Novartis Lauds Launch of World's Most Expensive Drug

By Denise Roland and Carlo Martuscelli 

Novartis AG reported a strong launch for its new gene therapy Zolgensma -- the world's most expensive drug -- overcoming concerns about whether insurers would cover the treatment and a data-manipulation scandal at the unit that makes it.

Zolgensma, which costs $2.1 million per patient, brought in $160 million in the three months to Sept. 30, its first full quarter of sales. That was well above analyst expectations of around $98 million.

The one-shot treatment, which promises to cure a devastating muscle-wasting disease in infants, launched at the end of May. It is one of the first in a new wave of treatments known as gene therapies whose price tags are raising concerns about whether they can be afforded by governments and health insurers struggling to control spending.

Novartis Chief Executive Vas Narasimhan said on a call with reporters Tuesday that 99% of patients who were eligible for Zolgensma were receiving it, although some must go through an appeal process to do so. He added that, even with appeals, patients were on average receiving Zolgensma within 30 days of requesting it.

To allay payer concerns, the company is offering outcomes-based deals where a portion of the cost is refunded if Zolgensma proves ineffective. It is also offering insurers the option to pay for the treatment in five equal installments over five years.

Dr. Narasimhan said that while the outcomes-based offer had been taken up by every payer that has agreed to cover Zolgensma, there had been little interest in the installment option. Although the payment-by-instalment approach would ease the upfront cost, cash flow isn't a major concern for insurers, which are by law required to hold large reserves.

The Novartis boss said Zolgensma's uptake hadn't been affected by a data manipulation scandal that has sparked criticism and could lead to criminal penalties from the Food and Drug Administration.

The company earlier this year discovered that data on mouse testing related to the manufacture of certain lots of Zolgensma had been manipulated by scientists at the AveXis unit that makes it. The FDA criticized Novartis for failing to disclose those concerns immediately, but has said the manipulation doesn't change its view that Zolgensma is safe and effective.

Novartis has since replaced AveXis's two top scientists -- one of whom was a founder of the gene therapy company -- and promised to accelerate the integration of the unit into the wider organization. Novartis acquired AveXis for $8.7 billion in April last year.

The update on Zolgensma came as Novartis reported an 8% rise in third-quarter net income to $2.04 billion, driven by strong sales of its newer drugs. Sales rose 10% to $12.17 billion.

In addition to Zolgensma, Novartis highlighted heart-failure pill Entresto and skin and rheumatic disorder treatment Cosentyx as top performers.

Core operating profit, a figure watched by analysts that strips out extraordinary items, was $3.75 billion, up from $3.26 billion.

Novartis raised its full-year guidance, saying it now expects sales to grow by a high single-digit percentage at constant currency. It forecast core operating income to grow by a mid-to-high teen percentage, also stripping out currency effects. It had previously expected sales to grow by a mid to high single-digit percentage and for core operating income to increase by a low double digit to midteen percentage.

Write to Denise Roland at [e-mail]

(END) Dow Jones Newswires

October 22, 2019 04:13 ET (08:13 GMT)

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