I want to highlight that to maximize this opportunity it's important to note that remibrutinib launches into an established MS footprint in the U.S. but also across the globe. At Novartis, we have been commercializing MS drugs uninterruptedly since 2009, and many of our colleagues, including myself and [ Sriramaradila ] have been involved in the development and commercialization of Extavia, Gilenya, Mayzent, Kesimpta and now remibrutinib. And during all these years, we have been compounding expertise and capabilities that we will now put in service of this medicine.

As you can see below, in terms of HCP reach, remibrutinib will have 100% overlap with established Kesimpta prescribers. And we also have an exceptionally strong marketing team who has been optimizing patient activation channels for years. And here, you can see how in terms of patient awareness. The team achieved very strong patient awareness increases for Kesimpta over the last years. Same in terms of market access, we have extraordinary expertise in market access as demonstrated by our very strong Kesimpta access as well as patient support programs to pull through patient requests as well.

Now moving on to Slide 35. I want to highlight that beyond MS-specific commercial capabilities we also -- I wanted to highlight that for this launch, we're building on capabilities compounded across multiple U.S. self un-ministered specialty launches, but with a fully owned patient support model with industry-leading breach program that enables between 3 and 5 days average time to dispense with market access team that has enabled more than 70% access to label within 6 months across most recent launches as well as free-to-paid conversions and a really strong customer engagement [indiscernible] has driven a 20% improvement in engagement effectiveness over the last 3 years. So as you can see, we are planning to launch remibrutinib with a proven launch engine that enables fast access rapid onboarding and effective engagement as well.

Now moving on to Slide 36. In this last section before the Q&A, I want to quickly zoom out and provide a broader perspective on the opportunity that remibrutinib offers as a pipeline in appeal.

So moving on to the next slide. Slide 37. Here, we currently have this chart that shows that we have 2 approved indications in CSU and CIndU. We just discussed the MS opportunity. Now we will highlight our plans in [indiscernible] and food allergy. Now before I do that, I just want to mention as well that there's 2 additional late-stage trials in chronic pruritus of unknown origin and in [indiscernible].

So now moving to the next slide, A quick summary on our launch performance in CSU as this is the first commercial footprint, proof point, sorry, for remibrutinib with strong momentum building towards first-line leadership. As of Q2, we had 200,000 U.S. patients treated more than 4,000 prescribers across allergy and dermatology with the majority of patients prescribed in first line right after antihistamines and with strong access secured as well. As a reminder, it's a very large opportunity with above 500,000 U.S. CSU patients on control and antihistamines, and we have extra lab also ongoing.

Just to highlight in terms of upcoming catalysts and adolescent Phase III readout this year and also a Phase IIIb reclaim study, which is a head-to-head versus DUPIXENT with a readout in the first half of 2027.

Now moving to Slide 39, just briefly also mentioning that [indiscernible] is also expanding into CIndU with the first and only FDA approval in symptomatic nermographism, building on that same prescriber base as CSU. This -- we received approval in October 2026 for this subgroup, the symptomatic dermographism that represents 2/3 of CIndU patients. And in this population, we saw twice as many adults taking [indiscernible] or achieving complete hydresolution by week 12. Again, a very important opportunity with about 100,000 patients in the U.S. with this indication.

Now moving on to Slide 4. Briefly, in [indiscernible], our Phase II data support remibrutinib as an oral option and it has a large another treated market. Just as a reminder, HS is a chronic and debilitating disease characterized by painful nodules, abscesses and tunnels with [indiscernible] with about 440,000 moderate to severe patients, it's an underdeveloped and undertreated population. And in our Phase II, we observed biologic-like efficacy at week 16 versus placebo. And we are now conducting that RECHARGE-1 and 2 Phase III trials, which are 2 identical trials that -- with the primary endpoint of hydrantugrativa clinical response 50 at week 16. And this weak sustain readout is expected in Q4 2026 with the first filings in 2027 with 52-week data.

Moving on to the next slide, in food allergy. We also saw a rapid dose-dependent Phase II results that support remibrutinib's multi-allergen Phase III program. In food allergy, there are more than 3.5 million high-risk eligible patients across major markets with few targeted options and the constant risk of accidental exposure that create a need for a fast allergen agnostic protection. And as you can see in the chart in our Phase II trial, we observed dose-dependent response as early as week 4. In the Phase III trial, we are testing remibrutinib 75 milligrams versus placebo with multi-allergen focus for the global market in patients 12 to 65 years old. In the Phase III, just to note that it was initiated in Q3 2026 with an expected readout beyond 2029.

So finally, moving to the Slide 42. I just wanted to say in closing that with remibrutinib, we have a medicine that is differentiated by design, slightly selective, potent covalent BTK inhibitor that enables immunomodulation without chronic B-cell depletion that with remibrutinib, we are able to offer comprehensive disease control with significant reductions in relapses and MRI lesion activity as well as clinically meaningful delay in disability progression coupled importantly with a robust, favorable safety profile with no liver safety signal, no infection imbalances versus the [indiscernible] and nearly 50% fewer discontinuations due to adverse events. We also saw how at Novartis, we have both the scale and the capabilities to maximize this opportunity that has broad potential across naive, oral and anti-CD20 switch patients and launching into an established MS footprint.

Now finally, last but not least, with remibrutinib, we've seen that we have a pipeline and appeal. We've indicated a $4 billion peak sales potential in RMS with upside from nonrelapsing SPMS and also a $4 billion peak sales potential in CSU and CIndU plus a Phase III HS study reading out in Q4 in '26 and additional studies ongoing in food allergy, CPU and papulopustular rosacea.

And with that, we will open the line for questions. So please, operator?

[Operator Instructions] And I show our first question comes from the line of Michael Leuchten from Jefferies.

I was wondering if you could speak to the split of efficacy between treatment naive and treatment experienced patients. You had 60% of patients naive in the trial and a professor talked to how this is a pretty standard patient population that he would see. But is there any data you could share on the efficacy naive versus experience, please?

Well, thank you very much for the question, Michael. Nazem?

Yes, Michael, we -- so the results are for the overall population. And this population 60-40 breakdown between naive and prior treated patient is relatively typical for MS population. We have not looked at subgroup analysis at this point, but we will for sure. And when we have this information, we'll be happy to share it at future compound.

And I share our next question comes from the line of [ Trunk Huen ].

I have a question on the label. So the 6 months confirmed disability progression that was reduced by around 30%. It had a nominal p-value. The 3-month CDP showed a trend 20% with a p-value of 0.09. So do you think you can get the 6-month CDP benefit on store label? And then just your thoughts on if FDA could impose the class-wide liver monitoring requirement for all BTK inhibitors in MS. I know your data showed no high law cases, and I appreciate that PSU that's free but that was 25 mg versus 100 mg for MS. So I just thought on the label, please.

Yes. Well, thank you very much for your questions, Frank. On the first one, right, in terms of what's going to come in the label, these will be further discussed with regulatory agencies across the globe. But overall, we feel very confident that we have a package that is solid and broad enough that will allow us to promote this drug appropriately, both across comprehensive disease control and safety.

Now in terms of the FDA lever monitoring potential. Nazem, do you want to take that one?

Yes, yes. No, absolutely. I can take this one. So when it comes to safety, I would say that remibrutinib is a class on its own. We don't expect to have monitoring in the label. Obviously, this is pending discussions with the regulators. But we believe we have a very strong case to make to the regulators, both the data that we have in REMODEL-1 and 2, which is a pretty substantial number of patients that were exposed to remibrutinib we're clean as you have seen, no liver enzyme elevations and no high's low cases. This is in addition to the 4,500 patients that were treated in trials up to 600-milligram dosages and the 10,000 patients that took this drug on the market for CSU. And as you have seen in the CSU label, we don't have monitoring requirements or a black box for this one. So because of all of these things, we don't believe that -- we don't expect that to have monitoring in the label.

One thing maybe I would add that having monitoring in clinical trials does not automatically translate to having the same monitoring in the label. And the CSU trial is a good example for that. So we had to monitor for the remibrutinib in the REMIX-1 and 2 trials, but there were no requirements and then that's a good example. But it's an important question. And I know you're asking about the monitoring, which is the burden both on the physician HCPs and on the patients to come in and do these tests which sometimes also can be false positive or slightly elevated, they have to come back, and it is a big burden.

But also, I think we should not forget the real problem, which is the liver tox. I mean high lock cases in other programs having a high lock case in these -- in drugs is not a simple thing. It's really a major safety risk that we need to keep in mind. So [indiscernible] important. We don't expect to have that in the label, but also safety is even more important than that.

Our next question comes from the line of [ Alex Etlin ] from UBS.

It's on fatalities. So you noted 1 suicide in the remi arm, which I understand was in a patient with a history of psychiatric illness. But given that the fenebrutinib RMS and PPMS trials, both had suicides in the active arm and not in the comparator arm. And since BTKI's are brain penetrant, how do you kind of rationalize this?

And to kind of further to that, would you consider adding a mood scale or something similar in other remi MS trials?

Thank you, Alex, for your question. I'm going to ask Professor Wiendl to offer this perspective.

Well, first of all, given the high number of more than 2,000 patients, a suicide in such a population might very well be a background noise. That's one thing. The other thing is I already noted that this patient specifically had a history of psychiatric illness and depression. So it's rather unlikely and by the principal investigator, not related to the drug described. I know the fenebrutinib data, and these cases look really different. And they are hard to explain because they seemingly be associated with the drug. And I don't see this like being a real question to come up with remibrutinib, honestly. I also don't think this is a class effect. But this is a good pick that you made. This is a struggle that fenebrutinib has to solve. I don't think that this is really something that is seriously coming up with this percentage or number we have seen.

Our next question in the queue comes from the line of Thibault Boutherin from Morgan Stanley.

Yes. Maybe a question for Victor. Just considering the different dosing classifications. How should we think about potential for different brands for each indication and sort of tailor pricing. So you're thinking about this and sort of preventing the arbitrage between dosing and indications.

Yes. Thank you very much, Thibault. We are, of course, thinking about it very carefully. What I can tell you is that we've aligned with the FDA to have separate brands in immunology and in multiple sclerosis. So these will be filed a separate NDA. And in terms of pricing, we will, as we always do, disclose that at launch.

Thank you. And I show our next question comes from the line of James Quigley from Goldman Sachs.

Just reading -- one for Dr. Wiendl. So reading the stats plan in the Lancet, the trial was initially powered to detect a 45% reduction in ARR and a 40% benefit on CDP, and this looks fairly consistent across all the other Phase III design. So is that what would have been considered clinically meaningful? So how do you put the data here in the context of that? And you mentioned that the MRI was similar to fenebrutinib but the ARI endpoints are not? So what could be the reasoning here?

The line was not perfect. But if I understand your question is, would I consider this reductions of clinical relapses clinically meaningful. The answer is, while it's definitely statistically meaningful. And if you translate what it means to a patient with them has to have 1 relapse in, let's say, 13 or 14 years, that's clearly meaningful because to eliminate relapses, we are considering the goal of 0 disease activity or 0 colorants that's definitely.

The difference to fenebrutinib is another question, and I already referred to it's hard to compare across trial. What can be said is that the fenebrutinib trial had a different population. They were more active. There were more patients that were treatment naive and they had for that reason, higher, let's say, relapse activity when they were included. And this partly explained to me why the relative relapse rate reduction numerically the entire 50% plus. But when you look at the MRI, which I already alluded to is, in my opinion, the more objective and sensitive measure what a drug is statistically also doing, there is not that much difference, okay?

The problem is, and I guess this has to be really sensed very few relapse events in a condition where there are not that many events actually changed the numbers quite significantly. When you look in this high number of recruited patients, there were very few events. So this is what I mentioned with it's a rather low active contemporary population. And therefore, the reduction would be considered, yes, definitely clinically meaningful. And it's hard to say whether there is so much of a difference in regard to fenebrutinib.

And I show our next question comes from the line of Richard Vosser from JPMorgan.

Just a question about your ability to continue to grow Kesimpta at the same time as launching remibrutinib. Obviously, Victor, you outlined significant patients where you could use remibrutinib, but how are you going to differentiate between the 2 products to ensure continued growth of Kesimpta?

Well, thank you very much. Richard, very good question. So if you go back to the 3 categories that I described of patients that can benefit from remibrutinib, I started with a naive population stating that about 70% of those patients are currently started on anti-CD20, and we don't expect that to change significantly. Those high-efficacy therapies are a great drug for patients to start and we expect that to continue to be the case. But after so many years, B-cell therapies being commercialized, including Kesimpta, there's still a substantial proportion, 30% of those patients that are not starting on anti-CD20. So we believe that's a great first step that will not affect the performance of Kesimpta.

Then I described the oral population that obviously does not affect the [indiscernible] anti-CD20 so those patients are on more legacy products. And then when it comes to the anti-CD20 population, right, I did share that about 45% of that population, we believe, will be eligible to sequence. And that -- there, we expect a modest impact on Kesimpta just because about 75% of those patients currently are not on Kesimpta other anti-CD20s in the U.S. So although there might be some effect on Kesimpta, it will be predominantly affecting other therapies. And that's why also the Phase III study reshape is actually a switch of ocrelizumab, which is the predominantly used therapy.

So we continue to see a $6 billion plus opportunity for Kesimpta not affected by this launch. And I will also, lastly, also mentioned that ex U.S. right, where Kesimpta also has a very strong performance in the majority of patients are still on oral therapies, right? And therefore, a lot of opportunity there to continue to grow.

So all in all, Richard, to your question, we believe we can grow these 2 brands concurrently. And we also have a very clear positioning for one or the other that will allow us to use the same field teams and create substantial synergies as we promote them both.

And I show our next question comes from the line of Simon Baker from Rothschild & Co Redburn.

I hope you can hear and there's not to much background noise. I just wanted to drill down with progressive [indiscernible] on the clinician and patient perspective on switch motivation. If a therapy is working, is there much appetite to change? What -- good to get an idea of what really does drive change of therapy other than relapse.

And Simon, just to confirm, you're thinking about switching post CD20 or in general?

Switch in general, I mean -- and back to your slide about the opportunity for remi, yes.

Totally fair question. So what are reasons to switch I mean we are usually categorizing in a so-called vertical and horizontal switch. And what is meant by this is if you're on a drug and you're doing fine, so the disease is totally okay, you might have, for example, tolerability problems we're not well tolerating the drug in the group of orals. We do have this problem, but maybe also in the group of injectables. So you're doing it because you're not doing perfectly well, but the disease activity is not the reason. So that is one reason.

The other is, if the previous therapy is not optimally controlling the disease, so you're optimizing the disease. So this is the, let's say, a more medical disease controlling reason. And then there is a third reason, which is the so-called conceptual switch or a, let's say, switch for other reasons, let's say, lifetime decisions, changing business, you don't want to infuse anymore. You don't want to inject anymore. And for all of those switchings which happened relatively frequently, one has to say, when we go to it with an option.

Yes. And thank you very much Professor Wiendl. And Simon, just to put a point on that and link it to the presentation. in Slides 30 and 31, what we did is actually note what are the patients that actually comply with those conditions Professor Wiendl have described, right? And the patients currently on oral up to 40% at a risk of treatment failure because of one of those. And then Slide 31, you see for the post we looked at that eligibility to sequence as well based on those considerations, right? So and we like excluded patients were stable on those therapies, which, as you pointed out, would not be inclined to switch.

And I show our next question in the queue comes from the line of Steve Scala from TD Cowen.

A question for Professor Wiendl. In 2 or 3 years, what do you anticipate the share split between remibrutinib and fenebrutinib to be in your practice? So for instance, might it be 50-50 or 60-40 favoring remibrutinib. And since safety is probably a factor in your answer, I think Roche has said the 7 deaths on fenebrutinib are not drug related. Do you think that, that is a flawed conclusion?

I do think that, particularly with this decision-making the complete medication profile is key. And this is very much influenced if they are considered pretty equally efficacious, it's safety and its monitoring burden. I think this is crucial, and Nathan did mention, there is a very high likelihood that there is no monitoring requirement. And this is something that eases the job tremendously. The monitoring situation. I'm practicing in the EU, we have tolebrutinib approved, which is a very harsh monitoring requirement every week basically for a couple of months. This is nearly -- I mean, given the low burden of monitoring with the contemporary medications, particularly B-cell depletion and other orals this is a drawback. So that would be one clearly strong discriminator that you can outbeat with a highly significant better maybe efficacy, which we don't see.

Thank you. I share our next question in the queue comes from the line of Michael Leuchten from Jefferies.

Question for Professor Wiendl. There's different ways of looking at disability as you outlined. So there's the standard there's [indiscernible] as PIRA. I think for fenebrutinib, they looked at a composite CDP score. What's the best yardstick to measure visibility from your perspective?

Thanks for the question. I'm coming from a meeting where we discussed about how do we best measure disability and what is the best measure. And the simple answer is there is probably the most accepted one is the 6 months confirmed disability progression. This is the most often used one, it's based on a clinical score. Then there is a couple of very sophisticated approaches on this combined measures to measure visibility combining with [indiscernible] walk test to, I mean, simply spoken, increased event rates. So in -- if either of shows up, then you are changing in terms of visibility. What we have seen is that they are maybe increasing event rates, but they're not really increasing power.

So basically, my clean answer to it is it is nowadays CDP. PIRA is very often off, but it's very much depending on the definition you're using and combined endpoints are having not really shown consistently that they are so much superior depending on who you talk to, the only combination that is probably makes sense is the combination of EDSS, which is the basis for CDP in combination with the 9 hole actors, which is testing the upper arm functions. So it's a different functional system in a way. But to simplify the answer, I guess, with the CDP endpoint, we are on safe ground.

Thank you. And I show our next question in the queue comes from the line of Richard Vosser from JPMorgan.

Just one on MSN pricing in Europe. You mentioned Victor, I think that this is -- will be a separate NDA. Does that mean that you'll come under the MSN pricing regulations with respect to Europe? And how do you think that might impact the uptake in Europe if that is indeed the case?

Yes. Thank you very much, Richard. So the MSN agreement is actually contemplates products at a molecule levels, independently of whether they are the same NDA or separate NDAs -- so answering your question directly, these will only -- so ex U.S. prices will only affect Medicaid, the Medicaid segment in the United States, which in multiple sclerosis, who is around 10%. So that will be a difference. And that's basically because we already launched remibrutinib in chronic spontaneous urticaria before we signed that agreement with the U.S. government. So that will be in contrast with drugs that will get approved after those deals were signed.

So we expect a minor impact that we have already incorporated into the guidance that we have provided. And of course, we will work and coordinating to make sure that we both ensure broad access ex U.S., which, as you can see, is a very large market, while also being mindful of the Medicaid price in the U.S.

And I share our last question in the queue comes from the line of Steve Scala from TD Cowen.

I have a question for Victor. But before I ask that Dr. Wiendl, I assume based on the answer to the share question, remibrutinib will be the only BTK you prescribed. So if you can just confirm that. But for Victor, given how strong Novartis sees the remibrutinib data and a handful of concerns about fenebrutinib tox. Why isn't Novartis raising the $4 billion remibrutinib sales target? And I have to say, you sounded more confident in the HS data than I would have expected. Is the data in-house?

So Steve, to your last question on the HS data, no, it is not in-house. But based on -- I was talking on the basis of what we've seen in the Phase II trial, of course, that will have to be confirmed in the Phase III. And in terms of the opportunity Steve, we are very optimistic on this profile as Professor Wiendl. I mean we concur with Professor Wiendl's perspective on the benefit risk profile of this drug. At this point, we're guiding to this $4 billion plus opportunity. if I'll ask Professor Wiendl to ask the first question -- to answer the first question.

Well, in medicine, there is never -- I would never I'm practicing in an academic environment where we are obliged to also get experience with all approved drug. But I mean, in tendency, my preference clearly would be given the rather not that divergent efficacy profile, remibrutinib. But there is another part of the answer that is the label. I mean in case there is a label that is potentially primary progressive MS in fenebrutinib, then there would be a place for fenebrutinib because they would currently not be an expected label for remibrutinib.

Well, thank you very much, Professor Wiendl. And with that, I think we've come to the end of the call. I want to take this opportunity to thank Professor Wiendl for joining us tonight. Thank you very much to all of you for joining us, and I wish everyone a wonderful weekend ahead. Thank you very much.

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

Good afternoon, and welcome to the Novartis Q2 2026 Results Release Conference Call and Live Webcast. [Operator Instructions] note the conference is being recorded. [Operator Instructions] A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends.

With that, I would like to hand over to Mr. [ Nigel Rothman ], Head Business Planning and Analysis and Digital Finance. Please go ahead, sir.

Thank you, Sharon. Good morning and good afternoon, and welcome, everyone, to our Q2 2026 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 and its most recent quarterly results on Form 6-K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission. .

[Operator Instructions] And with that, I'll hand over to Vas.

Thank you, Nigel, and thanks, everyone, for joining today's conference call. Moving to Slide 4. As you saw in the results we released earlier today, Novartis delivered strong performance across our priority brands and launches, while advancing the pipeline, allowing us to return to growth in the second quarter. The business grew 1% in constant currencies in USD, and we had flat core operating income at $5.9 billion. Mukul will go through the numbers in more detail later on in the call, but we're reaffirming our full year guidance for 2026.

We also had some important pipeline highlights, which I'll talk about more during the course of the conference call, including updated Kisqali OS data, the Del-brax, biomarker data in FSHD as well as some other regulatory milestones we were able to deliver over the course of the quarter.

Now moving to Slide 5. Our growth drivers continued a strong trajectory in quarter 2. They were up 26% in constant currencies. Some of the highlights include strong performance from Kisqali, Kesimpta, Scemblix, solid performance from Pluvicto and strong performance as well from Leqvio. So all taken together, these growth drivers are performing strongly. We believe that gives us momentum going into the second quarter -- second half of the year as we now move beyond the [indiscernible] patent and set us up well to deliver on our midterm growth guidance.

Now moving to Slide 6. Kisqali was up 43% in constant currencies on the quarter. We outpaced the CDK4/6 market. We had strong performance in the U.S. and outside the U.S. In the U.S., we were up 39%, reaching over $1 billion in sales for the first time. We continued our metastatic express cancer leadership, with an increasing share in first line. And we also sustained our early breast cancer NBRx leadership with 58% of new patients now from our exclusive N0 and N1 nodal population.

We also continue to grow our total prescriber base, up 16%, and we see future growth continuing to be driven by these exclusive Kisqali early breast cancer segment. Outside of the U.S., we were up 49% with continued metastatic leadership. Our growth was accelerating in our eBC launches. We're now approved in 76 countries and reimbursed in 42. And as you can see in the chart, in case study in Germany, we reached 79% eBC NBRx share. We're having similar performance in other key markets. Overall, we're pleased with the trajectory for Kisqali and remain confident in our $10 billion sales goal.

Now moving to Slide 7. We're announcing today also updated 6-year follow-up data demonstrating that Kisqali showed clinically meaningful OS in that broadest at-risk eBC population. That data will be presented at an upcoming congress. This is the 6th-year prespecified landmark data for iDFS as well as for OS. The iDFS benefit continues over time and continues to strengthen the case for use in the broadest at-risk eBC population. Safety remained consistent with known profile of Kisqali. We believe this data underscores the value of dual emission with Kisqali and endocrine therapies across all subgroups. So we'll look forward to providing the full details of this data, as I mentioned, in our upcoming medical congress.

Then moving to Slide 8. Kesimpta had another strong quarter, up 32%, continuing to increase its share across our key markets. In the U.S., we were up 32% in quarter 2, increasing our TRx share in both B cell and MS markets. Importantly, we're going our NBRx share ahead of our competitors in the first-line and first switch segments, which are our targets segments for this medicine.

Outside of the U.S., also very good performance. We're seeing strong growth in Europe as well as sustain NBRx growth in our top international markets. We see a continued opportunity in these international markets, given that 2/3 of patients remain treated with older therapies, not on B cell therapies. This is a clear opportunity for expansion over time. We also continue to progress our next-generation evidence and continued life cycle management for Kesimpta. Our ongoing Phase III with a once every 2-month dose Kesimpta per maintenance dosing is on track for a 2027 readout.

So moving to Slide 9. Pluvicto grew 43%, and this is driven primarily by our PSMA population in the pre-taxane in mCRPC. We also see now acceleration outside of the U.S. In the U.S., our pre-taxane is now driving over 70% of new patients. We continue to focus on use after the first ARPi. This is our largest segment. And we believe we now will have the opportunity to drive further growth given that the NCCN guidelines have been updated to remove routine use of a second ARPi in this setting. We continue to expand our sites, over 880 sites now providing Pluvicto. And a lot of our focus now is getting additional depth in those sites, especially as we prepare now for the [ mHSPC ] launch.

Outside of the U.S., strong growth, 83% growth in new patients, with accelerating adoption in Europe and launch momentum in Japan and China. The number of sites now that are providing RLT outside of the U.S. to over 650. This sets us up well as well for our future RLT pipeline, where we're excited to continue to progress beyond Pluvicto, Lutathera, hopefully in additional cancer types in the coming years.

The next wave of growth for Pluvicto will be the approval -- expected approval in quarter 3 in mHSPC. This will increase the eligible patient pool by 75%, give us a strong foundation for further growth. 2/3 of the patients in the PSMA addition population are with healthcare providers that currently use Pluvicto today. So we think we have -- or with established referral patterns, so we think we have a strong base for rapid adoption.

And then we continue to progress the pipeline. We presented posting results for our actinium PSMA in mCRPC. This medicine is now being studied in the post-Pluvicto setting, in the post-chemo setting and then as well in the first-line mCRPC setting in combination with ARPi. So an opportunity here to life cycle manage Pluvicto for the longer term.

So moving to Slide 10. Leqvio had a strong quarter, growing 59%, driven by strong demand we saw across the globe. In the U.S., we were up 55% in quarter 2. We outpaced the advanced lipid-lowering market. This was driven by monthly TRx growth of 49%, demonstrating Leqvio, the differentiated profile, strong persistency. The demand is being driven with increasing depth in the prior health systems that we're targeting. The most important segment for us remains the Medicare Part B segment, where we see 23.3% share, that's up 3.6% year-to-date. And we see an opportunity for continued advantage. I think even with orals launching, our opportunity remains for driving strong growth in the segment that wants infrequently administered physician-administered medicines for light lipid lowering in the United States, and we see us as attractive and growing segment that supports our peak sales potential in the U.S. and beyond.

Outside of the U.S., NRDL inclusion is a lock in significant demand. You saw that in quarter 1. It continues in quarter 2. Our market share has doubled now versus the NRDL -- we currently -- we were previously seen. We also see sustained growth in Europe and Japan. So overall, pleased with our performance. We keep generating additional data Leqvio, 3 world studies demonstrated that inclisiran Leqvio improves adherence and persistence compared to other advanced lipid lowering therapy. And then we also have the V-CHALLENGE head-to-head study of inclisiran versus bempedoic acid, which we will present in ESC. And lastly, we're on track as well for our 2 outcome studies to read out in 2027 for Leqvio.

Moving to Slide 11. Scemblix had a very strong quarter, 89% constant currency growth driven by both U.S. and ex-U.S. performance. In the U.S., we had 93% growth in the quarter. This is driven by sustained leadership across all lines. But importantly, we now expect to reach a first-line NBRx leadership share in the second half of the year. You can see steady improvements in that NBRx share -- first-line NBRx share.

Outside of the U.S., we're primarily still driven by the third line and beyond performance, with 75% NBRx share across our key markets. But importantly, for future growth, we're seeing early line adoption now starting to pick up. We are now approved in 65 countries outside of the U.S. In Japan, we've already reached first-line NBRx leadership, as you can see in the lower chart. In Germany, our early NBRx first-line share is already up to 15%. So we're very excited for the trajectory of Scemblix and to continue to be a growth driver long into the future.

Now with Cosentyx, we had a solid quarter, 10% constant currency growth, in part driven by some one-timers with still strong underlying growth. When you look at in the U.S., we were up 16%. You can see that in HS, we are steady in our NBRx share, in the high 40s, and we expect that to continue. We see steady demand growth in HS and IV. Underlying growth in the U.S. is around mid-single-digits, as we've guided to in the past. And outside of the U.S., continued solid growth in Europe. We do see additional challenges in China with more competition, but we're able to manage that to maintain the overall global performance of the brand.

And then we're excited by the Phase III REPLENISH-PMR, [indiscernible], which we recently published and presented at EULAR. It showed very strong data with sustained remission at 52 weeks. That was twice as high in patients treated with Cosentyx versus placebo. So we're anticipating FDA approval for that indication in the second half and remain on track for the $8 billion peak sales guidance that we've previously provided.

Now moving to Slide 13. Rhapsido continues its strong launch trajectory with Phase III CIndU data now available to support our broader potential in urticaria. First, targeting -- starting with the CSU launch, we see continued solid U.S. uptake, over 4,000 prescribers, over 10,000 patients treated, 60% of those patients are treated in the first-line setting. We see steady expansion in our patient access. We have 2 of the 3 major PBMs now covering remibrutinib, Rhapsido with [indiscernible]. And in second half, we expect steady expansion in that access with an effective bridge and sample program in place. We don't expect an inflection per se. We think this will be steady expansion. We want to ensure that we're disciplined in how we approach getting reimbursement the multiple indications we hope to secure for remibrutinib over time.

Outside of the U.S., we see good traction in China, launches and are going across Europe and the Middle East. And we'll see further expansion in the second half post the EMEA, Japan and Swiss approvals. Now importantly, in chronic inducible urticaria, we presented our REMIND data supporting remibrutinib has the potential as the first targeted therapy for chronic inducible urticaria. We had early and broad efficacy with onset as early as we do in the 2 additional largest subtypes, consistent 12-week responses versus placebo. So we're on track for the FDA approval in SD, which is the most common CIndU subtype, 2/3 of CIndU patients. And then we'll have global funds across all 3 subtypes later this year. Just as a reminder, we expect -- we estimate in the U.S., there's about 100,000 CIndU patients that are uncontrolled with antihistamines with no other treatment options. So this is a significant expansion in the population that can be helped by Rhapsido.

Now turning to Slide 14. We also presented some updated data on Ianalumab, showing the favorable ESSDAI benefit of the medicine and longer-term follow-up, and we remain on track for a U.S. launch in Sjögren’s disease in the second half. So you can see on the left-hand side of this chart, in our pooled NEPTUNUS data, you can see the consistent benefits in ESSDAI, a statistically significant versus the placebo arm across both studies when both demonstrating the benefits we seek with the medicine. And then as well, we presented 108-week long-term extension data, which showed that we can maintain the benefits of Ianalumab over time. And then also was supported by clinically meaningful improvements for the placebo crossover group when crossing over on to the active arm.

Also throughout all of these long-term follow-ups, we see a favorable safety profile, no increase in adverse events. So this supports Ianalumab's multi-blockbuster potential. We're on track for the ITP first-line readout in the second half of 2026. The SLE and [indiscernible] nephritis Phase III readouts in 2027 and the systemic sclerosis Phase II readout as well in 2027.

So turning to Slide 15. I wanted to provide an update on 2 of the acquired programs [indiscernible]. First with Del-zota. We achieved our first FDA submission for the therapeutic use of an antibody also conjugate that FDA submission is for accelerated approval in the DMD44, using dystrophin as a surrogate biomarker. We previously received FDA breakthrough therapy designation for this. The submission package is based on the outstanding data that we had in the EXPLORER44 study as well as long-term follow-up. And we expect the first launch here in the first half of 2027 with the ongoing Phase III studies ongoing. We have multiple follow-on programs now targeting additional exons that we'll be bringing forward as well. So we're quite excited to leverage this technology to take on DMD across multiple subtypes.

And then with respect to the Del-brax data, we read out in the quarter as well that the Phase I/II study at the target dose that we are taking into Phase III studies met its primary and key secondary biomarker endpoints. So as a reminder, this is a study that looked at KHDC1L, [indiscernible] in the plasma. KHDC1L is a protein that the downstream and believe to be regulated, the [indiscernible] being the gene that's impacted in FSHD. And so having these plasma biomarkers indicates that we have strong target engagement and muscle damage reduction as indicated by the statistically significant, creating reductions that we saw.

Our base case remains a submission in 2028. But based on the data that we've seen in the biomarkers and ongoing work we're currently conducting to strong -- hopefully correlate biomarkers to [ DUCs 4 ] as well as clinical improvements in these patients, we plan to engage FDA and other regulatory authorities in the coming months. And then we'll ultimately provide an update if those regulatory authorities support our ability to file this medicine based on this data.

Now moving to Slide 16. So we're on track for a busy second half. We already had 4 readouts in the first half. In the second half, we expect with pelacarsen, remibrutinib and del-desiran readouts in the coming months and then before the end of the year, readouts for Ianalumab, Rhapsido and HS as well as additional readouts for Phase II programs, QCZ484 as well as VHB937 in ALS. So exciting, I think, second half coming up, solid first half out of the year and looking forward to continued progress in the months ahead.

So with that, I'll hand it over to Mukul.

Thank you very much, Vas, and good morning, good afternoon, everyone, on the call. I will now share more details on the financials for the second quarter. And as a reminder, my comments as always refer to growth rates in constant currencies unless otherwise noted. .

Turning to Slide 18. So in the second quarter, net sales grew 1% to $14.4 billion, while core operating income was flat at $5.9 billion. This is our sales growth drivers and engineered productivity offset the impact of the significant generic erosion that we saw in the first half of this year.

The strong performance of Priority Brands supported a return to net sales growth in quarter 2 faster than we initially expected. The second quarter core operating income margin was 41.2 percentage of net sales. This was a decline of 70 basis points versus previous year, mainly due to the incremental ability cost with a lower gross margin being offset by productivity gains. It's worth noting that Q2 is generally a stronger margin quarter when we look at the phasing across the whole year. Free cash flow for the second quarter was at $5.6 billion, which is in line with expectations.

Worth to note that Q2 results were also positively impacted by some onetime feeding items, which will reverse in the second half. Together, these items positively impacted net sales by approximately 1 percentage point and core operating income, by about 5 percentage points. And then for the first half of the year, net sales declined 2%. Core operating income declined 7%, and the core operating margin declined 2.3 percentage points to 39.4%. Free cash flow for the first half of the year stood at $8.9 billion.

Turning to Slide 19. We remain committed to our shareholder-friendly capital allocation strategy that has served us well as a company, balancing disciplined growth investments in the business with meaningful capital distribution. In Q2, we continue to execute multiple bolt-on M&A and BD transactions, including the completion of the Pikavation and Excellergy acquisitions at the same time, continue to invest in our internal R&D pipeline.

Our capital distribution during the first -- on capital distribution during the first half of this year, we paid out $9.1 billion in dividend and repurchased $2.1 billion of shares under the [indiscernible] up to $10 billion share buyback program. There is still $5.6 billion to be executed in this program, and we target to complete the program by end of 2027, as previously indicated.

Slide 20, please. With this, we are reaffirming our full year 2026 guidance. We continue to expect net sales to grow low single digits and core operating income to decline low single digit for the full year. For the full year 2026, we also continue to expect core net financial result to be around $1.7 billion and core tax rate to be around 16.5%, both in line with our guidance from beginning of the year.

Moving to Slide 21. As I shared previously, H1 net sales declined 2% and with a strong momentum of growth drivers delivering performance at the upper end of sales guidance from the start of the year. Turning to H2. We continue to expect net sales to grow mid-single digit as we move beyond the impact of U.S. [indiscernible]. However, it's worth pointing out that there will be a notable difference in the sales growth rates between the 2 quarters, Q3 and Q4. This is because we still have about $800 million of U.S. Entresto in the sales in previous year quarter 3 base. We expect H2 core operating income to grow mid- to high single-digit with continued investment in our growth drivers as well as our R&D pipeline.

Slide 22. Finally, if exchange rates remain at mid-July levels, we expect a positive 1 percentage point impact on full year net sales and a positive 1 percentage point impact on core operating income. As a reminder, we published updated FX estimates monthly on our website.

That concludes my remarks, and I will hand it back to Vas.

Terrific. Thanks, Mukul. So in closing, we delivered our first half performance at the upper end of guidance with Q2 returning to sales growth. We remain on track to deliver our full year guidance. We're progressing our indications for Rhapsido, Ianalumab, both potential multi-lockbuster assets. And we're focused on our second half pivotal readouts that remain on track. That would allow us to raise our mid- to long-term growth outlook. .

And with that, we'll open it up to questions.

[Operator Instructions] We will now take the first question. And your first question today comes from the line of Peter Verdult from BNP Paribas.

Peter Verdult, BNP Pariba. I realize there's not much incremental you can say the upcoming Phase III readouts, I heard your comments on Del-brax. So with that in mind, can we focus on the accelerated approval potential for branaplam in Huntington's? I know Phase III planning underway, but do you have any visibility or ballpark time lines you can give us for when FDA might make a decision on whether you can file early on the Phase II data generated thus far?

Yes. Thanks, Peter. So we're planning in the process of engaging with the FDA on that Phase II data. I think at this point, our base case remains that we would need to do the Phase III study as designed. So no change on that expectation. I don't have a specific time line. I would expect it to happen in the second half to provide more clarity. And I would also note that we continue to follow these Phase II patients for a longer duration as well, which could provide us additional data.

We do note the FDA's recent decisions or recent guidances from some of other therapies that are available for -- that could be available for Huntington's disease, which certainly, I think, shows the FDA's openness if the data ultimately is compelling. So we certainly want to have that engagement, but I wouldn't change our base case at this point that a Phase III study would be required.

Your next question comes from the line of Sachin Jain from Bank of America.

So I am going to ask a question on pipe given there's a lot of focus, and it's a kind of catch-all question. So given the change from your communication in and out Ianalumab showrooms on clinically meaningful, just wondering whether you've decided internally how you define clinically meaningful for the 3 reads investors most focused on, so MSDM1. Maybe I just give you a catch, it fair to think that any static benefit is clinically meaningful in your eyes for different reasons for which asset and any changes in level of confidence on each?

Yes. Thanks, Sachin. So no change from previous comments. We don't know anything else that I can provide on any of the 3. I think in terms of how we will read them out, I mean, I think we always focus on the primary endpoint and statistical significance and reaching the goal and the primary endpoint in the study. I think certainly -- so that -- I mean, that will guide how we communicate and then as appropriate additional secondary endpoints as well, if appropriate to comment on them. I mean, I think for pelacarsen, as we've guided in the past, we continue to -- we powered the study for the kind of 13% to 15% CVRR benefit. And certainly are hopeful to see that level or higher. And if we can see higher, obviously, we'd prefer that, but I think that's how we think about it.

In MS, we'll certainly be looking at not only the ARR reduction, but also the impact on disability. And clearly, in DM1, in addition to VHA, also want to see some of the secondary endpoints and how they perform as well. But I think the reality is we have to be thoughtful because we want to be able to preserve the ability to present this data at high-profile congresses in the future. So we'll navigate that best we can, making sure investors have clarity on what we believe the path forward is, but still preserving that ability to present the data as well.

Can I just take one follow-on on that? So you commented in the answer to the powering of these. I don't think you've ever given us any color on how REIMS or DM1 are powered.

Yes, I don't think we have for either of those. I mean I think for MS, you all know well how studies that are head-to-head against have been powered in the past. So I think you have that as background. So I don't think there's more that I could provide there. And I think on DM1, primary endpoint is VHA and then we have the various secondary endpoints that we've been discussing with the agency, but I don't think we could provide any further clarity on that one at the moment.

Your next question comes from the line of Florent Cespedes from ODDO BHF.

Florent Cespedes from ODDO BHF. A quick one for Mukul. Maybe, Mukul, could you give us a little bit more color about the one-off events which impacted the Q2 top line and operating profit margin? Some color on that point would be great.

Yes. Thank you very much, Florent, for the question. So the onetime phasing that I mentioned, so we have a 1 percentage point impact on top line. This is primarily inventory-related changes that we saw across the whole world. This would simply move from Q2 to Q3 from an inventory perspective. And then on the cost side, on the R&D phasing side, we have a couple of clinical trial-related costs that have essentially were planned for Q2 and now will move to Q3. If you put both of them together, then on the top line, it's an impact of 1%. And on the bottom line, the cumulative impact of the top line over delivery added or compounded by the cost phasing leads to a 5% impact on the core operating income.

Your next question comes from the line of Colin White from UBS.

Just to go back to remibrutinib in MS. Please, could you recap specifically what gives you confidence that remibrutinib can improve upon annualized relapse rate of about 0.1 [ Aubagio ] has achieved in recent RMS studies?

Well, I mean, I think for us, as you know, we don't have Phase II data. So we're basing this based on other BTK inhibitors performance in similar studies. We continue to monitor blinded rates for safety and relapse rates. And I think taken together, that gives us confidence that the study is performing as expected in terms of the differences between the active and the control arm.

But not more we can say at this point until we ultimately read out the trial. I think for us, clearly, with remibrutinib, in addition to looking at annualized relapse rate and MRI performance, how it performs in disability progression will be important to understand is REMI, something that would be used in a setting post the B-cell antibodies? Or could it be used in a setting in line or ahead of the B-cell antibodies. And this will all be data-driven. And obviously, once we see that data, we'll be able to provide better guidance on that use. But that's probably about as much as we can provide at this point.

Your next question comes from the line of Richard Vosser from JPMorgan.

Just another question on pelacarsen. We've seen some other cardiovascular trials recently suffer from high levels of drop-ins of existing therapies. So wondering how you've controlled for that in the HORIZON trial. Just thinking about it in relation to, I suppose, PCSK9s, but also for GLP-1s and SGLT2s given the 25% of patients that are diabetics. So how should we think about that level of use and potentially the impact on any benefits of pelacarsen?

Yes. Thanks, Richard. I mean it is important to note we study pelacarsen on top of optimized background lipid-lowering therapy. I mean our current estimate is that the number of patients who were on incretin-based therapies in the study is less than 10%. I mean we estimate it to be around 6%. So we don't believe that, that -- if there was any effect from those medicines in the setting that we wouldn't expect that to impact the results here. So when we look at it, overall, it's as we -- more or less as we planned in terms of background therapy. And so we don't think that will be a major swing factor, at least based on what we can see so far.

[indiscernible]

Go ahead, Richard.

No, it was just on PCSK9, just one quick follow-up. Was that controlled as well? I know it was 11% at the start, but does that creep up during the trial? Anything you can say?

I think with respect to PCSK9, I believe they've also been in line with what we saw earlier in the study, but we could follow up with the details. I know the GLP-1 data for sure, but I don't recall that the PCSK9s are a source of concern either.

Your next question comes from the line of Michael Leuchten from Jefferies.

Question for Mukul, please. The guidance for mid- to high single-digit CER EBIT growth in the second half seems to imply more cost control, especially taking into consideration the Avidity R&D phasing that you just mentioned. Can you talk about the P&L dynamics? Like where are you containing costs? And is that something that we need to take into consideration as we think about '27? Or is that sort of tucking in expenses that will not recur?

Yes. Thanks, Michael, for the question. I think from a P&L dynamics perspective, 2 things I'd say is H1 to H2, we always have from a profitability perspective, from a spend perspective, H2 being a higher spend half for example, Q2, our profitability finished with 41.2% operating margin. And we know that Q2 is typically the most profitable quarter, so to say. So that part of the dynamic will remain going into this year as well. In terms of where we are working from a productivity perspective, things have been pretty consistent from beginning of the year.

Beginning of the year, we said we'll continue our productivity measures when it comes to our manufacturing operations. Operations has done very well. Gross margin would be pressured as the portfolio shift, but productivity should probably -- should help us keep gross margins more or less to where second half last year was on gross margin. On R&D, we will continue to invest what the pipeline needs.

And this would mean incremental investments this year on the back of Avidity, but also a couple of other assets that we took on, including Termalin, Regulus and Anthos last year. And then SG&A as a percentage of sales is a place where we believe we, as a company, can do more productive efforts, specifically focused on third-party spend, which is upwards of $10 billion for the company, and that is what we continue to do. As we look at Q2, we actually see while gross margin -- quarter-on-quarter gross margin has been a negative, but SG&A as a percentage of sales has actually been a positive negating that gross margin impact. And that, I would assume, I would think is -- from a prognosis perspective, that is something that we will continue towards the second half of the year.

Your next question comes from the line of James Quigley from Goldman Sachs.

I've got one on deals and M&A. I think Vas, your quote on Bloomberg as you'd consider larger deals again. So this is a bit of a transition in sort of commentary over the years. A few years back, it was no big deals, then it was focused on bolt-ons, then we had Avidity, which is later stage and a bit larger. So what's changed either internally at Novartis or externally that's driven openness to larger deals? And what could a bigger deal look like in terms of strategic fit given your therapeutic areas and technology set?

Yes. Thanks, James. I don't know what exactly Bloomberg growth, but I can say there's no change in our M&A strategy. We've been, I think, disciplined and consistent that we focus on steady deals in the kind of sub-$2 billion range, which with the upfronts in that range, often lower and then selectively do larger deals in the range of things like Avidity when there is a compelling asset that fits with our -- either our platform strategy or our TA strategy or both and Avidity fit both. So no change at all in our M&A strategy. We don't need to do anything larger than that. We have full confidence in our internal portfolio and pipeline and R&D engine. And yet we know we need to constantly supplement that engine with additional external innovation. So you can expect just a continuation of what you've seen over the recent years.

Your next question comes from the line of Simon Baker from Roth & Co.

One on the pipeline, if I may, please. I wonder if you could just update us on your thoughts on the confidence and potential for abalastimab. And also, I see that it's still showing us a 2027 readout milestone in the slide deck. Clinical trials is now showing a late December '27 primary completion. So is that still a '27 event? Or is there potential for slippage into 2028?

Yes. Thanks, Simon. So we remain excited about abalastimab. As a reminder, this is a monthly monoclonal antibody that has shown outstanding, I think, overall pharmacokinetics and pharmacodynamics on well, very well-behaved antibody on Factor XI. We've seen with competitor data that Factor XI appears to deliver on the promise of a very strong anticoagulation without increased bleeding risk, which is what the genetics would indicate for us. And so we have the study ongoing in patients who are ineligible for NOACs. And that study -- we have upsized that study given the event rates that we saw, so you can also see that on clinicaltrials.gov.

But we're on track for a readout before the end of the year. That is a readout at 75% of events, just to be clear. And then the study would continue if it's not successful at that point or that doesn't meet the stopping criteria at that point to finish the number of events in 2028. And then we evaluate now or in the process of beginning additional studies in secondary stroke prevention as well as assessing other indications as well. So excited about that opportunity. I think it could be a significant asset if the trials ultimately read out positive.

Your next question comes from the line of Thibault Boutherin from Morgan Stanley.

Just a question on -- that you have launched the drug and we start to see the sales coming in. Do you have any more visibility on what you expect to be the shape of the bolus of sales from this therapy over the next few years? If you have any indication on when you expect the sales to peak? Is it next year? Is it '28? And then on the magnitude, I think in the past, Novartis was talking about multibillion dollar for this asset. So just if you could comment on your confidence on the peak sales here.

Yes. Thanks, Thibault. So no change. I'd say we -- as you know, I just got the European Commission approval. I think in general, with gene therapy, as we learned with Zolgensma, it does take some time to get the reimbursement. But once we get the reimbursement, we see a relatively rapid ramp on the product. So we -- I would say, over the 3-year period is where we would expect to see the ramp on as we get additional countries online. It's also worth noting for -- as with Zolgensma, we expect ex U.S. to be larger than the U.S., the same dynamics we saw that with Zolgensma.

So all on track, but it is important to note this first year will be mostly focused on securing reimbursement. From a peak sales potential, also no change with Zolgensma, we expect the continued steady state in this blockbuster $1 billion-plus territory. and we expect Abema to have a kind of $2 billion range so that the overall package of these 2 medicines have a $3 billion potential.

Your next question comes from the line of Steve Scala from TD Cowen.

Vas, you called out Kesimpta in non-U.S. markets as a growth opportunity, but Kesimpta had leadership in 9 of 10 markets in Q4 and Q1 and 8 of 10 markets in Q2 and one difference appears to have been China. So I'm curious what happened with Kesimpta in China in Q2?

Yes, Steve. So no change in China that we're aware of. We did drop off in Italy actually from 9 out of 10 to 8 out of 10. I'd say, in general, Kesimpta does very well in Asia. It's a market leader in Japan, but it is worth noting that multiple sclerosis levels in Asia are significantly lower than what we see in other parts of the world. So the overall sales potential is lower. So -- but I would say, overall, we continue to see significant opportunity outside of the U.S. just simply because the market has not -- the cell therapies have just not adequately penetrated the market outside of the U.S. So for all B-cell therapies, there's just an opportunity to get more patients on the best possible medicine. And I don't have the details on the Italy shift, but I imagine it's just market share dynamics in a country that we have, of course, other competitors.

Your next question comes from the line of Seamus Fernandez from Guggenheim Securities.

So, I guess the question on our side is just given the substantial valuation increases that we've seen across biotech in the last year, how should we be thinking about the business development opportunities as you see going forward? You talked about the BD focus really being no change, but certainly one change in that mix has been valuation. So just trying to get a better sense of how you're thinking about that and the kind of risk that Novartis needs to take going forward?

And then just a quick question that I wanted to ask on the pelacarsen side of things. It's a composite endpoint. And my recollection was we saw a muted benefit or maybe not muted, but a teens benefit with SGLT2s, but an outsized benefit in the heart failure population on cardiovascular death. How might that kind of an outcome play out? Or do you see that as a potential outcome for pelacarsen as the data reads out in the second half of this year?

Thanks, Seamus. So I think on valuation, I mean, look, when I reflect over 9 years, I would say that the price of assets that don't have minimal clinical data has gone up quite dramatically. You see now ourselves and our peers doing upfronts that are over $1 billion for assets that have limited or no clinical data, which is, I think, if you took at the long arc of the sector, a significant shift, which I think just means you have to have higher levels of conviction in the science and differentiated, something that you believe is unique and differentiated.

In our case, the 3 deals we did this year with Pikavation, we believe that there is an opportunity to address more of the mutant -- to a pan-mutant kind of approach in PI3 kinase-driven breast cancer with Excellergy to tackle with hopefully a much higher efficacy than historical IgE therapies given the ability to target Ig in a fundamentally different way. in the case of Mirix, a novel payload that hopefully has the NMTI payload has a cleaner profile than the topozeimerus payloads. But I think you have to have some sort of differentiated conviction just given that the price levels are climbing.

That said, you have to be able to access external innovation to grow companies of our size. So we have to just keep looking for that right balance of breakthrough science and then finding the right balance from a valuation standpoint. Your point on pelacarsen is well taken. I mean there is an element here of the MACE endpoint versus CV death. Lp(a) is associated with high rates of sudden cardiac death. -- particularly in younger patients. Very difficult, of course, for us to say without having lock the database and see the data to know exactly. But there is at least the potential for CV death to be an important component, at least theoretically, given the profile of Lp(a), it's something we'll have to look carefully at and how that drives versus other elements of the endpoint.

Your next question comes from the line of Kerry Holford from Berenberg.

Question from me on Kisqali, just on the IP, the extension that you've been granted related to pediatric exclusivity. Can you confirm now that, that conduct matter expiry is May 2032? And in the context of your earlier settlements with generic players, is that when we should now be assuming generic market entry?

Yes. Thanks for the question. So our guidance is a second half 2031, so Q3 2031 guidance for LOE for Kisqali with the pediatric exclusivity, and that's inclusive of the settlements that we have with generic manufacturers. And just as a quick note as well, we double checked in China for Kesimpta, we have 70% market share and are market leader as well.

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

Maybe I'll take one on Ianalumab and Sjogren's. Given we must be relatively late in the regulatory review process. Could you perhaps just give us an update on how that's proceeding? Is everything on track? And are you expecting a panel? And then on commercial readiness, some sense of expectations for magnitude of initial access, breadth and willingness to prescribe, et cetera. Could you just give us a sense in those parameters? Should we be looking at something like classic immunology launch like Cosentyx -- or are there other things -- other analogs which perhaps bear in mind?

Yes. Thanks, Emmanuel. So again, as far as we know, no advisory committee planned for Ianalumab. We've had the mid-cycle review meetings. And so we're continuing to provide FDA all the information they're requesting. So all on track from that point for Q3 approval. I think from a market uptake standpoint, our current expectation is given that there's no approved therapy in Sjogren's, we should get relatively broad access with all the caveats that this does take time to get the environment opened up.

And then we think that physicians, given that the drug has a clean safety profile, will err on the side of trialing the drug in patients and ultimately seeing how patients respond. I mean this is a very heterogeneous patient population. Even the STI endpoint is covering a broad range of domains. And we do see in our own data sets, there are patients who are super responders and patients who respond less well. And so we're, I think, going to see in the marketplace for patients who respond, they'll stay on medicine and other patients will cycle off.

But I think the key thing here is we have a clean safety profile, which lowers the, I think, bar for physicians to at least give patients the option given the nature of disease. These are young -- often young female patients in working age who obviously want better control of their symptoms of their disease. So we're optimistic on that front as well. We continue to guide that stand-alone in Sjogren's, we should reach a multimillion dollar potential. And then as I mentioned in my opening comments, Ianalumab has a number of other indications that we're also pursuing, both in hematology and in immunology.

Your next question comes from the line of Graham Parry from Citigroup.

So on pelacarsen, a quick follow-up, actually, just you clarified the 13% to 15% is what the trial is minimally powered to detect. I think you said it was just what it was powered for, but I think the design paper says it's 20% on all comers. And would you view that 13% to 15% as a clinically meaningful result? So that was a follow-up. And then on REMS, could you just comment on your confidence in achieving disability progression, perhaps talk to the brain penetration of the molecule and action of the microglia compared to remibrutinib, which actually didn't show that with statistical significance in its Phase III.

Yes. Thanks, Graham. So you are correct. 13 to 15 would mean a win. It's powered for 20% for the patients who are 70 milligrams in DL and above or 25% for the 90-milligram DL and above. And so I think we would say in the mid-teens is clinically meaningful given that these patients have no other option and that this is an independent risk factor. And so yes, we'll ultimately see what the data shows. And then with respect to REMI and MS, I think we have -- everything indicates to us that the trial is being conducted and the data that we're seeing that from an ARR standpoint that we're on track versus what we would have expected in the data set.

As you know, with disability progression, we have no way to know. And I think it's very difficult for me to handicap that. We saw the data with fen ibrutinib, we do believe that our molecule is more potent on the target and more selective. And so we're hopeful that, that leads to the improvements in disability progression that would bring us in line with the antibody-based B cell therapies. But there's no way for us to assess that in any sort of objective way at this point until the study reads out.

Your next question comes from the line of Rajesh Kumar from HSBC.

One question for Mukul. Thanks for clarifying what sort of cost cuts is going forward. Just if we are thinking through the P&L on margins, the gross margin level we have now sort of captured most of the interest or negative impact. Should we sort of expect this to be the level from which you can build based on when you get growth from younger products in the portfolio, while you get the profit growth through SG&A management and R&D phasing, obviously, growth in the second half. So just in terms of gross margin trough point, should we be thinking about now or later in the year?

Thanks for the question, Rajesh. So I think gross margin, we already said we had this discussion beginning of the year, and I think it's -- the point on the gross margin where we are now is a good point to take from modeling for the future. And what we already said is end of last year, Q3, Q4 of last year, if you take an average of that, that should be the gross margin point that we take. But worth saying is that gross margin would never be flat. It depends on the profit mix that we have from a quarter-on-quarter perspective.

And as we move the portfolio forward, there are pushes and pulls that we have in our portfolio. We've got a great drug if comes to life like remibrutinib, a small molecule. We don't have any royalties versus some of our other portfolio where the gross margins would be more stretched. But I think from a modeling perspective, I would take the year-to-date gross margin as a good indicator of what to expect for year to go.

And the next question comes from the line of Florent Cespedes from ODDO BHF.

A question on the cardio business. Assuming positive results on pelacarsen later this year and positive Leqvio outcome trials next year, will you have to use either new sales force? Or will you use an existing sales force that will be the one on Leqvio be Leqvio? Some color also on the budget going forward. Will you have to invest massively on marketing to promote the new exciting clinical results?

Yes. Thanks, Florent. I think at the moment, we would expect that with for pelacarsen that we will be able to leverage the existing global Leqvio field force that we have. Of course, usual adjustments that we might need to make. And I think the overall, any investments that would be required for the pelacarsen launch, particularly around disease awareness to get additional patients tested for Lp(a) levels, we would be able to -- is all factored into the guidance that we've been giving on margin progression. I think as we've noted in the past, it will take time to drive up these biomarker testing rates. But we're hopeful that with a drug that has an attractive efficacy that will motivate physicians to test and ultimately patients to get on therapy.

I think for elsewhere in the cardiovascular portfolio, obviously, with abalastimab as well as the Phase III program we'll be running with our anti-IL-6 recently acquired medicine as well. Those might require additional field force investments. And we'll, of course, provide any guidance on that once we get those Phase III results and have a better read on those -- because those obviously go to different physician segments, both for anticoagulation and in the case of the anti-IL-6 pibecatug would be for physicians who are treating in the more acute coronary setting.

Your next question comes from the line of Colin White from UBS.

Colin White from UBS. Just on the stocking in the quarter, I understand the 1% of sales beat was from stocking. Cosete explained some of this, but not all of it. So are you able to provide any color on what other drugs may have experienced stocking?

Yes. Colin, this was no particular brand I would call out on stocking. I think this was across the board. It was not just in one single geography, but multiple geographies. And I would not attribute this to a specific drug destocking.

Yes. And maybe just to provide a little bit of color as well. I mean this was related to the implementation of our new SAP system, where it's often the case when we roll that out in multiple geographies, we do have to shift ship stocking levels for the cutover to the new SAP system. So that's the driver and the reason why it's not associated with one brand per se.

Your next question comes from the line of Michael Leuchten from Jefferies.

Vas, interested in your Scemblix comment about the second half aiming for NBRx leadership in the U.S. Is that just natural progression of the dynamics that we're seeing? Or is there a pivot point that would inflect that further?

Yes. Thanks, Michael. I think, yes, it's just the momentum we're seeing. I also think that now we've gotten very strong access position for the brand. And so I think that stronger access position as it flows through. I mean one of the things with CML is because it is a rare disease, and there's a limited number of newly diagnosed patients in a given year, it just takes time. And so any of the smaller fluctuations that you see quarter-on-quarter is driven by very few patients. But all indications we're seeing is that given the very strong safety profile that physicians are seeing with the drug and obviously, the known efficacy profile, there's just a lot of momentum now. So that gives us confidence that we'll get to that market leadership position in the U.S.

And I mean I'll flag again, I mentioned in my opening comments that we're really just at the beginning now of moving from third line to first line ex U.S. And I think one of the things that's been a positive trend as well, there are multiple generic medicines available in that first-line setting. There seems to be a strong demand from physicians, but also payers are accepting the fact that Scemblix has demonstrated that it is a superior medicine in that frontline setting and more openness to give us the reimbursement we would expect for such a medicine.

Your next question comes from the line of James Quigley from Goldman Sachs.

So I think earlier this year, Lutathera generics were cleared to launch by the courts in Delaware. So I think a small impact overall on the sales perspective. But how should we think about potential launches for future generic RLTs? We don't have an experience here, obviously, when thinking about generic impacts for RLTs and Novartis clearly has a number of competitive advantages, but how are you thinking the markets could react? Or how could this play out if and when we see generic RLTs launching?

Yes. Thanks, James. So we -- as far as we know, neither of the 2 companies has received an FDA approval. One is a 505(b)(2) and one is a generic -- we continue to believe there needs to be a high threshold used by regulators to ensure that the same dose of radiation is being delivered to the tumor versus the originator brand that we have. Now that being said, we do believe that given our extensive network of supply and our ability to deliver on time in full to physicians across the globe, but also across the United States, we impact from a generic launch even with a lower price being brought into the market.

We think that RLT will behave very differently than either small molecule and potentially biosimilars just for biologics, just given the logistical complexity and as well as the expectation that physicians have that the medicine is delivered on time each time given the nature of the logistics for the office. So we feel confident on that. From that said, we're not -- we continue to work to keep bringing better medicines, not only with the case of PSMA and prostate cancer, but we also have follow-on efforts as well for GRPR and really trying to improve the treatment for neuroendocrine tumors as well, follow-ons for lutathera. So stay tuned on that front as well.

Your next question comes from the line of Urban Fritsche from ZKB.

A question on Leqvio in China. Maybe if you could share some details on how the momentum is developing and what would be needed to really have upside to your current guidance of, I guess, it's $1 billion in China alone.

Yes. Thank you, Urban, for the question. So with Leqvio, we initially saw a very strong uptake in launch in the private self-based segment, which I think really indicates there's a high demand for the medicine in the secondary prevention, but importantly as well in the primary prevention setting as well from a self-based standpoint. And then what -- I think what we've seen is very strong performance now in -- once we had the NRDL listing, we see that both in the hospital segment and in the traditional segments as well, a very strong performance.

So I think seeing that continued steady growth should get us to it being our largest medicine potentially that we've ever delivered in China. Entresto gives us a very strong benchmark in China, but we think Leqvio has the potential as well. And I think really, it depends now on the dynamics on the growth as we try to continue to expand into additional hospitals into additional regions. I would say as well, we look now to also bring additional siRNAs into the China market rapidly.

We think there's an opportunity in cardiovascular hypertension and CVR risk reduction for our follow-on siRNAs in China, where there seems to be a high demand for infrequently administered therapies with very clean safety profiles. And I think that gives us a bigger opportunity in China in the longer term for that cardiovascular siRNA portfolio.

Your next question comes from the line of Steve Scala from TD Cowen.

Were there any surprises in the label or the pricing of the oral PCSK9 inhibitor recently approved that alter Novartis' view of the commercial potential for Leqvio? And Vas is a very skilled and experienced drug developer. Any thoughts on how limiting the fasting ultimately will be?

Yes. Thanks, Steve. So I think no surprises other than the reference to the PCSK9 outcomes trials. So I think we're trying to understand that given that usually we don't get to refer to somebody else's outcome studies. And I think with respect to the -- other than that, nothing that changes our view. I mean, look, our belief is that there's a significant segment of the market -- and this is a huge market and the number of patients who are not at goal for lipid lowering to reach their lipid targets is significant in the United States.

We're talking about here a 70 million patient segment overall and a significant portion of these patients who are not at goal. And so I think the opportunity for the PCSK9 is -- for these advanced lipid-lowering therapies is significant. And we see that there's ongoing demand for patients who want infrequently administered therapies and physicians who want to provide the therapy as well in the physician-administered setting. So I think the fact that we are not participating in the gross to net battle that will ensue between the monoclonal antibodies and the orals actually are in a segment that's insulated from that, I think, gives us a strong position in the longer run for our goal of a $4 billion to $5 billion plus product.

Now with respect to the food effect, I think it remains to be seen. I mean, I think clearly, an 8-hour fast plus the 30 -- I think it's a 30-minute or so post fast in this particular drug. But I think we'll have to see because, obviously, patients can find ways to manage that. And I would say there are other competitors coming that as far as we understand, may not have the food effect. So given that, I think we just have to focus on our segment and focus on the patients that we can reach in that Part B buy-and-bill setting in the U.S. I do want to pitch again outside of the U.S., particularly in Asia, we see very strong uptake for siRNAs.

And we think that in some -- it's a very country-by-country situation as to what kind of profile people are looking for in the medicines. And at least in Asia and Middle East, we see high demand for siRNAs that gives us a lot of confidence.

Your next question comes from the line of Sachin Jain from Bank of America.

I just had one on FSHD. In your introductory comments, you referenced ongoing analysis looking at correlating CDOs to outcomes and that you would use that for the conversation with the regulator. So I guess 2 linked questions. One, will you comment on that data when you have it? And b, what conversations have you had with the regulator around using that analysis to try and accelerate the biomarker-driven file?

Yes, Sachin. So we have the previous interactions that Avidity had with the -- with FDA on what would be required in this Phase Ib, Phase II study to enable filing. So we're very clear on what the FDA is looking for. And I mean, if you think about it, the way the FDA thinks about this is we know that DUX4 is impacted in this disease. How is circulating KHDLC correlating with DUX4. How is that relating to creatine kinase -- and how is all of this relating ultimately to function and muscle function as best as we can determine in the patient set that we have. So we have that data. We're analyzing the biopsy data that we have as well from the patients in the trial and then putting that all together to take it to the FDA.

What I can say is the data that we've seen thus far gives us we believe we have reason to have the discussion with the FDA and to make the case. We can't guarantee that we will win the case, but I think we have what we think is worthy of a case that should be made to the FDA for an accelerated filing. And once we have that meeting, we'll provide further guidance.

We will now take our final question for today. And the final question comes from the line of Peter Verdult from BNP Paribas.

A quick one to end for Mukul. Just on, the IQVIA trends look great. I heard your comments earlier about don't expect an inflection. But can you help us at all giving us a ballpark split between what is bridged versus paid prescriptions right now? Just any ballpark numbers would be helpful.

Mukul or is it you asking me or -- so I think -- well, I can take that, Peter, with addressing Mukul. But on Rhapsido, yes, we're not providing any detailed guidance on the bridging program. What I would say is it's in line with what we've historically seen in terms of getting patients over to paid scripts. I think now for Rhapsido, it's really just a story of step-by-step continuing to drive up the access environment. I mean we see strong demand, very strong demand in the dermatology segment. We're working on building stronger demand as well in the allergy segment.

In general, once physicians start using the medicine and they get the feedback from the patients that they're seeing disease improvement within hours and certainly within a week, that gives a very compelling case to continued use. But we're trying to stay really disciplined on the gross to nets here. We just believe that if we play the long run out here, remibrutinib has the potential to be used in a broad range of indications, as you all well know. And any points we give now, we won't be able to get back in the future. And so we're just being very thoughtful.

And so I think the access will improve sequentially over the course of this year, but that will ultimately set us up, I think, for a strong 2027 and then a strong longer-term outlook for remibrutinib in the future.

I will now hand the call back to you, Vas.

Absolutely. And I just wanted to come back to Richard Vosser's question. We can confirm that the use was just modestly increased versus the 11% from the baseline population. So not a significant factor we expect in the studies.

But thanks for that question, Richard. So thanks, everyone, for joining today's conference call. So we look forward to keeping you up to speed as we have the readouts over the coming months and of course, catching up with you in various settings in the meantime, and we look forward to a strong second half and wish you all a great summer break as well. Thank you.

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

Good morning and good afternoon, and welcome to the Novartis Q1 2026 Results Release Conference Call and Live Webcast. [Operator Instructions] The conference is being recorded. [Operator Instructions] A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends. With that, I would like to hand over to Ms. Sloan Simpson, Head of Investor Relations. Please go ahead, madam.

Thank you, Sharon. Good morning and good afternoon, and welcome to everyone to our Q1 2026 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 and its most recent quarterly results on Form 6-K that respectively were filed with and furnished to the U.S. Securities and Exchange Commission.

[Operator Instructions] And with that, I will hand across to Vas.

Thank you, Sloan, and thanks, everyone, for joining today's call. So if we go to Slide 4.

As you saw this morning, we delivered a strong start to the year across our priority brands and launches, which is really where our focus is at the moment. These brands and launches are what's going to drive our mid- to long-term growth and where we believe now we have demonstrated that there's strong momentum behind these medicines -- sales for the quarter, you saw that those growth drivers were up 34% in constant currency. Our base business was largely stable, but we did see significant Gx erosions as we've guided to, and Mukul will go through some of the dynamics for that over the course of the rest of the year.

On core opinc, we were down 14%, driven by the sales decline as well as the increased investments in R&D, which we also guided to. When you look at some of the pipeline highlights a number of important highlights, including the continued progress for Rhapsido across a number of indications. Ianalumab received a breakthrough therapy designation and priority review in Sjogren's disease as well as a few other important milestones, which we'll go over the course of the call. Importantly, we're maintaining our full year sales and core operating guidance for the year.

Now moving to the next slide. When you look at those growth drivers in a little bit more detail, that 34% was driven, in particular, by very strong performance we saw in Kisqali, Pluvicto, Kesimpta, Leqvio driven by our strong launch overseas, particularly in China and the continued performance of Scemblix. So I'll look forward to going through now some of the dynamics for each of our key brands over the course of the remaining slides.

Now moving to Slide 6. In quarter 1, Kisqali grew 55%. And as you know, Kisqali now is -- has a lot of momentum, both in early breast cancer and metastatic breast cancer and given our global launches, we're starting to see a pickup of the ex-U.S. markets. So focusing in on the U.S., you can see our NBRx share now in the early breast cancer setting is very strong, 65% plus 2% now versus prior quarter. In addition, in metastatic breast cancer, we have 47% NBRx and 41% TRx. So taken together, we're in a very strong position in metastatic and early breast cancer.

And when we look at that data in more detail, we see that Kisqali has a strong position, not only in the overlapping segment with our competitor in early breast cancer, but also in our unique segment, particularly the node 1 high risk and the node 0 high-risk patients. And going forward, our focus will be very much continuing to expand Kisqali's utilization in those early breast cancer population. Now turning to the ex-U.S. I think one of the markets that we're keenly focused on is our performance in Germany, where we saw outstanding performance in quarter 1. You can see in early breast cancer, our shares are approaching 80% now in Germany.

Overall, we were growing 50% in constant currencies in the first quarter. We have continued metastatic breast cancer leadership across our key markets with 50% NBRx share. And we also see growth accelerating now as we have more EBC launches across a range of markets, 69 countries and we reimbursed now in 40 of those markets. Some of the other markets, we're paying close attention to in the U.K., we have 78% early breast cancer. And we have a strong early start in China where we do have now NRDL listing. So looking ahead, Kisqali is a brand we expect to have continued strong momentum over the course of this year.

So turning to Slide 7. Kesimpta had also a solid quarter, 26% growth ahead of both the MS and B-cell markets. In the U.S., we saw a 21% TRx growth versus prior year. That was 2 points ahead of the market and 1.5 points B-cell class share increase versus prior year. Importantly, when we look at our NBRx market share, both in the overall market, we reached 17% and the B-cell class we reached 28%. So we're gaining share in both our B-cell class competitors as well as the older drugs that still nearly the majority of patients are taking in the U.S.

Overall, we continue to see a significant runway for Kesimpta. I think a lot of that performance in the U.S. is down to strong operational execution. We've gotten much better, I think, at targeting the right patient groups -- the right physician groups as well as owning our messaging around the unique benefits of Kesimpta as a self-administered monthly therapy. So excited about that. We also continue to progress now our every 2-month dose Kesimpta, which we're looking forward to reading out next year.

Now in the ex U.S. setting, 31% constant currency growth, strong growth in Europe. We estimate 1 in 6 MS patients now are in Kesimpta. We see 79% of patients that are coming on to Kesimpta either as naive or first switch in the EU5. We also have continued NBRx leadership at 9 out of 10 major markets. We do find, in general, outside of the U.S., a strong interest in self-administered medicines that can get patients out of the hospital or out of needing ongoing visits for infusion, so very amenable to the Kesimpta's profile. And we see an opportunity for continued expansion with 2/3 of DMT-treated patients continuing to not be on a B-cell therapy in our key markets.

Now moving to Slide 8. Pluvicto continued its strong rollout, particularly driven by the pre-taxane mCRPC setting. We saw strong demand, and we also saw good progress on our ex-U.S. rollout. Starting with the U.S., we saw the U.S. sales grew 76% in the quarter with 70 -- over 70% of that business now coming from the pre-taxane setting, and that's coming from a mix of urologists and community oncologists. Right now, we estimate about over 60% of our NBRxs are coming from the community. And I think that demonstrates we've now successfully made RLT, a medicine that can be prescribed in the community setting for patients who prefer to access care in the community.

Outside of the U.S., we saw 48% growth with NBRx up 92%. This was driven by strong EU uptake, but also, I think, a notable solid start in Japan where we're seeing very strong interest in Pluvicto, so we're excited about that. And the initial stages of a launch as well in China. As a reminder, we have manufacturing sites that are being built and getting up to speed now in Japan and China, which will allow us to serve the Asian market. So diving a little bit deeper to think about some of those growth drivers.

A key element of our story is driving depth in the existing sites and expansion into urology that continues, and I think we're making good progress on that front. And then we also expect the hormone-sensitive approvals in the second half. There, we expect the hormone-sensitive indication to increase the total patient pool available to Pluvicto by 75%, so a substantial expansion and one that I think will enable us to get the next inflection of growth for Pluvicto. You can see here at the bottom of the slide, some of the data on the number of sites, so over 830 sites now prescribing in the U.S., 580 in the ex-U.S. I think that all just gives us confidence that we've been able to make RLT standard that's available now broadly in the communities that we serve and also sets us up well for the future radioligand therapy portfolio over the coming years.

Now moving to Slide 9. Leqvio had a really strong quarter, and that was driven primarily by our performance outside of the U.S. with strong growth in China as well as in Europe and Japan. Now first, let's start with the U.S., where we saw 31% growth in the quarter. We continue to outpace the advanced lipid-lowering market, but I think in the U.S., the next inflection point we would expect is when we get the outcomes data in the first part of next year with -- in the secondary prevention setting, and that will be an important milestone for us.

Now when you think about some of the other data, the highlights we're seeing, we're seeing that we are expanding in the Medicare Part B population, up 11 points versus prior year. That's about 2/3 of our current business. And we also see that our TRxs are consistently up 41% versus prior year. So I think all heading in the right direction, consistent, steady growth across the U.S. in the buy and bill segment.

Outside of the U.S., 106% constant currency growth, that was led by China, the NRDL listing unlocked significant demand. It is early days. So I think we'll have to see how the coming quarters evolve in China to really understand how much of this was a bolus versus a steady demand. But I think the early benchmarks that we're looking at suggests very strong demand in China and something that we're excited about for our future siRNA portfolio.

Now lastly, in terms of evidence base for Leqvio, I mentioned the importance of the outcomes trials. So we also are advancing -- we received an FDA approval for adolescents in 2 specific rare disease indications, and that will be important as well from a long-term pediatric exclusivity standpoint. Leqvio is included in the ACC and AHA guidelines. And I think many of you likely saw that the guidelines highlight aggressive lipid management now even at younger ages for patients. So I think that really points to not just statin use, but adding statin and PCSK9 use wherever possible. So I think that all points to a positive outlook for the medicine.

Now moving to the next slide. Scemblix was up 79%, I think, really outstanding performance for this brand, both in the U.S. and ex-U.S. We see in the U.S. Very strong performance in the frontline setting and outside the U.S., both second, third line and frontline now starting to pick up.

Let's take each of those in sequence. So first in the U.S. now we've reached 31% first-line NBRx share. You can see the steady climb upwards in the graph, so very excited about that. And then hopefully, soon, we'll be consistently the leader in NBRx new to brand scripts in the United States. When you look at the -- we're also a leader across all lines now with 42% share, so I think that also demonstrates the breadth of interest in Scemblix.

Outside of the U.S., we grew 68%. That's driven primarily by our third line leadership, 73% share across our key markets. But we are seeing early line indications now starting -- the indications starting to advance. We're approved in 63 countries. You can see in the chart here that the NBRx share in the first line in Japan, we've already reached 50%. In Germany, we're seeing early traction as well with 11% NBRx in the front line. And of course, for the long-term outlook for the brand, our goal is to make this the standard of care in the frontline setting across all major geographies. And as you can see in the data, we're well on our way to deliver that goal.

Now moving to Slide 11. Now Cosentyx had a broadly stable quarter, and we were impacted by some of the onetime effects that we had in the prior quarter in 2025. So when you net out those effects, we would estimate that our global sales growth was about 2%. In the U.S., we were roughly flat to 1% growth. So I think that indicates that we're stable and I think set up well now as the new indications come online for Cosentyx. And that's going to be very, very important to ultimately achieve our peak sales goal.

So when you look at some of the data, when you look at the hidradenitis suppurativa NBRx naive share, you can see here pretty consistently around 50%. We did see a slight dip in January because of the reverification and the availability of biosimilars, but we see that now climbing back up. So we expect to be stable in that 50% range. Importantly as well, for IV patient share, we see steady growth up to now 14%. And so both of these will continue to be important. We are hoping that the HS market continues to develop not just for Cosentyx, but as we'll address later remibrutinib now will also have a readout later this year in HS.

So we want to see this market expand so the patients who need better therapies are getting them. Outside of the U.S., we were up 3%, that's primarily driven by growth in Europe and emerging markets. We continue to see competitive pressures in China with multiple local NRDL entrants. And so there's a long list of competitors that we have, and we've had very strong share performance in China now over many years, but our goal will be to maintain now share and hopefully can stabilize as well the performance in China over the coming quarters. We continue to advance the new indications. Importantly, the PMR submission happened across geographies, and we expect the FDA approval in the second half. And we also received FDA approval for the pediatric HS indication. We completed EMA submission as well. So all on track on that front.

Now moving to Slide 12. I wanted to just say a few words on our renal portfolio by talking about each of the key brands. So first, let's talk about Fabhalta. Sales were up 103% in quarter 1 with NBRx leadership now, both in PNH and C3G. In PNH at the moment, we're seeing 50% NBRx share as well as important and significant contributions from some of our key ex-U.S. markets. In C3G, 56% NBRx share, and we're now approved in 46 countries. So both of those indications really having solid and consistent performance.

Now importantly, in IgAN, I think we believe our uptake in U.S. patients will continue to build in patients with persistent proteinuria and glomerular inflammation, so here, we're at later line therapy. But I think very important was the 2-year Phase III APPLAUSE IgAN data, which was published in the New England Journal. It showed an impressive slowing in kidney function decline of 49% versus placebo and a reduction in progression to kidney failure by 43%. The FDA has granted us priority review for the traditional approval. So I think that just indicates the strength of the Fabhalta data in IgAN.

For Vanrafia, we see steady U.S. uptake in a very competitive field, I think, as all of you know. That launch is ongoing. We have about 11% NBRx share. We see a significant market expansion opportunity with most patients still on supportive care. As that market grows, we hope that Vanrafia will ultimately benefit as a really effective and safe vascular agent -- endothelin agent. And we do expect traditional FDA approval to drive future growth. You saw in the quarter, we topline the ALIGN data, and we do expect to submit that data to FDA and EMA in the first half. We will present that data in full and while we didn't reach statistical significance, we feel confident that the data is compelling, will allow that full approval to ultimately happen.

Now moving to Slide 13. Now Rhapsido CSU launch off to a strong start in the U.S., and we have the early steps now to begin the rollout as well outside of the U.S. And I think when you look at the profile we're building, pipeline-in-a-pill potential, significant medicine here that could address a range of different dermatology and immunology indications. So starting with the CSU launch, the U.S. uptake, we see 3,000 prescribers to date, across allergists and dermatologists now prescribing the medicine. 6,000 patient starts and we're seeing very positive feedback on the speed of the onset of action. And we estimate an NBRx share now of 24%, which I think is very good in these early phases of launch.

We are having early access wins, but I would say that access will build over the course of the year. So it will take us the full year to get to where we want to ultimately get to from an access standpoint. And that will be important as well because that's what allows us to bridge from 3 drugs to ultimately paid scripts. So that will be a steady uptake over the course of year, not a fast inflection.

And then outside of the U.S., the China commercial launch and the European EC approval that we've received will enable us to hopefully have a solid launch for Rhapsido in the second half of the year. We did also have the positive CIndU readout, primary endpoint in chronic-inducible urticaria. We saw significantly higher rates of complete responses versus placebo across all 3 CIndU types. First time a medicine has delivered that. Well tolerated with a favorable safety profile. We're on track now for the FDA approval in the first subtype of CIndU and FDA submission of the other 2 types in the second half.

Now building on the overall profile for Rhapsido, when you look at the next slide, Slide 14. We did release as well the Phase II results for remibrutinib in food allergy to support a fast-acting oral option for these patients. We also have -- are on track now to initiate the Phase III study. You can see here on the left the data that we read out. The 100-milligram dose provided 86.7% of responders, which I think a very impressive result. Our modeling indicates that the 75-milligram b.i.d. would be the appropriate dose for the patients moving forward. So that's the dose we've taken forward into the Phase III study.

Our focus will be a multi-allergen prevention study. So I think that's really exciting across a broad range of age 12 years all the way up to 65 years. And as I mentioned, anticipate initiation in the second half. This has the potential to address a significant unmet need, 3.5 million high-risk eligible patients across major markets. So very excited to add this to the indication list, hopefully, for Rhapsido.

Then moving to Slide 15. Also in the quarter, we completed the acquisition of Avidity, adding 3 late-stage medicines for neuromuscular disease. And I just wanted to highlight 2 data points from the quarter. We did release the 1-year results for del-zota for DMD exon 44 skipping medicine, which was presented at the Muscular Dystrophy Association to a standing ovation, which I think shows the impact that this medicine could have for these patients.

You can see here the creatine kinase declines, which are remarkable. And you can, I think, really -- experts have opined that is really a revolution with this medicine. We're excited to also build after this a range of additional exon skipping medicines for DMD. We are expecting the submission now in the first half as we work through some of the additional CMC topics to make sure that the file is fully submission-ready.

And then with del-desiran, we had the final results for the Phase I/II study MARINA trial published in the New England Journal. Those are results you all know well. But I think highlight the excellent profile that we've seen with this medicine, and we're on track for the Phase III readout for the HARBOR study in the second half.

Now moving to Slide 16. I did want to say a word on the pipeline readouts for the rest of the year. We have quite a bit happening and we're excited about that. So in the first half, I already mentioned the Rhapsido CIndU positive readout. We did have ianalumab readout in warm autoimmune hemolytic anemia, which did not meet statistical significance, so we won't be taking that forward. But we don't expect that to be a read-through to ITP, where we already have positive second line data, and we'll look forward to the first-line data in the second half.

We also have data in-house now for votoplam, which confirm our approach for the Phase III study based on that data, we feel very comfortable taking the 10-milligram dose now forward into the pivotal Phase III readout. We are, in collaboration with our partner, PTC, now discussing the best next steps for that medicine, including further interactions as well with the FDA, and we'll keep everyone apprised as we continue to progress that medicine forward.

We also are on track as well for the FSHD biomarker cohort readout as well. Our plan would be to ultimately disclose that data after we've had any discussions with FDA to understand better if the data meets the standard for an accelerated approval. We do not have that data in-house yet, but we do expect it over the course of the remainder of the first half. Other important readouts include, of course, the pelacarsen readout, which I'm sure we can discuss. The remibrutinib MS readout, which will have 2 replicate studies. The del-desiran DM1 study, which I also mentioned. And then we've accelerated now the Rhapsido HS program into the second half of this year. That study enrolled extremely quickly.

So very excited because that will give us another -- first oral option for patients with HS. We also have our QCZ484 siRNA for hypertension Phase II data reading out. And then lastly, VHB our ALS-TREM2 antibody reading out as well in the second half.

So with that, I will hand it over to Mukul.

Thank you very much, Vas, and good morning, good afternoon, everyone. I will now take you through our financial results for the first quarter, which, as Vas mentioned, was strong despite significant U.S. generic entries. As always, my comments refer to growth rates in constant currencies, unless otherwise noted.

Slide 18, please. Our Q1 results, as expected, were impacted by U.S. GX erosion with sales down 5% and core opinc down 14%. Worth noting is that we did have a positive gross net in our base from Q1 last year that also had a negative impact on the overall quarterly growth rate. Core margin in Q1 declined 4.1%. This was mainly due to higher R&D investments as well as the impact of generics on the gross margin. These results were fully in line with our internal expectations and how we see 2026 P&L phasing through the year panning out. Most importantly, our growth drivers continue to show very positive growth momentum something that Vas has shared earlier on in the presentation, with growing at 34% in Q1.

Slide 19, please. What's great to see is that our continued focus on free cash flow generation has paid off in Q1. The lower core opinc was compensated by favorable working capital movement and this brought back the free cash flow broadly in line with previous year quarter 1. Our strong cash flow continues to support our reinvestment into our business, including bolt-on M&A as well as gives us the opportunity to return capital to our shareholders through dividends and share buybacks.

Slide 20, please. We remain committed to our balanced shareholder-friendly capital allocation strategy, alongside an increased R&D. In the first quarter, we closed Avidity acquisition, and we also announced 2 early-stage deals to support our oncology and immunology disease franchises. On the other hand, for the return of capital to our shareholders front, we did pay $9.1 billion in dividend in March and April, as previously announced, and in addition, we continue to progress with our up to $10 billion share buyback program. This program still has around $6.1 billion remaining and is targeted to complete end of 2027.

Slide 21. With that, I'll move to the guidance piece. So with our Q1 results, we are now reaffirming our full year 2026 guidance. We continue to expect 2026 to have low single-digit sales growth and low single-digit decline in core operating income. Worth noting is that this is the year we are growing the top line of the company through the largest LOE period that the company has seen. Core net financial expense will be around $1.7 billion and core tax rate would be about 16.5%, and these 2 parameters are consistent with our previous estimates.

Slide 22, please. We continue to expect 2026 to be a year of 2 halves, H1 growth will be impacted by a tough previous year base following U.S. generic entries for Entresto, Promacta and Tasigna mid-last year. And with that, in the base, we had guided H1 sales to decline low single digit and core operating to decline low double digits. With our Q1 results now in the bag, we are on track to meet that guidance with Q2 sales expected to decline low single digits and core opinc expected to decline high single digit to low double digit.

In half 2, the impact of the U.S. generic entries and the base will start to minimize and this will allow strong growth of our priority brands and launches to show through the overall P&L. And hence, we continue to expect H2 sales growth of mid-single digit and core opinc growth of mid- to high single digits. And that brings us to our full year guidance.

Next slide, please. If exchange rates remain at late April levels, we expect positive plus 2% impact on full year sales and positive 1% on full year core operating income. As a reminder, updated exchange rate assumptions are published monthly on our website.

And that concludes my remarks, and I'll hand it back to Vas.

Great. Thank you, Mukul, and welcome as well, Mukul, for his first quarter here as CFO is off to a tremendous start. So overall, we've delivered a strong start in 2026 across our priority brands and launches, and we remain fully confident with our mid- to long-term growth outlook. We continue to advance our pipeline, completed the Avidity acquisition and are well set up for multiple readouts in the second half. We remain on track to deliver our full year guidance. And we'll also look forward to those readouts, which could enable us to raise our mid- to long-term growth outlook.

So with that, we can open the line for questions here.

[Operator Instructions] We will now go to our first question, and the first question today comes from the line of Peter Verdult from BNP Paribas.

Pete Verdult, BNP. Just one question, just a deep dive, please, Vas, on HS. Could you perhaps -- you talked about NBRx during the presentation, but could you talk about current volume price dynamics for Cosentyx in HS, the target clinical profile for Rhapsido in HS? And how, if the data is positive, you would intend to position both assets in the market?

Yes, Peter, absolutely. So overall, with Cosentyx, we've had stable, I'd say, gross to net across our indication suite this year. So I think we've been able to manage things pretty well. So overall, with -- this is primarily -- we saw very solid volume growth in the quarter with HS, more of the headwinds than we saw were with some of the older indications. But nothing notable in terms of increased gross to nets for Cosentyx in the quarter.

And when you think about remibrutinib, the Phase II data indicated, I think, impressive -- early but impressive results in disease management. I think we'll ultimately have to see how the Phase III results play out. But the ambition would be to play as we have with remibrutinib in CSU and plan to do in CIndU is to hopefully have an oral option that could be placed ahead of biologics. And so clearly, adding 2 medicines would be helpful. We would have the oral option and ultimately, the biologic option as well. But I think this is really dependent on the data set. This is a heterogeneous population, and we're going to have to see how the data looks before we can fully define the positioning.

Your next question comes from the line of Sachin Jain from Bank of America.

I actually have a follow-on to the prior question on HS, if I may. So you sort of commented that, but what's your target efficacy profile relative to existing biologics, just given the Phase II was hard to interpret with the inverse dose response and very placebo adjusted rates. And then in your mind, is HS or MS likely a bigger indication?

Yes. I mean I think I don't know if I have the details, Sachin, we may have to follow up with you on our expectations on the Phase III study design in HS. But I would still say it's all really going to depend in terms of your second part of your question, the overall data profile that we see. I think clearly, if remi in MS proves itself both in relapse rate and disability progression to be better than the anti-CD20s, then, of course, the opportunity here is massive. I think if it's in line or ultimately a little bit worse, then I think HS could be a similarly sized indication.

I mean we know the HS market is growing. We've guided it to be a $5 billion market growing. But certainly, the patient potential is there to be much larger. And it might be that a safe and effective oral option would be really attractive. So I think it's really going to be dependent on that MS readout to understand the size of the MS opportunity. But I think it's exciting that we have 2 shots on goal with 2 -- with remi to add to what's 2 already very compelling indications that we have going forward. But we'll get back to you on your question on HS.

Your next question comes from the line of Richard Vosser from JPMorgan.

A question about China. You referenced competition for Cosentyx, but we also saw much lower growth in general in China across Q1 despite the strong start for Leqvio. So should we expect more slower international growth for Entresto, Cosentyx going forward? And slower overall China development? Or can Leqvio continue to post drag China growth to double digits? And I have one quick linked question on Leqvio. How much of the peak do you think can come from China given the strong start?

Yes. Thanks, Richard. So overall, the dynamics in China, we've seen a stabilization in the early part of this year. I don't think we're back to the pre-2025 growth levels, but we do see a stabilization overall in the market as well in our key segments. And so we feel confident that our China business can be in that high single-digit to low double-digit growth range. So that's been positive overall. I think -- but there's no question it won't get back to the really high growth rates we saw a few years ago. We also see a higher number of competitors entering in, in each segment as well, which is something we have to just be ready for when we do launch in China.

Nonetheless, very large market, highly attractive. And I think you've seen the strong performance that we've had. I think for Leqvio, we have guided that Entresto can be a $1 billion medicine across its indications. And certainly, we have the aspiration to make Leqvio as big or bigger than Entresto over time. It's early days. I think understanding the trajectory of how we get there. But I would say we see very solid demand for the medicine. And I think if we could make it in the range of Entresto, that would be a success.

Your next question comes from the line of Simon Baker from Rothschild.

I will stick to one. Taking up on your offer, Vas, could you give us your updated levels of confidence on the timing and outcome of the pelacarsen HORIZON study?

Yes, Simon. So I don't think I have anything new to add, unfortunately, because we don't have any new information. But I think we, of course, continue to make sure that the study is on track. No change in our expected readout. We do expect a readout in the early part of the second half of the year. So no change with respect to that. I think if we get a positive result overall, that regardless of the relative risk reduction, we'll find a way to ultimately launch the medicine. I think what we'll be really looking for is, are there either the 90-milligram prespecified subgroup or other subgroups where we can really demonstrate a significant benefit for patients, that I think will help with the uptake. But we have no insight yet as to what that would be. We've modeled it extensively.

We continue to believe that we've done the right study and are fully powered for a 20% relative risk reduction in the 70-milligram per DL and higher patient population and a 25% relative risk reduction in the 90-milligram per DL patient population. As a reminder, the median level in the study is 108. So we definitely have enrolled the right patient group. And so we'll ultimately have to see. I think some of the other dynamics that will be important is cardiovascular versus stroke and how those different elements contribute to the primary outcome. We do have a MACE-4 endpoint here, so we do include stroke. And I think some of the recent literature would suggest stroke is going to be an important element of the story for Lp(a). So we'll see how that unfolds. So exciting, but we'll also have to see.

I do want to highlight as well that as I've articulated in the past, this will be a slow building market simply because we need the testing rates to get much higher. So this will be -- assuming it all plays out as we hope, multiple iterations, but our DII-235 is ready to go into Phase III studies, which could be a once yearly Lp(a) injection. So we're quite excited about that as well to be ready. Lastly, I would note that ACC and AHA have now added that everybody in the United States should receive an Lp(a) test once in their life. And that's an important milestone to hopefully get testing rates up and to start to build the market over time. So thanks for your question.

Your next question comes from the line of Matthew Weston from UBS.

My question is about Rhapsido. Vas, now that we're heading to EU approval, Rhapsido is going to be one of the first pricing discussions for a multibillion dollar product since MFN. So assuming that you've had some early discussions with European governments, are you seeing countries inclined to pay higher prices for innovation in Europe?

Yes. Thanks, Matthew. So first, it's important to note, Rhapsido only has an MFN impact for Medicaid because the approval happened before the signing of our MFN agreement. Our first launch that will have, I think, clear MFN-related implications across all segments in the U.S. would be ianalumab. So I think that's just one clarification. Nonetheless, I'll still answer the question in terms of the ongoing discussions with governments. We are engaging with governments across Europe as well as in Japan to hopefully get to a better place. I think we're not seeing the progress that we had hoped to see at the pace that we had hoped to see. So I think there has to be some urgency here because I do expect across the industry, there will be difficult decisions companies will have to take in terms of how they launch or ultimately progress medicines.

We're already in a situation where depending on how you look, 30% to 40% of medicines in Europe -- available in the U.S. don't ultimately come to Europe. You could have that number grow. In general, significant delays for introduction of medicines into the European Union. So there's a lot of work to do. We certainly have, I think, proposals to all the key governments and most important in my mind are Japan and Germany, but we haven't seen the progress that we need to see. So this is something we'll have to continue to advocate for over the next year because I think it's really a 2027 story where you start to see the impact of MFN on launches in Europe.

Your next question comes from the line of James Gordon from Barclays.

James Gordon from Barclays. The question is on hormonal breast cancer. So Roche look set to have giredestrant U.S. approval for adjuvant hormone breast cancer well before the year-end because they've used a PRV. And they're suggesting this could be an $11 billion-plus product across adjuvant and second line, but mostly in adjuvant. So -- and that seems to assume big broad uptake. I think the logic is that, that could be used instead of someone using an aromatase and CDK4 for some of the patients. So based on what you know about hormonal breast cancer, do you think that's plausible? Do you think even from the end of this year, you could see some pressure on CDK4 use because people instead would just do a SERD. So any thoughts on that, please?

Yes. We don't see that in the same way. I mean what we expect -- continue to expect is that physicians will want to use something to ultimately impact the hormonal access and then separately the cell -- cyclin-dependent kinase access, especially for patients that we're talking about here, which are patients that are node 0, node 1, node 2 or more and have other risk factors that indicate they have a higher risk of recurrence of breast cancer. So that's point one. That's all of our market research suggests that. And I think part of the reason the major oral SERD companies are partnering with us to do combination studies is they ultimately see it in a similar way as well. I can't comment on patients who are very early or less high-risk early breast cancer patients. We used to call them kind of Stage 1.

I think that would be a separate topic that you can talk to our competitor about, but that's not something that we see. I would also say that it is not a straightforward thing to replace established therapies like aromatase inhibitors that have been used for decades. So I think this is something that will take time. I think when you look at the data in almost any class of drug, when you're trying to replace a very established therapy, it requires a lot of education and a lot of work and that ramp will come up over time. So we don't view this as having an impact on the Kisqali outlook, particularly now that in the first-line setting, it seems clear that CDK4/6 will remain the standard of care for the remainder of Kisqali's life cycle.

Our focus very much is on CDK2, CDK2/4, CDK4 to make sure that we can life cycle. Kisqali, you saw us bring in Pikavation, which we think has the opportunity to be a pan-mutant PIK3CA that has the ability to avoid some of the toxicity profiles that we've seen with hyperglycemia and off-target toxicities. So that could be an exciting medicine that hopefully might be able to be used broadly in the approximately 50% of patients who have those mutations over time and then developing the combination drug studies, which we continue to do with the oral SERD companies.

Your next question comes from the line of Michael Leuchten from Jefferies.

Vas, question for you on Avidity. So Dyne Therapeutics presented the ACHIEVE data recently with a splicing correction at month 3 to 11 at a higher rate than we've seen with del-desiran. And they also showed positive trends in MDHI, I think we haven't seen any data for del-desiran. Can you elaborate on how this data fits with your decision to pursue Avidity as opposed to other assets?

Yes, absolutely. No, I think, obviously, the way biomarker data, splicing correction data ultimately correlates with function is to be determined. And I think this is obviously a complex topic given that the target here is in the nucleus. And so it's definitely something where you're going to have different profiles for the different drugs given that we're comparing here an siRNA versus an ASO versus other technologies that are being deployed. When we look at the data set that ultimately was published in the New England Journal of Medicine, very clear that you saw compelling data with the hand opening time. We saw functional endpoints going in the right direction. And so we saw everything the way we would expect it.

And we have the opportunity here with a fully enrolled, fully powered Phase III study that's going to read out well ahead of the competition. And I think once that happens, we would make it harder for accelerated approvals to ultimately happen in the field as historical precedents have shown. So I think being first to market with a key -- first-to-market medicine with a key -- with a compelling profile is going to be very attractive. And then I would also say that with the Avidity acquisition, we have not only DM1, but we also have the opportunity to be the first medicine even if we need to complete the Phase III study in FSHD. So we'd be first-to-market DM1, first-to-market FSHD. And now we're increasingly excited as well about the opportunity we're seeing in the pipeline to address more forms of DMD as well as apply the technology of Antibody Oligonucleotide whether siRNAs or ASOs to our own internal pipeline. So taken together, we think that was the right decision and everything that we've seen since completing the acquisition continues to confirm that.

Your next question comes from the line of Graham Parry from Citigroup.

So on remibrutinib in MS, you've now had 3 trials readout with Aubagio control arm, giving a pretty good view on the annualized relapse rate in that population. So to what extent can you compare that data to your blinded data in the remibrutinib Phase III relapsing MS trials? And to the extent that you can comment, does that give you any increased confidence in the ability to meet the endpoint? And also, could you just reconfirm that at this stage, you're not seeing any drug-induced liver injury or high elevations of ALT in the blinded data?

Yes. Thanks, Sam. So I don't have any comment on the ARR data. I'm not up to speed on any blinded views that we have or have not taken on the ARR data. But we do track the blinded safety data quite carefully. And I think all of the data that we've looked at and that I've also seen indicates that we don't see any contribution if we assume that the historical rates that we've seen with teriflunomide in historical studies for liver -- drug-induced liver injury, enzyme elevations, et cetera, there is no contribution from the remibrutinib arm because all we see in the blinded data would be consistent with what one would see from having teriflunomide in the study.

So that gives us a high degree of confidence given that all these patients have now are well past 3 months where normally you would see any liver injury showed up. So it gives us a high degree of confidence in the safety profile for remibrutinib is clean and consistent with what we've seen in CSU, in CIndU, in the Phase II HS study, in the Phase II food allergy study. So now we have a pretty large portfolio of studies that have indicated the clean profile of remibrutinib. But no insights so far on ARR, and I think we'll obviously read out the studies this summer, and we'll see where we are.

Your next question comes from the line of Thibault Boutherin from Morgan Stanley.

So my question is just on Rhapsido. The previous communication was that we should see limited sales in Q4 last year, Q1 this year because of the free scripts before we see a step-up in Q2. And actually, we saw quite decent sales in the first 2 quarters. So I guess question is how much stocking have we seen so far? And should we still expect a step-up in Q2 as we bridge to paid scripts? And in general, if you could help us with the dynamic in terms of bridge for the rest of the year?

Yes, absolutely. I would say, first on stocking, we've seen stocking levels that are in line with what we've seen historically for brands. So I don't think there's a significant -- anything that's out of what we would expect from a stocking perspective. I think when you look at the early data, as I mentioned, 6,000 patient starts, 3,000 prescribers, about 1/4 of the top CSU physicians prescribing the medicine. So that's all, I think, in the right direction. We think that the early script data probably has to be interpreted carefully because we are using sampling and bridge programs. And as payer coverage expands, we will start to see the conversion from free to paid, but that's going to be a stepwise process over the course of the year. We have some early access wins, ESI, Cigna, Optum, and we have been able to secure first-line post antihistamine coverage across those commercial plans.

So I think overall, that gives us confidence. But I would expect it to be a steady increase in these initial months, not a hockey stick simply because it does take time to get all of that in place and then ultimately start bridging patients. We would expect then to see an acceleration in 2027 as we then have the payer coverage in place and then we're well suited to have a significant launch. It doesn't change our long-term outlook. As we've guided, we think this can be a very large medicine in CSU alone. And then when you add CIndU on top and then hopefully, MS, hopefully, HS and then down the line additional indications, food allergy, et cetera, we have a really exciting path ahead of us for the medicine.

Your next question comes from the line of James Quigley from Goldman Sachs.

I've got one on del-desiran in DM1. So as we're heading into the data, what are you thinking will be a clinically meaningful impact on video hand opening time? And to what extent are the secondary endpoints even more important here in interpreting the data into an overall benefit from a functionality perspective? And then also any comments you have on the recent early data from Sarepta in the same indication. So where do you think del-desiran will be differentiated relative to the emerging competitors?

Yes. So I think we will be in a position to kind of comment on a specific video hand opening time, but we do believe it's a well-understood endpoint. And if we reach statistical significance, we think that would be an important milestone. And all of our physician discussions would suggest that would be sufficient to warrant broad use of the medicine. I think importantly as well, we're going to be looking at additional functional outcomes such as the quantitative muscle testing and patient reported outcomes as well as the 10-meter walk and run test. I think all of that will help us to further characterize the treatment effect. Now when we look at some of the competitor data, I think it's important to note, it's quite early. And as we know in these medicines that ultimately, you need a relatively broad patient group because of the diversity of manifestations of the disease.

So I wouldn't want to overinterpret what we're seeing. Certainly, it's exciting that there are many medicines coming forward to treat DM1 patients. But we feel like because of the large data set that we have now, over 100 patients treated across multiple disease states, 500 infusions, up to 4 years of multi-infusion -- multiyear exposure. That gives us a longitudinal data set that can really help us interpret the impact we're seeing. And I think most important for us is the muscle manifestations. I know there's been a lot of discussion as well about CNS. But I think in this particular disease, what really matters is muscle mobility and managing those muscle-related manifestations and that's very much our focus. So having, I think, 54-week follow-up, long-term data on a large cohort of patients gives you a very robust read. And I think we feel confident that based on everything we've seen in the Phase II study that we're set up well as well as we can be towards that Phase III readout.

Your next question comes from the line of Florent Cespedes from ODDO BHF.

Florent Cespedes from ODDO BHF. A big picture question for Vas. On your last slide, you highlighted that there will be multiple readouts in H2 that can raise your midterm to long-term growth outlook. Maybe, Vas, could you be a little bit more specific and give us a bit more color on from where do you see the potential upside coming from?

Yes. Thanks, Florent. When you look at what we guided to last fall, I mean, our focus was very much on what we had in hand and a probabilized view of our pipeline. And I think when some of these medicines, if they ultimately come forward and we unprobabilize that can lead to significant upsides versus where we are today. I think, obviously, the big readouts, not surprisingly, I think to all of you will certainly be remibrutinib for the 5-year term, remibrutinib in MS, remibrutinib in HS, del-desiran the DM1. We also believe ianalumab in first-line ITP can be $1 billion-plus indication. I think pelacarsen will be significant. I think it will take longer to build over time. And I think overall, the combination of pelacarsen plus DII-235 will give us a very significant opportunity.

But in that kind of 5-year term, I think that medicine will take time to build up. But I think those are the medicines where if we see some wins, it could allow us to -- once we do the modeling to reevaluate the 5% to 6% growth out to 2030 and hopefully drive additional upside. So I think that's a great story. And I would say also in 2027, we have a number of readouts, important readouts as well, abelacimab in stroke prevention. We will have as well the IL -- no, we'll have as well the Kesimpta data as well as some other Phase II readouts as well as starting to read out as well our immune reset portfolio. So I think a number of readouts coming that could further bolster the long-term outlook of the company.

Your next question comes from the line of Kerry Holford from Berenberg.

A question for me on Pluvicto, please. So following the recent European filing withdrawal in that pre-taxane setting, just keen to hear whether you plan to run any additional trials to address the EMA requirements? And if not, does the lack of pre-taxane approval in that region have any impact on your peak sales forecast for that drug?

Yes. Thanks, Kerry. So no impact on the peak sales forecast. We continue to expect $5 billion plus. We had assumed all along that navigating the European feedback on the comparator arm would be a challenge. We evaluated multiple ways to try to address it, and we tried to make the best arguments that we could. But ultimately, we thought it was prudent at that point to withdraw. We do see continued strong uptake in the VISION population in Europe. It's important to note as well in Japan and in China, we are able to both have the PSMAfore and PSMA VISION populations, which are critical long-term markets.

And the next step now for Europe will be the hormone-sensitive setting, where we -- because Pluvicto is used in combination with an ARPI versus an ARPI. There the comparator arm is what EMA would want and I think would allow us then if we're to move forward now, we have the strong, as you know, our PFS data. We're waiting on the OS data. Once we have that OS data, we should be able to file in Europe and then expand the patient population there. So I think that was the best outcome we decided rather than running additional studies that would take many years to just withdraw the file and wait for the HSPC readout.

Your next question today comes from the line of Steve Scala from TD Securities.

Some of your competitors are becoming increasingly vocal about extending big LOEs at the end of the decade. Novartis is the notable exception. It could be attributed to nothing more than communication practices. But if Novartis feels it has a good shot at delaying Cosentyx LOE then why not note that? And if this is an area of active pursuit, what is it that you're doing, co-formulation, extended dosing? And related to all this, if Karen Hale is in the room, can she compare and contrast the store experience at AbbVie?

Yes. Thanks, Steve. So Karen Hale is in the room, but I'll spare her from having to compare her thoughts with AbbVie. I think that would be not the appropriate setting to do that, but we appreciate the question. I mean, of course, we have extensive efforts to defend our IP and then look at other ways to formulate our medicines. I mean a good example is the Kesimpta 2 months, which we do have now planned readout. We have additional efforts as well to life cycle manage Kesimpta into longer intervals as well, which are still in the early phases of efforts. We'll see how that progresses. All of that would generate new IP. I think -- and so that one is clear.

I think with Cosentyx, we have a number of cell line formulation and other patents that we continue to prosecute. We, as a practice, don't add those in as potential scenarios until we've gotten further along, I think, in the litigation phase to really understand where those trials ultimately fit. So I think with Cosentyx, with Kesimpta, many efforts. I think we've discussed extensively with Kisqali, the efforts around CDK2, CDK2/4, the Pikavation efforts as well. Harder with a small molecule, as you know, to come up with significant reformulation efforts, but something that we're certainly looking at.

I would point out, even for medicines like Scemblix, we're actively already working on ways to hopefully extend that franchise even further. You know with Leqvio, we moved from 6 months also to now go up to 12 months and also to look at combinations of Leqvio to target other siRNA targets within cardiovascular disease, things like HMG-CoA reductase amongst others. So I think we have quite a broad effort to always think about this. But we don't want to overpromise at this stage, sitting here in 2026, what may or may not happen 5 years from now. But rest assured, those efforts are ongoing. And as soon as we have something that we think is credible to put forward, we certainly will let the markets know.

Your next question today comes from the line of Naresh Chouhan from Intrinsic Health.

Just one, please, on Cosentyx. As we think about the margin impact of the Cosentyx LOE, is it fair to assume that you've already started optimizing the profitability of Cosentyx as would be typical ahead of any other LOE?

Thanks, Naresh. I'll give that Mukul.

Yes. Naresh, thanks for the question. Yes, absolutely, I would confirm that. I think as we have previously indicated, I think we are -- we projected an LOE in the U.S. for Cosentyx in 2029. There is also an IRA event in 2028 that we have factored into our numbers. And this is all baked into our back to 40% latest by 2029 guidance on the margin.

Your next question comes from the line of Seamus Fernandez from Guggenheim Securities.

This is Zach Dunn on behalf of Seamus Fernandez. We're encouraged by the advancement of your IL-15, the GIA632 into vitiligo. Can you share your thoughts on how you think about the market size of biologic eligible vitiligo patients? And if you don't mind, tying that into your thoughts on atopic dermatitis and the market opportunity there?

Yes. Thanks. I mean the IL-15 is something we did mention at the Meet the Management, and we are quite excited by the profile of this medicine. For those of you who are not aware, this is a medicine that we in-license. It's overexpressed in patients with atopic dermatitis, but we also see the opportunity to address a number of other diseases over time, including vitiligo. And so it's early days. I mean these Phase II studies are ongoing. The Phase IIa study in atopic dermatitis is now recruiting. The vitiligo study is set to begin.

Obviously, if we can show meaningful improvements over the standard of care in atopic dermatitis or can obviously become a standard of care in vitiligo, these would be very large indications. I wouldn't be in a position to give you precise numbers, but obviously, very large market opportunities. And we are actively looking at moving that IL-15 across multiple other immunology indications over time. So I think as we progress, we'll, of course, keep you posted. And maybe I'll also note in atopic dermatitis, we also have the GHC program, which also IL-13, IL-18, which we're also on track.

[Operator Instructions] The next question comes from the line of Matthew Weston from UBS.

It's a quick follow-up about my first question about Rhapsido and ex-U.S. And I was intrigued by your comment around you coming in for U.S. approval before MFN. Just thinking about the CNS indication, which I think you've said previously is going to have a separate brand name, but obviously the same active ingredient at a different dose. Does that mean it would also be excluded from MFN considerations because of the original approval or is that something that we'd have to think of in MS?

Yes. So our current assumption, Matthew, it's a very good question. Our current assumption -- working assumption is that this is based on the chemical compound in question. So all -- because remibrutinib has an approval that even with different brand names that all of the subsequent remibrutinib indications would be susceptible to the Medicaid element of the MFN story, but not the overall MFN across all segments of U.S. reimbursement environment. I would say that is our current working assumption. And if that changes, we'll let you know. But our current expectation is that would be how remibrutinib would be treated as would be the case for other medicines where -- such as Zolgensma, where we have Itvisma. But while the dose is changing, of course, the underlying gene therapy is the same. So that is our assumption for all of those medicines.

Your next question comes from the line of Michael Leuchten from Jefferies.

Question for Mukul, please. The gross margin is pressured by negative mix effect. Obviously, that is partly driven by the generic erosions and partly by the new products having payaways. Is there a scale factor in here that we should take into consideration as we think about the first half, second half of the year or is the gross margin just plain and simple mix driven?

Yes. So I think there is -- as you rightly said, I think there's 2 things at play here. If we look at Q1, the overall decrease in the margin is 4.1%, 3 percentage points of that comes from R&D spend and 1 percentage point comes from the GX impact on gross margin. Now GX impact on gross margin, pretty much, I think if we take 2025 as a base, pretty much H2 base is what we should -- what you guys should model going into this year and that should be the base. And as far as R&D spend is concerned, I think we have to take into account not just the Avidity deal that we did, but we also did 3 other pretty significant deals in Tourmaline, Anthos as well as Regulus. And I think they were -- they all came into the P&L from Q2 onwards. So in Q1, all of these 3 deals plus 1 month of Avidity is incremental. And going forward, I think part of it is already in the base. So the incremental R&D spend would start to run on our P&L.

Your next question comes from the line of Thibault Boutherin from Morgan Stanley.

Just a question on your comments on votoplam and the potential discussion with the FDA on the Phase II. We had the Phase II data some time ago. Have you seen anything new in the full data open-label extension that makes you more confident on the potential for the FDA to accept a path for fast-track approval?

Yes. I think, as I said, we feel like the results that we've seen confirm our planned design in Phase III and also confirm that the 10-milligram dose is the right dose to take forward. I think at this point, we're still in discussions with our partner company on the right approach with PTC on the right approach with any further engagement with FDA. And I think as soon as we have clarity on that, we'll, of course, and have those discussions with FDA, we can keep the market updated. But I think no further comment until those discussions are complete.

Your next question comes from the line of Graham Parry from Citigroup.

Just on Cosentyx, actually, it would be useful if you could qualify the gross to net adjustments, both in the base year and this year, the quarter. And previously, you talked about U.S. growing mid-single-digit growth over the midterm to an $8 billion peak on that asset. Just that was absent from the release and slides today. I just wonder if that still stands.

Yes. So on the gross net and adjustments for Cosentyx from quarter 1 last year.

Yes. So I think if we exclude the gross to net impact on Cosentyx, Cosentyx moves into a positive growth territory for the U.S. I think to be exact, around 1% -- 0% to 1%, closer to 1% for the quarter. We have to think of -- and then I think if you think of an overall basis, we spoke -- we have 2 percentage points in our base for gross to net in the U.S. in Q1 2025. I think we also have a positive impact this year. The net comes to about 1% on our overall P&L.

And then I think, Graham, when you look going forward, yes, we continue to expect to be in this mid-single-digit range globally. And I think that will be a mix of U.S. and ex-U.S. and we're going to have, I think, see how the coming quarters evolve, but that's our current expectation is that we would be in that mid-single-digit range. Clearly, the peak sales for Cosentyx would most likely be in 2027, given the IRA event in 2028 would impact the overall pricing in Medicare, but also into the Medicaid best price in 2028. So all of those dynamics are unfolding alongside the PMR launch and the ongoing launch in IV.

Your next question comes from the line of James Quigley from Goldman Sachs.

So just following up on the remibrutinib food allergy data from the Phase II that are supporting the Phase III trial. So what is it in the modeling that you saw that makes the 75-milligram the most appropriate dose given the data we've seen for the 100 milligram and the 25 milligram. Is there a bridge between where the efficacy is between the 2? Or would the 75-milligram dose have the same target engagement as 100 milligrams?

That's a great question. So we modeled this really carefully based on the full data set that we have. And we do believe that at 75 milligrams, we do have full target engagement, and we should be able to achieve efficacy that approaches the 100-milligram dose. But -- and so we felt like this was a reasonable approach to take, particularly given that we want to move into the adolescent population and FDA would surely ask us to use the minimum required dose to achieve the efficacy required. So based on all our modeling, we believe we can get the necessary target engagement at 75 milligrams and then deliver the efficacy that you saw in the study, which as you could see, was really very compelling.

We will now take our last question for today. And the last question comes from the line of Steve Scala from TD Securities.

Slide 25 no longer mentions MFN, whereas the same slide in the Q4 deck did. I'm just curious why. I heard your earlier responses to Matthew's questions, but Slide 25 suggests that Novartis is increasingly confident in its ability to deal with MFN. And I'm just wondering what has changed as we start 2026.

Hold on one second, Steve. We're just trying to get Slide 25 up. Okay. So I think no -- no change in our perspective on MFN. I mean we don't -- we've fully factored in MFN into the guidance that we've given, both for this year and the 5-year period. So that's fully factored in. If anything, I think we've gotten even better now in modeling the MFN impact. So we've made clear assumptions on the impact on the existing portfolio of medicines for the Medicaid effect as well as on future launches, a set of assumptions on launch phasing for drugs that have a full MFN effect. And then we'll ultimately, of course, see how this all unfolds.

We also have signed the agreements to allow us to not have an impact from tariffs with the commercial agreement that we've signed with the U.S. government as well as scaling up, as you've seen, our manufacturing plants around the United States to allow us to produce fully in the U.S. for the U.S. such that we wouldn't expect any tariff impact. So all that to say, I guess, at this point, we feel confident enough with MFN that we don't need to mention it anymore. Hence, that's why you're not seeing it on the slides.

I think that is all the questions. So thank you all very, very much for an engaging discussion. I know we have some follow-ups, but we'll get back to you. We appreciate your time as always, and we look forward to keeping you up to date in the months ahead. Have a great day.

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

Dear shareholders, ladies and gentlemen, it is a great pleasure to welcome you for the first time in my role as Chair of the Board of Directors to our Annual General Meeting in Basel's St. Jakobshalle. By fortunate coincidence, this is also our 30th Annual General Meeting, which makes me extremely proud to be part of a jubilee year for Novartis.

As many of you may have seen, we have organized a small history exhibition in the hallway, which you may also visit after the AGM. The exhibition not only sheds light on some of our company's biggest achievements during the past 3 decades, it also reflects the long and successful history of our predecessor companies, Ciba-Geigy and Sandoz, which many of you know very well and may have worked for yourselves. We are proud of this legacy which provides us with a strong foundation on which we are building our future.

Let me now also welcome the attending members of the Board of Directors and of the Executive Committee. Also present in the hall are representatives of our auditor, KPMG AG; the public notary, Ms. Andrea Schmutz; and the independent proxy, Mr. Peter Andreas Zahn. The Annual General Meeting was convened by publication in the Swiss Official Gazette of Commerce No. 24 on February 5, 2026, with a complete list of agenda items announced.

I note that proper and timely notice was given for today's Annual General Meeting. Therefore, resolutions may be passed on all items on the agenda. Unless the law requires otherwise, the General Meeting passes resolutions and elections with the absolute majority of the votes validly represented.

Today's resolutions will be conducted electronically. Before the first vote, we will show a video that explains how to use the voting device. I would like to announce on behalf of the independent proxy, Mr. Zahn, that on Wednesday, March 4, he provided the Board of Directors with aggregated information on the voting instructions received. As Secretary of the meeting, I appoint Ms. Charlotte Pamer. I appoint the following persons as vote counters. Mr. Martin Kesselring, UBS; Ms. Olga Nieto, Citibank; and Ms. Alexandra Skriba, Cantonal Bank of Zurich.

I would also like to inform you that the general meeting will be recorded on audio and video. In addition, there is a live webcast. Shareholders who wish to speak are asked to go to the speakers' desk with the remission ticket to register. The speaking time is limited to 5 minutes.

Now that we are done with the formalities, please allow me and our CEO, Vas Narasimhan, to make a few additional comments on the past financial year and our company.

[Foreign Language]. Ladies and gentlemen. Allow me for the next few minutes to take the opportunity to share my perspective on the strategic trajectory of Novartis. The past 12 months have been very exciting for me as I've been able to gain a deep understanding of the impressive global operations of Novartis. This has included my time in Switzerland and visiting sites globally. After 1 year, I am enthusiastic about Novartis, including our highly talented and motivated associates, our deep research and development capabilities, our competitiveness at commercializing medicines globally and our proven track record of operational excellence.

Today, Novartis enjoys a very strong competitive position. Our transformation from a diversified health care player into a pure-play innovative medicines company was the right strategic decision and one that was executed very effectively. By remaining focused and consistent on our strategy, we are able to dedicate the right focus and resources to breakthrough science. Whether one looks at the work taking place in our research laboratories, the medicines we are developing, the external innovation we have licensed or acquired and our impact in the marketplace, Novartis today is truly redefining what is possible in medicine.

As we gather here to review our 2025 results, the strong achievements of last year provide a validation of our strategy and constitute a solid foundation on which we will continue to build in the future. During a year with considerable headwinds from patent expirations and pricing pressures in some of our key markets, 2025 group sales at constant currencies rose 8%, thanks above all to the strong growth of medicines from our oncology portfolio. In addition, efficiency gains helped core net income at constant currencies improved by 12%. We also substantially evolved our pipeline. While Vas will discuss progress with the pipeline in more detail, we met or exceeded all our objectives in research and development, which allowed us to strengthen our long-term outlook for the rest of the decade. Thanks to our strong operational and financial performance, we're proposing a 5.7% increase in the dividend to CHF 3.7 marking the 29th consecutive year of dividend growth.

Now looking ahead. During the last year, I've often been asked whether I see a need for Novartis to change its strategy. Based on what I have just mentioned, my answer is clear. I am confident we have the right strategy for long-term growth and impact on human health. Going forward, together with my colleagues on the Board of Directors, and working with our CEO, Vas Narasimhan and the Executive Committee, our focus will be to ensure that we continue on a strong trajectory and even at times of significant external uncertainty that the long-term prospects of Novartis continue to strengthen.

I would like to briefly touch on our research and development efforts, which are, of course, central to the strategy of a company like Novartis. In addition to our long-standing focus on chemistry and biotherapeutics, Novartis' decision to invest in 3 advanced technology platforms enabled us to establish an early leadership position across them. While we have already translated the promise of these platforms into medicines, all of them are just at the beginning of their impact potential. Looking at our research programs, I am confident there is tremendous potential to continue to advance our work in each of these areas.

Similarly, we have built deep knowledge and established a strong commercial presence across cardiovascular, renal and metabolic medicines, immunology, neuroscience and oncology. We see continued unmet need and substantial growth potential in all of these areas. While our internal research and development capacity with more than 15,000 scientists and clinicians forms the backbone of our innovation engine. We will also continue to pursue targeted acquisitions and licensing deals. We have embarked on more than 10 licensing deals and have completed several major acquisitions in 2025 alone.

While being disciplined in our capital allocation, the deals have helped us strengthen our pipeline and gain valuable expertise in areas such as RNA-based technologies and innovative monoclonal antibodies to name 2 examples. Our drive to boost medical and scientific progress is essential, especially in today's fast-changing environment.

I would also like to touch on our global footprint. On this slide, you can see whether where we are investing in research and development centers globally. With competition as fierce as ever, the changing international economic landscape as well as rising political tensions, it is necessary to be very disciplined and deliberate in our investment decisions. This is particularly important given the long-term development cycles in our industry, which lasts typically more than 10 years. For this reason, we will continue to prioritize environments where innovation is enabled, valued and rewarded.

One example is our decision to invest approximately $23 billion over 5 years in the United States market into R&D and manufacturing sites, which we announced last year. This decision was driven by the importance of the U.S. market for Novartis on multiple levels. First, the United States is our largest single market and one where we have demonstrated that we can be successful commercially as evidenced by our outstanding results in 2025. As important is the fact that the U.S. continues to recognize and reward innovation. In hubs like Cambridge or San Diego, we find the right ecosystem to continue to discover and develop innovative therapies.

As we have announced our decision to invest in the U.S., this has raised questions about our commitment to Switzerland. Switzerland, and I would like to underline this, is our home, and we are fully committed to our headquarters and to our strategic presence here. Technological progress is [ reach large ] year as the country regularly takes top positions in competitiveness and innovation benchmarks. This makes Switzerland an ideal investment destination, not just for our industry but across the board.

In recent years, we have increased our R&D footprint in Basel with new radioligand and small molecule labs. We are now also in the process of broadening our investment in the development space, and we will expand our local R&D -- RNA production footprint. Additionally, every year, around half of our annual R&D budget is invested in Switzerland. With more than 700 private and public research centers, the Basel region is one of the world's leading pharmaceutical hubs. It has all it takes to expand its role and remain among the world leaders. But as Switzerland is at the forefront of innovation and excels through its infrastructure, we believe there is an opportunity to continue to work on reforms to stay competitive.

We welcome the government's decision to support the development of a national life sciences strategy and hope this will include clear steps in terms of valuing and rewarding pharmaceutical innovation, an area in which Switzerland should do better and which will be increasingly important in the future. With the right strategy in place, I am confident that Switzerland can further strengthen its competitiveness, allowing companies such as Novartis to continue to invest here.

Ladies and gentlemen, beyond our commitment to deliver paradigm shifts in medicine, we are also determined to push the boundaries when it comes to sustainability and social impact. In terms of our environmental efforts, we are making significant progress in reducing our water and plastic waste as well as our greenhouse gas emissions, which is keeping us firmly on track toward our goal of reaching net zero by 2040. We are also determined to accelerate our efforts in the global health space, where we were able to further advance our leading infectious disease portfolio in 2025, most notably in malaria, which Vas will talk about in more detail.

Let me now turn to the Board of Directors. Over the past decade, the Board has worked to consistently improve governance and strengthen its focus. For this reason, and reflecting the changing risk landscape in our industry, the Board will assume direct oversight over risk and conduct periodic reviews of strategic risks. We have, therefore, decided to discontinue our Risk Committee. As our company has become more focused and the Board continues to evolve, we have also decided that the role of Vice Chair and Lead Independent Director will be structured as a combined role, again held by one member. Going forward, this position will be filled by our current Vice Chair, Simon Moroney. I would like to thank Patrice Bula for serving as a leading independent director since March of 2022. Mr. Bula will continue to chair our Governance, Sustainability and Nominations Committee. I would also like to thank my colleague, Daniel Hochstrasser, who has decided not to stand for reelection. Daniel joined Novartis in 2022. Thanks to his legal experience in M&A transactions and industrial and infrastructure projects, he made significant contributions to strengthening Novartis. Thank you, Daniel, for your years of support.

I would also like to welcome Charles Swanton whom we proposed to join the Board of Directors. Charles is a clinician, scientist and medical oncologist who has won broad industry recognition for his pioneering work on cancer evolution and drug resistance, among others. He is currently Group Leader at the Francis Crick Institute and Professor of Cancer Medicine at University College London where he also treats patients. We are very proud that Charles Swanton who cannot be here today and who will present himself with a video message has accepted our offer and will bring his valuable expertise to help Novartis accelerate its efforts in the vital oncology space.

Before I close, let me also reiterate that Novartis will continue to engage very actively with our shareholders. We will maintain the intensive and fruitful discussion we have nurtured in the past. Likewise, we will uphold our collaborative approach that has served as the basis for our success during the past 30 years.

Thank you for your attention. Let me now hand over to our CEO, Vas Narasimhan. Vas, please.

Thank you, Giovanni. [Foreign Language]. Thank you for joining us today for our Annual General Meeting. It's a pleasure to be with you to reflect on our progress and discuss the path ahead. 2025 was another strong year for Novartis. As we continue to deliver on our performance track record, when you look at the last 5 years, net sales have grown 8% on average, and core operating income has grown by 15%. We committed to reaching 40% core margin by 2027 and we have delivered on our goal 2 years ahead of plan. These results reflect the strength of our pure-play innovative medicine strategy and the momentum across the company.

Our performance has clearly translated into strong value creation, delivering 129% in total shareholder return over the past 5 years, well ahead of the Swiss market index. We also remain committed to expanding global access to our medicines, and we reached more than 300 million patients last year. This continued impact shows our ability to deliver both strong shareholder value and broad and meaningful patient impact worldwide.

Now taking a closer look at 2025, our net sales grew 8% in constant currencies. Core operating income grew 14%, reflecting strong top line momentum and continued financial discipline. And as I mentioned earlier, we achieved a 40% core margin. Free cash flow reached $17.6 billion, a historical high for Novartis and an important source of flexibility for strategic investment in launches, pipeline and value-creating deals. Our priority brands grew 35% demonstrating the strength of our in-market portfolio and our strong launch performance. An important example of this is Kisqali, our breast cancer drug, which continued to grow strongly, and is on track towards becoming the largest brand in Novartis' history.

We delivered strong performance across all key geographies with continued momentum in the U.S., China, Japan and Germany, markets we expect will continue to drive our growth in the years to come. We also saw performance across the rest of the world, with Asia, the Middle East, Africa and Latin America delivering solid results.

Our pipeline continued with 29 regulatory approvals and 29 [ submissions ] across therapeutic areas, each representing meaningful progress for patients living with unmet medical needs. We are expanding our reach across more patient populations by moving into the earlier lines of therapy and broadening indications. For example, prostate cancer patients in the U.S. can now receive Pluvicto earlier in their treatment journey before chemotherapy. Rhapsido is now the first oral treatment of its kind for chronic spontaneous urticaria in the United States, and we expect to expand to more indications over the coming years. These advances reflect the quality of our science and the power of our development engine.

We're advancing our innovation strategy by combining internal scientific excellence with targeted external opportunities. Over the past year, we were among the industry's most active player in strategic business development transactions, strengthening our early-stage pipeline and adding focused bolt-ons to take -- to our late-stage portfolio. Taken together, these moves build meaningful replacement power and power our long-term growth profile.

We also importantly made meaningful progress in global health. We launched Coartem Baby in Ghana, the first-ever malaria treatment designed specifically for newborns and young infants, ensuring even the smallest and most vulnerable can finally receive the care they deserve. In addition, the Phase III success of KLU-156, a next-generation antimalarial with the potential to combat resistance and block transmission marks the most significant innovation in malaria since Coartem's launch in 1999.

Building trust with society remains central to our strategy. We continue to advance our 2040 net zero emissions goal with significant progress in 2025. We are proud to lead in priority ESG ratings, including being #1 in the Access to Medicines Index and being a recognized leader in indices such as MSCI and Sustainalytics.

2025 was a strong year for our financial performance, productivity and pipeline execution and it gives us a solid foundation for the future. Now looking ahead, I'll share how we plan to continue that momentum and stay on track to achieve our long-term goals. After the loss of exclusivity of Entresto, Promacta and Tasigna in the U.S. last year, we will face the largest impact from loss of exclusivity in our company's history. And yet with the momentum of our business, we expect to continue to grow. As we shared earlier this year, we expect net sales to grow low single digit in 2026.

This will also be an exciting year for innovation. We expect 28 key submissions or approvals and we are on track to deliver on 9 key study readouts and 6 study initiations, many in diseases with no current treatment. And as Giovanni shared, we will stay disciplined in driving our focused strategy across our 4 core therapeutic areas, powered by the technology platforms that give us a competitive edge.

With this, we are well positioned for the years ahead. We remain confident in our 2025 to 2030 sales guidance of 5% to 6% average annual growth rate and expect our core margin to return to 40% plus by 2029. This confidence is grounded in the strength of our pipeline with 15 or more submission-enabling readouts in the next 2 years and 30 or more potential high-value pipeline assets.

Now when you take it all into account and look at the progress we've made, we've strengthened Novartis, our focus, our science and our execution. Our strategy is delivering. Our pipeline is advancing, and our teams are executing with discipline. We are grateful to the dedication of our people and the trust of our stakeholders as we work to improve and extend lives around the world. As we continue on our journey to become the most valued and trusted medicines company in the world, I'm confident in the future of Novartis and the impact we will continue to have on patients, society and our shareholders. Thank you very much.

Thank you very much, Vas, we have now determined the attendance.

[Interpreted] Ladies and gentlemen, I'm reading to you the attendance at the Ordinary General Assembly of March 6, 2026, are present today. 1,554 shareholders or their representatives and the independent proxy. Together, they represent 1,249,402,658 votes. This is 59.15% of the 2,112,421,867 shares issued. Votes are represented as follows: independent proxy represents 1,238,967,609 votes are represented by shareholders present 10,435,049 votes.

Thank you very much, Ms. Pamer. This brings us to agenda Item 1. Votes on the financial and nonfinancial reporting for the 2025 financial year. Under agenda item 1.1, the Board proposes approval of the operating and financial review of Novartis AG, the financial statements of Novartis AG and the consolidated financial statements for the 2025 financial year. KPMG has audited the annual financial statements of Novartis AG and the consolidated financial statements of the Novartis Group and recommends approving the financial statements. KPMG has nothing to add to its audit reports.

Under agenda item 1.2, the Board proposes endorsement of the report on nonfinancial matters for the 2025 financial year in an advisory vote. KPMG has provided an independent practitioner's limited assurance report on selected sustainability information specified in the report on nonfinancial matters. The annual report and the Novartis report on nonfinancial matters have been available on the Novartis website since their publication. I now open the discussion. There are 6 requests to speak on this agenda item. I invite Mr. Kaufmann to the podium.

[Interpreted] Chairman, members of the Board, shareholders, ladies and gentlemen, my name is Vincent Kaufmann. I am the Director of the Ethos Foundation. We represent more than 250 Swiss pension funds managing the assets of 100,000 people in Switzerland. And when we speak today, we speak on behalf of people who are placing their financial future in the hands of companies like Novartis. Novartis has a very good year behind it. Turnover has grown by -- and profits by 17%. Novartis is top of the access to medicine index. We recognize that performance, and we thank Dr. Narasimhan and team for that.

But just because something is good, doesn't mean that somebody should earn an unlimited amount of money. In 2025, the CEO earned almost CHF 25 million. Let me just illustrate what that actually means for you a little bit. A pensioner in Switzerland gets about CHF 3,500 from their pension fund per month. Dr. Narasimhan would earn that much money in less than 1 hour. He's earning almost 300x the annual median salary in Switzerland.

Now some people will say, okay, that's just the price for a global CEO. But I ask you whether that's really true and where do the limits lie here. Among the 10 largest companies in Switzerland, Dr. Narasimhan's earnings are more than 50% above the average. Many of you will remember the controversy about Daniel Vasella, who received almost CHF 40 million. So we're not there yet. Nevertheless, when Dr. Narasimhan came to the company in 2018 with such a healthy level of earnings, people said, well, the years of unreasonable pay are over. But nevertheless, we've seen his pay go up threefold in the last few years.

So it's not just a matter of fairness. I think it's a risk for the reputation of our company. Now we're not expecting that you should pay low wages. We know that Novartis is an international company. But nevertheless, receiving a total payout of more than 11x base salary and the increases we've seen in the last few years is unreasonable. We think this system is no longer in favor of shareholders. It's only in favor of management. And things need to change here. So we have 4 demands. First of all, variable remuneration should be limited to no more than 5x the base salary. Secondly, the companies that you can pay yourselves against should be primarily Swiss or European. You are after all based in Basel, not New York. Thirdly, a greater proportion of variable compensation should depend on performance. And fourthly, measurable sustainability goals should be part of the consideration for compensation, CO2 emissions and so on.

Until such reforms are implemented, we would call upon you, dear shareholders, to vote no on points 5.1, 5.2 and 5.3 on today's agenda. You are long-term investors. You want Novartis to be successful in the long term and to be able to attract and retain the best talent, but you also want a company that pays fairly, respects its shareholders and sets a good example. And you have the power today with your vote to do something about this. Thank you very much.

Thank you, Mr. Kaufmann. Thanks, first of all, on the positive comments on the performance of the company. And I'd like to address your concerns on compensation. First of all, I would start by saying we do look at a global set of peers because obviously, that is the talent pool with which we compete. That's the group of companies with which we compete when we look at our talent. And it is companies based in Europe, of course, and companies based across the world, including the United States.

When you look at how we set target compensation for our CEO, it is really in between the 25th and the 50th percentile of the global group. So it is really not based on U.S. comparables. It is very much anchored in our -- Novartis being a European company. I think what's most important is what you referenced that our compensation plan is really performance-based. And the most important part of the compensation plan, of course, is the long-term performance plan, which is based on measurable objectives, which include, of course, the financial performance of the company over 3 years, but importantly, also total shareholder returns as a measure of the value that is created for shareholders.

And that payout from the long-term plan is very variable. In fact, during the tenure of our current CEO, it has ranged from 57% to 188%, which reflects a very strong correlation between pay and performance, which we hear from shareholders is very, very important. And of course, it was 188% for 2025 in a year in which shareholder return was 84%, which is really the second highest in our industry globally. So we feel that our compensation strategy is based on measurable metrics. It is performance-based, and we continue to discuss it with all shareholders. We appreciate your comments. We are reassured by the fact that last year, our plan received 87% approval from our shareholders. But thanks for your comments. And now I would like to ask the second speaker, Mr. Kurath, to come to the podium.

[Interpreted] Chairman, ladies and gentlemen, I'm Rolf Kurath, and I'm here on behalf of Actares. We represent private individuals and are committed to a sustainable economy. We'd like to congratulate Novartis on the very good results, the excellent results, not just financial, but also the ESG ratings you are at the top of the chart. So congratulations to all of you. Nevertheless, we still see room for improvement in 3 areas, starting with communication and hiring policy and transparency. In terms of communication first, we expect more respect and less trump, please.

It became very clear to us over the past year that things are simply not like they once were. The change of attitude from the U.S. in the U.S. places considerable challenges before us here in Switzerland. And it's not acceptable that Novartis has jumped straight on board in the new alliance with the Trump administration. Pressure is being placed upon European authorities as a result of this. Let's look at one example. For example, nobody can really present a proper calculation of the way that prices are calculated, for example. Now it may be that people will say that Europe has a stable system. It's able to fund innovation, while the European system is all about high sales costs and transaction costs. And if that's the case and until that is clarified, then we need to see more of substance in your communication and more respect vis-a-vis the Swiss authorities.

Now secondly, I want to address recruitment policy and pay because we're seeing excessive pay as we've just heard, the CEO has earned a sum that's something like 400x that earned by those on the lowest wages. And I don't know how you can justify this. You're talking about reimagining medicine. And I think it's important that the collective performance of the entire workforce be respected rather than having such excessive pay for individuals. We don't know either whether the workforce is -- workforce at Novartis is happy with their working conditions and their compensation.

We'd also like to ask about your plant in Stein. What you're doing there? You've mentioned that you have a social plan, but you haven't published it. And that is not enough from a company of your caliber. We call upon to make sure that nobody is laid off unless they've got a job to go to. You need to look after your workforce and consider the broader society in these difficult times.

Thirdly, I want to talk about transparency. We need better transparency. Actares has noted that major ESG data is missing from the sustainability report. The last report still had data on staff engagement, whereas in the recent report, you only mentioned turnover -- staff turnover rates. And you haven't published anything about staff engagement, in other words, staff satisfaction and so on. And we do expect, please, that you make good on that in the next report.

As to environmental protection now, we expect better data on water usage and waste that we don't have to go searching for such information on your website, but that they are properly included in the report.

I'd like to thank shareholders for coming today and playing their role. And I hope that the members of the Board will take our words of constructive criticism into account. Thank you.

Thank you. Thanks, Mr. Kurath. And first of all, let me start by thanking you for your comments you made on our commitment and results in ESG. You've raised a number of points, and I will try to answer all of them. So the first one on communication. I'm sure you understand that the U.S. market being by far the largest market for Novartis, I think it's important for us to discuss it. It's important for us to be focused on it. And as we do everywhere in the world, to work with local authorities to ensure that the right conditions exist for us to continue to do business there. I think that's true in the U.S. I think that's true everywhere else around the world. And I just want to make sure that our position is clear. We do -- because of the work we do, we do aim for a collaborative approach with governments everywhere, including Switzerland, so that medicines that we develop and bring to patients are valued and rewarded with the right price that reflects their value.

And while you're right that there is complexity in understanding what the net prices of products is globally, it is clear that across Europe and in Switzerland, there is an improvement, which is needed in terms of our ability to have our innovation recognized with the right price. So with respect and a spirit of collaboration, we will continue to work with the Swiss government and other governments around the world to make sure that this situation improves because obviously, we have one objective, which is to bring our medicines to patients that need them wherever they are.

The second point from you was on pay. I've already made comments on that. So I'd like to comment very briefly on Stein and the changes that are happening there. Of course, as I mentioned earlier, we are very committed to continuing to invest in Switzerland. For us, it really is about the most advanced and sophisticated manufacturing. And so we -- in Stein, we are going through a transition in which we plan on continuing to invest in sterile dosage forms, manufacturing and most important in the next generation of cellular therapies. This is very aligned with the strategy of the company. But at the same time, we have decided to actually reduce our investment in some of the current manufacturing operations of Stein. And we don't take it lightly that this has an impact on the workforce. We are working very actively in order to understand how to manage that situation. There are consultations ongoing, and we're very committed to them.

The third point that you made on ESG, you are right that we have evolved our communication and disclosure strategy there. We've issued this year a report on nonfinancial matters, which replaces the Novartis in Society Report. I think this report has the advantage of bringing all of the disclosures in one place. It is consistent with Swiss regulations and with CSRD as it is evolving, and there have been metrics that have been added. Some metrics have been discontinued and many metrics, of course, we continue to follow. And the ones that are not in that report are easily accessible in an ESG data summary, which is easy to access. We'll be able -- we'll be happy to continue to dialogue with you on this, but we definitely are committed to transparency in ESG, which is a critical area for us. And your last point was on employee engagement and satisfaction. And I'd like to ask Vas Narasimhan to comment on that.

Very good. Thank you, Giovanni, and thank you very much for the interest on how our employees perceive the company's treatment. We conduct regular surveys quarterly to understand the engagement in the organization, both globally but also side by side. And these -- this feedback is very positive. Overall, the company ranks amongst the best in the world across sectors and certainly as one of the best, if not the best, in the pharmaceutical sector in how employees feel like the company treats them, the overall environment, the overall engagement. We, of course, have many areas to always look to improve and we'll continue to do so. But I want to reassure our shareholders, we take that matter very seriously, and all indications are our employees are very highly and well engaged. Thank you.

Thank you, Vas. Thank you again. And now I'm asking our next speaker, Ms. Swidler Mag, to come to the podium.

[Interpreted] Thank you very much, ladies and gentlemen. I'm here on behalf of myself and just a small number of shares. So I'm not representing anybody else, but I'm delighted to have heard what Ethos and Actares have had to say, and I entirely endorse that. Also, thank you for the explanations that you just gave us. I'm actually very happy about the restructuring in Stein and your move towards personalized medicine. Let me just sum up the way I see it, perhaps not in such fine language as you just did. But I believe that Novartis absolutely belongs to the avant-garde in this sector. You're leading the way, and I'm very proud of that.

You're much less positive in my view, though, when I see that 500 or so people are going to lose their jobs in Stein. And everybody says it's difficult to find qualified workers at the moment. So you need to be very careful and show that you are well set up for the future that you're not going to just lose these people. We should be able to retrain people that would be very good for our resilience so that we are resilient, we can cope, for example, with supply chain issues that might come up in the future or if we find that know-how expertise is being lost in traditional methods of manufacturing, for example, capsules, tableting and so on. This is important know-how, and it needs to be retained even here in Switzerland and in a company like Novartis to make sure that you are resilient for the future.

So please, may I call upon you to be flexible in the way that you employ your resources, as you say, in your strategy actually, to make sure that you don't lose expertise in traditional methods of manufacturing that you try to retrain your staff wherever you can because you know many of them will do almost anything for you. So I ask you, please don't just lay them off. You could, for example, set up a transfer organization. So thank you very much for your attention there.

Thank you very much for your comments. I've already addressed many of them. I just want to reiterate, there are important considerations that you made and there are good discussions taking place in Stein. We're very conscious of the importance of our decisions. I'd like to ask now the next speaker, Mr. Roveda, to come to the podium.

Good morning to everyone, and thank you for giving me the floor. I have 4 questions. The first one concerns the independent development of AAA. As some of you know, I am a Novartis shareholder and also a shareholder in Novartis subsidiary named AAA, also known as Advanced Accelerator Applications, which was acquired by Novartis in 2018. The acquisition of AAA allowed Novartis to become a world leader in radioligand therapy.

At last year's shareholder meeting, in response to one of my questions on the future of AAA, Mr. Vas Narasimhan surprisingly emphasized that in parallel to Novartis R&D investment and technological acquisition, AAA had invested independently in the development of the radioligand platform since the Novartis acquisition in 2018. Since all publicly available information tended to indicate that to the contrary, the AAA team and manufacturing site have been dedicated to the development, manufacturing and commercialization of Novartis products such as Pluvicto rather than to the development of AAA products. Can you please elaborate on the independent development you referred to last year?

The second question concerned the regularity of Novartis financial statement due to the lack of AAA's consolidated financial statements. For several years, I have raised concerns with Novartis and AAA regarding accounting irregularities without receiving any substantive explanation. It seems that since the 2018 financial year, certain information that are required by law in connection with the financial and economic position of AAA subgroup have been missing in Novartis financial statements. Upon many requests by my side, Novartis has repeatedly maintained that such information are rightfully omitted, relying on some specific waivers provided for by the applicable French law.

Nevertheless, it has recently been brought to my attention after thorough investigation that such waivers are indeed available only upon respect of the specific requirements set forth by the same French law, requirements that in all evidence are not met in the case hereof and that this submission may have implication for the regularity of those financial statements for their certification by the statutory auditors and for the validity of the resolution adopted at the general meetings over the past 8 years.

I'm also concerned about the potential regulatory or criminal exposure that could arise for the group, its directors and its auditors. It seems to me that it is a serious issue as these are Novartis financial statements, which are relied upon by investors on the Swiss and U.S. stock exchange where the shares are listed. The management of Novartis and AAA are well aware of my concern, which I have raised many times and as recently as 2 weeks ago, but I have never received a serious answer to date. Could you please inform all of us here today how you intend to address the situation?

The third question regards the annual report, production section, Page 29. Since the acquisition of the AAA Group in 2018, Novartis has heavily has not exclusively relied on the experience and the expertise of AAA team and the manufacturing site to develop, manufacture and commercialize its leading therapies, Pluvicto and Lutathera. Starting in 2022, Novartis has continuously stated in its successive annual report that it was integrating the AAA manufacturing site into its existing manufacturing and supply structure. I note that this is no longer mentioned in 2025 annual report. I presume this means such integration is over or suspended, I don't know. Can you please elaborate on what exactly this integration has consisted in and what has been the financial impact thereof for Novartis as well as for AAA?

Last question regards the principal subsidiary section, Page F 76 of the annual report. In the 2024 annual report, the Novartis equity interest percentage in AAA S.A., the French parent of the AAA Group, was reported at 99.23%. In all logic, the Novartis equity interest percentage in each of the main wholly owned subsidiary like U.S., Italy, Spain and Switzerland was reported at the same level, 99.23%. I note that 2025 annual report indicates Novartis equity interest percentage in AAA down from 99.23% to 99%, while it surprisingly remains at 99.23% for some subsidiary like U.S., Italy and Spain and has increased to 100% to AAA Switzerland International. Can you please confirm the equity interest percentage shown for AAA SA is a mistake and should read 99.23%? Can you also please elaborate on what has been the consideration paid by Novartis to AAA SA for the 0.77 both in AAA Switzerland in case this one is not another mistake. Thank you.

Thank you, Mr. Roveda. You asked a number of questions. I will ask our CEO, Vas Narasimhan to address your questions. He has good knowledge of the history here.

Yes. Thank you, Giovanni. Thank you, Mr. Roveda. We've appreciated, I think, now the almost 7-plus years of engagement with you as a minority shareholder in AAA. We also note that you have initiated legal proceedings against the Novartis subsidiary in question. As such, we can't comment on any ongoing legal matters with respect to that lawsuit that you have brought forward. I would also note we are prepared to answer your questions as appropriately -- as appropriate when they are raised at the subsidiary's shareholder meeting, which we believe is the appropriate venue for this discussion, not at the Novartis AG General Meeting. We're happy to provide our justification for that in writing. And we'll look forward to engaging you at that venue to do our best to address your concerns. Thank you very much.

Thank you, Vas. Next question from Mr. Nair.

Dear shareholders, Mr. President and members committee. I'm here in a slightly off position. I dedicated my life to educate young talent and to bring them to a state that they can contribute to the health of this country and of the world, working in companies like Novartis. I'm very happy to have heard your commitment to this site, Switzerland. To summarize what I will do now, I heard the message, but I have difficulties to believe you. And I'm sorry that I'm speaking in English, but I think it's important that we understand each other directly.

Your first and probably one of the more important strategic decision was to reduce the production side of Stein by 1/3. And the textbook tells all of us and the experience tells all of us, there is a reduction in production. There is some years later, a reduction in development and a reduction in research following. This is clear textbook knowledge.

You decided to devote quite some time to state your engagement in Switzerland. Thanks a lot. Can you make -- the proof of the pudding is in eating. Can you make reliable, controllable, understandable arguments how you are going to replace all the losses of sales and production, which are the consequence of the decision? And can you, because you have a pipeline, a planning of the pipeline, give us the names of what you are going to produce there because it will be easy for all of us then to understand how deep your engagement in Switzerland is and will be. I am sorry that I'm slightly polemic in what I'm saying, but I'm deeply concerned. And I'm sure or I hope that you can give me back my belief.

Thank you, Mr. Nair. I appreciate your comments. And maybe I can start and Vas, if there's anything to add, please. What I can say is when I look at Novartis today, it is a company that continues to evolve at the pace at which science evolves. Our industry 10, 15 years ago was one where small molecules and biologics were the main technological platforms in the industry. As I mentioned earlier, Novartis has actually been at the forefront of continuing to recognize the technologies of the future and invest in the technologies of the future. Today is all about RNA-based therapies, which are manufactured in Schweizerhalle. It is about cell and gene therapy. And I made a comment earlier about our cellular therapy, new platforms where Stein will play a role.

And what I can tell you is that the technology and the science that underpins the growth of Novartis can continue to evolve, will continue to evolve in the future. And I think with that, as a responsible company, we also continue to adapt our investment strategies. And there are technologies which are less differentiated and maybe less relevant to our future portfolio, and there are new technologies that come. And so I suspect that there will always be an evolution in our manufacturing footprint. And I am confident that actually Switzerland has a lot of the very sophisticated manpower that enables us to continue to have a presence in research, in development here and in some of the most advanced manufacturing technologies. You mentioned a textbook analogy. What I can tell you is that Novartis invests more in R&D every year, not less in R&D every year. And as a company that grows, that's our plan going forward. Vas?

Thank you, Giovanni, and thank you very much for your, I think, passionate defense of why investing in R&D is so important. When you think about Novartis' global investments in R&D, it approaches $11 billion. We're one of the global leaders in our sector, and our sector is one of the leaders in investments in R&D in any sector. And when you look at our footprint, nearly half of our footprint is in Basel for R&D. And that commitment remains absolutely clear. And when you look at some of the very, I think, tangible things we've done, in addition to expanding our internal R&D capacity, we have moved the Friedrich Miescher Institute onto our campus, and that is now more and more integrated into Novartis. So I would really separate, I think, our actions to optimize our manufacturing footprint from our commitment to R&D in Switzerland. That is absolutely clear, and we will continue to invest in R&D for the long run here in this country.

Thank you, Vas. Thank you again. I'd like to speak -- to call our next speaker, Mr. Grob, to the podium.

Chairman, ladies and gentlemen, my name is Grob, and I come from Bern. I've got 5 points I want to raise. I wanted to know how is your income exactly? I have read many different placings in the press. I would like to hear from you. I wait. Mr. CEO, what is your income in fact?

Was that your only question?

No, no. It's one of the questions. The first question.

Okay. I think I've already answered on compensation.

Yes, that's very nice. [Foreign Language].

So maybe if you wouldn't mind asking all the questions that we would answer.

I would want first half the questions.

Okay.

Okay. I continue. So the second question, going -- I guess it will be the first. How do you justify this income? What do you do for this money? What are you really giving to Novartis someone else couldn't give, that's why I want to know [Foreign Language] what are you doing for Novartis that nobody else can? And then I'd like to know the following. Yes. I see an increase in your salary since 2018. I mean it's gone up and up. Well, has it gone up, have anyone else gone up as much as you have? And now we'll come to the state. You're going to have a lot of investment there. You promised it now for 3 years. I have not seen and heard results. What did you build? What did you produce? What did you sell in the U.S.? Did you get help for Mr. Trump or his government? Do you have subsidies from the U.S. government in order to build your factory in the staters. That were my questions for the moment. I'm waiting now for the answers.

Sure. So you asked a number of questions. Let me say on compensation. I think I've already addressed many of your points. Maybe you asked how is the compensation composed? The vast majority of the compensation of senior executives, including the CEO, is variable compensation. And as I mentioned earlier, the long-term performance plan represents the vast majority of the compensation. That is performance driven, and so it changes every year depending on the performance of the company.

With respect to the U.S., I can say, of course, the U.S. is the most important market for Novartis, almost 40% of our revenue comes from the U.S. It is the entire portfolio of Novartis. We have demonstrated the ability to be successful in the U.S. market as you look at the performance last year. And of course, we manufacture already in the U.S. some of the medicines we sell there. And our plan is that over a period of 3 to 5 years, we will be able to manufacture in the U.S., the medicines we sell in the U.S. So that's as much as I can answer your question. So thank you for asking a question about these 2 topics.

So I continue. What are you going -- how are you going to drive prices in the U.S.? Or are you going to decline the prices? And what are the prices of your products in Switzerland. Mr. Trump has asked you to make more difficult, more higher prices in Switzerland? Are you following me, [ Mr. Trump ]?

Thank you. So of course, as you know, the prices of our medicines in any country -- in Europe, it's the case in Switzerland. It's not our decision. It's the result of a negotiation with the government. So for every 1 of our medicines, of course, we will negotiate with -- in this case, the Swiss government, so it's not easy for me to give you an individual answer on the price of each medicine. I think what's important is what I mentioned earlier, our objective that the price of our medicines everywhere, including Switzerland, recognizes their value. So thank you so much for your comments.

One last remark. When you continue with your [indiscernible] in this size, you provoke a new initiative from Mr. [indiscernible] for the next future. Thank you.

Thank you so much. Thanks for your question. The next question comes from Mr. [indiscernible].

Mr. Caforio, I have a difficult decision to take now, and I've never had to take this decision before. Should I stand here and speak in English or in German? I mean maybe we should take a vote on that as well on the languages that we use. Until a few moments ago, I thought I would come up here and speak in English, but now I've changed my mind, actually, and I'm speaking German, because I believe that the majority of us here in the room aren't so comfortable in English.

So I'm going to make my comments here in German. I think it's important as well for the people of Basel for former employees of Novartis. So Chairman, ladies and gentlemen, we've already heard this morning. And it's just as I expected, actually, we heard you talk. We heard from Ethos and Actares, I've listened to what everybody has said. And I mean, it's a bit like a stuck record. We're saying the same thing as in previous years. It's all about the compensation of the management. Ethos, Actares have made their comments or criticized Novartis' compensation policies. Well, let me perhaps, see the other side as well and points out that the Head of SAP in Germany earned EUR 16 million year -- this last year and in fact, nearly EUR 19 million the year before, so actually not much less than the CEO of Novartis. So just to put things in perspective. And I do actually have some positive aspects that I want to raise about Novartis. Others have touched on these as well, actually, the Chairman and the CEO touched on them as well. I want to highlight the strong performance of Novartis' shares over the past weeks and months. It's really been very good, and we're very happy about that. Secondly, we're very happy to see the ongoing increase in dividends that we've been enjoying for some years now. And thirdly, and this is something really particular this year here, I think. We have this internal message from Novartis that there is the one-off payment of a double pension payout coming in February. So pensioners of Novartis received a double monthly payments. And on behalf of my sister, who can't be here today, unfortunately, I'd like to thank you for that. She worked for Geigy, Sando and Novartis during her career. The Novartis pension fund has written to us about this one-off double payment, stating that the pension fund wishes to support pensioners at this current moment. Now of course, the tax authorities will be happy about that as well because the upcoming tax bill will rather bump up the tax bill as well, along with the additional social security payment that people receive in December. Anyway, thank you.

Thank you so much for your comment. Thank you. And I'd like to invite Ms. Gregorio to speak to the podium.

Chairman, Directors, ladies and gentlemen, thank you. I'd like to thank everybody at Novartis for the performance that they've delivered, that delivers the dividend to us. Now of course, Mr. Vasella set quite the example here at Novartis when he took his EUR 40 million. Now not to mention expenses and everything else. Now I once experienced a sell-off of an arm of the company, myself and as employees, of course, we were not asked about that nor were we given very much support. It's normally all the workers, of course, who are laid off first, many of them may have spent half the lives or longer working for Novartis. And in terms of communication, what we experienced was that we would only told then what we'd already read in the paper that morning. And then our managers told us that we needed to come to a meeting today. And then they made their announcement, even though we'd already heard it in the press. So we found ourselves pushed out in that way. And then I hear all these millions that you're earning there while treating others like this. It's simply beyond all proportion. People are losing their jobs while this is going on. I think you should be more conscientious in the way that you treat your staff. I, myself didn't find the redundancy process very pleasant, I was allowed to stay until the end, the end, if you like, although I was one of the younger members of staff. And I said, "Well, I think I can go. I think I can find a new job". And then it was very, very difficult because I had doors slamming in my face on a daily basis. You can imagine how we all felt back then. We didn't know who was next, what was going to happen and what we were going to get paid. Now I'm sure it's correct that those at the top should be correctly paid. But you know this is just totally disproportionate now, what you're earning and then when I see that people who have spent half their lives, toiling away from Novartis are simply being kicked outside like this. Thank you.

Thank you very much for your comments. Of course, we take any comments on fair treatment of our associates very seriously. That's an important priority for the Board.

So are there any other questions from the room before we continue with the program on this agenda item? That's not the case. So we will now play the video explaining how to use the voting device.

Your televoter system has 3 buttons. Green is for, Yes, Yellow is to Abstain and Red is for No. At the beginning of each voting, the 3 buttons will light up briefly and the agenda item as well as the time will be shown on the big screen in front of you -- at the front of the room. You should press the correct button in order to cast your vote, the button will light up to show how you have voted. Now within the time frame, you can change your vote by simply pressing a different button. If you have any questions during the meeting, please go to the help desk on the floor of the auditorium.

Okay. Let's now proceed to the votes. The Board proposes that you approve the operating and financial review of Novartis AG, the financial statements of Novartis AG and the consolidated financial statements for the 2025 financial year, and therefore, recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you have accepted the proposal of the Board.

Next, we will vote on agenda item 1.2. The Board proposes endorsement of the report on nonfinancial matters for the 2025 financial year in an advisory vote and therefore, recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you have accepted the proposal of the Board.

We now move on to agenda item 2. Discharge from liability of the members of the Board of Directors and the Executive Committee. The Board proposes to discharge each of its members and each of the members of the Executive Committee for the 2025 financial year. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That's not the case. Please note that current and former members of the Board of Directors and the Executive Committee were involved in any way in the management of Novartis in 2025 are not entitled to vote on this matter. The Board proposes that this motion be approved and therefore recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you have accepted the proposal of the Board.

Let us proceed to agenda Item 3. Appropriation of the available earnings of Novartis AG as per balance sheet and declaration of dividends for 2025. The Board proposes payment of a gross dividend of CHF 3.70 per dividend-bearing share. Should this proposal be approved, the dividend will be paid out as from March 12, 2026. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That is not the case. The Board proposes that this motion be approved and therefore recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you've accepted the proposal of the Board.

We now continue with agenda Item 4. Reduction of share capital. Agenda Item 4 provides for the cancellation of the shares repurchased in 2025 and the corresponding reduction of the share capital. I note that creditors were informed by means of a publication in the Swiss Official Gazette of Commerce on February 4, 2026, and that they may request security by registering their claims. KPMG AG will issue its audit confirmation after the Annual General Meeting. The Board of Directors proposes that the share capital be reduced by CHF 38,025,155.42 from CHF 1,035,086,714.83 to CHF 997,061,559.41 through cancellation of 77,602,358 million own shares repurchased in 2025. The reduction amount will be used to decrease the negative items for own capital shares shown in the shareholders' equity. I open the discussion. There are no questions. No requests to speak on this agenda item. Are there any other comments or questions on this agenda item? This is not the case. The Board of Directors proposes that this motion be approved and therefore recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you have accepted the proposal of the Board of Directors.

Next up is agenda Item 5 votes on compensation for the members of the Board of Directors and the Executive Committee. Under this agenda item, we will vote on the future remuneration of the Board of Directors and the Executive Committee, both in a binding vote as well as on the 2025 compensation report in an advisory vote. Further details on the compensation system can be found in the brochure "compensation votes", which is available on our website. KPMG AG has reviewed the compensation report and has nothing to add to its audit report. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That is not the case. Let us now vote on the compensation of the Board of Directors. The Board proposes approval of a maximum aggregate amount of compensation for the Board of Directors of CHF 8.240 million, covering the period from the 2026 Annual General Meeting to the 2027 and Annual General Meeting, and therefore, recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you have accepted the proposal of the Board. Next, we will vote on the compensation of the Executive Committee. The Board proposes approval of a maximum aggregate amount of compensation for the Executive Committee of CHF 95 million to be paid, promised or granted during, or in respect of the 2027 financial year, and therefore, recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you have accepted the proposal of the Board.

Let's proceed now to the vote on the 2025 compensation report. The Board proposes endorsement of the 2025 compensation report in an advisory vote and therefore, recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you have accepted the proposal of the Board.

We continue with agenda Item 6, reelections of the Board Chair and the members of the Board of Directors, election of 1 new member of the Board of Directors. The Board proposes the reelection of the current members of the Board of Directors except for Daniel Hochstrasser, as well as the election of Charles Swanton as a new member of the Board of Directors, each until the end of the next Annual General Meeting. Let us first turn to the proposal for my reelection as a member and as the Board Chair. For that vote, I would like to hand over to our Vice Chair, Simon Moroney. Please, Simon?

Thank you very much, Giovanni. This is agenda Item 6.1. We have no requests for the floor. [Foreign Language]

[Voting]

[Foreign Language] Congratulations, Giovanni.

Thank you.

And I would like to hand back to our Chairman.

Thank you, Simon. We now continue with the reelections to the Board of Directors. There are no requests to speak on agenda Items 6.2 to 6.11. Are there any comments or questions on agenda Items 6.2 to 6.11? That's not the case. Let us now move on the re-election of the 10 current members of the Board of Directors. You will see each candidate in the order set out in the invitation on the screen, and you have 7 seconds to cast your votes for each candidate. The Board proposes the reelection of all 10 candidates and therefore recommends that you vote yes for each of them.

[Voting]

I note that you have accepted the proposals of the Board.

I would like to congratulate all my colleagues and look forward to continuing to work with them. This brings us to the election of Charles Swanton to the Board of Directors. I have spoken to his biography earlier. I would only like to add that he is independent from Novartis according to the independence criteria set forth by the Board of Directors. Before we proceed to the election process, he would like to address you with a video message.

Dear shareholders, ladies and gentlemen. While I'm unfortunately unable to attend today's Annual General Meeting in Basel in person, I'm delighted to take this opportunity to introduce myself to you via video ahead of my proposed election to the Board of Directors of Novartis. I'm truly honored to be considered for a role at a company that has long stood at the forefront of scientific innovation and patient-focused medicine, especially in my field in the oncology space.

As a clinician scientist and a medical oncologist, my work is centered on understanding the evolutionary nature of cancer and translating fundamental biological insights into new approaches for prevention and treatment. In this context, I have long admired Novartis for its commitment to advancing precision medicine and for its willingness to tackle some of the most complex and challenging diseases through rigorous discovery science. I currently serve as a group leader at the Francis Crick Institute and Professor of Cancer Medicine at University College London, while continuing to care for patients with lung cancer. Thank you for your attention, and I really hope to meet you all in person in Basel soon.

I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That's not the case. The Board proposes the election of Charles Swanton to the Board of Directors and therefore recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you have elected Charles Swanton to the Board of Directors. I congratulate him on his election and wish him every success.

We will now consider agenda Item 7, reelections and elections to the Compensation Committee. The Board proposes the reelection of the current members of the Compensation Committee and the election of Elizabeth McNally as a new member of the Compensation Committee, each until the end of the next Annual General Meeting. If Simon Moroney is reelected, the Board intends to reappoint him as Chair of the Compensation Committee. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on agenda Items 7.1 to 7.5? That's not the case.

Let us move to the elections. You will again see each candidate on the screen and we'll have 7 seconds per candidate to cast your vote. The Board proposes the reelection or election of all 5 candidates and therefore recommends that you vote yes for each of them.

[Voting]

Thank you for your patience while we establish the results.

I note that you have accepted the proposals of the Board. I warmly congratulate all those elected.

We now move on to agenda Item 8, reelection of the auditor. The Board proposes the reelection of KPMG AG as auditor for the financial year starting on January 1, 2026. I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That is not the case. Let us proceed to the vote. The Board proposes that this motion be approved and therefore recommends that you vote yes. Please cast your vote now.

[Voting]

I note that you have reelected KPMG AG.

Our last topic is agenda Item 9, reelection of the independent proxy. The Board proposes the reelection of Mr. Peter Andreas Zahn, attorney at law in Basel, as independent proxy until the end of the next Annual General Meeting.

I open the discussion. There are no requests to speak on this agenda item. Are there any comments or questions on this agenda item? That's not the case. The Board proposes that this motion be approved and therefore recommends that you vote, yes. Please cast your vote now.

[Voting]

I note, that you have reelected Mr. Peter Andreas Zahn.

So before we close, I would like to just say a few words and thank an important member of our Executive Committee at Novartis, Harris Kirsch. Harry, after 23 years with Novartis, 13 years as the Chief Financial Officer of the company, you have overseen tremendous transformation of Novartis and have been intimately involved in the great success of the company. You leave Novartis in a very strong position. And I want to take this opportunity on behalf of the Executive Committee, the Board of Directors and all shareholders to sincerely thank you for your contributions of -- to Novartis and wish you all the best in the next chapter of your life. Thank you, Harry.

Thank you very much.

This brings us to the end of this year's Annual General Meeting. I would like to thank you for the trust you've placed in us through your votes and elections. The next Annual General Meeting is scheduled for Friday, March 5, 2027. I hereby declare today's meeting closed. Thanks to all for your attendance.

Good morning and good afternoon, and welcome to the Novartis Q4 Full Year 2025 Results Release Conference Call and Live Webcast. [Operator Instructions] The conference is being recorded. A recording of the conference call, including the Q&A session, will be available on our website shortly after the call ends.

With that, I would like to hand over to Ms. Sloan Simpson, Head of Investor Relations. Please go ahead, madam.

Thank you, Sarah. Good morning and good afternoon, everyone, and welcome to our Q4 2025 Earnings 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.

Please refer to the company's Form 20-F on file with the U.S. Securities and Exchange Commission for a description of some of these factors. The discussion today is not a solicitation of a proxy nor an offer of any kind with respect to the securities of Avidity Biosciences or SpinCo. The parties have filed relevant documents with the U.S. SEC, including a proxy statement for the transactions and a registration statement for the spinoff.

We urge you to read these materials that contain important information when they become available. Before we get started, I also want to remind our analysts to please limit yourselves to one question at a time, and we'll cycle through the queue as needed.

And with that, I will hand over to Vas.

Terrific. Thank you, Sloan, and great to be with everyone today. With me in the room are Harry Kirsch, our Chief Financial Officer; and Mukul Mehta, our Chief Financial Officer, Designate, who will be taking over for Harry in mid-March.

So let's dive into the results. And when we start on Slide 5, Novartis delivered high single-digit growth, as you saw earlier this morning. And importantly, we achieved our 40% core margin goal 2 years ahead of plan. And I think that demonstrates the strong operational performance of the company. On the full year, our sales were up 8%. Core OpInc was up 14%, as I mentioned, the 40.1% core margin, $21.9 billion now on Core OpInc.

I think significant growth over the years. On quarter 4, sales did decline impacted by both the gross to net, which we'll talk about a bit more as well as the Entresto LOE and Core OpInc is up 1%. We did have some important pipeline highlights, which we'll cover over the course of the call, but I think a few I wanted to highlight upfront.

First, remibrutinib, we achieved the submission in the most common type of CIndU that was based on positive Phase III results as well as interactions with the FDA. And we'll have the remaining readouts for the 2 other subtypes of chronic inducible urticaria over the first half of this year. And with pelabresib, we now have a path forward for both the EU and the U.S. I'll go through that data and the path forward on a future slide.

So overall, we met our upgraded full year 2025 guidance. We expect to grow in 2026 through the largest patent expiry in Novartis' history, which I think demonstrates the strong performance we have on our key growth brands as well as our pipeline replacement power. Now moving to Slide 6. The growth drivers in the quarter continued their strong trajectory as well as on the full year. Here, you see the full year numbers.

You can see Kisqali was up 57% on the full year. Kesimpta was up 36%. Scemblix up 85%; Pluvicto on the PSMAfore launch, having dynamic growth as well. We'll talk about each of these brands in turn. Overall, a 35% growth in this portfolio, and this is a portfolio that will carry us through the end of the decade as well with many of these brands taking us into the mid-2030s.

Now moving to Slide 7. On Kisqali, we grew 57% in the quarter -- on the year to $4.8 billion, outpacing the market for CDK4/6. Now when you look at the chart on the lower left, our growth was 44% in Q4. When you remove the U.S. RD adjustments, our global sales grew at 54% and our U.S. sales growth was at 62%. So in our view versus the consensus, the entire miss really came from these onetime RD adjustments.

We remain fully confident on the $10 billion peak sales outlook for the brand. And what's underpinning that confidence is the very strong volume growth we're seeing across geographies. When you look at the middle panel, U.S. eBC NBRx is now above 60% and holding steady. I think that really demonstrates the strong preference providers have for Kisqali, particularly in settings where we are uniquely positioned.

And in Germany, we have over 80% NBRx share in the early breast cancer setting, which I think shows again this early strong performance for the launch in Germany, which we hope to carry over now to other ex U.S. markets. So going to the last panel, I already went through many of the key elements, but I think I wanted to also note that eBC NBRx share is leading in both the overlapping and the exclusive population.

Outside of the U.S., we have important launches in Italy and Spain coming up in 2026. And finally, we continue to bolster the data profile for Kisqali, both with data that we recently presented at San Antonio and ESMO. We'll continue to follow up these patients over the long run, and that should allow us to continue to have mature OS data over time, which we think will continue to bolster the portfolio. So very excited. Kisqali continues to be -- have the outlook to be the largest brand in Novartis' history.

Now moving to Slide 8. Kesimpta grew 36% to $4.4 billion on the year. You can see the continued steady performance of this brand, driven by the continued expansion of the B-cell class within MS. In the U.S., we had 27% growth in quarter 4. Importantly, we see increasing adoption in naive patients, which are now 50% of our NBRx is now in first line. Outside of the U.S., we are leading now with NBRx share in 9 out of the 10 of the major markets that we track.

And the core opportunity we see ex U.S. going forward is to continue to expand B-cell therapies in the 67% of patients who are not on B-cell therapies and receiving disease-modifying therapies in MS. So we continue to generate additional value for Kesimpta. We continue to progress also our every 2-month formulation for Kesimpta. So I think we're on a solid track with this brand to fully achieve our peak sales guidance of $6 billion plus.

Now moving to the next slide. Pluvicto now really showing dynamic performance with the PSMAfore launch, 42% constant currency growth. We reached $2 billion in sales now overall globally. And that strong performance was driven primarily in the U.S., where we continue to see strong uptake in the pre-taxane setting. Sales grew 75%. We saw a 4x increase in our PSMA share since approval, now reaching 16% in that setting.

We also see continued growth on provider set, across provider settings, including the highest growth in community, where we now have over 790 treatment sites. Outside of the U.S., importantly, we've secured approvals in Japan and China, which also allowed us to continue to drive that ex U.S. strong growth. And we expect that growth to accelerate now with the Japan and China launches upcoming.

Now the next phase for Pluvicto as we expect to kind of get to the peak of the PSMAfore population over the course of this year will be the launch in the hormone-sensitive setting, which adds about 75% additional patients to the patients we already have from the VISION and PSMAfore population. That sNDA has been submitted to the FDA as well as the NMPA in China and PMDA in Japan.

We have the right foundation for that launch to be, we think, a rapid uptake with 2/3 of eligible hormone-sensitive patients already with existing treaters or providers. So the capacity is well established. I did want to flag as well that we have new manufacturing sites that are coming online in California, in Florida as well as in Japan and China. We have over 440 treatment sites now outside of the U.S. as well.

So we've really taken this to scale, which positions us well for the Pluvicto launches, ongoing Lutathera business as well as our future RLT portfolio. Now moving to Slide 10. Leqvio reached blockbuster status in the quarter, an important milestone for this brand as we continue that steady trajectory that we often see for cardiovascular launches, 57% growth on the full year, 46% on the quarter. In the U.S., we continue to outpace the overall advanced lipid lowering market.

And our real focus is increasing depth in the health systems we prioritize where there's strong capabilities within the buy-and-bill setting, strong interest in getting patients to goal, also focusing more on specialty areas as we've guided in the past. We saw a 33% growth in the setting versus the prior year. Now a key milestone for us outside of the U.S. will be the NRDL listing, which we achieved in China and is now already now started in the first part of January.

As you have heard on previous calls, we have had very strong uptake in China in the private setting. And now with the NRDL listing, the early signals are very strong for a rapid uptake in the China market for Leqvio. So we're quite excited about that, and it's a key focus area for us in 2026. We continue to build the evidence base for Leqvio, important publications in various journals, mostly focused on adherence rates as well as our ability to drive LDL-C down to goal regardless of which background therapy patients are on.

Now moving to Slide 11. Scemblix had another strong quarter. We've reached again blockbuster status with this brand, and we have NBRx leadership in the U.S. and Japan. 87% growth in Q4. Now if I could focus your attention on the middle panel in the U.S., we've reached 41% NBRx share now across all lines of therapy, and we plan to continue to grow that. But the most important thing for us now is to drive the growth in the first-line setting where we're trending ahead of our plan.

We're already now in the mid-20% range in the frontline setting. We want to drive that up. And I think as we get -- as we've now secured broad access, we have the opportunity now to continue to make Scemblix the medicine of choice on the front line for patients with TML. And now outside of the U.S., we also continue to have our leadership in the third-line setting with 72% share across the major markets that we track.

The early line indication is now approved in 60 countries, and we've already just launched in Germany, and we expect to get other EU markets online in the front line with launches expected in 2027. I think one ex U.S. market to note, which I think shows the ability we have to drive Scemblix outside of the U.S. is in Japan, where we already have 45% frontline market share -- NBRx share and 74% second-line NBRx share. So really strong outlook, confident in the $4 billion-plus outlook for this medicine.

Now moving to Slide 12. Cosentyx grew 8% overall in the year, getting to $6.7 billion on the steady march up to our $8 billion peak sales guidance. You can see the 11% growth on the quarter. In the U.S., we had 9% growth. That was driven by higher demand we saw both in hidradenitis and in IV. Right now, we're the #1 prescribed IL-17 across indications, and that's really because of the strong access that we have frontline access.

In HS now, we are the NBRx leader in naive patients with 51% share and 47% overall. And the naive market is 2.5x the switch market. Certainly, we've seen our competitor get traction in the switch market, but we're very much focused on that naive market where we have a really strong position. And the IV is also steadily advancing 8% a steady growth, 200 new accounts, and we expect that to continue over the coming years.

Outside of the U.S., no major changes, continued very strong growth, leading originator biologics in the EU and China. And overall, we would forecast Cosentyx to have, on average, mid-single-digit growth over the coming years as we get to that $8 billion peak sales potential. I did want to also flag that we have completed the submission with the U.S. FDA for polymyalgia rheumatica.

And so we're excited about that as an additional launch now for Cosentyx. And we've also are on track. We're also on track to file in the EU and Japan in the first half. So moving to Slide 13. Our renal portfolio has continued its rollout, I think, with steady progress. And separate from that, we also have amended our zigakibart Phase III protocol, which I wanted to talk about in a bit more detail. Starting with our renal portfolio, our IgAN portfolio contributed 50% of the NBRx market growth versus prior year, driven equally by Vanrafia and Fabhalta. So I think we see steady uptake across these 2 brands. Also in C3G, also continued steady adoption across the top accounts. So we hope to see that accelerate now over the course of 2026. And outside of the U.S., Fabhalta is now approved in C3G in 45 countries. Vanrafia had its EU submission.

So I think across these 3 brands, we have the opportunity to continue to build out a strong position. We do expect to be able to provide the full data set on the Fabhalta eGFR readout in IgAN soon and also move forward with the filing for a full approval in IgAN for Fabhalta. Now on -- and we also expect, I should also note the Vanrafia full eGFR data set in the first half.

On zigakibart, we have made the decision in order to optimize the overall label positioning and the competitive positioning to align our UPCR readout with the interim eGFR readout, which we expect in the first half of 2027. And we expect that to support our BLA for a full approval. This was a decision based on our analysis of the Phase I and II data. We think we have the opportunity to be second to market with both proteinuria and the eGFR benefit.

And so that, I think, is going to hopefully position us well to have a fourth renal agent in our portfolio. We also have combination trials underway because we certainly see the opportunity in having a hemodynamic agent, having a Fabhalta and having zigakibart, the opportunity to use combination to optimize care for these patients. Now moving to Slide 14. Rhapsido's U.S. launch, which is obviously something we're very closely tracking is delivering encouraging results.

We are optimistic with already what we're seeing in the early days for this launch. We see strong demand with an encouraging mix of patients, both patients who are post antihistamines as well as post a biologic failure. We have a strong and positive response from allergists and dermatologists. The sampling and bridge program has over 2,000 HCP starts. And I think that when we benchmark that versus other highly successful dermatology launches, it's right in line with some of the most successful dermatology launches.

We're also seeing early access wins. I think access will be now the gating factor. Every few months, we expect to bring on additional access on board. That will allow a steady pickup in sales over the course of the year with more of a steady pickup in the second half of the year. And I think for that second half, I would encourage everyone to watch as we get that access together. And as a reminder, I think you all know well, clean safety, no box warnings, no contraindication, no required routine lab monitoring, no liver safety issues in the label, fast relief across a broad population as fast as 2 weeks.

Anecdotally, we hear reports as fast as a day or 2 days, patients are starting to see benefit. And it's the only oral therapy approved by FDA who remain symptomatic despite antihistamine therapy. Now moving to Slide 15. Now Rhapsido is one of these brands that we hope over time could become one of the largest brands in Novartis' history. This is an opportunity over multiple indications. I mentioned CSU launch, the CIndU now positive data that we have in hand for type, 2 more types coming, an HS readout in 2028.

We have positive food allergy data, which we'll be presenting in Q1 of this year, and that's leading us to now initiate a broad Phase III program in food allergy. We are on track for the RMS readout second half of this year, but really mid of this year is the opportunity that we have to read out the RMS -- 2 RMS studies, SPMS and myasthenia gravis ongoing. So when you take that together, you clearly have an opportunity with a medicine with a clean safety profile. and strong efficacy with an oral -- as an oral option to have a significant long-term sales potential.

Now moving to Slide 16. Now Itvisma, which we haven't had as much attention, but it's something we continue to believe has a significant overall sales potential, total potential for this brand across the IV and IT of $3 billion plus. This is a U.S. approval that brings the onetime gene therapy in children 2 years and older. It's a broad label across patients who are non-sitters, sitters and walkers, no AAV9 antibody titer limit for this treatment.

There's a strong value proposition, single administration, durable efficacy, solid safety profile. So we see a multi-blockbuster opportunity for this brand. 7,500 children, teens and adults have not been treated yet with Zolgensma IV. We also have an extensive experience in the U.S. and ex U.S. with this medicine. Outside of the U.S., we've already been approved in the UAE 1 day after the FDA approval and Europe and Japan submissions are completed.

And as a reminder, for Zolgensma, actually, our sales are larger outside of the U.S. than in the U.S. So there's certainly a significant opportunity ex U.S. for Itvisma. Now moving to Slide 17. As I mentioned on the first slide, for pelabresib, we read out in the quarter 4, the 96-week data from the Phase III MANIFEST program, which both on safety and efficacy has now given us a path forward to, we believe, get this medicine registered, assuming successful regulatory and clinical trial Phase III trials.

In that study, we showed deep and durable responses and a comparable safety profile to ruxolitinib in myelofibrosis. You can see the data here on the left in terms of the spleen response. When you look at the data that we presented, we had a deep and durable spleen volume reduction for the spleen volume, 35% reduction landmark, 91.5% versus 57.6%. We also saw sustained improvements in symptom scores and anemia.

We had 2x as many patients reaching goal with the spleen volume reduction and the TSS50. So we believe this medicine has disease-modifying potential. We saw improvements in bone marrow pathology on the anemia. There was importantly now from a mortality standpoint, fewer deaths and progressions observed with pelabresib and ruxolitinib versus ruxolitinib alone.

And the overall safety now has proven comparable with ruxolitinib, including comparable leukemic transformation rates, which was one of the topics that was holding this program back. So with this data set, we have now an agreement with the EU to file in 2026 based on this data. And in the U.S., China and Japan, we'll be starting a new Phase III study focused on patients who have high TSS50 at baseline, where we believe we have the data set now to show we can achieve the regulatory milestone to ultimately get approval.

Now moving to Slide 18. I did want to also take a moment to mention our impact on global health. As I think many of you know, Novartis has been in global health for nearly 100 years, working on malaria and other neglected tropical diseases. With our Coartem medicine 25 years ago, we started a real sea change in the treatment of malaria, reaching now well over 1 billion patients with Coartem.

And now with the recent data we presented in November, we have the opportunity to bring the first new malaria medicine, novel medicines so in 25 years. This is KLU156, ganaplacide plus lumefantrine. It disrupts the parasites internal protein system, very positive data here. You see on the adjusted basis, 99.2% cure rates versus 96.4% versus a 5-day course, a 3-day course, opportunity to block transmission, very solid safety profile.

So we're quite excited to bring this forward as part of our mission in global health. So moving to Slide 19. Now taken together, a very good year for us from a pipeline standpoint in 2025. You can see we met the vast majority of our milestones and trial starts. And I think that really shows the strong execution machinery we have now in R&D at the company, very aligned across research and development and strong execution across our global development organization.

And turning to Slide 20. For 2026, we're on track for 7 pivotal readouts with the potential to strengthen the midterm outlook that we're guiding to, including the mid-single-digit sales growth we expect in the 2030s. A few particular readouts, which I haven't mentioned, which I'll call out. And on the left side, you can see pelacarsen for CVRR.

We do expect to read out middle of this year. It will be second half, but it will be middle of this year, which, if positive, would allow us for a U.S. submission this year. We also are on track for our submissions for Ianalumab in Sjogren's disease. and as well as the Del-zota DMD U.S. submission, which assuming the closure of the Avidity deal would also happen in the first half of this year. Number of pivotal readouts. I mentioned pelacarsen.

There will be the Ianalumab readouts in hematology, which could have significant potential to drive that brand to very large long-term potential. Of course, remibrutinib as well as the Del-desiran DM1 Phase III readout, again, assuming the closure of the Avidity. We also have the additional readout of the DUX4 interim data readout as well, which could support accelerated launch in FSHD.

However, that we would characterize as an upside case. And then a number of key study initiations you can see on the right-hand side of the chart. So another exciting pipeline year to continue to bolster our long-term growth profile. Now moving to Slide 21.

I will hand it over now to Harry.

Yes. Thank you, Vas. Good morning, good afternoon, everybody. I now walk you through our financial results for the fourth quarter and the full year of 2025, which, as Vas mentioned, was very strong despite midyear significant U.S. generic entries. And as always, my comments refer to growth rates in constant currencies, unless otherwise noted. So on Slide 22, 2025 marked another year of excellent execution.

So over the last 5 years, as you can see here, we delivered an 8% sales average growth rate and a 15% core operating income average growth rate, driven by strong commercial execution, a great late-stage readout and disciplined productivity programs. This translated on the right side into more than 1,000 basis points of core margin expansion in constant currencies.

And as you can see, in reported currencies, allowed us to reach our midterm core margin target of 40% 2 years earlier than planned. As you may recall, we initially planned for 2027. Now we have achieved it in 2025. With these results, I hope you agree, but I believe we have really elevated the company to a new level of sales performance, margin profile and as I'll discuss later, free cash flow generation.

On Slide 23, just a quick summary. You see that we have delivered our full year guidance in 2025 after upgrading twice throughout the year, and we guided to high single-digit sales growth, and we delivered 8%. For core operating income, we guided to low teens. and achieved 14%. And this is a strong result in the year, as I mentioned, where U.S. generic entries for Entresto, Promacta and Tasigna happened, and it speaks really for the momentum of our priority brands, as Vas already laid out, as well as disciplined cost management.

Turning to Slide 24. So here, a few more details. For the full year, we delivered the described solid top and bottom line growth, record core margin and record free cash flow, almost $18 billion. The core margin in the year improved by 210 basis points to 40.1% and core EPS rose 17% to $8.98. Free cash flow grew 8% to $17.6 billion. Now for the quarter, on the right side here, as expected, the U.S. generics had an impact, which we see in quarter 4, and then Mukul will lay it out first half of next year or 2026, but then again, back to growth.

Anyway, sales declined 1%, whilst core operating income increased by 1%. And the results were a little bit noisy due to some U.S. R&D adjustments, a positive impact in quarter 4 of 2024, so last year financially and a negative impact this year in quarter 4, 2025, mostly on generic -- so excluding this adjustment, underlying quarter 4 sales growth would have been positive 3%. As said, the vast majority of the gross net adjustments were Entresto and other generic brands like Promacta and U.S.

Core EPS in the quarter, $2.03, up 2%. Now on Slide 25, you can see our continued progress on free cash flow generation, which reached $17.6 billion, all-time high for the company in 2025. I think it shows you also besides the financial, the power of being a pure-play pharma company. As you know, many years back with even 6 businesses or even before the Alcon and Sandoz spin, these numbers were usually in the $10 billion to $12 billion range.

And now this is the earnings power of a focused and very successful pharma business. We remain, of course, focused on ensuring that the growth in core operating income translates into high-quality earnings and strong cash flow generation. This robust cash flow allows us to reinvest in the business, pursue bolt-on acquisitions and continue to return attractive capital to the shareholders through growing dividend and share buybacks.

On 2026 -- on Page 26, a quick reminder on our unchanged capital allocation strategy. And as you see, we continue to execute our balanced shareholder-friendly capital allocation in 2025. We invested more than $10 billion in R&D, an 8% increase versus prior year, announced 4 acquisitions, 10 licensing deals, strengthening our key platforms and pipeline across all of our 4 therapeutic areas.

On returning capital to our shareholders, we completed our $15 billion share buyback program in early July, and we launched a new up to $10 billion program targeted to be completed by the end of 2027. Approximately $7.7 billion of that remains to be executed. In addition, we distributed $7.8 billion in dividends during the first half of 2025. Now speaking of dividends.

Turning to Slide 27. We are proposing a dividend of CHF 3.70 per share, a 6% increase in Swiss francs and even double digit in dollars. And it's our 29th consecutive dividend increase in Swiss francs since company creation '96 and including years following the Sandoz and Alcon spins when we did not rebase the dividend at all. This reflects our long-term and long-standing commitment to a growing dividend in Swiss francs per share. That concludes my remarks.

Before handing over, I'd like to briefly acknowledge that this will be my final earnings call as CFO of Novartis. It has been a privilege to serve in this role in the last 13 years and to work alongside Vas and so many other great colleagues to help guide the company through a period of significant transformation and performance improvement. I'm very pleased to hand over to Mukul, a long-time colleague. In fact, we both started maybe at different stages of our career in 2003 at Novartis and very intensively worked together, especially in the last 10 years.

So with that, I turn it over to Mukul to take you through 2026 guidance.

Yes. A big thank you to you, Harry, for everything. It's been -- it is an honor to step into the role that you're leaving me with, and I look forward to getting to know everybody on the line in the months to come. So if you can go on Slide #29, please. For 2026, we expect sales to grow low single digit and core operating income to decline low single digits.

And this reflects the 1 to 2 percent points of core margin dilution related to the Avidity deal that we had previously indicated. Importantly, in 2026, we will be growing top line through a period of highest GX impact in our company's history. At the same time, we will make sure that we continue to invest in R&D. We fund our launches appropriately while driving forward with the productivity improvement plans that the company has.

As previously noted, we expect to close the Avidity deal in the first half of 2026. Looking ahead, we remain very confident in our 5% to 6% sales CAGR in the '25, '30 period, and we expect to return to 40% plus core margin in 2029 as laid out in our Capital Markets Day. For 2026, we expect core net financial income expenses to be around $1.7 billion. This is higher than the '25 levels, and this is largely due to the anticipated funding costs related to the Avidity deal, which we have previously indicated is primarily going to be debt funded.

We also expect core tax rate to remain around 16.5%. Moving to Slide 30, please. As we have previously indicated as well, 2026 is going to be a year of 2 halves. We expect -- we continue to expect strong volume growth from our priority brands throughout 2026. But we have to understand that for the first half of the year, we will have a tough prior year base with Entresto, Promacta and Tasigna generics having entered the U.S. market mid-2025.

With that, we expect the first half of the year sales to decline low single digit and core operating income to decline low double digit. Additionally, Q1 will be impacted by the 2% positive gross to net impact that we had in the base Q1 '25, which will weigh on the quarter-on-quarter growth rate in Q1. That said, in the second half of the year, we expect a clear improvement with sales growing mid-single digit and core operating income growing mid- to high single digit.

This takes us to our full year guidance of low single digit on top line. So moving to Slide 31, please. If exchange rates remain as at their late January levels, we expect a positive 2 to 3 percentage point impact on our full year sales and a positive 1% point impact on core operating income. And as a reminder, which Harry has conveyed previously, we published updated FX estimates monthly on our website.

So that concludes my remarks, and I hand it over back to Vas.

Yes. Thank you, Mukul. I want to take a moment as well to acknowledge Harry Kirsch's incredible contributions to Novartis over 23 years. Over my tenure as CEO, now entering my ninth year, Harry has been by my side as we've transformed the company into a pure play and I think unlocked really outstanding shareholder returns, outstanding financial performance.

But probably less visible is the strength of the finance organization Harry has built as well as the culture he's created in the company around productivity, financial discipline and operational excellence. He'll surely be missed, but will continue his legacy in the years to come. And a big welcome to Mukul, who I've known for many, many years. It will be a great addition to the team and continue the strong track record of Novartis finance and delivering strong operational execution.

Now moving to the next slide. I do want to take a moment to build on Mukul's comments on our confidence in the -- our 5% to 6% sales CAGR to 25% to 30%. That includes the impact of Entresto in 2026 as well as the U.S. MFN agreement impact. You can see in the chart, we do expect some generic impact. So a lot of that is front-loaded in the first -- early part of the 5-year trajectory here. A number of brands where we believe we can drive dynamic growth in the middle column.

And then lastly, a strong set of assets that we probabilized in our pipeline. This ranges from lanalumab, our various Pluvicto and actinium PSMA, pelacarsen as well as the Avidity assets, amongst others, that give us the opportunity to not only hopefully deliver the 5% to 6%, but if we're successful on those pipeline assets, we could even drive higher growth in the period.

So moving to Slide 34. and in closing, strong performance in 2025. We delivered the guidance that we outlooked and got to our 40% core margin early. Our priority brands continue to outperform, and that's what's going to drive our growth through the second half of '26 and then through the 5 years to come. We're advancing the pipeline meaningfully in 2020 -- we advanced meaningfully in 2025 with 7 pivotal readouts this year. And we're confident in that mid- to long-term growth guidance.

So move -- so with that, we can close this section and move to questions. So operator, we could open the line. Thank you.

[Operator Instructions] We'll start with our first question, and this is from Sachin Jain from Bank of America.

Perhaps I'll just kick off with thanking Harry for support and insight over the years. The question, I guess, for that on remi. You talked about avoiding liver monitoring in MS given no high law. Competition recently has been vocal avoiding monitoring in the label when monitoring has been involved in the studies could be difficult.

So I wonder if you could just give us any color on FDA conversations around this topic and whether monitoring in the studies picked up events that required dose changes? And then a quick follow-on on efficacy. Any color on what you're targeting on relapse or progression given we have no Phase II to go here.

Yes. Thanks, Sachin. So I think first on liver, I think we should first take a step back and note that we already have an approval and an approved label without any liver safety discussion in the label, which just points to the fact that remibrutinib structurally does not have the off-target toxicities we believe that the structures of some of the other molecules do.

And so that we didn't have any of that in the existing TSU label. I think I have an abundance of caution given the findings of the other competitors, FDA asked us for a limited liver monitoring to our understanding that's more limited than the liver monitoring that our competitors have had to add to their programs. And our full plan is assuming that we -- and as we've seen to date, no liver signals in our study, we fully plan to advocate to FDA that we should stick to the current label in the absence of any information to really -- any data to really change the current label with respect to that.

I'd also note that for -- in general, for competitors, when there is a Hy's law case, at least to our understanding, whether it's 1, 2, 3 cases, that generally leads to REMS programs, leads to monitoring, does lead to warnings and precautions, just given the safety risk that these -- that creates for patients who have alternative therapies. And in RRMS, there's numerous alternative therapies. So safety is absolutely paramount.

So I think that's our overall perspective on the safety. We're very confident in overall remi's safety and assuming 2 positive Phase III trials this summer, the potential for this to be a very significant medicine. Now with respect to efficacy, I think it's very fair to point out, we don't have Phase II data. We went to Phase III based on the findings that we saw from competitors.

So -- but I think given that we know that we hit the target very well at 25 milligrams BID and we move up to 100 milligrams BID in the study, we think we'll definitely have strong target saturation. We think the molecule is very well designed when we look at the PK and the PD of the molecule.

So that gives us confidence that assuming the class is effective against RRMS, we will have a compelling profile from an efficacy standpoint and with the safety profile and with the fact that we're established now in the market having already launched should give us a strong value proposition.

We'll take our next question today, and this is from Simon Baker, Rothschild & Co Redburn.

Two, if I may, please. Firstly, on -- just continuing on remibrutinib. -- going on from Sachin's question. I just wonder if you could give us your updated thoughts on the commercial opportunities here in MS because it kind of feels like that your enthusiasm for remi in MS has increased over time.

A couple of years ago, there was talk of almost MS being playing second fiddle to CSU. So just updated perspectives on your thoughts on the commercial opportunity. And then moving on to pelacarsen. You've now guided to a 2H '26 readout. Given this is an event-based study, could you just give us any thoughts on potential risks and risk mitigation for this what appears to be significantly lower event rate, does this run the risk of creating additional noise in the study?

Or is that more than offset by the powering assumptions and the design that you've built in there? Any thoughts on that would be very helpful.

Yes. Thanks, Simon. So first on the commercial opportunity, I think it's really going to be data-driven. I think our base case assumption is that an oral drug will struggle to have the same level of efficacy as monoclonal antibodies in hitting the B-cell pathways in MS.

And because of that, that still B-cell monoclonal antibodies will be the dominant class, but there will be a number -- large number of patients that would want an oral option and who don't want to go through injectable therapy. I mean, as I noted in my slide, still 25% of patients in the U.S. and 65% outside of the U.S. are on DMTs and are not on B-cell injectable B-cell therapy. So there's a large market there on its own.

And then I think it will depend if the efficacy and safety profile overall, particularly the efficacy profile in the case of remi in our hand is compelling enough to have a broader market. So I think we'll certainly see based on the data. But even if we take it as a given that there is a large B-cell monoclonal class out there, there is a large market opportunity beyond that, which we think is important.

And then, of course, the question is with the brain penetrant properties of our molecule, does that lead to other opportunities either in SPMS or in the control of RRMS that provides another dimension, and that will all be data driven as well. So in this case, I'll exceptionally take the second question, but if everyone could limit themselves to one question. Pelacarsen, so we expect a midyear readout.

The study is going to completion in terms of the number of events that we had originally outlined. We had powered up the study, you'll recall, during the process of the Phase III. So we feel like we're adequately powered to demonstrate both at the 70-milligram per DL cutoff and the 90-milligram per DL cutoff, the CVRR that we're targeting. And so I don't think there's necessarily any risk associated with going in full. I think what it does indicate is that the event rates are lower than what we had modeled from the published literature.

And I think that's just something that is just the reality now that we found. We suspect it has to do with the fact that we've really optimally managed these patients for all other risk factors, particularly LDL lowering. And I think that, of course, has an impact on event rates as well. So we'll see, and we're excited to see this data and hopefully creating an entire new class of medicines that can help a whole group of patients that have no other option.

And so I think with a positive study, we have the opportunity to give these patients a hopeful solution against sudden cardiac death and some of the other things that can happen for patients with elevated Lp(a).

And the next question today is from Matthew Weston, UBS.

Can I also add my thanks to Harry for all his support and best of luck for the future, Harry. Vas, Kisqali is building into a fantastic and highly profitable medicine for Novartis. And I guess the only challenge is it has an LOE just after your 2030 time window. What are the options in-house to extend the franchise further in breast cancer?

And given the SERD data that we've seen from a competitor, what other options are there from BD that could potentially -- or is oncology, I should say, a category where BD looks like somewhere you should supplement the Novartis pipeline?

Yes. So I think there's actually 2 questions in there, but I'll also take both of these, Matthew, because it's you, Matthew. With respect to Kisqali, I think right now, we guide to a mid-2031 with the pediatric exclusivity that we would expect for this brand in the U.S.

I think it's longer outside of the U.S. depending on the market. Our core goal at the moment is our CDK2, CDK2/4 and CDK4 programs, all of which now are in the clinic, and we're advancing as fast as we can to see which of these medicines can provide either additional benefit in the post- Kisqali setting or either in combination and we'll see what we ultimately learn.

Of course, we also are advancing our radioligand therapy portfolio. We have HER2 RLTs now in the clinic. Those will be important to watch as well as the [ neobombesin ] RLT as well in breast cancer. So a number of shots on goal. And I think those will all be very important for us to continue to life cycle manage Kisqali, as you rightfully point out, beyond the mid-2030s. I always think about it as a full year 2032 effect for this brand.

Now I think with respect to BD and M&A, I think absolutely, I mean, we see amongst our therapeutic areas, clearly, oncology is one we'll have to focus on. So we'll continue to focus there as we have. I would say we've had just more opportunities and traction in the last years in cardiovascular, immunology and neuroscience. You've seen us do a large number of deals in those spaces.

We'll continue to see, and of course, it's a high priority to continue to build oncology now that we have the scale we're building from Scemblix, Pluvicto, Kisqali. And so if we find good opportunities, good assets, we'll certainly go after them.

Next question is from Peter Verdult, BNP Paribas.

Peter, BNP Paribas. Just on Rhapsido and ianalumab. Given we're now in an MFM world, how should we be thinking about ex U.S. launch plans for what are clearly mostly significant assets. I'm basically just pushing my life to see how specifically you're comfortable being about changing in rest of world launch strategies for important assets like ianalumab.

Yes. So I think this is high in our minds. We're working through strategies here on Rhapsido, given that it's already launched, of course, we would be exposed on the first pillar of the MFN approach, which is on the Medicaid rebate it's more limited. And I think there we can manage. We think we have good options to manage the ability to launch Rhapsido globally.

Of course, we'll have tighter pricing corridors, but that's something we think we can manage. Ianalumab is more complex as we get to launches in 2027 in the G7 countries. There, of course, it's on the entire market of U.S. net price, not just Medicaid. And so we're working through strategies. Absolutely, it's our aspiration to get these medicines launched in all of these markets given the patients that need them.

But we certainly can't adversely affect the U.S. market. And so we're just going to have to be thoughtful about looking at where are there opportunities to price appropriately for the value that ianalumab brings. Given the PPP adjustments and some of the other elements of how pricing is looked at, are there things we can do to manage this. It's all in the works. I think we'll have a better sense over the course of this year on ianalumab. But on Rhapsido, we feel confident we have a way forward to get a global launch moving ahead.

Next question is from Steve Scala from TD Cowen.

On pelacarsen, Novartis has said previously, that a delay in the HORIZON trial readout would stem either from overestimating the baseline risk or underestimating the treatment effect. Do you have a sense of what is at work here I would think the baseline risk, if it were overestimated would question the value of lowering LPA in the first place. And I would think that Novartis should have a better handle on treatment effect based on early studies. So any color of Novartis' view at this point would be helpful.

I wish we knew, Steve. Honestly, obviously, I can only give you an opinion. I can't actually give you a fact because we're completely blinded, and we have no database insights. We believe that we have appropriately estimated the baseline risk. And that's not so many rounds of looking at it. So it might be that baseline risk is more prominent at higher Lp(a) threshold.

I think in my mind, it really comes on to what Lp(a) threshold that we appropriately thinking about the baseline risk and how -- and this is, again, I think not in our -- no way to know if this is correct, but my assumption is that at lower Lp(a) levels, there could be more interactions with LDL and other risk factors. And that Lp(a) becomes more dominant as you get to higher Lp(a) levels and because the risk goes up almost linearly at a higher Lp(a), that becomes the dominant risk factor.

And so the studies obviously have some portion of patients at the 70 to 90 to 100. We've, I think, announced in our papers that overall, our median is 108. So that's kind of our best guess in terms of the risk profile and how we've estimated. Obviously, we would love for this to be that our treatment effect is larger than we expect, and that would be the reason for this, but there's just no way to know that at this time.

Next question comes from Richard Vosser, JPMorgan.

Just a question on Itvisma. Just how should we think about the ramp of that product in the U.S. and ex U.S. could imagine that there are some patients that are potentially waiting for the therapy. So have you seen warehouse patients? And how should we think about the launch?

Yes. Thanks, Richard. In general, for gene therapies, we see often a pretty fast ramp as we get through the kind of prevalent pool of patients. And then it kind of comes down to a more steady state. And I think over the next 2 to 3 years, we would expect really Itvisma to penetrate the majority of the kind of relevant patient pool that it has.

And then come back down as we saw with Zolgensma more to a steady state because of the nature of the onetime therapy. So I think relative to other brands, the ramp will be on the faster side. It won't be in 6 months, but I think over the first few years, will get to peak relatively quickly and then come down from there. And we do have, I think, warehouse patients, we do have patients that we really understand. We also have strong access, we think, in many markets. And as we build that access forward, I think that will really allow us to maximize the medicine.

Next question is from Graham Parry from Citi.

So I reiterate the best wishes for Harry, of course. And then a question on Kisqali and the outlook for the year. So how much of the gross to net impact that was impacting fourth quarter carries through into the next year because of a different channel mix versus how much is one-off?

And so to what extent does that give you an easy base for comparison in 2025 into 2026? And then any thoughts you have on the risk that oral SERDs might pose to encroaching on CDK4/6 combinations in the adjuvant setting?

Thanks, Graham, and great to have you back. On Kisqali, I think the higher gross to net, we believe, is a onetime effect where we saw higher Medicare utilization than we had forecast in 2025.

We do expect as the early breast cancer launch continues to accelerate and our mix shift to younger and younger patients that this will net out back towards where we had historically expected. And I think we should be fine from that point forward. And Harry wants to add something.

Yes, Graham, thank you very much. And by the way, everybody, for your nice words. So on Kisqali, I mean, one thing to note is that actually in quarter 1 of '25, with a positive gross to net as Mukul pointed out. So in quarter 1, that's a higher base due to one-timers.

As Vas mentioned, the quarter 4, what we have noted here out-of-period adjustments. So if you take that out, it's really the true quarter 4 performance. And then quarter 4 of '26, there should be a bit of a lower base because of this negative this year. But overall, the -- basically, these gross to net adjustments are all out of period, so one-timers and the underlying is what you see.

And then with respect to the oral SERDs, we've had a lot of discussion, and we feel confident that when we look at the profile of Kisqali and what we hear from physicians that physicians want a CDK4/6 inhibitor for patients who can benefit. And they, of course, need to look for an endocrine therapy option.

Certainly, the oral SERDs now have the opportunity over time to become the standard of care endocrine therapy option. We already know that roughly half of patients in the early breast cancer setting in the U.S. are already now on a CDK4/6, and as we continue to penetrate that base of patients, we think that the opportunity will be CDK4/6 plus the choice of historical endocrine therapy or the oral SERDs, and that's how this market will play out.

At the margin, could there be some physicians who choose an older endocrine therapy plus a CDK4/6 or an oral SERD and not a CDK4/6. Certainly, that dynamic will happen, but we don't expect that to be the predominant approach in the U.S. or in any of the other core markets. That's what gives us confidence in the $10 billion-plus guidance that we have and are sticking to.

Next question today is from Seamus Fernandez of Guggenheim Securities.

And just would echo, Harry, we'll miss you, for sure. Vas, hoping you could maybe give us your thoughts on the overall food allergy opportunity within your overall portfolio, obviously, Xolair has done extraordinarily well in this space with excellent growth opportunity. Just hoping to get your perspective on that as well as the opportunity that you see potentially within your broader portfolio, not just for the BTK, but beyond.

Yes. Thanks, Seamus. We've had a long history looking at food allergy. It goes back to medicine. Some of you will remember called QGE031, which was a high affinity IgE. There was supposed to be a follow-on for Xolair. In the end, we weren't able to show a stronger effect than Xolair has ultimately shown in food allergy.

So we know the space well. once we saw the Phase II data for remibrutinib and food allergy, I think it changed our perspective to really think now how could we build this out to be a significant market opportunity. So we'll be sharing that data, as I mentioned, in the coming month or two. And with that data set and now the agreement with FDA on how to advance into Phase III studies, we see the option for a safe oral medicine to be able to hopefully be given broadly to patients.

And you know that a lot of the patients in food allergy that are most interested or at risk to be treated are children. And so versus ongoing injections, having an oral high efficacy safe option, we think would be pretty compelling. So I think overall, we see food allergy is a multibillion-dollar opportunity. I certainly with the potential to make something major out of this. We're going to obviously run through the phase Phase III program.

We're excited to share the Phase II data as well. And then beyond that, now we are evaluating are there other opportunities within the pipeline earlier at Novartis. And, of course, externally as always, to see can we further bolster our food allergy portfolio. So I think it's definitely a shift, but something we're getting quite excited about.

Next question is from James Gordon at Barclays.

The question was on pelacarsen and what a win now looks like. So you talked about a potentially lower event rate. Where is the latest magnitude of efficacy? I think the original design was a 20% benefit in the broader population, a 25% benefit in a narrow population with a longer study and maybe some other tweaks. Is that sort of the minimum? Is there a possibility that you could actually have a benefit for either of those groups that were statistically significant, but didn't quite hit the her? And if so, would that still be a product with strong commercial prospects?

Yes. Thanks, James. So you are correct. It is a 20% powered for 20% in the 70 mg per DL group and 25% for the 90 mg per DL group. We can win on the study with a relative reduction that's lower than that. And so certainly, there is the opportunity to win with CVRR in the mid-teens.

I think we have to evaluate, I think, for patients who have no other option. And if we were to win at that lower level, what would be the right approach to bring it to market. And that's something we'll have to see based on the data. But that's certainly something we'd have to look at. Of course, we hope for a much higher CVRR impact either at the lower cutoff or the higher cutoff, but we're going to ultimately have this to be data driven.

There have been no other changes, though, from a protocol standpoint, from a study design standpoint, everything is as it was when we originally started the study with respect to powering, et cetera.

Next question is from Michael Leuchten from Jefferies.

A question for Harry, please, given it's your last time with us. Harry, the SG&A expenses in the fourth quarter were extremely tight. Very good performance there, helped you to gear the margin in underlying terms. As I think about the margin for 2026, obviously, you do have the Avidity dilution.

But if that SG&A control continues, I struggle to see how you're going to get as much dilution, especially if avidity doesn't quite close as quickly as maybe it could. So can you just talk about the repeatability of that SG&A performance in the fourth quarter into 2026?

Yes. Thank you, Michael. Actually, any 2026 question is kind of for Mukul, so I will hand over in a second. But Historically, we always had quite an increase in quarter 4. So we took this year to say, look, this is inefficient to have such a peak in a quarter where you have 1 to 2 weeks of Christmas and you have also the U.S. Thanksgiving and so on. It shouldn't be actually a big peak here.

So we took that in order to even a bit out. And overall, we will continue and Mukul, of course, will drive productivity programs, right? But Avidity, just one thing. I mean, when we -- a day before quarter 3 earnings, when we took you all through the Avidity deal, we said it would be a 1% to 2% margin point dilution effect given the unusual high development cost burden in the next 2 to 3 years of a late-stage development product with a very expensive medicine from a COGS, especially when it is under contract manufacturing.

So not everybody has figured this into the consensus. It's okay when people don't follow everything we say, but we have mentioned it to you. And 1 to 2 points, if you take 1.5, it's pretty much what you get when you have a low single-digit increase on sales and a low single-digit decrease in core operating income. So we feel we have implemented exactly that without Avidity would have been unchanged margin basically.

But Mukul, what do you think?

Harry said it all. I think it's -- the short answer -- the short add-ons to the answer that Harry gave was, the SG&A cost control, productivity plans within the organization is something that we, as a company, feel very proud of on what has been achieved in the last 4, 5 years. And as we go into our next 5-year journey, this will absolutely continue going forward.

There is a certain bit of margin dilution that we had predicted. And if we -- and that's the reason that we gave clarity on H1, H2 because if you look at how once the GX for this year are going to come off the base, we actually see core operating income starting to grow. And that kind of sets the base or sets the expectations for what to expect of our P&L in the next 4 years to come.

We'll take the next question, and this is from Thibault Boutherin from Morgan Stanley.

Just a question on Cosentyx and the dynamic in the HS market. It looks like shares have been stabilizing for some time between Cosentyx and the main competitor in terms of NBRx and total script. So from here, is it fair to assume that both drugs should grow in line with the market. And I think the last is to say the HS market should expect a growth around 15%. So I just want to know if it's the type of growth that just you're seeing today?

Yes. Thanks for the question, Thibault. So you rightfully point out, we've seen stabilization in the overall NBRx share in the market. As I noted, we're kind of in this 48% to 50% range. And then we see the two other medicines splitting the remainder. We're doing very well in the naive population. And then in the switch segment, we see our competitor performing very well.

So I think that's kind of the dynamic. We've seen that dynamic kind of stabilize now. So we would expect that dynamic to continue going forward. So I think both -- all brands will grow based on the market. Now clearly, the market potential here is quite large. It's just a matter of how effective we are at getting patients to come in to get to get treatment.

So we continue to see this kind of $3 billion to $5 billion market opportunity, but could it be larger if we were able to mobilize with two competitors and potentially more future competitors coming in, the market growing faster certainly. And we, of course, want to capitalize on that. And that's part of the reason why we studied Rhapsido in HS because we see the opportunity here to build this market hopefully, with a high efficacy safe oral to then go make the market even larger.

So something we'll continue to work to build and hopefully get more of these patients are kind of lost to treatment, probably we're on a TNF ultimately not successful get those patients back into the medical home and backlog therapy.

[Operator Instructions] We will now take the next question, this is from James Quigley from Goldman Sachs.

My thanks and congrats to Harry as well for the next chapter. My question is on the Lp(a) portfolio. So as you showed in the slide, you started a new trial Phase II trial for DII235. Firstly, what are the dosing intervals by testing for that drug? And secondly, at the media management event, as you were saying that if HORIZON were positive, that could then lead a decision to move some of the longer-acting Lp(a) straight into Phase III.

So are there other assets in the portfolio that you're holding back, waiting for HORIZON to move into Phase III. Is this Phase II a function of a pushout in HORIZON? Or is it just you want to see more data beforehand before making a final decision here on which assets to take forward?

Yes. Thanks, James. So for DII235, our partner, Argo Biosensors, I think, publicly released that this is has had already strong data in the early Phase II study and has a potential for an annual dosing interval. And we are prepared to move that study -- that program directly into Phase III based on the HORIZON data set. So there's no change in our plan.

I don't know if there might be different things happening between the studies and their studies and et cetera. But our strategy very much is based on the HORIZON readout, to then based on the data we've seen with DII235 on an annual dosing interval to move that forward then into late-stage studies. We do have, of course, a range of other programs earlier stage as well on the range of cardiovascular assets.

We've talked about that in the past. HMG coA Reductase, annual PCSK9, of course, the angiotensin 2 siRNA and then combination programs as well that we're working on, both at the 6-month interval and at the 1-year interval. And so both because we life cycle manage Leqvio but also be prepared that pelacarsen is positive. So the HORIZON is positive to seem to be ready to come with what we think will be the preferred market option we want to be ready for all these eventualities.

And the next question is from Peter Verdult, BNP Paribas.

Just a follow-up for you, Vas, on the pipeline. Just on this basket of cell therapy programs in autoimmune, I think some of them do read out next year. Just wondered if you've got it in the top of your head in terms of which ones and which indications and perhaps a general temperature check on your behalf in terms of your level of enthusiasm for these programs.

Yes. Thanks, Peter. We remain enthusiastic. We have a huge effort internally on YTB as a first instance, currently in pivotal studies, aligned with FDA over 4 indications and then with follow-on programs that are now in proof-of-concept studies in 3 -- 4 additional indications as well. and then additional exploratory work that's ongoing.

And then behind that, trispecific and bispecific monoclonals also to explore can there be alternative options for certain patient groups in the immune reset. I think the first readouts we'll have will be in SLE lupus nephritis. That's building off of the data we presented last year on 20, 23 or 24 patients where we showed, I think, pretty spectacular results for those patients in terms of winding the progress of their disease other than the permanent damage that has happened to the kidneys.

And so quite exciting data. That's allowed us, I think, to move forward on that study quite quickly. But we also are advancing all the other programs. And some of them, if we're fortunate, might even be able also to read out next year depending on enrollment patterns and enrollment time lines. So we're advancing these as fast as possible.

Depending on the program, many of them have alignment with FDA that we can file off of a single arm and then continue on to provide data on randomized data sets. Others need the randomized upfront. So that all varies based on indication. But I think a lot of the enthusiasm and focus inside the company.

Now take the next question, and this is from Michael Leuchten from Jefferies.

Vas, just on Scemblix, you helpfully provide the share data across lines of therapy for the product. It looks like it's plateauing in first line in the U.S. a little bit over the last few quarters. What's stopping the momentum to continue?

Yes. Thanks, Michael. So we have looked into that. One thing to note is that data is very noisy because with CML, it's a rare disease, most physicians only see 1 or 2 patients. And so the data here always is getting restated. Overall, our view based on our internal assessments is we continue to see steady share growth on the frontline setting.

Actually, I would say our frontline share growth is ahead of our plan and our original planning assumptions. And so we see the opportunity here to really continue to grow. We have really strong broad access. One of the biggest things we're trying to overcome is the perception that we don't have strong access to get that access perception to where we want it to be.

And then, of course, as we've outlined in the past, you do have Gleevec loyalists out there who want to stay with a product that they've used for a long period of time. That will be more of a refractory group. But to get from the mid-20s up to the 40% to 50% share range is absolutely what our ambition is, and we see a path to get there. Next question I think this might be the last question, operator.

So the last question today is from James Quigley from Goldman Sachs.

I've got one quick one on Zigakibart. The data has been pushed out a little bit in order to have the eGFR data on the label at launch. But as you think about sort of the strategy here with your other assets, whether you had the UPCR data first and then adding the eGFR data.

Is this a case that the data were quite close together so it is worth having a delay, just trying to understand the rationale here versus the mechanism? Or is there something around the Zigakibart mechanism that could lead to a stronger benefit on eGFR relative to UPCR.

It's a great question, James. I think when we looked at the number of competitors entering in the [ anti-APRIL ] space. We asked ourselves, given we already have a strong portfolio in the nephrologist office, what would give us the most compelling data package to kind of cut through all of the various launches that are ongoing. And we felt coming right away with hopefully the second medicine with a full approval, clear proneuria reduction and eGFR benefit would give us a very compelling proposition.

I mean theoretically, assuming everything goes as we hope, we would have three medicines in IgAN with eGFR outcomes benefit across Fabhalta, Vanrafia, Zigakibart, and that will give us a very compelling proposition. So we thought that was prudent given that the time that passes here is three quarters, it's not the end of the world, and then we would have a much more compelling data set to provide to FDA.

All right. Well, thank you all very much for joining the conference call. We look forward to keeping you up to speed, and we wish you all a great 2026. Thank you.

Thank you. This concludes today's conference call. Thank you for participating, and you may...

Welcome to the 44th JPMorgan Healthcare Conference. I'm Richard Vosser, European pharma analyst at JPMorgan. It's my great pleasure to host the CEO of Novartis, Vas Narasimhan, for this presentation. Just a housekeeping. If you have a question, you can either raise your hand or you can go through the portal.

And with that, Vas, welcome to the conference.

Terrific. So a very good -- happy New Year, everybody, and great to be here with you today. This is a momentous occasion because it's the first time in my tenure, entering into my ninth year that we are a buy rating from JPMorgan. So really happy about that as I come here today. But overall, I think really happy to share with you the story of where we are at Novartis on our journey. As you know, over the last decade, we've really focused as a pure-play medicines company, exited all of our businesses, focused on high-end leading technologies in the therapeutic areas we care about most.

So just as a recap, over the recent years, very strong sales, core operating income performance for the company, 7% and 15%. That core operating margin by 2024 had reached 38.7%, on track to reach the 40% guidance that we had given. And I think this year, we have -- 2025, we certainly have the opportunity to approach that 40% range as we -- as you saw in quarter 3.

Now I think importantly, what that strong performance has allowed us to do is generate very strong free cash flow. You can see the free cash flow generation for the company, $16 billion last year and $16 billion through the first 3 quarters of 2025. That's given us the ability to really turn around our return on invested capital. We're now at 17%. We're approaching the top quartile on return on invested capital amongst the peer set, showing that we have the financial firepower to stably fund our operations.

And that's also being reflected now in the TSR for Novartis over the 5-year period, in the top 5 in the industry; in the 3-year period, top 2 in the industry. So I think our strategy is working and importantly, it's returning tremendous value to our shareholders.

Now our strategy remains unchanged. We set this strategy out really 5 years ago. We think it's the right strategy once we've exited now the other businesses, four core therapeutic areas, the 2 + 3 technology platforms, which I'll talk more about, our four priority geographies. And then our focus on driving growth and returns, strengthening our foundation. So a big focus on culture in Novartis remains to be the case, curious, inspired, unbossed company. And then continuing to deliver world-class operational excellence as you've seen through that margin performance over the recent years.

Now our capital allocation priorities remain unchanged: invest in the organic business as needed. Continue to do value-creating bolt-ons, you saw last year, we were one of the most active companies from a BD&L and M&A standpoint. We have the proposed acquisition of Avidity that we hope to close in the first quarter, acquisition of Tourmaline and Anthos, a number of licensing deals in our core therapeutic areas.

We remain committed to consistently growing our dividend in Swiss francs as we have since the creation of Novartis and ongoing share buybacks. We continue to work to complete our $15 billion share buyback, which we initiated last year. We expect that to be ongoing through the course of this year -- the $10 billion, excuse me. And then on an ongoing basis, we'll continue to look to additional share buybacks when we have excess capital. We see all of these components happening at the same time. It's not a sequence, and it's all with a view to return leading capital -- leading value to our shareholders.

Now taking a look at our pipeline, you can see that we've now developed, I think, one of the more deep pipelines in the industry. We don't face binary risk. We have 14 in-market blockbusters, which means that a single patent expiry, as you'll see this year with Entresto, we're able to grow through these difficult patent expiries when they happen. Nine in-market brands with multibillion-dollar peak sales potential, I'll go through that in a moment. Six ongoing launches, 15 submissioning-enabling readouts in the next 2 years, so coming up on a real catalyst-rich period for the company.

I mentioned the five platforms. And I did want to note that in those technology platforms where we're investing, we see markets here that are substantial, $36 billion for RNA therapeutics, $28 billion for radioligand therapies and potential with the opportunity to reset immune systems, up to $50 billion in cell and gene therapies.

Now turning to our long-term guidance. We guided to the markets in November, high single-digit growth, '24 to '25; 5% to 6% growth to 2030 and then mid-single-digit growth, 2030 and beyond. And what I hope to show in this chart is that's underpinned by a number of derisked in-market brands that I think we'll talk about also with Richard as well as a set of pipeline assets, we think that we'll have the opportunity to launch in the coming years, and then a very deep portfolio of pipeline assets as well as a number of brands that have protection into the mid-2030 period. That gives us, I think, that strong foundation as we continue to grow to a $60 billion, $70 billion; hopefully in the middle of the next decade, approaching an $80 billion revenue company.

Now when you look at our net sales growth in that period, it's going to be a story of offsetting Gx, which we'll primarily face this year with the loss of Entresto; full year effects of Entresto, Promacta and Tasigna; in-market growth from our in-line brands and then that probabilized pipeline. Clearly, if the pipeline delivers in full, we have the opportunity to outperform that 5% to 6%. But on a probabilized basis, we think this is a reasonable approach.

I did want to note that as we've guided previously, for 2026, we do expect 1% to 2% of short-term margin dilution from the proposed acquisition of Avidity and then expect to get back to the 40% by 2029. We think we can get opportunities. We have opportunities to get there sooner, but I think that's a reasonable guidance that it will take us till 2029 to really absorb these recent acquisitions and then get back to the 40% plus where we'd like to stay.

Now when you look at our commercial execution, I think one of the things I've been extremely pleased about in the recent years has been outstanding commercial execution from both our U.S. and international regions. And here is an example from our U.S. business. You can see Cosentyx in hidradenitis suppurativa, within month 8, we got to 67% NBRx share. When you look at Kisqali in early breast cancer, 63% early breast cancer share. Pluvicto, very strong performance. Importantly, Scemblix, very strong performance both in the first line and in the second line setting.

So I think that shows now that we're a company that can consistently deliver once we get an approval, the outlook launch trajectories, which we guide to all of you. And that will be, of course, extremely important as we now go through launches of Rhapsido, of ianalumab, as well as other launches we have in the coming years.

I also did want to note that from a geographic standpoint, we're #2 in China, #1 in Germany, #4 in Japan with an aspiration to get top 3 in Japan. So our ability to balance geographically, I think, also is a unique value proposition that Novartis brings.

Now turning to peak sales guidance. These are some of the peak sales guidance that we outlooked in November. As you can see, a number of brands with very significant potential. I would take note that now we guide for Kisqali to be a $10 billion-plus medicine. That's on the back of the very strong performance that we see in early breast cancer. Scemblix, we also now see with the long strong trajectory that we have, a $4 billion-plus opportunity.

We recently got the approval of ITVISMA, which is our intrathecal version of Zolgensma, so for patients 2 years to 18 years with spinal muscular atrophy. We're guiding for that to be a multibillion-dollar medicine. And then very importantly, for this year, one of our top priorities is the launch of Rhapsido, where we have the opportunity to have a multibillion-dollar medicine in CSU as well as on many of the other indications that we'll be reading out over the next 2 years.

Now when you look at our opportunity and from a pipeline standpoint, you can see a broad pipeline here. And one asset I wanted to call out -- a few assets I wanted to call out here, ianalumab for Sjogren's disease, opportunity in Sjogren's to be multibillion, but then across all indications, another multibillion-dollar opportunity. We're adding back on this chart, pelabresib. I'll show the data in a moment. But now with a very strong 96-week data that we have, this is an additional multibillion-dollar opportunity, we'll be a filing in Europe and then with an additional study, hopefully, filing in the U.S. And also, we include here the Avidity assets as well as some of the other assets that we acquired over the course of last year.

So over the coming period, we enter a real catalyst-rich period for the next 2 years. You can see the number of readouts that we have on some of our key medicines. 2026 will be a very important year, important readouts that I think can underpin that growth into the mid-2030s as well as in 2027, a continued regular flow of regulatory filings as well. So we'll be looking forward for these data readouts, keeping the markets up to speed. And then, of course, as we get those submissions in, the launch trajectory thereafter.

Now turning to pelabresib. This is the data, 96-week data we presented of pelabresib plus ruxolitinib. And the data showed at this time point, deep and durable responses with comparable safety to ruxolitinib. We presented this at ASH, very strong efficacy, significant reductions in spleen volume, you can see 91% versus 57%. Twice as many patients reaching spleen volume reduction or the TSS50 response, very good safety profile.

So now our path forward after consultation with the EU will be to file this medicine in 2026 based on that 96-week data. We also have alignment now with the U.S. FDA to start a new Phase III submission-enabling study which will focus on patients with higher symptom burden at baseline, where we think we can meet the TSS50 reduction based on the data we've seen here. So new assets that we can add now to the portfolio, continuing our long legacy of treating MDS and CML and AML.

And then when we look forward, the 30% -- 30-plus high-value assets that we have in the portfolio, very excited both for the Phase II and III assets, but also a number of Phase I assets that we think can continue to show our replacement power, replace our sales and drive growth. And I'll go through these in a little bit more detail on the pipeline-specific charts in a moment.

I did want to note as well that from a BD&L standpoint that over 10 of these assets have been licensed or acquired in the last 2 years. I think that shows how active we've been on the BD&L M&A front and certainly at a conference like this, we want to continue to look for the best ideas that fit with our therapeutic area priorities as well as our platform priorities to enable us to be successful in the long run.

Now turning to each therapeutic area. In turn, in cardio, renal and metabolic, I think, an exciting portfolio that's underpinned both by our work in cardiovascular risk reduction on the back of Leqvio and pelacarsen, trying to move further with siRNAs to more infrequently administered medicines as well as a portfolio of assets in the renal space, I think, we are quite excited about as well.

I would also say in the early phases of our research portfolio and early clinical portfolio, a number of assets targeting arrhythmia, which we think is a significant opportunity, high unmet need, difficult science. But if we're successful, can certainly help us with our long-term cardiovascular positioning. And seven Phase III readouts in this portfolio between now and 2030.

Now three assets in particular, I wanted to say a word about, first is abelacimab, which is our Factor XI inhibitor for thrombosis. And you can see very good data that we had in AZALEA. This is a study that is now enrolling in Phase III, we hope to get the readout over the course of this year or the early part of next year. It's an opportunity for us to tackle a very large patient segment. These -- 50% of these patients don't reach their goal in terms of prevention of future events. So I think a really exciting program there.

We also brought in an anti-IL-6 for reduction of inflammation, residual risk in patients who are -- immediately post a cardiovascular event. And lastly, farabursen, our microRNA to tackle adult polycystic kidney disease, which gives us an opportunity to take on a relatively prevalent genetically-driven disease of -- kidney disease, 160,000 patients in the U.S. and estimate 400,000 to 500,000 patients in our target markets, and with very promising Phase Ib data. And hopefully, if we had very strong efficacy in our Phase II study, an opportunity to file off that data set.

Now turning to immunology. I've spoken a lot already about it. But clearly, Rhapsido is incredibly important now for the outlook of the company. We already had the approval in CSU. The CIndU readouts will happen in 2026. The opportunity to expand into hidradenitis. We had very good data in food allergies. So we'll also be taking it in food allergy. And then we also have a number of Phase II programs as well to expand Rhapsido over time.

Ianalumab with the opportunity to clearly be a very significant medicine in lupus nephritis, SLE on top of Sjogren's disease. And then I'll say a world about YTB in a moment because clearly, our focus on being a leader in immune reset is one of the pillars for us in immunology in the long run.

So just to say a word about that, T-Charge is our rapid CAR-T platform now, where we showed very compelling data in SLE, in lupus nephritis last year in the first 24 patients treated. I think remarkable efficacy where we really see across disease domains, a return to normal biology for these patients with the only residual impact being damage in the kidney that's already happened and difficult to reverse.

So we've entered now pivotal studies on a pretty broad range of indications, as you can see here. We would expect readouts to start to happen in the 2027-2028 time period, alignment with FDA that those Phase IIb readouts can be the basis of submission with confirmatory data to then support us longer term. And then earlier phase programs ongoing in areas like relapsing MS, primary progressive MS, myasthenia gravis, rheumatoid arthritis. So this is really a platform we plan to build out across the full gamut of severe immunological disease.

And then also recently, we brought in a high-affinity IL-15 monoclonal antibody that we're excited about, at least the early data would indicate to us this has a significant potential. This could be another pipeline and a drug opportunity for the company. We have an atopic dermatitis study ongoing, a number of other derm studies now in planning, so an opportunity for us to have a next important innovation in immunology.

Now turning to neuroscience, here, I think, what I'm really pleased about is how we've built significantly more depth in our neuroscience pipeline and portfolio. As you know, we've been a leader in MS for a long time now, 20 years. And clearly, on top of Kesimpta, we have the opportunity to life cycle manage Kesimpta to less frequent dosing. But remibrutinib gives us the opportunity now with a clean liver profile, already established efficacy in CSU with the readouts coming, hopefully, an opportunity to have another pillar medicine in MS.

We're also studying remibrutinib in myasthenia gravis and also bringing iptacopan as well in the myasthenia gravis. Separate from that, a very, I think, broad portfolio and exciting portfolio in neuromuscular disease. That's on the back of some of the recent acquisitions that I'll talk about as well. But certainly, Kate Therapeutics, an opportunity to bring in gene therapies. We have now the siRNA portfolio with Avidity, which we hope to close, as I mentioned. So exciting opportunity there. And then of, lastly, neurodegenerative diseases.

Now just to say a word about the Avidity acquisition. This is a slide we showed immediately after the acquisition, but an opportunity to address three very high unmet need diseases with the first-in-class therapy for DM1, for FSHD and for a subtype of DMD, exciting data that I think will play out over the coming year or 2. 80,000 patients with DM1; 45,000 to 80,000 patients plus with FSHD. And one of the things we expect is as we get drugs that ultimately can help these patients, diagnosis rates will likely increase as well. So the opportunity here could certainly be even larger than what we expect today.

And then lastly, turning to oncology. Here, our story is very much to build on the strength of Kisqali as well as our work with Pluvicto in prostate cancer. At the top of the chart, you can see the depth of the efforts that we have to ensure that we can continue our breast cancer leadership into the 2030s and beyond. Broad efforts in CDK2, CDK4, radioligand therapies, which I'll talk more about in a moment. Pluvicto as well, moving through its various indications and then the opportunity to expand further within prostate cancer, both with actinium as well as with oral agents.

And then an ongoing effort to try to expand into cancers that are not well addressed. So this includes cancers like colorectal cancer, prostate cancer, cancers of the central nervous system. And that's something we want to continue to be aggressive about because clearly, we see the opportunity is to start to address those areas of high unmet need.

Now just to say a word of where we are on the radioligand therapy platform. You can see here the various targets at the top that we're currently pursuing in the clinic. So these are all in the clinic today. And the opportunity to address a broad range of cancers. So clearly, prostate cancer, but neuroendocrine tumors, breast cancer, lung, PDAC. And then a number of efforts ongoing with undisclosed targets to -- we think have the opportunity to address multiple tumor types.

So 16 programs now in the clinic, 22 preclinical RLT programs. We have both lutetium and actinium capacity now within the company. We continue to believe depending on the target, there is the opportunity to get a stronger therapeutic index versus antibody drug conjugates and hopefully drive better efficacy over time with combinations. And as I have already mentioned, a $28 billion opportunity.

So just -- a congress like JPMorgan, a conference like JPMorgan, important to recognize all the great innovation that's happened externally that we've been able to bring into the company through our efforts. So you can see here the full range of deals we've done in the last year. So very excited about that, and we want to keep that going in the year to come.

And I wanted to close as well by just mentioning that our company continues to be a leader in ESG. We take this seriously. It's who we are as a company. ESG and global health are fundamental to what Novartis does. And you can see very strong rankings across the board, leaders index in many cases, both of our sector or across any sector. And in global health, we've delivered last year, two incredibly important breakthroughs, which matter a lot to me personally. Coartem Baby was launched in Ghana. I was there in Ghana for the launch. It's the first malaria treatment ever for children under 5 kgs. And then we had the first Phase III readout of a novel drug to treat malaria since our last readout of Coartem over 25 years ago. So another incredible breakthrough to be able to treat resistant malaria across the world.

So in closing, very strong results. You can see that the numbers, I think, speak for themselves. The growth profile remains attractive. We're confident in that 5% to 6% growth through 2030, the 40% core margin in 2029 and beyond. And then lastly, the strong pipeline that we have and the 15 potential submission-enabling readouts and the 30 potential high-value assets that we have to drive our growth in the long run.

So with that, I'll move over to Richard. Thank you very much.

Are there any questions in the room, first of all? I mean, I can't see any. Maybe -- please put your hand up if there are. So maybe first -- sorry? Okay.

First of all, maybe the 5 to 6 percentage CAGR, when your -- the slide you put up seemed to suggest a long -- a large proportion of that would be realizable within market brands. So how should we think about the risk adjustment taken on the pipeline and the relative contributions there?

Yes. I mean I think when we look at it and we see the strength of the in-line portfolio that we already have with big brands like Cosentyx over most of this period, but certainly Scemblix, Pluvicto, Kisqali, Leqvio as well performing very well. So we have the opportunity with those, I think, to really have a strong foundation.

And the pipeline really gives us the optionality to outperform. But when we look at the opportunities that we have, Rhapsido is already in hand, ianalumab already in hand. I think we just need one or two of the remainder to hit to have the opportunity to even beat that 6%.

Yes, makes sense. Maybe on one of the in-line brands, Kisqali, you mentioned the $10 billion peak sales. We've seen data from the oral SERDs in this space. Maybe your thoughts on how all that impacts the $10 billion, if at all?

Yes. I think when we look at it, it doesn't -- first, it does not affect our outlook on the brand. I mean we're very confident that Kisqali on its own, compelling proposition. And really, our job now is to ensure we generate data with Kisqali with each of the relevant oral SERDs. And we're doing that. We have -- are pursuing agreements or plans to generate data with each of the competitor companies that have oral SERDs. Because we think the way the standard of care will evolve is that for the backbone endocrine therapy, an oral SERD, will be an opportunity to do something other than the standard hormonal therapy that's used. And then you need to add a CDK4/6 on top. And a lot of that is going to depend on managing the safety profile. So I think generating that data is our #1 priority, but doesn't change our outlook for Kisqali.

Makes sense. You mentioned Rhapsido as well in hand. Obviously, just being launched. Maybe you could give us a little bit of color of the early stages, what the reaction has been.

Yes. First, early days, and we wouldn't expect, I think, significant sales pick up until mid-2026, but I think the feedback from physicians has been very positive. So this is a medicine where we saw in the clinical studies, resolution of -- or the beginning of resolution of symptoms in patients with hives or flares within 2 weeks. The anecdotal feedback we're getting is that within 1 or 2 days, many patients are seeing resolution of symptoms.

And I think that in that context of patients who are highly symptomatic with a highly efficacious drug, we're seeing high demand from physicians in terms of patient start forms, many of the things that we track in order to give us confidence in the launch dynamic. And I would say, in general, our experience is that when you have highly symptomatic diseases with high efficacy in a very short period of time, that's a strong recipe for a very strong launch because we saw that, as you will remember, once we could actually get patients to understand the symptomatic benefit of Entresto, Entresto started flying. And I think that we have that kind of opportunity with Rhapsido.

And the other indications like CIndU, food allergy may be different. But are you seeing that same in your data, the speed of onset is and resolution?

I think in these inflammatory conditions, certainly, CIndU like CSU, we certainly see a very rapid impact. I think it'd be interesting to see with the MS data -- of course, as well, it would be nice with hidradenitis because I think, certainly, the IL-17s -- with the TNFs and the IL-17s, there's a lot of efficacy still on the table for HS. I think either our drug or the competitor drug, this is not leading to significant improvements for these HS patients. So if Rhapsido could do that, then I mean, that's another $5 billion-plus market that this medicine could address. So really exciting.

And do you think of combos with Cosentyx there in terms of Rhapsido? Do you think does that make sense?

I think as you know, in immunology, the hard part with combinations has always been stacking side effect profiles and things. So -- and I think, obviously, with Cosentyx life cycle where it is, probably it'll be difficult. I think the good news with Rhapsido is thus far, as you know, we've seen no liver -- we've seen no liver signals, very clean safety profile. So I think we're in a good spot.

Excellent. Maybe on RMS, just -- we've not seen huge data outside of the company. What gives you the confidence in RMS? We've obviously seen mixed data in the -- from the competition here.

Yes. I think we have to be humble here. I mean I think we have to say that we haven't seen any data on our own, right? So I think we're basing our confidence off of what competitors have seen with their BTK inhibitors. Clearly, top line now from one of our competitors stating that they hit their endpoints both in PPMS and RMS. Certainly, the data from another one of our competitors in non-relapsing SPMS. So all of that would indicate that BTK inhibitors are active. I think now it remains to be seen how active and what the clean -- do you have the right safety profile.

I mean I think notable to me is what was said in the recent CRL from FDA, which I think points to how carefully FDA is looking at liver signals for these medicines. And we have a BTK inhibitor that's already licensed with a label that's clean on liver. And so that gives us a huge opportunity to differentiate if we can show the efficacy benefit.

Maybe a couple of -- we have a few questions here at the front. I think this may be this gentleman here who is first.

[indiscernible] First, congratulations for continuous efforts on ESG front because malaria is an important effort for the population. My question is actually focused on oncology, in terms of diversification in terms of modality. I think kudos to you, the RLT as a modality has now become a very important pillar in oncology. But on the other modalities, it didn't seem to be there is a lot in the portfolio. I would love to see your view on that.

Yes. Thank you for the question. So when we think about our oncology pipeline, we think about trying to ensure we have depth across small molecules, bispecifics, RLT and ADCs. It doesn't always work out that we get there at the same time. But certainly, our concept is to have compelling options in each one of those therapeutic areas.

I would say right now, a lot of depth in RLTs, the history of the company is very strong in small molecule drug design. So I think when you look at our ability to have CDK2, CDK2/4, CDK4, two CDK2/4s, so we're really covering our basis on the small molecule side. I think two areas we're very interested in improving our depth are clearly bispecifics and ADCs, where we don't have a compelling position. And those are -- that's something we're certainly looking at actively.

There's a gentleman with three over there. And then...

Vas, [ Angus Liu ] from Fierce Pharma. Also on oncology, so of course, Kisqali is doing well. But if you look at Novartis' late-stage oncology pipeline, 15-plus submission-enabling readouts in some of the Phase III, Phase II programs, beyond a lot of excitement coming out of the oncology pipeline, granted this is from -- after [ NATALEE ] and PSMAfore, but it is -- and last time I check, I think you still don't have a permanent oncology R&D chief. So is there -- is this kind of you're taking a break from oncology late stage? Or is there a plan to kind of fill that gap?

Is this an upcoming article, Angus? Or -- so no, there's no break from oncology. We actually just brought in an incredible clinician, Mark Rutstein, who's in now to lead our oncology portfolio, outstanding PhD clinician, scientist. So we have the right leadership team.

When I think about it, often you have in therapeutic areas, these things come in waves. I mean, we -- you have to remember, we just had Scemblix, Pluvicto and Kisqali which combined, could have $20 billion of peak sales. So now when we -- before we declare a big challenges for Novartis Oncology, the fact that we were able to generate three drugs with $20 billion of peak sales, is a reasonable outcome.

And so I think we're in a period now where we need to reload. And I think some of the key things we'll have towards the end of the decade are readouts on a lot of the RLTs, on the small molecule oncology pipeline and as I mentioned, the bispecific portfolio. So -- but I do think we need to have more strength in oncology, there's no question. I mean -- and that's going to be an active focus for us from a BD and M&A standpoint.

I'm [ Veenu Aishwarya ] with AUM LifeTech and AUM Biotech. We have an antisense platform for drug discovery. So being a small biotech in Philly, we are leveraging a lot of AI right now to advance drug discovery. I'm just curious to know your thoughts, someone like Novartis with all the resources in the world, how are you leveraging AI for drug discovery? And do you have any thoughts for smaller biotechs so that we can advance drug discovery development and partner up with you guys faster?

Yes. I think AI is something that now has become a part of the toolkit now for both target -- certainly for target identification, target optimization, I think we'll -- candidate optimization. I'd say certainly from a drug target standpoint, we'll have to see how AI pens out. The way we think about it is having deep partnerships. So we have the partnership with Isomorphic Labs for the Google DeepMind team. We have the partnerships with companies like Schrodinger and Generate:Bio. And those all just become standard toolkits for our biologists and medicinal chemists in terms of optimizing any candidates that we have.

And so I think we're open, I mean, to any partners who can come to us with good ideas on ways to enable this. Because our vision would certainly be on average now from when you have a target that you want to prosecute with a drug to when we get it into the clinic, it's about 4 years on average in this industry. So how do you get it down to 2? And how do you increase the probability of success of that effort significantly? Because as you know, now it's quite low. And then, of course, in the clinic, can we optimize trials, et cetera, is also a high interest for us as well.

Your confidence in ianalumab and the potential seems to have grown even since the data, so -- in Sjogren's. So maybe you could just talk about what's leading to that increased confidence in Sjogren's and also the potential of the asset beyond.

When you look at a disease like Sjogren's, the second most prevalent rheumatological disease without any real disease-modifying therapy available. And most of these patients, of course, are on high levels of corticosteroids, challenging quality of life. This is an opportunity, I think, to completely reshape a whole sector.

So I think when we look at the data across NEPTUNUS-1 and 2, when we look at the pool data, important domains that matter to patients, things like salivary flows, things like lymph node size, where we see important benefits, and I think that's going to be very compelling. But I think the reality is a lot of the launch is going to be physicians trialing the drug, and they are going to begin to identify which patient profiles benefit most from ianalumab. We'll learn as well then which patients to be targeting with our field force and our marketing efforts. And I'm confident there'll be a significant opportunity there, even if it's only 30%, 40% of that patient population just because of the sheer size of the patient population.

We've had a couple of questions from the web. So first one is on zigakibart. So the person is saying, it's a disease-modifying therapy. Could this become a blockbuster asset, question.

Yes. We think zigakibart has a multibillion-dollar potential. I mean I think the challenge here is going to be in a setting where there's four agents coming forward, all with compelling proteinuria reduction, unclear eGFR benefit, how do you position it. And the way we think about it is to focus very much now in eGFR. Our proteinuria reduction looked very good. We also think from a safety standpoint, the fact that we target APRIL without BAF, I think it could be ultimately a safety differentiator. But a lot of this will come down to the eGFR data and how robust that eGFR data is and then your ability to use this in combination.

I think the future of IgA nephropathy therapy is going to be combining in the appropriate way for the appropriate patient, a vascular agent, a complement agent and an IgA-targeting agent. And figuring that out is now the ball game. And the good news for us is we have all three and hopefully, we'll get all three approved, and that will enable us to generate the data to help physicians navigate that.

And on Fabhalta and Vanrafia, how are you seeing the uptake in IgAN?

So I think as you saw already in quarter 3, very solid uptake. I mean I think these will be steady growers. Certainly, with Fabhalta, we see that in PNH, C3G, now with IgAN, Vanrafia as well. I think what will be important as well for those two assets is the eGFR data. And I think we are -- we will be disclosing the eGFR data for Fabhalta soon. We should get Vanrafia data in the coming year. And I think that will give physicians even more confidence to ultimately prescribe these medicines. But so far, so good on the renal portfolio.

Makes sense. We've got another one from the web, which is on business development. And so they're just asking, in today's competitive biotech landscape, how do you position yourself within deals in your overall portfolio strategy in terms of risk diversification and value creation?

Yes. I think, we, of course, are always looking for opportunities that fit in our core therapeutic areas or fit with these technology platforms. I think what differ differentiates us, I'm sure every company thinks this is you have to have deep scientific expertise that allows you to have a differentiated view on an asset. I mean we have, I think, outstanding people, expertise within neuromuscular disease, which allows us to build conviction to do a deal like Avidity, to do deals like Kate, DTx. If you actually look at the history, we've done now four deals across neuromuscular, treating diseases with poor standard of care in neuromuscular disease. And that's based on real deep expertise.

Similarly, in cardiovascular risk reduction, we've been at this a long time. We, of course, with the CANTOS study, understood that biology, so then doing an IL-6 deal, doing deals like Anthos make a lot of sense. So I mean that's the recipe. There's nothing else to it. I think we tend not to be the company that wins the very aggressive auctions. But I think when we have a differentiated view, we'll go after it.

And you mentioned, again, considering share buybacks, and you obviously have significant R&D spend as well. Maybe you could talk about the free cash flow and the capital that allows you to do that. So that you can -- not have to prioritize necessarily one thing over the other?

Yes. I think for us, obviously, with the free cash flow where it is, approaching $20 billion, we're in a position, a very luxury position that we're not capital constraint in terms of the deal sizes that we can look at. I think it's much more strategic fit, scientific fit. That's what has to really play out.

Certainly, we also look at R&D expense. I mean, I think, of course, our R&D budget growing now $11 billion, $12 billion over the coming period, significant R&D spend. And so of course, you have to absorb the R&D spend, but certainly not capital constrained. It's really finding assets that make sense, which is why we've moved away from even providing target ranges in terms of the size of deals. We want to do deals that make sense, and we have the capital to be able to do that.

And you mentioned upfront the 100 to 200 basis points of margin contraction around Avidity and around -- into what -- this year. What's encompassed in that beyond? That -- we've had a lot of sort of health care reform, there's IRA, all sorts of things going on.

Yes. All of our guidance already takes into account the recent agreement we signed with the administration on Most Favored Nation. And that's primarily driven by the Medicaid component and then, of course, the impact on ex U.S. launches. But that's certainly all factored in. We also factor in the fact that we assume IRA inclusion of Cosentyx and Kisqali in 2028.

Now importantly, for that, interestingly, given that both Cosentyx and Kisqali certainly in the eBC setting, is not a very Medicare-oriented population, but the spillover affected to Medicaid and 340B is where you see the effects. And I think it's always important for investors to look at spillover on best price whenever you're looking at IRA pricing. But that's all factored into the guidance. And so that gives us, I think, a high degree of confidence now looking ahead.

Makes sense. Makes sense. Maybe a last question, just to return to one of the growth drivers. Pluvicto has been -- you've got a new indication. We'll then see a new indication in the Addition study maybe this year as well. How do we think about the cadence of adding those new indications to boosting sales?

Yes. As you saw with VISION that we had PSMAfore, now we're on a strong trajectory, and we upped our guidance there on Pluvicto, very confident in that $5 billion-plus outlook for that medicine. And I think with PSMAddition now, we'll see that next opportunity. And probably after that, getting into the earlier stages of all -- metastatic prostate cancer will take a bit longer. But in the meantime, we're going into pivotal studies as well or already started the pivotal studies with the actinium PSMA.

I think more important even than the Pluvicto performance is we believe now we've established RLT in the community setting in the United States, which was an incredibly important unlock. It was a 2- to 3-year effort. I give tremendous thanks to our U.S. team and working so hard at that. But now we have over 700 centers that are able to prescribe RLT and growing. We have figured out those patient pathways. And what that opens up is for the whole future pipeline of RLTs at Novartis, we have the ability to launch these medicines at scale. And that took time with Pluvicto, it shouldn't take as long for the next wave of positive readouts.

Perfect. I think we're out of time, unfortunately. Thanks very much, Vas.

Thank you very much, Richard.

Good morning and good afternoon. Welcome to our 12th Annual Social Impact and Sustainability Event. Before we start, I would like to quickly read our safe harbor statement. 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 and its most recent quarterly results on Form 6-K that, respectively, were filed with and furnished to the U.S. Securities and Exchange Commission.

Now to officially open our event and set the stage, I'm pleased to hand over to Steffen.

Thank you, Mavic. Welcome, and thanks to everyone online for joining us. My name is Steffen Lang, and I'm the President of Operations. We have prepared a full agenda for the next hour. First, we have Lutz Hegemann, who is our President of Global Health. He will cover our progress on our global health pipeline, including recent milestones in the fight against malaria. Then we'll share a fireside chat, which recently took place between Sujata Vaidyanathan, our development Head for Global Health; and Martin Fitchet, the CEO of Medicines for Malaria Venture, a key partner of ours.

After that, we will have Korab Zuka, our Global Head of Social Impact and Chief Sustainability Officer who will cover some of the innovative work we are doing to expand access to innovative medicines to medically underserved populations in high-income countries. Finally, I will cover environmental sustainability and then proceed to Q&A.

As we get started, I think it's important to anchor in our company strategy. Novartis has evolved from a diversified health care conglomerate into a pure-play innovative medicines company. We remain fully committed to executing our focused strategy and our strategy remains unchanged. We have defined 4 core therapeutic areas, each with strong science, clear unmet need and significant opportunity for growth. And we continue to invest in 5 technology platforms, particularly advanced platforms like radioligand therapies RNA and gene and cell therapies, which we believe will shape the future of medicine through 2030 and beyond. And finally, we remain committed to being a truly global leader serving all major markets worldwide while maintaining focus on 4 key geographies: U.S., China, Germany, Japan.

Our priorities are clear. We aim to accelerate growth and deliver returns by bringing high-value medicines to patients with launch excellence. At the same time, we are focused on strengthening our foundation, unleashing the power of our people scaling data science and technology and building trust with society by driving social impact and sustainability. We have stayed the course on our commitment to social impact and sustainability, and we will continue to do so regardless of external factors.

Also, execution remains central. We are delivering through operational excellence driving efficiency and agile resource allocation and continuously improving R&D productivity to ensure sustainable growth and impact. On the next slide, please. Our social impact and sustainability efforts directly support our strategy and long-term value creation. We focus on 3 strategic pillars: Global health innovation. We are committed to finding breakthroughs for diseases often neglected by science and ensuring innovative medicines reach communities in low and middle-income countries. This is about expanding access where it's truly needed most.

Second, inclusion and access. We embed access principles across the entire research, development and commercialization continuum, actively working to close equity gaps by reaching underserved populations. Third, environmental sustainability. Protecting human health also means protecting planetary health. We have strong environmental commitments to reduce our footprint and preserve resources for future generations.

Underpinning these pillars are 2 foundational topics. First, ethics, risk and compliance. We maintain the highest standards of ethical behavior and regulatory compliance across the value chain. Second, culture and people experience. We are building a workplace where everyone belongs and thrives while preparing our talent for the future and offering fair competitive rewards.

In short, these initiatives are not separate from our business. They're integral to how we deliver sustainable growth and long-term impact for patients, society and our shareholders. To dive deeper into our first strategic priority, global health and innovation, I am pleased to invite Lutz to share more about our global health pipeline.

Thank you very much, Steffen. Hello, everyone. I'd like to say a few words about our global health innovation, if we can move to the first slide, please. Then I would like to highlight that at Novartis here, we use the entire continuum that we have from drug discovery, development, delivery and of course, also operations in order to support the global health pipeline as much as we would use that continuum for any other disease area.

And let me highlight that in California, we have a dedicated drug discovery team under the leadership of Thierry Diagana, who specifically focus on infectious diseases, sickle cell disease and other neglected tropical diseases.

The development unit under Sujata Vaidyanathan, who will be in a fireside chat later in this program. Then of course, the operations team that essentially produces millions of tablets, particularly for malaria. And then our delivery team, including our dedicated team that we have in Sub-Saharan Africa serving the disease endemic countries. And those teams have access during discovery and development to the whole array of different technologies that we would use for any other disease area as well.

On the next slide, we see how we are looking at the diseases that we are focusing on in global health. And the WHO, the World Health Organization has a list of diseases that do not have adequate therapies available. We see that about 2 billion people struggle to have even access to basic medicines and more than 1.5 billion people suffer from neglected tropical diseases. And we have seen recently, particularly as a consequence of climate change further spread in those diseases and an increase in the disease epidemiology.

And those diseases typically affect underserved patients, patients who are living in countries which are characterized by fragile health systems and where the triple burden of disease is felt particularly hard. With that, I mean that we have an unfinished agenda in infectious diseases. We have a rise in noncommunicable or chronic diseases. And then we often also see epidemics who put an additional burden on those health care systems.

We decide when there is an unmet need that is acknowledged also externally, for instance, by WHO. And we have the scientific capabilities to address those diseases. That, for us, is a call to action and a disease area that we would then target. And we see that the unmet medical need in those disease areas is quite pronounced. We see either in diseases, emerging of resistance that is particularly the case for malaria or we see that toxic or poorly effective treatments are available as we see for other parasitic diseases like [ Chagas ] disease and leishmaniasis often medicines that were developed 50 or 60 years ago and that do not meet the current standards of quality, efficacy or tolerability or we even have diseases where treatments have never been developed like dengue fever or some other emerging viral diseases. Typically, those would be the viral diseases where we also see a rise in the epidemiology of those diseases.

On the next slide, you see the pipeline that I'm always very proud to talk about because when I started in development more than 12 years ago, there was -- this pipeline was essentially empty. And now through the great work that our colleagues in drug discovery and development have made you see that we have quite a number of different disease areas that we tackle and drug candidates that we are advancing through the different phases of development.

We are currently running 11 clinical trials, which involve 14 low- and middle-income countries. And we believe that once we advance this pipeline, we have a very good portfolio of new drug candidates that address those diseases that I spoke about just earlier.

The next slide, please. Let me now take a deeper look into malaria, which, as you know, has been a focus area for us for many years. Currently, artemisinin combination therapy still cures malaria and we shouldn't forget about that because it is still a life-saving medicine, but we see those early signs that make us worry because those signs have over the years always led later to a full flash resistance which then has dire consequences as we see some estimations here that we will see millions more malaria cases, more hospitalizations and about 80,000 additional malaria deaths annually. And that is what we need to avoid and this has been our focus for the last 10 years to develop a non-artemisinin combination therapy that addresses the need in malaria even when resistance is on the rise.

And then we see also now the effect of climate change, which will essentially lead to a wider spread of malaria into areas, for instance, like Southern Europe, which have long eliminated malaria. And of course, that will only exacerbate the burden of the disease, together with the resistance that we are facing.

On the next slide, we see the different needs that's been highlighted for new antimalarials. And I just mentioned the need to address the threat of resistance. But of course, we always strive to also simplify dosing current antimalarial therapy is a 3-day treatment course with twice daily dosing. Now for the new antimalarials we'll have a daily dosing, but we are trying to further reduce also the treatment duration. And then one important element is the transmission blocking whereby we aspire to not only treat the patient, but also make sure that the patient cannot transmit the malaria then through the vector to another person, which currently requires a different medicine to be taken on top of the treatment.

And the idea here would be to find antimalarials that have the ability to also block transmission. And we have 2 candidates who demonstrate that at least in vivo and now most recently for ganaplacide. Then we also need to look beyond falciparum malaria and look at vivax, which is particularly prevalent in countries that have almost eliminated Malaria, where we are developing single-dose exposure radical cure approaches.

Now on the next slide, let me go a little deeper into KLU156, which is our most advanced new antimalarial. We've just published and presented the data of the confirmatory Phase III trial at the American Society for Tropical Medicine and Hygiene meeting in Toronto. And we see in this large trial that the medicines works, and it works remarkably well with a cure rate of close to 100%. And this drug candidate is effective in killing the parasites, even parasites with mutations, but also addresses the gametocytes, which are those stages of the parasite that would then transmit the infection to other patients.

So we have essentially 2 benefits here that are being conveyed by this one drug candidate. It should be noted that this wasn't easy to get to that stage because we screened 2.3 million molecules in our library to find ganaplacide. And we also reformulated lumefantrine, which is currently the combination partner in our current artemisinin combination therapy so that it can be administered only once daily.

Next slide, please. So in closing, you see the malaria commitment that dates back more than 25 years ago. And in 1999, we launched the first fixed-dose artemisinin-based combination therapy. We have now surpassed 1 billion of these treatments globally. We introduced a pediatric formulation, but we continued. We only this year have a Coartem Baby formulation that was introduced, there was no treatment for newborns and babies up until now. And now we are coming with the next generation of chemical entities of new antimalarials to address resistance and some of the other needs that I had highlighted earlier with future introductions. So we'll continue to stay our course in malaria.

That brings me to the end of my quick overview, and I would now like to invite Sujata Vaidyanathan, our Development Unit Head for Global Health; and Martin Fitchet, who is the CEO of MMV, the Medicines for Malaria Venture and the long-standing collaboration partner to hold the fireside chat. Thank you.

I'm here with Dr. Martin Fitchet, CEO of Medicine for Malaria Venture, a product development partner in the antimalarial R&D space. Martin has been in the pharmaceutical industry for quite some time and he's worked here at Novartis. He's covered multiple therapeutic areas with a focus on global health and public health at J&J, where he covered end-to-end focus on R&D and access. Martin, it's really a pleasure to have you here with us.

Thank you very much. It's great to be back in Basel.

Indeed, you were here at Novartis many years ago.

I just walked past my old office.

Excellent. Excellent. So we saw you recently in Ghana for the Coartem Baby launch, quite exciting for us. We had Vas join us as well for the launch. Would just love to hear your thoughts on just the Coartem Baby formulation, the development, our partnership. And the launch as well.

So what an incredible event, thank you very much for the invitation. It was an honor to be there. This was an extraordinary program. And I think -- it really illustrates the concept of partnership in global health in getting a very, very difficult job done. So there was one evidence gap in malaria, and that was the efficacy and safety of antimalarials in children under 5 kilos. It hadn't been studied and with enormous credit to Novartis you decided to create the new formulation for this very young and vulnerable age group and study it to prove that it works. Many thought this study in such tiny vulnerable children under 5 kilos couldn't be done. But with the partnership with global partners around the world, including doctors, health workers and families in malaria-impacted regions, we got it done. And it was an incredible feeling. And I will never forget the day I think it was in July when the product was approved. And the announcement came out that this was approved.

It took the world by storm. It surprised us all how incredibly welcome this news was I think in a very difficult world right now, I think people saw this as a really important story of a company, nonprofits, government, doctors, families, nurses getting together to solve a very difficult problem because the most vulnerable children needed that data, and we needed to understand how to treat them with this new product, and it was successful. And I'd just like to say thank you to Novartis and congratulations for leading that.

It's really a humbling experience to be part of that, to be able to bring that medicine to the most vulnerable patients and couldn't have been done without the collaborations and partnerships that you mentioned. So thank you so much.

We're so proud to partner with Novartis, and we look forward to many, many more innovations in the future.

With over 25 years of experience in R&D and global health, what do you see as the most persistent or complex challenge in advancing global health outcomes?

So a challenge, where to start. Perhaps we can talk about malaria as a good example. So if we think about malaria. In any 1 year, 0.25 billion people are infected. 600,000 people will die in that year and around 75% of those are children under 5. It's a massive public health challenge, catastrophic to families, catastrophic to communities. So what to do? Innovation is really the long term and the only answer to getting ahead of malaria. And the reason for this is because it's caused by a parasite that parasite is very widely and highly adaptable to current treatments, meaning it adapts to become resistant to those treatments. So we have to continually think ahead of the parasite, -- we have to beat it with urgency with new medicines that have a high barrier of resistance and new mechanisms of action that can be used to treat the malaria parasite even as it adapts. And then we have to think about eliminating the disease. So many challenges. So the only way to do this is innovation. And the core of that innovation is innovation of pharmaceuticals, medicinal R&D. Now you and I know, I'm ex Novartis. We both worked in this area for many years. R&D for medicines is extraordinarily complicated, has to be executed to an extremely high quality. The science is extremely important to get right and to be at the highest level of thinking. And add to this, the need for these new medicines to also be accessible and affordable, that's a real challenge. But I'm really happy to say that I think we can get there. So allow me to give some history as to how we came into being and how we came to be partners with Novartis and how we came to rise, I believe, to this challenge that we're facing.

So MMV was formed about 26 years ago. We came out of what was called the chloroquine crisis when the only real effective drug for malaria, chloroquine, became pretty much useless as the parasite adapted to become resistant to it. So through the '90s, mortality climbed until you got to about 1.2 million deaths per year because the treatments just weren't working anymore. Governments, pharmaceutical industry, WHO got together and created our organization medicines from malaria to drive and forge partnerships, global partnerships to drive innovation to develop new medicines. Now about the same time, Novartis was coming forward with the new generation, a revolutionary new medicine for malaria, the next generation after chloroquine and it was called Coartem and it contained a revolutionary new agent called artemisinin. And this has been the mainstay of treatment for malaria for the last 25 years. We've been fellow travelers with Novartis for a quarter of a century, and we've been close partners now for 20 years. It's been an incredible partnership, delivering new medicines, new formulations and I think we'll talk a little bit later about a really exciting new dawn in innovation as well.

But this innovation is, as I said, it's extremely expensive and complicated and has to be driven through true partnership. And at the core of it, has to be a company with vision, with scale and scientific expertise to lead the development, and I'm really delighted that Novartis is so committed to this fight.

And I'm glad we're able to contribute and collaborate Martin. So maybe we talk about something that we saw recently where we saw encouraging clinical trial data from the ganaplacide lumefantrine combination, part of our innovation pipeline for antimalarials. In your perspective, what makes this innovation significant in terms of our fight against malaria. So would love to hear your thoughts.

It really is a fantastic data. I think it's been released a little bit. So I think I can talk about it slightly. So we saw very, very good efficacy at least as good as current standard of care. But we also saw indicators that this new mechanism of action is going to have a high barrier to resistance. As I said, the big fight is staying ahead of the parasite ability to adapt and become resistant. So this is a huge advance. And it looks like it has transmission blocking properties. This is game-changing. So think about what I talked about with the failure of chloroquine and then Novartis coming in with Coartem and the next generation 25 years ago of the artemisinin containing drugs.

We're seeing partial resistance already developing to this class of drugs, the artemisinin drugs. We're seeing our delayed cures. We're seeing some franc failures. And history and biology tells us, eventually, we'll be in the same situation with the current class of drugs as we were chloroquine. So having ganaplacide lumefantrine as a brand-new product with a brand-new mechanism of action designed to stay ahead of the parasite ability to adapt and become resistant is going to be an incredible advance.

No, we're excited about the data as well. How do you see the future of malaria innovation? And what do you think we can achieve together with these partnerships?

So at the beginning, I talked about this huge massive burden of disease goliath of a disease, the impact it has on communities, 0.25 billion infections. 600,000 deaths per year, most of them very young children. Even in that context, I think we can be cautiously optimistic and allow me to tell you why. So I think we're entering a golden new age of innovation for malaria, not just to treat malaria, but also to prevent malaria and eventually to eliminate malaria. The reason we treat malaria and prevent malaria is to save children's lives, but we must always think about how do we use toolbox to eradicate this disease from the face of the earth.

I'm excited because we have ganaplacide lumefantrine, we just talked about that. And I know we're working together on a really exciting new platform, where we're combining that with a fast-acting new drug that has the potential to give what we call single-dose cure. So the ability that when the mom brings her baby to the clinic with malaria over a temperature, you can observe that baby getting that one treatment in the clinic or in the middle of the village, that baby has no more medicines they need to take, and they are cured as opposed to twice-a-day treatments for 3 days. That will be an extraordinary advance. And I think we are getting towards that realizing that vision. So that's cure. We're working with global partners where we're looking at new technologies to prevent as well as vaccines, we have long-acting injectable medicines where imagine one injection into a child's arm at the beginning of a season, one injection of a medicine prevents them for the entire season from getting malaria.

That's it, one supervised visit. Combine that with insecticide-treated net, and you can visualize a toolbox of advanced technologies that will really bend the curve of malaria and take us to this really, really incredible goal of elimination of malaria from planet Earth. Wouldn't that be incredible?

It's amazing, right? Just thinking about that future is incredible. Thank you so much for your valuable insights. We really appreciate the long-standing partnership with MMV and Novartis and look forward to continuing that journey with you. And looking forward to eliminating malaria.

Sujata, it's my pleasure, and we're so proud to be your partners.

Same. Thank you so much, Martin.

That was excellent. It's gratifying to see the strong relationships we've built with our partners who are critical to the work we do in social impact and sustainability. I'm Korab Zuka, I joined Novartis late last year as the new Global Head of Social Impact and Chief Sustainability Officer.

Today, I'll walk you through how Novartis is strengthening our social impact and sustainability strategy and in particular, our new inclusive health accelerators or as we call them [ IHAs ], will help us reach underserved populations in our priority markets. A key principle guides all of this. Disparities rarely come from a single factor. They're almost always driven by a mix of socioeconomic conditions, geography, insurance coverage and the structural capacity of the health care system.

To present how we are further evolving our strategy, I'd like to focus on our inclusion and access pillar as Lutz has already presented our global health work, and Steffen will talk about our environmental sustainability. Our access principles R&D, affordability and health system strengthening really remain the foundation for how we bring our medicines to more patients. They guide how we think about our trials, pricing approaches and how we work with health systems to improve access. We recognize that no single company can close the access gaps alone, which is why our approach is built on partnerships across the broader health care ecosystem.

As a company, we've already made strong progress through several initiatives like tiered pricing, emerging market brands and other efforts that expand access. The next step is to ensure our innovative medicines reach underserved patients in our priority markets. To do this, we've designed inclusive health accelerators, a structured model to reach underserved communities.

Over time, we will extend this approach to different markets so that Access really becomes fully embedded in how our country teams operate. Inclusive health accelerators, our strategic initiatives, they're built around the high priority therapeutic areas, really designed to identify underserved populations in specific markets and address key barriers to care along the patient journey. The idea is simple. Historically, Access was about low and middle-income countries. But we know that even in developed markets, there are underserved populations who are not getting our medicines. Entire segments of patients are falling through the cracks. So we developed a data-driven approach to identify these patients and expand our reach while creating sustainable business growth. We started by designing IHAs for the U.S. market focusing on prostate cancer, cardiovascular disease and breast cancer, and we plan to launch them using a phased approach in the first half of 2026.

Let me make this real with the example of prostate cancer. We started by looking at the patient funnel for prostate cancer. In the U.S., blAck men are nearly twice as likely to develop the disease. But when we go deeper into the patient funnel, the patterns, mirror, socioeconomic and structural factors in that men in low-income ZIP codes are less likely to have a regular provider, less likely to be screened and less likely to have access to PSMA imaging. As a matter of fact, we see a strike in disparity.

Black men are about 10% less likely to receive a PSMA scan. For context, a PSMA scan is a specialized imaging test that helps doctors better understand the type of cancer they're dealing with and actually decide if advanced treatments are appropriate. Without that scan, which has a positivity rate of almost 90% for metastatic castrate-resistant prostate cancer patients, they may never be able to identify as candidates for more advanced therapies such as [ radiopharmaceuticals. ] The gap in diagnostics is critical because it could be one of those factors contributing to the fact that black men faced twice the mortality rate from prostate cancer compared to white men. We found similar gaps in breast cancer where black women have 25% higher occurrence of elevated LP(a) levels. These gaps track closely with socioeconomic indicators, where a patient lives, the type of hospital they can visit, insurance status and availability of advanced imaging.

So we asked how can we make sure these patients are not left behind. Working together with the therapeutic area teams in the U.S., we map the barriers keeping these groups from accessing appropriate care. For prostate cancer, for example, black men are more likely to visit community hospitals than academic centers. and many community hospitals don't offer PSMA scans, plus community oncologists don't have a large referral network to forward patients to centers that could perform it. Based on the identified barriers for the 3 therapeutic areas, we designed solutions that could be clustered in 4 archetypes. The first archetype awareness and empowerment, focusing on community-based education and trusted local voices that built understanding of risk, screening and treatment, for example, faith-based campaigns that normalize screening discussions. The second archetype navigation and access, supporting patients move through the health system from screening to referral and follow-up such as community health workers, guiding patients to follow-up appointments.

The third archetype, provider readiness, providing training and tools that enable providers to deliver timely guideline-based and culturally competent care, for instance, virtual learning networks for clinicians in urban and rural areas. The fourth architype impact measurement and model expansion, leveraging both local data and shared learning that track results and scale the most effective solutions. We will work with local reputable partners to implement these initiatives and expand access to those overlooked populations. This approach not only brings together social impact and sustainable growth, but also strengthens Novartis' reputation and relationships with health care systems and communities, positioning us as a partner of choice in an era of increasing scrutiny and accountability.

As previously mentioned, we're building the inclusive growth accelerators in the U.S. first, taking a phased approach for implementation and starting with prostate cancer. We have plans to expand to other markets in the near future. For us, this isn't just about meeting social impact expectations. It's about supporting the redefinition of what sustainable growth looks like in health care, one that is measurable and deeply aligned with our purpose to improve and extend lives.

As we think about social impact and sustainability, it's also incumbent on us to think about our environmental footprint. Although pharmaceuticals are not the most carbon-intensive industry, we still have a role to play both in terms of climate risk mitigation as well as adaptation of our portfolio, building a climate-resistant pipeline that can tackle disease burdens exacerbated by climate change. I'd like to hand back to Steffen, who will share more about our environmental sustainability efforts.

Thank you, Korab. As nature becomes an increasingly important topic for our industry, we have updated our environmental sustainability framework this year. Previously, our framework focused on 3 areas: Climate, water and waste. We have now streamlined it into 2 pillars: Climate and nature. Our ongoing efforts of water and waste remain a key priority and are now included within the new nature pillar. In the following slides, we will share our progress against both our climate and major targets.

Here is a summary of our performance against our 2025 targets. These targets are part of our legacy commitments and the progress shown here reflects our performance as of third quarter this year. In the Q3 progress column, you'll notice that we have already achieved most of our 2025 targets. And for the remaining targets, we are confident to meet them by the end of this year.

Our ambition is to achieve Net Zero by 2040. And here is our transition plan. At the top, you will see our Scope 1 and 2 reduction plan and at the bottom, our Scope 3 reduction plan. For Scope 1 and 2 emissions, we have already made strong progress and continue to reduce emissions in line with our approved SBTi trajectory, aiming for a 90% reduction by 2030 and then maintaining it thereafter.

For Scope 3 emissions, we have reduced them by 13% versus 2022 baseline as of last year. Our target is a 42% reduction by 2030 and 90% reduction by 2040. Addressing Scope 3 emission is a key priority as the majority, namely more than 90% come from upstream supply activities. Therefore, we are working closely with our suppliers to drive emissions reductions across the value chain. We have listed some of the key actions we are taking with our suppliers here.

You can see our 3-step approach. First, we are onboarding suppliers in line with our targets by including environmental sustainability criteria in their supply contracts. To date, more than 90% of supplier emissions are covered by these criteria. This year, we also updated our procurement process, such as sourcing evaluation and RFP processes to ensure these criteria are applied consistently with new suppliers.

Second, we are engaging with direct suppliers to collect product-specific carbon footprint data. To facilitate this, we are using the Siemens data platform, [ SiGREEN ], which helps us track the carbon footprint associated with our products. Third, we continue to partner with our peers to define common minimum sustainability standards for suppliers and help them build their capabilities. Having said that, Scope 3 remains a complex challenge. At the bottom, you will see some of our key challenges. Suppliers have different levels of maturity when it comes to prioritizing sustainability topics and there is hesitance to invest early due to the relatively higher cost of green technologies.

Climate policies also vary by country. Most European countries aim for Net Zero by 2050; China by 2060; and India by 2070. So we do expect that policies and regulations will further streamline in the future, which will further support this transition. Now moving to another pillar nature. Here you see our 2030 targets built around water and waste, which are part of our existing targets and 2 new focus areas protecting biodiversity and sustainable sourcing, which we are currently developing.

For water, we have 2 targets: Water consumption aligned with the nature standard [ SBTN ] focusing on sites in water-stressed regions. Our 2030 scope covers both our own sites and supplier sites in these regions. And second, water quality, expanded from 2025 scope to now include labs and all API suppliers by 2030 in addition to manufacturing sites and high-risk suppliers.

For Waste, our target is to reduce waste by 30% by 2030 versus 2022 baseline. We are tracking well and have already achieved a 22% reduction to date. The 2 new focus areas, we have started working on are implementing biodiversity management plan for sites located in or near protected areas; and second, implementing a sustainable sourcing program with paper as a pilot commodity. We aim to define specific targets for these areas once assessments and pilot initiatives are complete.

To summarize, based on Article 964 of the Swiss Code of Obligations, and our previous nonfinancial reporting, we believe we are well positioned to comply with the CSRD, the EU taxonomy, MCS DDD once the EU Omnibus legislation is finalized. We are working to continuously strengthen our nonfinancial reporting systems and processes striving to bring them to the same level of robustness as financial reporting over time. This includes obtaining limited assurance from our auditors and refining our processes to meet any future requirements for reasonable assurance.

Generally, we feel confident and on track to fulfill these obligations. For the reporting of full year 2025, we will adjust our disclosure strategy to focus on a more targeted report on nonfinancial matters to meet regulatory requirements. This change does not reflect a shift in our ESG strategy or commitments. Rather, it aims to ensure our readiness for future requirements and to maintain consistency across regulatory filings. We will continue to share relevant information that may not be included in the report through other channels such as our usual ESG data summary to communicate effectively with certain investors and stakeholders.

This slide indicates that we are on track to achieve our 2025 ESG targets and meet our commitments related to sustainability-linked bonds, which are maturing at the end of this year. As you can see, even at the 9 months mark, we have already met our targets for a number of patients reached with strategic innovative therapies in low middle-income countries global health R&D as well as for water and waste management. As previously mentioned, we are making excellent progress in these areas and remain on course to meet our 2025 ESG targets.

On the next slide, we have a snapshot of our prioritized ESG ratings. While our initiatives are not driven by these ratings, we are proud of our achievements and welcome the external and independent validation of our efforts. Notably, we have been part of the leader scope in the Access to Medicines Index for the past 10 years. And this year, we have reached the #1 position. This is particularly gratifying considering our transformation journey.

As you know, just a couple of years ago, we spun off Sandoz, our generics arms. While this may result in overall decrease in patient reach achieving the top spot reinforces our commitment to expanding Access, particularly to innovative medicines. So it's really nice to see that progress. Additionally, we have received an upgrade to AAA from MSCI, the highest possible rating. Our controversy score also improved from yellow to green. Additionally, we are in the leaders group for ISS ESG #1 amongst peers in Sustainalytics and maintain a AA list status with the CDP for both climate change and water security.

As we close, let me highlight 6 key messages: First, we remain fully committed to our social impact and sustainability strategy even as the external environment continues to evolve; second, we are launching inclusive health accelerators to combine social impact with sustainable business growth; third, Novartis continues to lead the global health innovation with 8 new chemical entities in clinical development; fourth, our malaria portfolio; reflects more than 25 years of unwavering commitment to global health; fifth, we have strengthened our sustainability framework with a sharper focus on climate and nature; and finally, we continue to make strong progress on our social impact and sustainability targets earning recognition as an industry leader. These actions underscore our dedication to creating long-term value for patients, society and our shareholders.

With that, I invite our panelists to join me for the Q&A session.

Thank you, Steffen, Lutz and Korab, for your presentations. So now as we open the Q&A, I would actually like to focus on the top social impact and sustainability questions that we've been receiving from our investors. Let me start off with a recurring question this year, and it relates to the financial rationale behind our social impact and sustainability initiatives. Maybe starting off with you Lutz. Could you elaborate on the business case for the global health program? Some investors have actually asked would climate change accelerating the spread of vector-borne diseases, do you see the Novartis global health as a potential long-term growth opportunity?

Yes. Thanks for the question, Mavic. I think we need to remind ourselves that the main motive why we are doing the global health programs, both in the infectious diseases, but also the community health work is to create the desired impact on those communities. And particularly the diseases in tropical medicines are often characterized as market failure. While that may change, it also implies that the business rationale comes later and the impact rationale needs to be the first to consider. As you know, the way we have set this up is that our programs are self-sustainable. They are financially sustainable. So they are not dependent on constant investment. And in some parts of the world and some of our programs are accretive to the business. So they not only deliver the societal impact that we aspire, but also financial impact.

Thank you, Lutz. Let me turn to you, Korab. So you actually mentioned that inclusive health accelerators are strategically aligned with our core therapeutic areas. So could you just walk us through how this alignment translates into tangible value creation for Novartis, both from a business and impact perspective?

Yes. So thank you for the question. The inclusive health accelerators are really -- these are in our core therapeutic areas where we, as an organization, have actually a leadership position in. So in CVD, in oncology and they're really meant to translate into value the following ways. The first one, it is really around making sure that we're building trust with communities, patient groups. And these are communities in a way that have really very frequently not been seen by the health care systems. And we believe by building this trust, we'll be able to improve the diagnosis, but also we'll be able to improve treatment initiation and also adherence. The other piece that's really unique to the inclusive health accelerators is that we are working to address the specific barriers that patients face in a way that allows for these very targeted interventions that enable us to really look at the fragmentation of the health care system so that we can drive that intervention and the solution to those patients. If we're able to really narrow these inequities, we will be able to both increase our social impact but also from a business perspective in terms of the value we'll be able to deliver.

And Steffen, from an operational resilience perspective, of course, we have to ask that question. Have you observed measurable financial benefits from our environmental sustainability efforts. So we know that these initiatives likely drive efficiencies, but we also know that they also require upfront capital investments. So how do you actually do the trade-off and assess the return of these investments?

Thanks a lot for the question. Yes, we see tangible financial benefits out of those efforts. And it starts with our direct cost. When you look at our energy efficiency programs, we see, for example, reduced energy consumption, which translates directly in reducing our spend, but it goes beyond electricity. Our efforts on the waste reduction and increasing recycling also results in financial benefits as you use less material as you recycle material. And last but not least, part of our water activities is as well to reduce water consumption. And as a result, of course, this has also a financial benefit. When you look at overall, our investment, we started several years ago in technical operations when we look at capital investment to embed environmental sustainability as a key theme into each investment proposal. And what is very interesting to observe is that most of our CapEx project proposals have a positive financial benefit. For example, through upgrading of utilities or replacing and upgrading cooling and heating systems. So all in all, we have, over the past years, invested more than EUR 200 million into those efforts. And as I said, most of them with a very positive payback financially. And that's -- I would say that's the direct measurable financial benefit. But of course, it goes beyond that there's also an indirect, not so much measurable benefit as, of course, we fulfill with our efforts, regulatory requirements. And we also have an increase in trust of our stakeholders. So all in all, it's not only the right thing to do, but also it has tangible financial benefits for us.

Thank you, Steffen. That was reassuring. Now shifting gears to something very topical this year. I think it would go amiss if we don't talk about the current external environment. So back to you, Steffen, on supply chain resilience. It remains a top priority, particularly in today's volatile global environment. And how is actually Novartis managing risks relating to supply chain resilience? We know that recently, we had announcement on new manufacturing facilities in the U.S. So does this represent a strategic move to bolster supply chain resilience?

Yes. Look, first of all, of course, it's our key objective to ensure uninterrupted supply of all of our medications to patients worldwide. And I think I'm very proud to report that we are doing very well on this. Our customer service levels are close to 100% over the past few years. And this is basically a track record, which we are really proud of. And for sure, it's all built on a fit-for-purpose manufacturing network. We have more than 30 sites in our network. We partner also with external suppliers to complement where required. And these investments to maintain our network up to a state-of-the-art is very important. But moreover, I think the way we then deliver the demand worldwide is centered around appropriate inventory policy. So we always have a certain stock level in the country, but also at the different stages of manufacturing. Another important aspect is for most of our products, more than 80%, we have set up 2 parallel supply chains, which is very important to overcome local geopolitical challenges or challenges with regard to transport. And this results then truly in the very high customer service levels. And you mentioned our investment. We recently announced a large investment, a [ $23 billion ] investment in the U.S., one of our key markets. It's really a strategic investment in the market where we see also an enormous growth, and this investment into 6 new facilities, not only in manufacturing also, there's and inherent increase in R&D investment related to that. But [indiscernible] investment will, of course, ensure that we also can continue to ensure access of these medicines to make them available. And over the next few years, we will make sure that all key products will be produced locally and the U.S. So we believe it will further strengthen our ability to supply products to the U.S. locally, but also globally through other areas where they also have growth. And this is thanks to the strength of our supply chain setup.

Thank you. Lutz, turning over to you with increasing constraints on public funding for Global Health, how have your programs been impacted? So what strategies are in place to ensure continuity and scalability in this current external environment?

Yes. We have certainly seen the consequences of the very sudden and very significant reduction in official development assistance being spent, especially on the African continent. And health systems that were weak to begin with, are even weaker now and had very limited time to prepare themselves for that new scenario. And areas like disease surveillance, which is so important for infectious diseases is suffering as much as individual patients. However, our direct programs are not impacted because we have never received direct assistance from any government. But that was the reason why we have set up our global health approach in a self-sustainable way that the little money that we essentially make, we reinvest into drug discovery, drug development or health system strengthening on the ground, and that has sort of insulated us from the overall spending levels that we see at the governments. I see a potential here, of course, that we are now also pivoting into a new era of global health, where private capital and private sector engagement could even be strengthened, for instance, through public-private partnerships. And while the transition period will potentially be difficult and painful to manage I think that we could emerge even stronger out of this situation in a way where countries take more ownership and global players support the priorities being set at country level rather than the other way around. But that will require a lot of dedication and still hard work in order to arrive at that desired outcome.

Korab, I think I need to ask a question on the most favored nation pricing as this is also top of mind for a lot of our sustainability and stewardship analysts listening in the call. So what impact do you expect the MFN policy in the U.S. to have on Novartis inclusion and access initiatives? So for example, how does Novartis price medicines in lower middle-income countries? And do you see any impacts at all from the MFN policy?

Sure. So maybe I can just start initially with framing the philosophy where we do look at a value-based approach in terms of how we price our medicines and that value is really looked at across 3 dimensions. The first dimension is the value to the patient. For example, this is exhibited in the form of potentially increased efficacy. The second value lens we look at, it is really the value to the health care system. And this exhibited, for example, is could it be reduced hospitalizations in terms of what we're providing. And the third value lens that we look at it is really the value to society. And that means in terms of productivity and the return to the workforce for either the patient or the caregiver. And we believe this is really fundamental in terms of how we approach our pricing philosophy. We don't believe MFN is going to have an impact in terms of access and LMICs. And we, as an organization, continue to be committed to piloting different approaches, different models to make sure that we're able to do our part to reach more patients around the world.

So I'm just conscious of time because we have a few minutes left for one more question. So maybe this is for you, Korab because I think Steffen highlighted earlier that 2 of our 3 social targets are set to sunset by year-end. So Korab, can you share how Novartis is approaching this next chapter on target setting? Are there plans to renew or redefine our social impact targets?

Yes. So let me actually start initially with the good news in that we are actually on track to meet our targets that are associated with the sustainability-linked bond. We have also been working on the next-generation targets, and we will be able to announce that in the early 2026. So stay tuned for that. What you'll see in the new targets, it is a combination of, of course, our continued commitment around Access and making sure our medicines make it to patients around the world. Of course, we are continuing with all of our climate-related commitments our commitment to global health, and you'll see some new areas in terms of the work that we're doing as part of the evolved social impact and sustainability strategy. So I'd just say stay tuned for that.

I'm sure the investors tuning in are eagerly waiting for those new social impact targets. I just want to say thank you to our speakers and the investors tuning in. Thank you for your time and engagement. If there are any questions that we did not address in this webcast, please feel free to reach out to me or any member of the Investor Relations team. Thank you.

Okay. Good morning, everyone, and welcome to the immunology breakout session. My name is Victor Bulto, I'm the Novartis U.S. President, and I'll be on host today. I'm here with the team with Ingrid Zhang, who is our Chief Commercial Officer, for the international regions. Thank you, Ingrid. Also, Angelika Jahreis, she's our Development Head for Immunology. Thank you, Angelika as well. And with Richard Siegel. Richard is our Head of Immunology Research. So here, you have the entire R-D-C continuum ready to answer your questions. Before we do that, I just wanted to stress that this has been a phenomenal year for the immunology team here at Novartis across a number of dimensions. The first one with the continued solid performance of Cosentyx, which reinforces our commitment to that $8 billion peak sales guidance. As you all know, we had positive Phase III results in PMR, right, both across primary endpoint and all the secondary endpoints. It's an area of high unmet need, and we're very eager to be submitting registration early next year.

Then we had the fantastic news of the FDA approval for Rhapsido, about remibrutinib in chronic spontaneous urticaria. This is the first BTK inhibitor approved in immunology, and we are very, very encouraged by the early signs in the market. The feedback from both patients and physicians is very strong on the basis of a broad clean label, very fast onset of action and sustained response. So we're very excited with the launch and it's progressing to plan as we speak. And it's very important for us because that launch is the foundation for a number of other indications that Angelika's team is working on right across other indications like CINDU, which is already in Phase III with a readout next year. And Hidradenitis Suppurativa, where based on the Phase II data, we saw a biological like potential in terms of efficacy. And in food allergy, where we top line Phase II results and Angelika's team is now finalizing the Phase III design. Of course, that's only in immunology space. Vas mentioned earlier today in multiple sclerosis also expecting 2 Phase III readouts next year as well.

So as you can we have a lot of runway -- potential runway with Rhapsido and very excited about that molecule. The other piece of great news we had this year with NEPTUNUS-1 and 2, the 2 Phase III trials in Sjögren's disease with Ianalumab, readout positive. You saw the results. Angelika went through them recently in one of our calls, but we are very excited to be the first potential approval in Sjögren's disease, an area with tremendous unmet need for patients, where we will be able to bring a molecule that showed placebo-like safety and that was the first ever molecule to actually demonstrate efficacy in SjD and significant trends across a number of secondary end points. We're also equally excited on the -- like Rhapsido, where we see a pipeline and appeal with Ianalumab. As you can see, we went very fast with a number of subsequent indications as well with Phase III trials ongoing in lupus and lupus nephritis with readouts in '27 and also a Phase II ongoing and systemic sclerosis as well with the '27 readout, right?

And again, these are the immunology indications, also working on some hematological indications across ITP and wAIHA all, by the way, both in Rhapsido and Ianalumab in areas we know well. We know how to develop the drugs. We have commercial presence as we speak and therefore, substantial future commercial synergies as well. And last but not least, Richard's team is working with Angelika on our CAR-T YTB, CD19 in autoimmune reset. And there, we saw very encouraging data in our lupus trials. And now that gives us the confidence to start 4 parallel Phase II potentially registrational trials in lupus systemic sclerosis, myositis and ANCA vasculitis, right, with the potential there of an immune reset across a number of different immunological indications. So very excited about that as well. So all in all, we are expecting about 13 pivotal readouts before 2030 and 3 Phase II readouts, which gives us tremendous confidence as we continue to build this portfolio in immunology. And with that, we'll be very happy to take your questions, yes, please.

Yes, let me start with Ianalumab. So the involvement of B cells in the indications...

Sorry. Can you start again so that I can...

Sorry, my bad. It's Michael Leuchten from Jefferies. Starting with Ianalumab, the sort of the B cell involvement in the different settings, if we sort of go from toughest to most obvious, where does Sjögren's sit and then how does that read into lupus and then SSc. So like, I guess what I'm asking is like how derisked are the other indications?

Yes. Let me get started on that with respect to the clinical data maybe, and then I'll pass it on to Richard maybe to augment on the scientific data. Sjögren's disease, we've been trying to find therapies. And when I say we, then I mean the larger -- the pharmaceutical companies, biotech as well as academia for over 20 years. And I really want to stress that these are the first pivotal trials that have readout positive, and they replicate pivotal trials adequate into well controlleds that have met the primary end point and therefore, proven effectiveness of Ianalumab in children's disease. Children's disease has certainly has been proven to be a difficult-to-treat disease and what we have seen is that it is a very prototypical B cell-driven disease similar to lupus. Lupus Nephritis where we see infiltration of B cells in the tissue. And what is particularly interesting is that we have been doing a mechanistic study, and Richard, I invite you to talk about that a little bit better, but we've seen that we target these B cells specifically.

Now that has led not only to statistical significant differences in the primary endpoint in Sjögren's but also to a very consistent response across patient as well as physician-reported outcomes in both of these trials that have shown clinically meaningfulness of that response and have allowed us to really -- and I've shown these data in our investor call, right, to have also an increase in salivary flow in those patients who we believe still have a reserve for salivary flow. Now looking at lupus and lupus nephritis where other B cell therapeutics have already been successful, but also only if you deplete tissue standing B cells. We have seen in our Phase II study in lupus an SRI4 difference of about 35% to 40% rate. And that is at week 24, whereas most lupus studies readout at week 52 or later, and that is a really impressive result. We have also been able to reduce the flare in this patient population and the flares that patients typically see.

So I think our -- in summary, our Sjogren's data really do give us an increased confidence for lupus, lupus nephritis. As well, there are interesting data and important data of B cell involvement in systemic sclerosis. For example, pre-taxane is approved in Japan. It's the only country it's approved, but that gives you some indication that also in systemic sclerosis B cell pathology is important. So I certainly see it has increased. And I would be in particularly very excited about the prospect in lupus because we have tissue-dependent B cell depletion there. And in addition, we inhibit through the mechanism of action also BAF as the growth cytokine for B cells. So we have a dual mechanism of action, you could think of right overlaying to some extent, several mechanisms here that have already shown efficacy, and we expect much larger efficacy thereby in lupus, lupus nephritis. Maybe, Richard, do you want to add?

Sure. No, thanks. I think you summarized it really well. In some ways we're the pioneer in Sjogren's and that we didn't have as much prior evidence from approved drugs in B cell mechanisms in Sjogren's than we do in lupus. But I do want to draw everybody's attention to along with the Phase III results these 2 mechanisms studies that were reported at ACR, the ultrasound study that demonstrated differences in salivary gland pathology. And I think even more significantly, the biopsy study, where we showed 85% depletion of B cells in the target tissue in the salivary gland. And those 15% of B cells that were left, we demonstrated transmissional reduction of BAF-dependent signaling.

So that really brings to life the second MOA a reason for it to be there is that we're not depleting 100% of tissue B cells the way that CAR T therapy does. But we think that's an important reason to believe that Ianalumab will be differentiated from a standard B-cell depleter, CD20 based. There's also a difference between CD20 and BAF receptor expression, BAF receptor is expressed further along B-cell differentiation with the plasmablast lineage closer to CD19. So important reasons to believe and the strong Phase II results that actually lupus and lupus nephritis will be positively differentiated.

[indiscernible].

So maybe just a first question on remibrutinib development program. So you started the SPMS study. Can you tell us a little bit about how you're thinking about the potential primary progressive study confirming that you are focusing on disability progression? And so any sort of trial consideration that you can tell us about, based on your learnings from competitors without? And just a second one on food allergy. You already have the Phase II, so we are waiting for the data, but we know we have positive data in food -- in peanut allergy. Can you just talk about the probability of success when moving to Phase III in food allergy because conceptually, it looks quite high if you already deliver data in peanut.

So Thibault, on the multiple sclerosis indication, I will invite you to ask the question to the neuroscience team. But what I can tell you is that what the team is right now doing is trying to consider what is it that we could include or how could we shape that secondary progressive MS trial to also reinforce evidence on primary progressive progression. But the team will have a better answer for you on the neuroscience section. And then Angelika, do you want to take the question on food allergy?

Absolutely. Thank you. So remibrutinib, we are developing it across CSU inducible forms of urticaria. We also have very interesting data that we've presented in hidradenitis suppurativa. And then food allergy, we are entering a Phase III study. We will be soon sharing the data at quadruple AI, the Phase II study that we have conducted. What I do think is very interesting for food allergy is the fast onset of action that many patients with food allergy will want. You will not only see that this remibrutinib has -- is showing a fast onset of action, but also very good efficacy. So it has biologic like efficacy. We also have fast onset of action there.

Victor, you already talked about the really clean label that we have seen for remibrutinib now in the U.S., which is, I think, also really important for patients with food allergy who are looking for a safe product to take as a first-line therapy for food allergy to mitigate the potential risk of accidental exposure to a food allergen. So we agree with you that the likelihood of success also based on the biology and similar pathways being involved in and food allergy being triggered through same histamine release in mast cells is high. And maybe, Richard, if you want to add something on that aspect.

Yes. So we will be presenting the data, but you can see that we're very excited about it and that we're initiating a Phase III study in food allergy. And if you want a preview of what it's likely to look like, you can look at the acalabrutinib academic repurposing study that was presented, very small number of patients, but very strong effect size, I think, 78%, 80% had significant protection from induced food-induced symptoms and rapid onset of action. And we know just mechanistically that even from Phase I studies, remibrutinib within a day of starting the drug, you can see total blockade of basophil activation, which is the blood-based equivalent of mast cells. So I think something to really look forward to at the Quad AI. And like I said, a lot of excitement to share with group.

Florent?

Florent Cespedes from Bernstein. Two quick ones. First, to come back on Rhapsido. Maybe could you share with us a bit of the opportunities of the different indications, the size of the markets populations because, of course, food allergy is a huge unmet medical need. HS is more competitive with the drugs already approved. So some color on that would be great. And my second question is on Cosentyx. Could you maybe remind us what do you have in mind kind of to some life cycle management to, let's say, protect the franchise beyond IRA and potentially biosimilars as well?

Well, thank you very much. Look, on the Rhapsido side, right, we've quantified the population in CSU that can benefit from this therapy in about 415,000 patients in the alone of course, we would add there the international patients. Just to give you a sense, there's about 1.1 million patients with CSU in the U.S., right? It's a very large indication about half the size of psoriasis. And out of this 415,000 patients, what we know -- sorry, out of the 400,000 are not well controlled with current antihistamine treatment. And that's despite very high doses of antihistamines, right? So the idea here having a clean broad label and oral therapy that actually acts very fast would be to take that step right when patients need to escalate before -- after antihistamine. And there's only about 20% of them who have escalated to biologic for a number of reasons, right? So we clearly aim at having that position after antihistamines. And based on what we are hearing initially, that is a very realistic goal right now, right?

So that's the idea with clearly 2 biologics in the space that take substantially more time to start having an effect. So that's for CSU. In CINDU, there's currently no biologic approved right? So one of the biologic was never studied the other one failed a Phase III trial, right? So right now in CINDU, we have a wide open space, and the overall population is as well around 400,000 patients in the U.S., so a similar market there when it comes to CSU. I think the HS market, I know there's a debate on the size of the market. We continue to see that market at about $3 billion to $5 billion market. And it would be very interesting to bring an oral therapy into the space, now provided we see a replication of the Phase II data where we did see biologic-like efficacy, right? So it is a more competitive space. But we do know in all of these areas. There's 2 benefits to it.

One is the overall component of it, which some patients prefer. And the second one is in highly symptomatic diseases. We know faster, rapid onset of action is also a benefit. And then when it comes to food allergy, look, on the surface, this is a massive market. If you think about food allergists, particularly with the potential that BTKis have, to actually be allergen agnostic given how downstream they operate. We know there's more than 3 million patients with severe food allergy across the main G6 countries, right? Then we'll have to start understanding and we have to start the work there, what are the patients that would benefit the most and when.

But we already know, for example, Xolair is off to a phenomenal start with food allergy. So we're very excited about that potential. And when it comes to Cosentyx, so the main life cycle management right now, of course, will continue to grow . We see HS will continue to be a key growth driver. It's a market that is growing double digit, right? That will continue to grow double digit because today, we only have about 20% of the patients properly diagnosed and treated. So it's a market that in the U.S. in international markets will continue to grow. And we believe as well Cosentyx in PMR, right, will be another strong life cycle management for Cosentyx there before we see IRA in '28 and LoE in '29, right? Sorry, do you want to...

Yes, maybe I can just build on because Rhapsido is already approved in the U.S., and we're looking at China approval any time, and followed by Europe and Japan in early '26. So that's all coming. I'm personally super excited about CSU, right? Because it's a huge market, right? That number -- equivalent number diagnosed and not controlled by antihistamine is about 4 million. And those are biologics less than 10%. And Xolair, CSU alone internationally is almost 1 billion already opportunity. So we're really looking at international to contribute strongly to the multibillion estimate forecast, right? But certainly, HS, right, because the health care system is very constrained from a capacity perspective in Europe. So having oral medicine with rapid onset, great efficacy and clean safety is going to be super valuable. I will just stop here. And then on the Cosentyx part, right, like, the -- I mean I think we're confident to get to $8 billion by the 2029 time frame. But in Europe, actually, the compound patent is a bit later. So we're also looking forward to that.

Yes. Okay. Thank you. Matthew?

It's Matthew Weston from UBS. Two, please. The first on Rhapsido, it's obviously an important driver based on Vas' comments this morning for 2026, return to growth in the second half of the year and then going into 2027. So if you could -- I'd just love to understand if you can help us on launch cadence in terms of particularly that look through 2026, when should we expect free drug to go to paid drug? What are the key drivers of that, that we can look for. We will promise that with Sotyktu. I realize that's not you, by another competitor in the space and it never materialized.

Why do you think you're going to have an access advantage to really drive the revenue growth for Rhapsido? And then a second question, if I can, just on YTB. A lot of focus on using CAR-T and immunology from lots of players. But as a regulator, you're clearly having a massive impact on someone's immune system. So clearly, at the very end of the therapeutic spectrum, I get it. But if we're going to bring it more mainstream, is there any way that we can look at more modest immunoablation in immunology or is that just totally counteracts the mode of action of what we're trying to achieve?

Great. So I'll take Rhapsido and then Richard will take the YTB question. So Matthew, a couple of differences here, right? One, we are extremely confident on the clinical profile of the drug, right? If you want to make sure that you're going to get access and pull it through the first condition is that you have a strong appetite from both patients and physicians to utilize the drug. And that's what we're seeing in the first weeks of this launch. And that's important. And what we're doing is 2 things. We're not only utilizing free drug, we're utilizing samples as well, but because when you have a highly symptomatic disease where patients are exceptionally miserable with these antihistamines, right?

There's a tremendous appetite for these patients for a rapid response. The main determinant of their urgency is lack of sleep due to the itch, right? So it's a very pressing disease. And so what we're seeing right now is a strong appetite from physicians to use the samples and get patients started right away. What Richard noted in terms of the speed of action, it's actually the anecdotal reports we get right now is that some patients call back day 1, actually already referring substantial symptom relief, right? I don't want to generalize that, but these are some of the reports we are hearing.

And then, Matthew, the -- our free drug program requires a prior authorization denial, right? So that means the physician will have to send a prior authorization, if they're denied, then these patients will get them free drug, right? And that's important for 2 reasons. And our Head of Market Access for the U.S. is sitting here in the room, Rob Rowinsky, right? The more pressure payers will see the more utilization and prior authorization they will see coming their way, the more urgency they'll be to negotiate and get access for this medicine. So right now, we are confident that through the first half of next year, right, we will have a cadence of payers, right, coming down with access.

And at that point in time, first priority will be to make sure that those patients on those free drug programs which we have identified will be pulled through into paid fields and that, of course, will pull through that access in the normal demand because our free drug program only kicks in if there's a prior authorization denial, right? And that is what gives us confidence, Matthew, that as we start getting that access, we will be able to pull it through. And of course, we don't want to rush it either because we're very mindful about the level of discounting that, that will take, right? So -- but we will keep you updated on that cadence as we go, but I'll reinforce that the demand, the underlying demand that we're seeing is there and that the satisfaction is there from patients. So that gives us the confidence that the Rob and the team will get the access and we will pull it through.

Maybe I can add one sentence before we go to Richard is that I think the comparison with psoriasis is also not quite adequate in my view here because psoriasis many, many therapeutic options are available to patients, whereas where we are with CSU right now is in a patient population that have very few treatment options. So I do think the unmet medical need is much, much higher in CSU than it was at the time of TYK2 entry into a very saturated psoriasis market.

Absolutely.

Yes.

Yes. So thanks for your question on YTB and B cell immune reset. So although you can argue that the immune set concept is a dramatic reset of the immune system. The idea is to have new generation of B cells from precursors and really change the immune repertoire. In terms of area under the curve of immunosuppression and immuno safety, you could argue that this type of therapy is actually safer than staying on chronic immunosuppression, which is the standard of care. So what we're seeing then the -- really the reason this is kind of a revolution in immunology therapeutic paradigm, patients recover B-cells 60 to 90 days, which is totally different. So please do not think about the original Kymriah and all the original CAR T and ALL, which is almost chronic B-cell aplasia. That doesn't happen even in DLBCL. And in autoimmunity, all of us, and there's some nice data from ACR, we're essentially all seeing the same thing as the original reports from air long and in others of the 60- to 90-day repopulation, which we think is important.

If you hear about 2 weeks of B-cell aplasia, we don't think that may be sufficient. But that level of aplasia, that short term is it's the depth that we think differentiates from even our own Ianalumab, which we know is not 100%. So we think from an immuno safety point of view, that it's actually a reasonable proposition for a severe refractory patient, the conditioning that's used fludarabine and cytoxan is an issue, but it's very transient. And just to remind everybody, that before 2010, cytoxan given in higher dose for a much longer period of time was the standard of care for lupus nephritis. Every rheumatologist knows how to give cytoxan, and so I think that is not going to be a barrier to rheumatologists adopting this therapy as their own if it gets to the market.

Simon Baker from Rothschild & Co Redburn. I've also got a question on YTB, but from a slightly different angle. As Vas said, and as we can see from the slide, this is potentially a pipeline in a product. But it's a slightly harder product to manufacture and scale than most. So where do you see the potential scalability of this? And how is manufacturing moving on going forward, both in terms of the logistical ability to scale out, but also from a cost of goods perspective? And then another slightly broader question, how sensitive is your growth outlook in immunology to the current structure of the U.S. market, particularly the PBMs. We talk -- we hear a lot about and we talk a lot about the imports of rebate walls when you got multiple indications for the same products. Are we overstating that? Or is the current structure critical growth? And do you envisage any change to the PBM model in the U.S. over the coming years?

Great. Thank you. You want to take on YTB manufacturing, Angelika, the trends in the process and why that makes a difference as well. And then we will touch on the logistical standpoint?

I think there are a few very important considerations. Our manufacturing time for YTB is only 2 days, and we aim for a 14-day window from the vein to door time as we manufacture the process. I think also when you look at autoimmune diseases, that are typically chronic diseases, the shorter time line, it is not quite as critical as it is in oncology. But I can tell you that we have deep experience at what sets us support at Novartis. We have deep expertise and experience in manufacturing. And we have to date been able to obviously -- for the clinical trials, but we'll also be ready for the launch to then produce YTB on a scalable level. We have that. We have shown that with KYMRIAH, I think we have -- and Ingrid you can talk about the numbers of patients we have treated with KYMRIAH, and we will take all learnings.

Now let me go also from the question about manufacturing, maybe to the clinical trials, they are progressing very well. And we have, as Vas has said, started our 4 pivotal trials that we have discussed with health authorities and aligned with them on how to bring this very novel and transformative therapy to patients with -- for right now, lupus, lupus nephritis, systemic sclerosis where I'd like to highlight physicians are very comfortable with that modality because they use stem cell therapy for patients who are refractory as well as vasculitis and myositis. And then Richard and his team is also looking currently at the earlier indications with srSLE and Sjogren's disease. But maybe you want to add a few words Ingrid around KYMRIAH and our ability on the CMC side?

Yes. So international of course, there's a U.S. number. But internationally, we actually serve KYMRIAH in over 400 centers across 30 countries, 30-plus countries, right? Cumulatively, we're talking about probably tens of thousands of patients. That's the number we're looking at. And I would also add, Novartis being a very global company, right? We have a really great strength of being able to manufacturing complex modalities with speed, quality and scale. I think an extreme, you talk about oncology is RLT. Vas mentioned 99.9% on-site on-time delivery at a very narrow window. In fact, right now, internationally, we place the order guarantee delivery within 2 weeks, and we're trying to further set time in a very -- in some ways much more difficult given the time frame. But certainly with Zolgensma, you think about, again, a very complex and we're serving internationally in well over 40 markets.

Yes, Richard?

So -- and on the PBM landscape. So obviously, there's a number of initiatives right now that are forcing -- well, or putting pressure on the system as it exists, right? Starting with more transparency on the gross-to-net barriers that are constructed. So I don't think that's going to change in the short term. But all these pressures will put some pressure on the system to evolve over time. And of course, that will change again, over time, and I don't know if it's 2 years from now or 5 years from now, where we've all said the PBM system will change much sooner than it did in the past. So -- but what that means that if you look at our strategy in immunology, already about 3 years ago, we decided we were going to go into the areas where there's substantial unmet need and where the areas are not that crowded. .

So if you look into Sjogren's disease, CSU, CINDU, if you look into lupus, systemic sclerosis, that's precisely why we wanted to go to areas where clinical differentiation and being one of -- the first to market and one of the first 2 market was going to make a difference. I think that positions us well to also be successful where that changed were that change -- were to change. In the meanwhile, of course, the benefit for us to have volume in the immunology space as we negotiate these new indications, but we are ready to if that changes substantially in the coming years on the basis of this portfolio. And actually, CAR-T is another great example of that, where it will be a medicine, right, that will be quite agnostic to what happens with the PBM space as well.

I wanted to point out as well on the CAR T space as we try to size this opportunity, well, there's 3 factors that we're considering, right? One is in how many in indications does this work? As you know, as you see, we've been very broad in our approach where we believe this space can work. Of course, the more indications we have, the volume we have, the more synergies and with the lower the manufacturing costs, so that's an important consideration. The other one you did ask is lymphodepletion and conditioning, the more comfortable the space is going to get, the more comfortable rheumatologists will get. I know -- we know in China, rheumatologists are conditioning themselves, right? And they don't have a problem with that.

Well, that be widespread as we get approvals for these medicines. And one is what other alternative mechanisms actually emerge. If T cell engagers work in these later patients or not, right? The more this is a differentiated approach and the more we're comfortable with the lymphodepletion, the more this will go into like earlier patients given the promise of an immune reset, which is really something very attractive for these patients, right? So these are the factors that we will be considering, and we'll be fully from a manufacturing and from a logistics standpoint for that.

Yes. And maybe I'll just add one quick one there back to maybe Matthew's question also we -- we're in a very, I think, excellent position. We have CAR-T in multiple indications. You can see also on our pipeline, we have PIT565 a CD19 T-cell engager, with some interesting properties that might increase efficacy in lupus and RA in early trials, and we have Ianalumab. So -- and remibrutinib, so if you go all the way from B-cell modulation to immune reset, we have the entire landscape in our pipeline. We want to bring the best therapy to patients and hit the sweet spot between complexity and efficacy, and we're in a position to kind of do that in almost mechanistic agnostic way. So it's a -- I think we have a good position to define the best therapy. And we're in research looking, of course, for CAR T in a pill, but we'll let you know when we get there.

Looking forward to that.

It's Naresh Chouhan from Intrinsic Health. Two questions. One on Cosentyx. Clearly, given the growth you've seen in HS you've had strong volume and price. How do we think about price mix going forward as kind of HS slows as part of the growth? And then for Rhapsido and CSU, given the rapid onset of action, do you expect patients to cycle on and off? How are you thinking about this data?

Yes. So on the -- you want to take the Rhapsido cycle, yes, and the nature of the disease and the progression?

Yes. So I can start out with that. For -- we have -- in our clinical trials, we have looked at the disease and the patients that we enrolled in our Phase III trials, for example, they all have long-standing disease, right? Sometimes you think about CSU as being only a short-term intermittent disease. But for many patients, this is truly a chronic disease that spans over many, many years. And we have seen many patients in our clinical trials who had more than 5 years of disease duration. And this means daily hives, right? The patients we enrolled in our trials, they had 50 hives. And now imagine, right, you have 1 bee sting or 1 mosquito bite how the but these patients have 50 per day. And that has a huge impact, as Victor has said, on the ability to sleep, the quality of life, ability to keep a job, right, the ability to even parent with the disease like this. Why am I highlighting this?

I just want to ensure that you understand that CSU is in some patients of waxing and waning disease in many patients, it's a very chronic disease. When we have -- after our Phase IIb, we've stopped the treatment and looked at the relapse rate and then we started treatment. There are 2 things I wanted to highlight. One is that when you stop treatment within 4 weeks, 1/3 of the patients had relapses of the disease, and were really happily going back onto treatment. And when we retreated, we had the same efficacy again because it's an oral drug, there is not a risk for neutralizing antibodies. So patients recovered their response based upon retreatment. But certainly, right, there may be patients who want to after a year or 2 stop treatment and see if they still have the disease or if they relapsed, it's easy for them to go back on and there's a huge motivation in patients based on the burden of the disease to go back on to therapy.

Right. And on Cosentyx HS, look, what we continue to see is the market growing at about 14%, 15%. And I do presume that that's what's going to see -- that's going to happen in the coming years, right? Given the amount of patients that are currently not treated or not even diagnosed, we have efforts to continue to grow that market, but the patients are quite stigmatized. Many of them don't even show up to the doctors. So that it's going to take time for us to activate these patients. And we do expect that as new competitors come, they will hopefully invest as well into that development, and we'll see the market continue to grow.

But in the meanwhile, right now in a market that is growing at that pace, we have a 50% NBRx share. That means 1 in 2 patients are either start or switched to Cosentyx. So we do believe that, that will give us a good growth profile for Cosentyx in HS. And from a pricing perspective, right, we have very broad access now with Cosentyx and HS, predominantly in earlier lines, which is where the majority of these patients come when you get longer durations of therapy, and we don't expect that to change in the short term as well. So that's why we're confident on HS continue to be a growth driver for Cosentyx.

Good Matthew. And then Steve, after that?

Okay. It's Matthew Weston from UBS again. Two please, if I can. Just one quick follow-up on Cosentyx HS. The efficacy for all of the HS drugs probably isn't as good as everybody would like based on some of the other immunology agents, which probably means that there's a lot of patients who are satisfied and then cycled off. You've put all that effort in, you've already said it's difficult to find the patients. You put all the effort in to get them. Is there anything you can do with Cosentyx to keep them on? Can you raise the dose? Can you talk to physicians about that means that you'll make Cosentyx patient sticky? And then the second question is back to YTB. I think Vas mentioned in his opening comments, potentially registrational Phase II, can you tell us, are you aligned with regulators on what you need to see from the Phase II studies in order to file?

Great. So I'll take the Cosentyx question, and then we'll ask Angelika and Richard to comment on the CAR-T. Right now, we have approved for Cosentyx and HS, at least in the U.S. by the FDA, 2 different dosing regimens. So every 4 weeks or every 2 weeks, right? And so the majority of patients who start with in every 4 weeks treatment. And if they don't respond, they have the option to go to every 2 weeks. And I'll ask Angelika to mention what we saw in the clinical trials. Right now, initially, that rate of patients that would escalate before discontinuing was 15%.

We've been putting efforts to make sure physicians understand that, that's an option for their patients before they switch out to another drug, and that number is up to 25% now, Matthew, and we will continue to make sure that everyone understands that, that's an option that they have before they have to switch out because you're right, the high adenitis suppurativa clinical response scores are about 50 versus psoriasis being 90. So naturally, you'll see a little bit more turnover of these patients. And actually, we have some data from the clinical trials as well. Maybe you can comment.

Yes. Yes, so certainly, I mean, the data that you've cited are the primary outcomes of 50% high score data. If we look longer term on patients, how are they performing. And we have presented our data out to 4 years. And the efficacy actually increases over time. And what is particularly important for patients with HS is the pain and the flares that they experience. And many of these young women who come to the physician with hidradenitis suppurativa and their flares, they are in parallel to their menses. So we have seen about a 65% reduction in the pain score of those patients who came and entered our trials with moderate to severe pain and then they experienced mild or no pain at week 52.

In addition, the flares, and I think that is particularly important 70% reduction in flare rates over 1 year, and we see that persistence over time. But I agree with you, we are not there where we are with psoriasis yet. That is why we have a very active research and development efforts ongoing in HS, we are excited. We talked before about the remibrutinib data. Remibrutinib as an oral therapy, fast onset, very safe for these patients with hidradenitis suppurativa who often are young women overweight smokers for these a pill -- twice-a-day pill will be a really good treatment option if we can replicate the biologic-like efficacy in the next study. Maybe I start...

Briefly, I want to make sure we get Steve's question.

Yes. I'll be brief. With respect to YTB, yes, we have had discussions for all the pivotal trials with the respective health authorities, and we have aligned with FDA on the readouts and the data that is necessary for us that we need to provide for submission if the data are transformative, which we expect that they will be and the current studies are well aligned with that. And we expect the first data that we could submit by 2027.

Thank you, Steve? We'll take the last question.

Stephen Scala from TD Cowen. Two questions. And on the first one, I could be wrong. But my recollection is that Novartis had a Cosentyx orally delivered formulation in development many years ago. Is that correct? And if so, why was it dropped? I assume bioavailability and you continue to pursue that. Also, do you have late-listed patents that you plan to unearth similar to the brilliant strategy you had on Gilenya many years ago? And then on Ianalumab, I think an unanswered question is the subgroups. Now it's been weeks since the presentation. So I assume Novartis has visibility on the subgroups. What can you share with us at this time?

Do you want to take the oral...?

So I think oral equivalents of biologics have been a goal across the field. There were programs in the past. You've seen how difficult it is across the industry to develop a truly low-molecular IL-17 inhibitor. I'm sure you've been following that very, very challenging pharmacologically. Now that we've seen with IL-23 cyclic peptide inhibitors success that I think that's going to probably be highly successful. It's very difficult now to sort of think about Internet space way behind that. But I think the cyclic peptide approach, just from a drug discovery development point of view looks really exciting. And if we started a program today, we'd probably be going with that rather than a standard low molecular weight approach.

I can close by -- or I can answer the question about Ianalumab, yes, we do have the data in-house, and we are obviously looking at these data with great detail. We plan to submit to the house authorities in the first and second quarter next year. So early first quarter, we expect to submit data. And we have seen consistent trends over most of these domains.

Great. So with that, we'll conclude the immunology session. Thank you very much, everyone, for your attention, and have a great rest of the day.

[Break]

Here in the room and as well on the webcast. Welcome to the cardio, renal and metabolic session. My name is Patrick Horber, and I'm the President for International. I'm here with 3 colleagues. Starting on the left side with Ruchira Glaser, who is our business unit -- Development Unit Head for CRM. Then Dianne Auclair, who is our U.S. Therapeutic Area Head for CRM; and then finally, Shaun Coughlin, who is our Global Head for Biomedical Research as well for CRM.

1 year later, after our meeting last year, I think we made significant progress across our 3 strategic pillars. ASCVD, atrial fibrillation, arrhythmia and as well on renal. If we look into ASCVD, we're developing a number of assets, which are targeting different risk factors like Lp(a), LDL-C and as well inflammation.

In Lp(a), we're progressing with pelacarsen, and we're expecting a data readout of our Phase III outcome trial in 2026. In LDL-C, we have Leqvio , which is now a blockbuster. And we are continuing to build evidence with Leqvio to support the use in different settings, including as well 2 outcome trials ORION-4 and VICTORION to prevent, which will have the data readout in 2027.

And then finally, inflammation where we acquired Tourmaline in this year with an IL-6 inhibitor, where we'll see more data of our Phase II trial by end of this year. Then going to atrial fibrillation. We have abelacimab, which is our lead compound, which is targeting stroke prevention, and it provides a benefit risk profile, which serves patients which are currently undertreated because of a high risk of bleeding with current available medicines.

At the same time, we're looking as well broadly there into antiarrhythmic molecules with different MOAs, which all of them are in very, very early development. And then finally, in renal, we have Fabhalta, which is our anchor drug, which has approvals now in C3G and as well in IgAN and we're developing Fabhalta in 4 additional renal indications.

If we talk specifically about IgAN, we have a product portfolio there with 3 assets, Fabhalta and Vanrafia, which are approved in the United States and as well in China. And the third one is zigakibart, which is currently in Phase III development, and we'll have the data readout in 2026.

And then finally, the acquisition of Regulus Therapeutics, where we got into our pipeline for fomivirsen, which is an oligonucleotide for the treatment of polycystic kidney disease. It's an autosomal dominant disease, where we see here the potential for a better treatment than the current standard of care.

Overall, if we look back these 12 months, I think we have made significant progress and strengthened our pipeline through collaborations and as well acquisitions. And if I look from here to 2030, we have 7 Phase III data readouts, which will definitely be catalyzers in CRM.

And with that, I would propose that we go into the Q&A. I just have here in the first row.

It's Matthew Weston from UBS. Two questions, if I can. The first on pelacarsen. And it's about trying to -- I'm old enough that I remember the Diovan launch, the Leqvio launch, the Entresto launch, took 5 years to get to $1 billion, but then was $1 billion a year additionally every year.

So if I look at pelacarsen, you have kind of 2 options, you go high Lp(a), normal cardiometabolic price. It probably takes you 5 years to break even, but a very big area under the curve, or you take it to kind of ultra-high Lp(a) on the cutoff with a much higher specialty cardiology price, maybe the same NPV, but you break even much quicker. I'd just love to understand, is that a reasonable assumption? Or you're just going to go for everyone and see what the data brings?

I will start with the U.S., maybe Dianne, you can start, and then I will add on, on the international side.

I'm old enough to remember all of those launches, too. And the good thing is, when we're old enough to remember them, we can learn from them.

So I think the reality is cardiovascular launches do have a slower ramp. So that is something that we should accept. But what I think will be different with pelacarsen is that we do have the ability to leverage the learnings that we have from most recently Leqvio in ASCVD. And one of the key learnings is that as we shifted our focus with Leqvio to a post-event patient where the motivation of the patient and the provider were higher, we started to see more momentum pick up.

And so our intent with pelacarsen is to launch in the early year or years to a focused patient where we believe the motivation is going to be the greatest. So that will be consistent with the HORIZON trial, looking at patients with early events and family history.

I think there's a couple of other things, too, that will bode differently than what we've seen in LDL-C. There is no standard of care for Lp(a). So we wouldn't expect the same level of friction in the system where physicians have to step through a generic -- a lower-cost generic. And I think the other key thing for us to think about with Lp(a) is the genetic component of it should be a motivator. The family history is an emotional motivator for people to take action.

Yes. Maybe building on that. I think we made significant experiences over the last decade with our launches. And I think as Dianne said, Lp(a) is different than everything else what we had. There is no treatment available today. That's a fact. We have 20% of people who have Lp(a). There is a family history.

We will focus clearly on a smaller patient population when we start, and I think that will give us a higher probability as well of success. And then I think we know as well our customers much better even after the launch of Leqvio. So I see that definitely as a significant tailwind, which will give us the opportunity to really make a significant footprint from the beginning, which I think will be critical.

Perfect. Can I jump in with the second question, which was abelacimab, why don't I pass the mic on.

That would be nice. Thank you.

Just sticking with pelacarsen, please. If the -- if there's kind of a slow like we've seen in the LDL field, how does the readout of HORIZON not lower the bar for fast followers? So how do you think about the competitive landscape? And how would you then think to defend that?

So I think there's a couple of things. One of the piece, as Dianne was saying, is that HORIZON, our experience in the trial was that people -- whilst the level of entry was 70 milligrams, people with much higher Lp(a) were signing up for the trial. And our median Lp(a) levels [ 108 ] and 80% were over 90%. And I think it just signifies that there is an awareness of this genetic risk factor and people are waiting for that first therapy. So I think that the uptake early will be quite different.

And what we've seen to date are an acceptable safety profile in terms of no changes to our protocol from the IDMC. So I think there's another opportunity there in terms of people getting on to drug early and staying on drug because they're satisfied. And then from a development perspective, the last thing that I would mention is that we do have in our pipeline additional drugs that are ready to go for our early portfolio in terms of long acting.

And I think that's -- I think the important thing here is that we do believe that we have a comfortable lead. And in a market that will be crowded with cardiovascular companies, that lead is going to be important for our ability to establish the standard of care early, but also to start to establish the payer leverage. And to the point that Ruchira made, we do have follow-on assets in the pipeline. And so anything that we're doing to build the market benefits that to.

Next question, it's going to the fourth row. I think it was the next question. The gentleman on the left side. Sorry, let's go on the fourth row, the gentleman on the left side, I think he raised his hand first, sorry.

Steve Scala from TD Cowen. I have 3 questions, but they're pretty brief.

So regarding the recently launched IL-6, Vas said on the Q3 call that Novartis seeks to differentiate via study design. So where can you improve on what Nova is doing? What are they not doing right?

Secondly, pelacarsen event accumulation. Can you tell us whether it's leading to an H1 or H2 readout? I assume H1 because the original readout was 2026. So it seems if it slipped to 2027, there are real issues.

And then second, lastly, ORION-4, somewhere along the line, it slipped from '26 to '27 readout, was that also due to event accumulation?

Thanks, Steve. Maybe Ruchira?

Yes. So your first question was on IL-6. Could you repeat that one?

The differentiation.

Differentiation in the -- yes. So I think you said, is there something that Novo is not doing right? It's not about Novo not designing their program correctly. They have obviously a broad Phase III program underway, atherosclerosis and chronic kidney disease, heart failure and very acute myocardial infarction patients in the first 72 hours.

We think that there's an opportunity here to pick a more differentiated patient population, one which combines high inflammatory burden with clinical adoption and practical use. We're looking at that design actively now with our academic collaborators. We're going to engage next year with health authorities globally after the completion of the Phase II trial, which we'll complete in December. And once we do those things, we'll be able to share more details about IL-6.

And I know you asked about ORION-4, so I just to cover that off, that third one, which is that, no, there is no -- the event rate is as expected for ORION-4. This is a collaboration with Oxford University. So they are managing the trial dynamics, and they have indicated to us that they need more operational time to do data clean out and things like that.

And the readout in 2027 doesn't affect our plan, which was to submit both ORION-4 and V2P, our sponsored secondary prevention trial at the same time. Between the 2 trials, we've got over 30,000 patients. And so I think this gives us really robust power, particularly for cardiovascular death endpoints. So we would wait for both of those trials to read out and which will come much more similar time frame at this point.

And could you remind me the second question? I didn't grab that.

Pelacarsen readout in H1 or H2? And if it's H2, it would seem like there's an issue because it was already to have reported.

Yes. I mean this is an event-driven trial. So we're continuing to monitor the event rates carefully. We still believe it could come in first half of 2026. I think regardless of when it comes in, our intent is to submit the file in 2026.

Florent?

Yes. Florent Cespedes from Bernstein. Two quick ones, please. First, on Leqvio, could you remind us the profile of the patients on primary prevention because sometimes if there are a little less sick, there is less events and sometimes a risk to, let's say, to try to target a broad population and potentially miss the endpoints. So some color on that would be great.

And my second question is on abelacimab. Could you maybe remind us the positioning of this drug, we understand it's for the more severe sufferers and the ones that do not respond to the existing treatments. So size of the population, the potential -- sorry, it's early days, but the price or the cost of this treatment, given it's not first line, but as for the most severe sufferers. So any color on this one would be great.

Okay. Let's start maybe Ruchira with the primary prevention.

Yes, for our V1P trial, which is our primary prevention trial for Leqvio, we are targeting a much broader population in this trial. So what that means is patients who have all of the traditional atherosclerotic risk factors rather than singularly diabetes are included in the trial. When we look at the baseline characteristics of what that means, 70% of those patients do not have established atherosclerotic cardiovascular disease.

So this will be a very broad population, which I think I'm very excited about because I think it will be very clinically meaningful to show that LDL reduction really translates to longer lives and free of heart attack and stroke.

Maybe I can take the abelacimab question. So we see that about 40% to 50% of patients today are either undertreated or untreated by the current DOACs and that's because of drug interactions, bleed risk, and contraindications. And so it is a sizable population that we are going to go after. And in the U.S., we see about 9 million patients and growing. And we think the growth rate in this space is high because not only of the aging population, but we also see the wearables playing a role in the growth rate over time.

Just one on farabursen, when Regulus was in charge of the assets in the development programs that were planning to start a Phase III in the second half of '25, and they were talking about getting an accelerated approval on the base of kidney volume endpoint at 12 months. So as you're starting to plan the trial a little bit later, do you see the same similar strategy? Are you still looking for accelerated approval? Are you changing the Phase III plan compared to Regulus initial plans?

And then just a follow-up on abelacimab. Can you frame the market opportunity depending on infection data in AFib? Because obviously, if it works, I think the landscape is different versus there is no Factor XI on the market for [indiscernible].

Maybe Ruchira?

Yes, I can start with farabursen. Yes. Well, first of all, I would say that I'm very excited about the Regulus acquisition for farabursen. This is our anti-miR-17 oligo. And what we've seen here is more broadly, a great fit for Novartis. I mean it's the research -- on the research side, it's -- it fits with our platform strategy at xRNA.

On the development side, as you point out, the accelerated approval pathway offers us a great opportunity to bring in the Phase III trial with the readout potentially in 2029. So -- and on the commercial side, it fits in very well with our rare renal commercial footprint, which Dianne can speak more about.

In terms of the company's original Phase III plan, we looked at this thoroughly and talked extensively with them during the diligence process and obviously, since the acquisition. And at this point, we are in -- we are talking with health care authorities and regulators.

But as you pointed out, the height adjusted total kidney volume and imaging end point has been an accepted surrogate by FDA. And so we would anticipate and this is something that we saw great data on in the Phase Ib study, where we saw that compared to placebo in the lowest dose there was almost a complete stopping of growth with -- as measured by height-adjusted total kidney volume. So I think that, that's something that we would certainly pursue.

And then I think -- was there a question about abelacimab and if milvexian fails. So we did model that scenario in our deal case. We modeled multiple scenarios. And regardless of the outcome, we see a multibillion-dollar opportunity.

Maybe just to add on this. This is across the globe. So we see significant opportunities as well in the vaccine markets. But I think as Dianne was saying, even if milvexian comes, we still have a market of 40% to 50% of patients, which are today undertreated or even not treated, which with abelacimab, you would get in there, and I think that's what we want to do.

And then you, Matthew. I think you were waiting now for some time. Sorry.

Simon Baker from Rothschild & Co Redburn. Two for me, please. Going back to pelacarsen, could you give us an idea in the HORIZON study, the split between the different entry criteria in terms of previous MI stroke and PAD. The reason I ask that is a few KOLs we've spoken to have suggested that the observational epidemiology for the link between Lp(a) and stroke is mixed. MI, it's nailed on, but with stroke is mix. I just want to get an idea of the proportion of those patients in the study.

And then a slightly broader question on obesity when you're thinking about development opportunities. We've seen a dramatic change in the price dynamic within that space in the last few weeks. The expectation is that will lead to an equally dramatic volume shift, but the whole price volume thing is alien to pharma even if it's common in every other consumer category in the world.

So I just wanted to know how this has affected your appetite for the category and what you would be looking to develop? Is this now one where niche indications within this huge market are more favored or less favored? Any thoughts would be really useful.

Okay. Thanks for the question. Maybe let's start with the pelacarsen patient population.

Yes. So I think taking a step back for the reason for your question, the data show in general for stroke across different risk factors that it's just a more heterogeneous endpoint. So sometimes you don't see the translation as crisply in epidemiologic studies. But I think the randomized trials where you do the intervention, if you're hitting the right biology, you should actually see an improvement in stroke. And our primary endpoint is a composite that includes stroke.

So for us to show a benefit in the composite, we want to also enrich for patients who have stroke. So I think that the 2 go hand in hand. And it's still always -- it's always going to be a little bit of a minority of the endpoint and the patient population that's brought in. By the way, the stroke history is predictive not just for stroke, but for cardiovascular events in general. So I wouldn't limit that translation only to stroke.

And I think the other thing to point out is that, that is very different to the approach that's been taken for Amgen, where they're looking at a more coronary heart disease endpoint. Our key secondary endpoint is the same as theirs, and our trial is 90% powered to show an 80% reduction in our primary composite endpoint.

Maybe let's start more from a development perspective on obesity, and then I can add something on the commercial.

Yes, sure. So big picture for obesity, we still see tremendous opportunity and unmet need. The contribution to atherosclerotic cardiovascular disease and heart failure and Afib and other core areas for us is very apparent. And so managing obesity is central to managing cardiovascular patients now.

The GLP-1s have obviously established a huge market, been transformative. But the discontinuation rates, I think, are pretty telling. The type 2 diabetics have discontinuation rates around 30% at 3 years, despite the drug being covered. So that I think the tolerability opportunity is really large. So we think the field will evolve. We'd like to evolve with it. There's, I think, an opportunity for differentiated and more tolerable medicines, orthogonal mechanisms, et cetera. So we have quite a number of early programs, very exploratory, but novel to try to contribute in a differentiated way.

Maybe just adding on, I think you see that we're really looking to obesity, but we're in very early stages. And if we want to get something forward, then it has to be highly differentiated because I think there is a need for highly differentiated and better products. But even with your statement as well that the market is probably becoming bigger because prices are changing, we will not change our overall strategy. So we'll stick to that what we already have communicated in the past.

First, Michael and then...

So it's Matthew at UBS again. Two quick ones, please. One area where the Street seems to be very different from Novartis by 2030 is Leqvio. But one thing that I think we've all been surprised with is the ex U.S. growth. So could you split out, if you had to guess, the percentage of ex U.S. revenue that you think will contribute to that peak sales number in 2030 to give us an idea of how important the U.S. is in your mind versus probably in our mind?

And then the second question, just on abelacimab. In the past, with DOACs and other modulators in the area, physicians have been very focused on having an antidote in case the patient needs some kind of surgical intervention, and you want to prevent bleeding. What's the plan for abelacimab?

Okay. I take the first one as it's mainly international. Yes, you're right. I think we're doing extremely well as well in international with Leqvio, mainly driven as well by the Asian markets, China. I think Vas as well mentioned this morning that we were expecting to get public reimbursement, and that would be great. And that would open up, of course, the Chinese market with many, many patients there.

So China will be a significant driver and a contributor to the overall top line of Leqvio, which will be as well the case with Japan, where we're doing as well extremely well. But we're doing well as well in Europe. I would say Germany is currently the smallest market because we have a more restricted patient population where we will add some additional data over the next 2 years to extend that. And then with the 2 outcome trials, we see the opportunity to further drive the international market.

Now what is the split between the U.S. and international? I would say probably here, we have like a chance to see something like a 50-50 or 60-40 split. So 60% in the U.S., 40% us. I think it depends as well on how strong we can penetrate the Chinese and the Japanese market. I think this will be 2 markets, which would drive very strongly the top line from an international perspective.

And you to handle the...

The abelacimab.

Reversal agent. So yes, I mean, first thing I would just point out before answering the question is that the Factor XI genetically deficient patients, they don't bleed. They don't bleed through surgery and things like that. And that we've actually seen through the development of abelacimab growing comfort from investigators about adalastimab.

And what we saw in our Phase II trial, not only did we have a 60% reduction in bleeding compared to rivaroxaban, but our open-label extension study, patients who are still on adalastimab have had procedures, have had surgery, and there has not been an excess in bleeding still.

That being said, we understand that as people get comfortable, they still may want to have a reversal agent on the shelf. Clinicians -- myself included when I was an interventional cardiologist, were very worried about bleeding and procedures. And so our plan -- we would have a reversal agent ready in that circumstance.

And maybe I could add on that the commercial research that we've already done shows that there is already a segment of the physicians who don't believe that it's needed. And I think the rest can come through education as well. But to Ruchira's point, we will have plan.

And maybe just building a little bit on that, just recall that LILAC is actually sit against placebo. So there's a nice opportunity to see if there is indeed a bleeding signal up and above that in the placebo.

Two questions, please. It's Michael from Jefferies. Patrick, with Giovanni coming in, just wondering, given your long history at Novartis, whether you could talk to whether things have changed and how they may have changed with the new Chairman coming in?

And then back to the research side of things. We get the zigakibart data next year. For me, maybe I'm getting this wrong, Biologically, there's a bit of a conflict between the complement side and the [indiscernible]. So how do you think about positioning zigakibart versus the C5?

Okay. I'll start with the first one. Thanks for the question.

From a strategic perspective, I think as you see as well and as you've seen on the presentation this morning, nothing is really changing. Clearly, when there is a change from a person, there are different maybe questions which are coming up and different discussions, great direct interactions.

I have to say, I think Giovanni got in the beginning of the year. We're working very closely with him. He's supporting us. He's fully aligned with the strategy, which we have communicated as well this morning. So I don't see any major change strategically. Clearly, from a collaboration perspective, I think we see a strong collaboration with the ECN, with all the members, but of course, as well with Vas, who is our CEO.

And then on the second question, I would hand it over first to you and...

Yes. So I mean, just a reminder, IgA nephropathy, it is a heterogeneous disease, and we know that different patients require potentially different individualized treatment options. In that regard, I think we have a great advantage having 3 of the key mechanisms for IgA nephropathy. You didn't mention the foundational therapy and Vanrafia, but that's our endothelin receptor antagonist, and it can be seamlessly added on without any adjustment to ACEi and ARBs and with additional benefits shown in SGLT2 patients. So I think foundational, most likely regardless.

And consistent with the recent update to the KDIGO guidelines, the -- the strategy that's being encouraged is to have one therapy like a foundational therapy that helps with the downstream damage and the previous damage to protect the kidney function and the second therapy to get at the source of the damage. And this is a place where the anti-APRILs have great promise, including zigakibart.

So zigakibart is an anti-APRIL. It does not have the BAFF component, and it prevents the pathogenic IgA from being formed and creating the complexes that create disease. So I think we have a great opportunity with the anti-APRIL class and with zigakibart.

Zigakibart specifically from a data perspective, has the longest data in terms of proteinuria reduction with 2-year data showing over 60% proteinuria reduction and stabilization of the eGFR. And that Phase III trial is on track.

And if you think about that versus the BAFF combination, there is a theoretical benefit to having the combination potentially, but we have not seen that translate so far in the clinical studies. It's hard to do cross-trial comparisons always. But that being said, the proteinuria rates at similar time points have not been different, if anything, numerically slightly worse for the dual.

There is on top of that, the safety considerations for having a BAFF component in terms of infection. And we saw with the Vertex drug at the highest dose, which has been not continued increase in infections in hypogammaglobulinemia. So I think that will remain to be seen what the long-term profile is.

In terms of the last piece of that, that you asked around the positioning of that versus iptacopan and other complement inhibitors. So iptacopan really gets at the inflammation that's produced as a result of the pathogenic IgA. And when we talk to nephrologists, what we're hearing is that they like to use it for patients that they feel are more inflamed. There's different markers potentially that, like such as hematuria and other signs.

That being said, we've seen really good uptake of Fabhalta in IgA nephropathy clinically. And we will be -- there is a very strong interest in studying this more effectively. Our last -- my last point is that we will be working with our academic community. We had strong interest in generating combination data for efficacy and safety to look at the combinations of these foundational therapies with either Fabhalta or zigakibart.

Maybe I could add on to this with a commercial view. What gives us confidence in the ability to position all of the drugs appropriately is that we are already seeing today with both Fabhalta and Vanrafia on the market, where we are -- we do have a specific patient type for each we are getting the patient types that we're asking for.

So Fabhalta is the patient that has rapid progression, persistent proteinuria and glomerular inflammation. Vanrafia is that seamless add-on. And so the positioning is in line with where we see the benefit to the patient, but also where we see the field going. And we do -- zigakibart is also -- if you look at our portfolio, does bring -- have the biggest value. So that positioning is in line.

Florent Cespedes from Bernstein. Two questions, please. First, on LTP and PAH. Could you maybe share with us how you anticipate how you will position this product versus the drugs which are already on the market?

And my second question is more on earlier phase pipeline. I'm very curious, arrhythmia, inflammation, multiple assets, multiple modalities. That sounds exciting, but could you share with us a little bit more color about these assets? Maybe on arrhythmia, high-risk, high reward, do we have to understand that you will maybe target the most severe sufferers, or will you try to address or to beat the existing treatment on broader populations? Some color on that would be great.

I'll take first.

I can do...