Thank you very much. And good morning and good afternoon everybody. Thank you for taking the time to join us on the Q1 Results Conference Call. We appreciate that you are taking the time. Before we start, I just want to go through the 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. And with that, I'll hand across to Vas, our CEO.

Thank you, Samir. And thanks again everyone for joining today's conference call. With me today I have Harry Kirsch, our Chief Financial Officer; Marie-France Tschudin, our President of Novartis Pharmaceuticals; Susanne Schaffert, our President of Novartis Oncology, John Tsai our Head of Global Drug Development and Chief Medical Officer; Richard Saynor, our Head of Sandoz; Tom Kendris, who is our Chief Legal Officer at Interim; and Samir, who we’ve just heard from. So, moving to the next slide, what I'd like to do is give you an overview of our performance and then dive a little bit deeper into the four key areas as part of the overview section before handing it over to our business leaders. First and foremost, we feel confident in the growth outlook of the company, particularly given the momentum we're seeing in innovative medicines and the expected stabilization we foresee in the Sandoz business. From a productivity standpoint, when you control for forward purchasing, we continued our expansion of our core margin, and I'll say more about that in a moment. We had multiple important milestones from an innovation standpoint. I'll go into a little more depth as to some of the upcoming milestones and some of the updates we have in our Phase 2 and Phase 3 pipeline, which we view as one of the leading pipelines in the industry. And lastly, in ESG, we continued to our March to being a sector leader within the pharmaceutical and biopharmaceutical sector, as well as being a leader across sectors ranked number two in the access to Medicines Index, and number one in Sustainalytics. And I'll talk a little bit more about that in a moment. So going to the next slide, starting with the growth outlook, our key growth drivers really demonstrated that they are…

Thank you, Vas. Good morning. Good afternoon. I'm pleased to update you on our Q1 performance for pharma. We had revenues of $6.3 billion this quarter. And while the overall growth rate was affected versus Q1 2020, our growth drivers and launches are showing excellent momentum with 23% growth versus prior year. What is noteworthy is that half of our revenues are now coming from our growth drivers and launches. This is a result of clear portfolio prioritization and a relentless focus on commercial execution. We've also doubled down on early launch preparation and our investments reflect that. If we move to Slide 15, Cosentyx, our largest brand deliver double-digit growth. As we said in Q4, we've seen an access change in one U.S. account which has impacted volume. Although the shares were affected, we will continue to deliver double-digit growth in the U.S. based on the rebate upside realized and the volume growth over time. Our overall access remains strong in the U.S. and continues to be a key pillar of our strategy. The other constant is that customers continue to experience Cosentyx as a tried and trusted complete treatment. Now that the shares have adjusted to the new access levels, we are back to our position that we will grow with the market in dermatology and outgrow the market in rheumatology. Ex-U.S., our focus is on accelerating volume growth. We're off to a great start in China following our NRDL listing in March. In Europe, Cosentyx continues to be the leading originator biologic across all three indications. As we bring the newer indications to market, we expect some pricing concessions in Europe, and that will only further enable volume-driven growth. Full year we're confident that the Cosentyx team can deliver double-digit growth based on our strategic pillars: focus…

Thank you, Marie-France. So let's move to Slide 21. Our oncology business has delivered solid performance in the first quarter with net sales of $3.8 billion, broadly in line with previous year. Our key growth drivers continue to perform well, including Kymriah, Kisqali, Promacta/Revolade and Jakavi. Both our growth trends and recent launches together grew 15% versus the previous year and contributed to almost half of the overall oncology sales allowing us to more than compensate for the continued generic erosion of Afinitor and Exjade/Jadenu in the U.S. and Sandostatin LAR in the EU. The first quarter was marked by the continued impact of the pandemic on certain segments of our portfolio with a more pronounced effect on hospital initiated therapies, our breast cancer portfolio, and recent launches. Due to the pandemic, patients did not see their physicians at the same frequency in diagnosis and treatment initiations remained below pre-pandemic levels. However, we remain confident that patient visits to hospitals will resume and treatment patterns will normalize leading to acceleration of growth in these segments. Moving to Slide 22. Just to remind you that we are the only pharmaceutical company, which is pursuing four different cancer treatment platforms. These include radioligand therapy, cell and gene therapy, targeted therapy and immunotherapy with an opportunity to combine these platforms for better outcomes. Today, I wanted to especially reflect on our progress these radioligand therapies. Since the acquisition of AAA in 2018, we have established strong global expertise in commercializing radioligand therapies supported by a specialized supply chain manufacturing capabilities across four [ph] radioligand therapy production sites. With Lutathera, our radioligand therapy for neuroendocrine tumors, we have gained a lot of momentum and in partnership with now 400 centers. We are able to deliver this lifesaving treatment to more than 9,000 patients since…

Yes. Thank you, Susanne. Good morning and good afternoon everyone. I'm now going to walk you through some of the financials for the first quarter, as well as provide you with an update on our 2021 guidance. As always, my comments refer to growth rates in constant currencies, unless otherwise noted. So Slide 26 shows the summary of our operational performance for the first quarter. As we indicated at the start of the year, quarter one growth was negatively impacted by prior year quarter one forward purchasing, which amounted to around minus 3% points on sales and minus 7% points on core operating income. This quarter also still had a continued demand impact from COVID-19 particularly at dermatology, ophthalmology, our breast cancer portfolio and for the Sandoz retail and anti-infectives businesses. Free cash flow was impacted this quarter by the $650 million upfront payment for tislelizumab in-licensing from BeiGene. I would give more detail about free cash flow later in the presentation. With these caveats, you can see the changes in net sales and core operating income, minus two points and minus eight points respectively, which flowed out into EPS and free cash flow. Turning to Slide 27. We have shown the change versus prior year for sales, core operating income and core margins in the first quarter as reported on the left-hand side of this table. On the right hand side, as we did a similar chart last year quarter one, we have illustrated what the underlying operational performance looks like if we excluded the prior year forward purchasing. Innovative medicines had a solid underlying performance. Sales grew plus 3%, core operating income plus 6%, and core margin was up plus 1% point. Innovative medicines’ performance was driven by continued strong double digit growth of all the key growth…

Perfect. Thank you, Harry. I want to highlight before closing. We do have a catalyst-rich period coming up for the remainder of this year. A number of submissions, as you see here on the chart, a number of important readouts that would enable submissions either this year or next year. So we'll look forward to keeping you up to date on these readouts as they happen over the course of this year, and also present the data at major congresses. So moving to the next slide and in closing, I think you've heard now from all of us that we have confidence in our growth drivers and launches to continue their strong momentum. You've seen that underlying performance is starting to come through and momentum is picking up. Solid IM top and bottom line performance and even when you take into account the prior year purchasing, you really see that underlying performance come through. Our broad pipeline of novel medicines in Phase 2 and Phase 3 continue to progress well. And we're confident in delivering our 2021 and more importantly, our longer-term top and bottom line growth outlook. So, with that, operator, we can open the line for questions. I would ask questioners to limit yourself to two questions as we have a lot of people in the queue. Operator?

Thank you. [Operator Instructions] Your first question today comes from the line of Mark Purcell from Morgan Stanley.

Yes. Thank you very much for taking my questions. So, one on cardiovascular outcomes studies, one on Kesimpta piece. In terms of the ORION-4 study, I just wondered if there's anything more you can say about the delay from December 2024 to 2026. And whether, given you're still recruiting patients, this study I think is run by Oxford University where there's the options to add more patients to try and expedite the readout. The reason why I asked is that there's been a recent update for TQJ230 and the HORIZON study is still on track to complete in March 2024. So, I'm not sure what's unusual or otherwise about ORION-4. And then secondly on Kesimpta, Marie-France, one for you. Could you help us understand the latest NBRx share trends in the United States? And as the sort of patient flow comes back and your promotion there responds in kind, where do you feel the NBRx share should evolve during the course of this year? Thank you.

Great. Thanks, Mark. So, John, do you want to take the CV outcomes study?

Sure. Will do. Thanks, Mark. Thanks for the question on Adakveo. As we noted in Meet Novartis Management last year at the end of the year that our expectations for Adakveo at that time was conclusion in 2025. We've seen a pretty significant impact, as you know, we're doing this study with the Oxford Group where the majority of our patients are recruited from the UK. And as we've seen both with COVID and then the additional variants with the impact of COVID in the UK, recruitment has been challenging. Initially in December as we saw, there was an uptick in COVID cases in the UK. And then subsequently, throughout the first quarter of the year in the UK, there was a significant impact of COVID. So, based on the recruitment timelines, we actually have deferred the study results to 2026. Because during that time, I think the healthcare systems were overwhelmed with taking care of COVID patients, so it was very difficult to recruit these patients. As we've had discussions with the Oxford Group, I think recruitment is starting to tick back on track and we're working very closely in terms of a report out of the results in 2026.

Thanks, John. Just one additional note. Across other studies like TQJ where we had a global footprint, we've been able to flex our recruitment around the world to maintain timelines. In this particular study, we've been given a high proportion of patients in the UK NHS, so this was a bigger impact. We, of course, look at all ways to expedite the study in the meantime. On Kesimpta, Marie-France?

Yes. So, thanks for the question. The first thing to note is that our U.S. launch is progressing really well. And as I said in my opening remarks, the areas that are under our control are progressing really well. We talk about positioning, we talked about the first line, first switch at 50%, ease of initiation which was very important for us, and access where we already have 75% of commercial lives covered. So, based on that, we saw that paid product is going faster than expected. And we're also looking at 65% of sales in the second half of the year, previously we had said 75%. If I pivot to NBRx, we're currently at 10%. But as you know, the dynamic market is still suppressed, and we see hesitations to switch patients or to initiate patients on B cell therapies prior to vaccinations. As the market bounces back and as we see vaccination campaigns progress, I believe that we'll see a significant uplift in the NBRxs for Kesimpta. We're also bringing in additional markets or Kesimpta to additional markets and can also expect strong uptake based on the efficacy. As we said, you know, we talk about one relapse every nine to 10 patient years. And now, we've got additional evidence that shows that Kesimpta reduces risk of progression independent of relapses by up to 60% in naïve patients. So, all of this points to a tremendous opportunity for patients and for this product. We're also very confident that we'll see a big expansion in the B cell market. So, currently, we see around 30% in the U.S. and we expect that number to get to 50% over the next couple of years.

Thank you.

Thanks, Marie-France. Next question, operator.

Thank you. Your next question comes from the line of Graham Parry from Bank of America.

Great. Thanks for taking my question. So, another one on Kesimpta [indiscernible] and the free versus paid-for. I think you previously said it was around 30% paid for you're aiming to get that to 70% by the end of the year. So, if you could just give us an update on where you are now and where you expect that to be at the end of the year that drives the 65% number. And then secondly on Sandoz, just – you talked about stabilization in the second half of the year. But some – if margins are down largely because of price, is there a risk this does – just doesn't reverse thereafter. So, perhaps help us understand what happens in 2022 and where are you in terms of the separation of Sandoz into a fully autonomous unit inside Novartis? I think you said it was probably around the middle of this year that would be complete, and is that the point to which you then decide whether Novartis remains the best owner of Sandoz? Thank you.

Thanks, Graham. On – first on Kesimpta, back to you Marie-France.

Yes. So, currently, we have about 2,400 patients treated on Kesimpta. And as you pointed out, we have a 12-month bridging program. When we discussed this at the end of Q4, we were actually looking at 30% paid with 70% free. That is radically changed. So, it looks like we flipped those numbers and we're currently at 70% paid product. We expect that to get up to 80% for the rest of the year and that's why we've changed our percentage sales for the second half of the year from 75% to 65%.

Great. And then on Sandoz's stabilization and dynamics, Richard?

Thank you, Graham. We've already assumed the level of price erosion going through the rest of the year. You got to remember, a lot of that's been driven because of volume declines we saw in Q1. And with volume declines, you saw a stabilization in the market, service levels go up. And invariably, that means that the competition for price goes up as well. We've seen that will start to wash through and wash out as we go to the second half. We also assume that will be a normalization in demand, patients start returning back to hospital elective surgery. And we also anticipate a slightly stronger cough and cold season, given that it really had very little this season with social distancing. So there's a number of drivers, and we've already assumed a level of price erosion going on through the rest of the year. I'll let Vas comment on the Sandoz in autonomy.

Yes. Thanks, Richard. So – and thanks, Graham. On Sandoz, we've now successfully separated the manufacturing unit with links to our global manufacturing. And I think in most of the relevant area, Sandoz is now enabled to compete at the relevant cost structure and flexibility to be successful as a leading generics player. Our focus now is to get Sandoz, as we've stated consistently, to a consistent mid-single-digit sales growth and core operating margins that are in line with the top end of the peer set, which would be in the high 20s. And that's where our energy and focus is. A lot of that is getting to world-class launches and biosimilars, getting our oral solids business and launches back on track in the U.S., as well as being at market formation for key launches in Europe, and that's what we're really focused on at the moment. Thanks, Graham. Next question, Operator?

Thank you. The next question comes from the line of Andrew Baum from Citi.

Thank you. A couple of questions, please. With inclisiran, you attained a pre-approval agreement with the UK. I'm wondering whether you have or will be entering into similar agreements with European territories for your PD-1 license from BeiGene? That's the first question. Second question is, could you talk to which subpopulations [indiscernible] within the U.S. where you may be able to get on trade with tislelizumab. And then finally, if you have a second to comment on how you look at the competitive outlook for the centers given we've been surprised by ophthalmologists' feedback on brolucizumab ahead of anticipated approval. Thank you.

Great. Thanks, Andrew. So both PD-1 questions in Europe and U.S., Susanne?

Yes, sure. Thank you, Andrew. So, our ambition is to provide global access to tislelizumab is in the broad array of indications. As you know, BeiGene is running a very broad development program, and that is really our first ambition. We really want to establish tislelizumab in key indications, where PD-1s are currently market, and also pursue novel combinations with our portfolio. So really, short term, the focus is on getting first indications filed. We plan to file in non-small cell lung cell cancer and esophageal cancer. And we expect these to be submitted in the second half of 2021. On specific agreements, I don't want to comment. You have seen the data. We have very solid OS data presented at AACR. And we believe that tislelizumab is a very differentiated PD-1. So in terms of subpopulations, we, of course, want to make sure that we focus on the areas where tislelizumab is differentiated. And I think the two data readouts show that I think there is still space for a strong PD-1. So that's for now, and then we work through reimbursement agreements while we then prepare for launch.

Thanks, Susanne. And then on Lucentis, Marie-France?

Yes. So Lucentis did really well in Q1. It's growing 4% due to the steady performance in Europe. So there is some rebound. We can expect to see that to continue. And also the strong NRDL-driven momentum in China, which is definitely where we're looking to see a good chunk of our growth this year. So for the remainder of the year, we expect to see Lucentis grow at low single digits, and again, with China being a major driver. In terms of the competition, just to remind you that Lucentis is really established in the market, and we believe we'll continue to do well. One of the key drivers is just a very complete indication portfolio that Lucentis has and that newer products will not bring to market immediately.

Thanks, Marie-France. Thank you, Andrew. Next question, operator.

Thank you. Your next question comes from the line – so your next question comes from the line of Keyur Parekh from Goldman Sachs.

Hi, good afternoon. Thanks for taking my questions. Two, please. One, Vas, I know you kind of suggested that the Sandoz separation is kind of the independent company is kind of on group. But can you just remind us conceptually the positive, the negatives from a Novartis perspective of keeping Sandoz in-house, kind of it's been a drag on your growth as long as one can remember? So just conceptually, why does it belong within the Novartis equity story would be great. And then separately, for Marie-France on Zolgensma. As we think about kind of the next few quarters, can you just remind us of the incremental countries you're going to be launching the product in and the size of the bolus opportunity in those countries? Thank you.

Yes, thanks, Keyur. So on Sandoz, there's – I think, a few considerations. One, historically, and we continue to believe in certain markets, there is commercial synergies in having a broad portfolio across generics and innovative medicines. We, of course, continue to challenge ourselves and evaluate that, but we do have those agreements in certain markets. And that, yes, depending on how healthcare systems evolve in the future, it could be an advantage to have one of the largest, if not the largest by volume generics company in the world. The other part of the story, of course, is biosimilars, where our manufacturing scale and know-how enables us, as well as our development expertise, enables us to – enable Sandoz to build a leading biosimilars portfolio and then, of course, the company will benefit over time. And we're hopeful that the Sandoz biosimilars portfolio can help us get Sandoz to that mid-single-digit growth up on the margin spectrum and then contribute to the growth of the overall company. Those, I think, are the two key considerations. There is, of course, the broader software consideration that Sandoz serves hundreds of millions of patients and provides billions of doses to humanity, which is consistent with the overall purpose of the company to reimagine medicine. So on Zolgensma, Marie-France?

Yes. So in the U.S., our business is driven by the incident patients. So the growth ex-U.S. is coming from these recent reimbursement wins in Europe. For the rest of 2021, we expect the U.S. business to remain stable and to be – continue to be driven by the incident patients. In Europe, we're working on securing reimbursement in additional countries. Right now, we've seen good uptake in Germany and recent reimbursement and acceleration in smaller markets, such as Czech Republic or UAE. If we look at the nature of the European markets, we also expect to see reimbursement on a rolling basis. What you can expect going forward is the UK and Italy, where we've now secured reimbursement, and that will bring Zolgensma to additional patients. As we said before, the initial source of business in all of the launches comes from previously treated patients. And over time, that patient mix shifts to the incident population. Overall, for 2021, we expect blockbuster status with Zolgensma.

Thanks, Marie-France. Thanks, Keyur. Next question, Operator.

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

Thanks for taking the questions. Emmanuel Papadakis from Deutsche Bank. Maybe a couple of products, specific ones. Just on the iptacopan Phase 2 with MCV, IgA and data [ph] relatively soon, obviously, perhaps you could give us any commentary around the conference. And just – I mean, in terms of [indiscernible] primary or secondary endpoint with UPCR, should we expect to see a consistent benefit on the key secondaries like eGFR? And what would you regard as a clinically meaningful improvement on the primary and any key secondaries? And then maybe a question on the SHP2, TNO155. Just your take on any ramifications from some competitor data we saw at AACR. Can you just remind us of confidence on that program's potential and when we should be looking to see the first KRAS combination data? Or if you no longer believe that is the most promising combination, what we should be particularly anticipating in terms of the various combinations studies, ongoing that molecule. Thank you.

Thanks, Emmanuel. So, John, you want to start on IgA nephropathy?

Sure. Thanks for the question, Emmanuel. As you know, for iptacopan, we're looking across a number of indications, including IgA nephropathy, also C3 glomerulopathy, as well as PNH. Specifically, in IgA nephropathy, we do have the Phase 2 dose-range finding study, which is ongoing. We've had an interim readout and based on that interim readout, we've already decided to advance into the Phase 3 studies. Those results will be coming out before the half of the year. The specific conference, we – the posters and abstracts have not been released. So we've refrained from telling you exactly, but we are confident that those results will be presented before the first half of the year. And as I said, the Phase 3 has advanced as we move forward in IgA nephropathy and the expected filing is based on conditional approval for proteinuria reduction at nine months. So these are the same results in the Phase 2, which we have in the Phase 3 study. And as you asked about the secondary endpoint, these are the same secondary endpoints that we have in our Phase 3 study. The final approval, which is expected to be in 2025 is based on the eGFR slope. And this was the Phase 2 study that we had in place and also is the endpoint also for a full approval expectation in 2025 based on results. So I think the second question that you had was around the SHP2 – our SHP2 inhibitor, and how should we be thinking about the SHP2 inhibitor as we move forward. As you know, SHP2 is as tyrosine phosphatase and exit a really important note as we look at the RAS MAP kinase pathway. And in preclinical studies, what we saw was not only single-agent activity but also in combination with other agents. Our strategy for our SHP2 inhibitor is that we expect to go broadly in terms of a number of combinations. And as we look at the approach that we're taking, there's four potential areas that we're currently looking at. First is in combination with our own eGFR agent. This would be our third-generation eGRF agent, and this would be our first consideration for combination with our SHP2 inhibitor. Secondly is looking at the role of SHP2 in immune cells. And so that consideration would be with PD-1, and we have a study ongoing with spartalizumab. Thirdly, would be looking at the MAP kinase RAS pathway as we look at the combination with potentially KRAS C12C. And also, we have a study in place with Kisqali. And then fourth would be we currently have an early study in combination with dabrafenib, trametinib as we look at the treatment for BRAF V600-mutant CRC patients. So we have high expectations in combination with our SHP2 inhibitor looking broadly in addition to the KRAS C12C pathway. Thanks.

Thanks, John. And maybe just to highlight again, we're not focused here on single agent. I couldn't see your question, Emmanuel. We really think the opportunity for SHP2 will be in combination, and hopefully, in combination with a range of agents, and that data should come out over the coming 18 months. Next question, operator?

Thank you. Your next question comes from the line of Matthew Weston from Credit Suisse.

Many thanks. Two questions, please. The first on U.S. tax reform. So Novartis, like many in the pharma industry, is a major beneficiary of transfer pricing. I'd be very interested in Harry's view of the long-term tax rate given the discussions that are being had or proposed by President Biden about changing the way multinational tax is calculated with minimum revenue-based metrics on a national approach. And I – also in the shorter term, if you could just give us some update as to the likely nearer-term impact of anything we've learned from the near-term U.S. domestic Biden tax changes, that would be extremely interesting. And then secondly, a product-specific question regarding the DARPin collaboration in COVID. Can you just give us an update on the project, both in terms of the early clinical data that we've seen on the first DARPin? How the tech transfer is progressing to Sandoz, and your thinking as to when we might have something to file from that program?

Yes. Thanks, Matthew. So first on tax reform, Harry?

Hi, Matthew. So as you know, this year, we guide to about 16% core tax rate. Last year, it was 15.4%. We see in the midterm the 16% to 17%, given the current tax loss. Now, of course, the Biden proposal, the U.S. part would not be a positive for anybody, if you will, right, from a tax rate standpoint. But our exposure to the U.S., if you will, is relatively low given that the majority of our IP and a lot of substance is in Switzerland. And the other issue with all of this is, of course, there not many details are available. And therefore, I don't want to go into any speculations because we don't know if and what will be in the end implemented. We don't see anything changing for this year or any time soon. At the moment, we have details, of course, we would come up with the respective scenarios.

Great, thanks, Harry. And then on the Molecular Partners collaboration, just to remind the group, the idea here was to pursue the DARPin technology, which is a naturally occurring technology – a naturally occurring protein-based molecule that acts in a completely different way to monoclonal antibody, though with a similar effect. The first DARPin – set of DARPins for COVID showed very strong preclinical efficacy in preclinical models, also against the variants at the Molecular Partners-Novartis collaboration. We've completed the Phase 1 study, which will enable a Phase 2/3 start shortly. We target a readout in the Q3 timeframe, which we expect to enable an emergency use authorization, if positive. The benefits of this approach would be: one, the potential for a subcu injection versus IV; and two, because this technology can be produced in bacterial fermentation or used fermentation, I should say, much lower COGS for the medicine, which would enable hopefully, broad-scale use. Also, much higher volumes could be produced versus mammalian cell monoclonal antibodies. So a lot to still work through and figure out, but we're working through it now. And hopefully, this – with the study start and then the ultimate readout over the course of the summer. Thank you, Matthew. Next question, operator.

Next question comes from the line of Richard Parkes from Exane BNP.

Hi. Thanks for taking my questions. Firstly, on Zolgensma, just in the U.S., I just wondered if you could talk a little bit more about where you are in terms of penetration of the incident SMA patient population. It looks like it's just in the 60%, but I wondered what room there was for that to move higher based on screening improvements. And maybe you could discuss that and where you are in terms of share among the various treatment options in that population that has been impacted by the Evrysdi launch. Also, I remember you talking about seeing physicians delaying starts due to COVID. I'm just wondering whether that's no longer the case. Then second question is heard from some of the management teams that seem to be expressing some optimism a compromised solution on U.S. drug pricing could be achievable given the current balance of power in the Senate? And I just wondered what Novartis' perspective on that was and your thoughts on what might happen medium term? Thanks, very much.

Yes, thanks, Richard. So, I'll just quickly take the Zolgensma U.S. question. For Zolgensma right now, the principal driver of business is newborn screening programs around the country, which in those screening programs, very high, nearly all patients tend to get Zolgensma. Right now, newborn screening is covering about 70% of newborn lives, we hope to get that number up to 82% before the end of the year, that would be then the steady-state driver for Zolgensma. And then we continue to see some utilization in switch patients who are in the so-called prevalent pool are on an alternative therapy and then switch to Zolgensma. So, we do believe we're at a steady state in the U.S. with some potential growth as newborn screening continues to expand over the coming years. And that's kind of how we think about the U.S. Zolgensma opportunity. As we stated in the presentation, we continue to work through the nonhuman primate studies to enable AVXS-101 intrathecal to be lifted off of clinical holds, and then we would rapidly want to advance that program through Phase 3 studies. We have agreement with FDA on the design of that Phase 3 clinical trial. Now in terms of U.S. drug pricing, we're absolutely supportive of finding a path forward to enable broader and more affordable patient access at the pharmacy counter, which would likely include reforms to the benefit designed in Part D, as well as elements of the design in Part B. I think we saw the outlines of that potential agreement in the Grassley-Wyden bill last year. But we are cautiously optimistic that we might be able to come to a thoughtful agreement that preserves the industry's ability to invest in innovation, and then also enables broader patient access. But as you know, there are multiple moving parts. The situation is quite fluid. I think the big shift is that the industry is working to be part of the solution here working actively with the relevant stakeholders to try to find a sensible set of legislations.

Thank you, Richard. Let’s move to next question, operator.

Thank you. Your next question comes from the line of Laura Sutcliffe from UBS.

Hello, thank you. Firstly, excluding the impact of forward purchasing you had both operating income growth and margin expansion this quarter. And I realize this could be difficult to pick apart. But how much were you still benefiting from cost savings that you might not ultimately get to keep in the first quarter? And secondly, for the two ex-China filings you are expecting to make for tislelizumab this year, could you confirm whether or not you expect those to include the U.S.? Thanks.

So quickly on the second point, yes, they would include the U.S. And then on the question on cost savings, I will give it to Harry. Harry?

Yes, thank you, Laura. So, of course, we had still some lower activity in quarter one. But when you look at the cost levels they are pretty much in line, even with prior year, quarter one, when the shutdown came mainly only in second half of March. And then secondly, we are of course, also thriving new ways of working to keep the good things if you will of the situation to run the company more effectively. And of course, also, our customer facing colleagues have a mix of tools where face to face is most effective at wanted, of course, that happens. But also, virtual and other interactions. So, I would say most of the cost savings we can keep. On the other hand, some increased investments will happen in quarter two. And of course, all of that is part of our full year guidance.

Thanks, Harry. Thanks, Laura. Next question, operator.

Thank you. Your next question comes from the line of Simon Baker from Redburn.

Great. Thank you for taking my questions. Two please if I may. Firstly, on Zolgensma, going back to the European situation. Could you give us a little bit more color on where the growth was coming from in the quarter? It's from what you've said it sounds like it's still the prevalent population in Germany, given the timing of the UK and Italian reimbursed. But any color on that would be useful. And on to Cosentyx, perhaps you could give us your thoughts on the competitive landscape within psoriasis Cosentyx in light of the ligelizumab data a few days ago. And secondly, on Cosentyx, also your thoughts on the Sigma debit card initiative to try and move people off Cosentyx and onto alternative products. Thanks so much.

Thank you, Simon. So first on Zolgensma growth Marie-France.

Yes, so when we look at the European business, the incremental uptake has been mainly in Germany. And as I mentioned before, we've seen acceleration in some of the smaller markets, so Czech Republic, UAE and Qatar. We have not yet seen the uptick in the UK and Italy and that's what you can expect to see towards the end of the year. So, as we said before, we will be moving from incident segments to additional countries where you'll see this initial bolus of patients and then they'll transition to an incident population is what you see in the U.S. So, you can you can expect some volatility in the quarterly sales pattern, because of course, it's a one-time treatment. So, every quarter we start again from scratch, but that's what you can expect to see. We're bringing in new countries, we have a number of countries that have day one access agreements. And we hope to bring about 15 countries with full reimbursement by the end of 2022.

And then on Cosentyx, yes, Cosentyx, yes.

Yes, so on Cosentyx your two questions. So, on the competitive overview, the first thing that I'd say is that we have to remember in this marketplace, so you refer to psoriasis, the biologic penetration remains really low. In fact, when we look at psoriasis, we're talking about, about 15% of biologic penetration. And if we think about Cosentyx, we know that there are a lot of competitors out there, but we've shown efficacy across four indications. In psoriasis, our data shows that we clear skin in eight out of ten patients, and that we have strong efficacy across the axial SpA spectrum. Remember that two thirds of patients are going to have some of these manifestations. One other point I wanted to make is that we have five-year plus safety data. And the bar is very high right now on safety, especially now. So, what Cosentyx offers is a tried and trusted complete treatment. In addition to that, we have strong access, not only in the U.S., but across the globe. And so, I keep talking about our three pillars in our strategy. And it's exactly that it’s strong access, early line access, that's going to allow us to grow volume in revenue in the U.S. and in the EU. We've got the geographic expansion in China, with the NRDL that just came in March. So, you'll see more of that in the rest of the year. Then we've got our complete profile. And we continue to have strong resonance in the marketplace, with the data that we have and of course, in the future, our lifecycle management program. So, we've shown that we can do well despite multiple competitive entries in the psoriasis space and beyond psoriasis space, and we're confident we can deliver double-digit growth in the year.

Thanks, Marie-France.

If I take you question on Tasigna…

Yes, Tasigna, yes please go ahead.

Yes, so I think that's a question for Tasigna. But what I'll say is that we're not going to change our commitment to physicians and patients. We believe that access should enable a clinical decision between a physician and a patient. And that's why broad access is going to stay a core pillar of our strategy. But we'll always balance that with the long-term value of the brand. We have fixed potential upcoming indication. So, it's our obligation to think about what drives value today, but also what drives value in our future.

Perfect, thanks very much.

Next question, operator.

Thank you. Your next question comes from the line of Wimal Kapadia from Bernstein.

Great, thank you very much for taking my questions, Wimal Kapadia from Bernstein. So can I just first ask about the PSMA-617 in the VISION study following the positive headlines in March. Because given the continued changing in the standard of care in prostate cancer, I just wanted to get your thoughts on the trial design and the implications for commercial potential. Should the real comparator for VISION have been Cabazitaxel in order to be a real clinical importance rather than the best standard of care given the likes of Zytiga and Xtandi no longer recommended in that setting. So, I appreciate it's quite a fluid situation when it makes – when it comes to trial design. But just your thoughts on commercial impact would be great? And then my second question is just on ligelizumab and the upcoming Phase 3 readout in CSU. Just curious on your thoughts on your level of confidence for that readout later this year. How quickly could we actually see switching from Zola should we see positive data? And can you just provide some context on what proportion of Zola sales come from CSU today? Thank you.

Yes, thanks Wimal. And thanks also for your initiation of coverage and your very comprehensive report a few weeks back. So first on PSMA-617, I’ll give it to Susanne on the commercial potential on the trial design.

Yes, thanks a lot. So, may be let me start with the trial design. So, just to remind you what the setting was for the VISION trial, so it was in progressive, metastatic castration-resistant prostate cancer, with at least one line of prior androgen therapy and at least one but not more than two lines of taxane-based chemotherapy. And we saw that in this setting, standard of care is the best comparator, it's really a setting where there is limited options and it’s a setting of very high, unmet medical need. So, we believe it is very strong data. And I think the fact that we were really showing positive data on both radiographic PFS OS, I think is demonstrating that. And as I said the commercial potential in this area is still significant as prostate cancer is the second largest cancer indication. This setting of course, is in late lines. But we still believe there is very high medical need and Lutetium-PSMA will offer a very, very attractive, treatment option. And when you just look into the setting, think again that the majority of these patients will be metastatic, have a very low survival, five-year survival rate. So therefore, it is a significant pool of patients.

Maybe I'll just add. As we noted in the presentation, we've already initiated or will soon initiate a range of earlier stage prostate cancer studies which will enable us successful to rapidly broaden the indication base for PSMA-617. So, on ligelizumab on the clinical program and our confidence, maybe John and then maybe Marie-France on the contribution of CSU and the ability to switch Xolair. So, John?

Sure. Yes, thanks. Thanks for the question. As you know, we moved into the Phase 3 program based on the Phase 2 head-to-head study that we had against Xolair, which was published in the New England Journal. Based on that Phase 2 study, what we saw was 42% symptom free with ligelizumab, versus 26% in omalizumab, which was a significant difference. And scientifically, as we think about that ligelizumab recognizes a different epitope on the IgE molecule for Xolair. And that's the confidence that we have and more specifically binds on the Fc epsilon RI effector cells. And based on this fact, we’ve moved into the two – two studies, Pearl 1 and Pearl 2. But we expect to get those readouts by the end of the year and the early part of next year as we continue accrue the endpoints. On the population and opportunity, I’ll turn it to…

Yes, we can go to Marie-France. Marie-France?

Yes. So, the first thing to point out is that the biologic penetration in this market space is also really low. We currently estimate that less than 30% of patients are on Xolair, and that’s probably optimistic. And what we know is that we’ve got about 1.3 million CSU patients in the top 11 countries that are still not adequately controlled. So, this is a big opportunity. This product is showing to differentiate itself significantly and an opportunity for us to bring this product to a much broader population, which right now is really underserved with antihistamines.

Terrific. Thanks, Marie-France. So, for the remaining questions…

Thanks so much.

Thank you, Wimal. If we could limit yourself to one question, that would be great as we have a number of people in the queue. So next question, operator.

Thank you. Your next question comes the line of Florent Cespedes from Societe Generale.

Good afternoon, everyone. Thank you so much for taking my question. For Susanne on Kisqali. Susanne, how would you explain the difference on the dynamic of the U.S. versus Europe markets? And why Europe is much more dynamic than the U.S.? And how do you see the U.S. market breast cancer market dynamic going forward? Thank you.

Susanne?

Yes, thank you, Florent. So, as I said, Kisqali globally was growing 19%. And as you rightly point out, there was very strong growth ex-U.S., especially in the EU while we say it’s more or less flattish or slightly declining in the U.S. And I think the reason is really very different market dynamics, that in the U.S., the market certainly is already quite penetrated with CDK 4/6 inhibitors. And when you look at the impact of COVID, you saw that NBRx, for example, in February was down 16%. And this has continued now since the pandemic has started. And this is now already impacting TRx going down minus 4%. So, of course, our growth would come from new patients and that’s hard to get if less new patients coming in. While in Europe, overall penetration of CDK 4/6 is much lower. So, the dynamics there are more active, and therefore, we could capture more patients there. So overall, as I said, Kisqali with the strong OS data, we feel is very well-differentiated. We keep on focusing, executing our gross brands. And we remain confident also for the U.S. that when patients will come back and things will open up more that we capture again strong growth.

Thank you, Susanne. Thanks, Florent. Next question, operator.

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

Hi, thanks for taking my question. Just a question on the ophtha brands erosion and just when we should think about that bottoming out and the growth of the ophthalmology franchise going forward? Thanks very much.

Thank you, Richard. So, on ophthalmology dynamics, Marie-France? I guess also referring to front of the eye as well. I know Xiidra, strong Xiidra performance as well really on the quarter.

Right. I was going to mention that. So, we do see – obviously, we’ve seen a huge impact in this space because of COVID. So, there is a combination of factors. So, we have seen some loss of exclusivity, which is obviously something that we anticipated over our strike-plan period. And then, of course, there was a COVID impact, which really hit the entire offset portfolio, as you know, starting with the anti-VEGFs, which nicely recuperated during the year and you see them off to a solid performance across the board in 2021. We still see a suppression in the marketplace, although that’s starting to pick up. And what I will point out is our front of the eye portfolio, namely in Xiidra, we do see very encouraging data. And we had to relaunch that brand as you know. But we also know it’s a big market, right, 32 million people with dry eye disease and only 1.6 million of them are in a prescription drug. So, we had a good quarter with Xiidra, 28% of NBRx share. And it just shows that if you have the share of voice, if you have the right campaign, then it’s worth investing in this space.

Terrific. Thank you, Marie-France and Richard. Next question, operator.

Thank you. The next question comes the line of Tim Anderson from Wolfe Research.

Yes, hello. Thank you for taking the question. This is Richard Wagner [ph] on behalf of Tim at Wolfe Research. The question on Kisqali. Could you speak about what you’re seeing in the U.S. in terms of rebating in this oral oncologic category? Our understanding is that the rebates are stepping up. Presumably, that is driven by Pfizer trying to hang on to the market share. What’s the outlook for the net price trends in this category and where – how would those trends in particular impact Kisqali, which does not have the volume of Ibrance and does not yet have the adjuvant data? Thank you very much.

Thanks, Richard. So, Susanne, on Kisqali, our CDK 4/6 rebating trends.

Yes, sure. So, I wouldn’t want to comment on that. Maybe let me just reemphasize what is our strategy. Certainly, we see that Kisqali has the best OS data and also has demonstrated now longest OS, combining all the Phase 3 trials. And that keeps us confident that if we focus, continued on execution, we will also see continued momentum. We get very positive feedback from HCPs and we see that they are changing now their treatment patterns, that more and more are willing to list Kisqali. So, I believe our focus needs to be on differentiation, on continued execution of our gross brands. And therefore, I still believe Kisqali is an important growth driver for us and I remain very confident in the brand.

Thank you, Susanne. Next question, operator. We have a few more left.

Thank you. Your next question comes from the line of Mike Nedelcovych from Cowen.

Hi. Thanks for taking the question. I’m curious on Entresto. It looks like the data in the post-AMI setting trended toward improvement despite missing the primary endpoint. But the readout is listed as neutral on the slide. So, I’m just wondering, should we take that to mean that filing in that indication might still be on the table? Thanks.

Yes, I’ll just quickly take that. We need to discuss with the regulatory authorities, and we’ll present the full data in ACC where you can see both the primary and secondary endpoint. So, then the question on the table, of course, is we demonstrated a positive trend versus an established standard of care in ramipril. But it was a superiority study, so I think we’ll need to work through with the regulators what’s possible in terms of any sort of indication in the label or any data in the label. But we’ll take those steps, and we’ll present the data at ATC. Next question, operator.

Thank you. And the final question comes from the line of Peter Welford from Jefferies.

Hi. Thanks for squeezing me in. A quick question on Sandoz again. I’m wondering if it’s possible of you to quantify the impact of the determination of your Solids partnerships, which I guess somewhat of a one-off. And just thinking about then, the Sandoz business and getting it back to growth and margins, how should we think about potential for disposing of parts of that business or slimming the portfolio down? I know you’ve tried this before. But, clearly, to a certain growth in margins, the other ways to slim down the sales line, is that even viable with the business portfolio that you have? Thank you.

Thanks, Peter. Good to hear from you. And Richard Saynor on the Sandoz U.S. business and legacy – well, the oral solids and dermatology business.

Yes, thank you. Thank you, Peter. So yes, you are right. I mean clearly, we’ve terminated or ended a number of the partnership relationships and that’s really washing through from the end of last year really pretty much to the end of this year. So, a lot of the decline that you see in the oral solids business is really related to that. But hopefully, that will wash out by the end of this year. And then really, I see the U.S. business in sort of three distinct chunks. You have the core business, the injectables, the biologics, and the ophtha business, which really has a strong momentum and potential for growth as we launch new products going into the end of 2022 and 2023. We’re currently looking at how we strengthen and stabilize the oral solids business once that wash-out phase has cleared with both in-house developments and rebuilding that capability, and then looking at also BD and M&A to strengthen it. And then the derma piece, already we’ve cleaned up a lot of the derma business. We divested some of those elements over the last month. And the remaining is relatively stable and accretive to the overall business. So, a lot of moving pieces, but we’ve got a clear plan going forward.

Terrific. Thanks. Thanks, Richard, and thanks, everyone, for your questions today. Maybe just to take a step back, I think it’s worth noting, when you look at the longer-term growth profile of the company, our key, again, drivers, Cosentyx, Entresto, Zolgensma, Kesimpta, are all demonstrating they have the outlook and the potential to really enable us to grow consistently through 2025 as Harry outlined. On top of that, we continue to expect to be able to bring inclisiran to broad groups of patients in the UK and the U.S. well ahead of the outcome study, giving inclisiran significant potential even ahead of the outcomes data which we now expect in 2026. With the Kisqali adjuvant and our continued efforts in Beovu, you have a broad range of products in hand to drive that growth for the next few years. Then on top of that, you have a deep mid-stage pipeline where we continue to show progress, multiple assets that could be multi-billion-dollar potential assets to drive our longer-term growth. You see already the first possibilities with Lu-PSMA and we hope to demonstrate with further readouts over the course of this year the potential of that pipeline. Continued margin progression, and aspiration and demonstration of leadership in ESG. So, I think the story is taking shape and we look forward to continuing to attract long-term investors to our company, to our stock, and our overall vision to reimagine medicine. So, thank you all very much for joining the call and we’ll look forward to speaking again soon.