Novartis (NVS)

[flatlander_60048]

NVS claimed that the share repurchases last year were done to offset dilution which occurred as a result of the Alcon acquisition. However, they have conducted several different buybacks in the past 5 years and have increased the dividend each year. NVS has tried to return cash to investors and was not rewarded by wall street despite sales and income growth which outpaced their peers. We will have to see how things play out this year when no growth is expected.

FL

[urche]

Annual Meeting items

From reviewing the annual meeting materials this year, the dividend proposed (CHF 2.25) works out to about 4.4% of current price.

Also, I don't know if the 39.4 million shares repurchased in 2011 is unusual, but it seems like it was a year when there were plenty of opportunities to purchase shares cheaply. I figure they repurchased about 1.4% of outstanding shares.

The Board of Directors proposes that 39,430,000 shares repurchased under the sixth share
repurchase program be cancelled, the share capital reduced accordingly by CHF 19,715,000, from
CHF 1,372,811,500 to CHF 1,353,096,500

[urche]

NVS Conf call

Thanks for the links to quarterly conf call.
I found this fact interesting regarding the $12.5 billion in free cash flow for 2011:

90% of 2011 Free Cash Flow used for dividends and share purchases

Some of that went to Alcon purchases. Bottom line is apparently those shareholder friendly actions were not enough to compensate for recent negative events (plant inspections, Diovan patent expiration, Gilenya warning, etc.)

By the way, the slides on the pipeline look impressive, even though there is not going to be another Diovan. Any opinions on how well NVS pipeline will compete vs other big pharma over next few years?

[flatlander_60048]

I'm inclined to agree the more some of the facts get released. However, it is obvious to me that NVS's competitors and there investors are more than happy to try to slow Gilenya's uptake by claiming it has a bad risk benefit profile.

During an investor conference about a year ago Bill Marth from Teva indicated that Laquinimod would have a much better safety profile than Gilenya. He forgot to mention that the efficacy would be about half that of Gilenya. I think that Biogen and Sanofi supporters are more than happy to get negative Gilenya stories out in the media even if it has questionable merits. Hopefully the reviews progress quickly.

FL

[DewDiligence]

NVS 4Q11 materials…

Financial PR: http://www.novartis.com/downloads/investors/financial-results/quarterly-results/q4-2011-media-release_en.pdf

Pipeline update: http://www.novartis.com/downloads/investors/financial-results/q4-2011-innovation-tables.pdf

CC slides: http://www.novartis.com/downloads/investors/financial-results/quarterly-results/q4-2011-investor-presentation.pdf

Financial appendix: http://www.novartis.com/downloads/investors/financial-results/2011-supp-financial-data.pdf

20-F annual report: http://www.sec.gov/Archives/edgar/data/1114448/000137036812000003/a120125-6k.htm

[DewDiligence]

Much ado about nothing, IMHO.

[DewDiligence]

Miscellaneous comments:

#msg-71324480

I’m staying long, FWIW.

[flatlander_60048]

Epsteins discussion/slides on the Gilenya deaths is worth a listen. For those that did not hear it, I've cut and pasted the transcript below.

<<What I want to do now before I move on is try to put the Gilenya story and to give you a little bit more perspective, given what we've seen in the press of late. You've all heard about the recent death of a patient that died less than 24 hours after she took her first dose of Gilenya. She went through her normal -- the normal 6-hour observation period. There was no ECG taken. And it was really uneventful and unfortunately, she passed away during the evening and we do not yet have a detailed autopsy report.

That event triggered the health authorities around the world to begin discussions with us about the product and the label and to look at overall benefit risk for the product. What I want to do now is be fully transparent with you and give you a complete overview of MS patients that have ever died after having taken Gilenya. The overview covers more than 30,000 patients who've been treated since 2003 in both clinical trials and in the post-marketing setting. And I want to emphasize that it's very unusual, perhaps unprecedented for a company to disclose all cause of mortality in this therapeutic area. So as a result, I'll show you the numbers now and we'll talk our way through those.

When we compare our data overall with the background rate of overall death as well as cardiovascular death in comparable population, we see no imbalances whatsoever. Also when we look at our controlled clinical trials, which are covering thousands of patients over several years, we see the rate of death is not elevated when compared to placebo. Since 2003, there have been a total of 31 MS deaths. 11, which is the number you see in the press are mentioned in the EMA's press release of January 19. These are patients that were in Gilenya from between 2 weeks to 3 years with the exception of that one U.S. case, which I already mentioned to you.

In addition, for full transparency, there were 20 cases not mentioned in the EMA's press release, bringing the total number to 31 and as you can see here, a number of these patients that have been off Gilenya for quite some time, some as long as 3 years. There are also people that passed away because of traffic accidents, suicide and the like. We are confident that Gilenya has a strong benefit risk profile and we believe this brand will continue to provide significant growth to our company. But as I said as a result, the regulatory authorities have started reviews both in Europe and in the U.S. In the interim, the EMA has asked that the patients who go through that 6-hour screening also have continuous ECG monitoring. The French have taken a more aggressive approach. The FDA's ongoing safety review, you can read off the chart, has told us that there are no interim recommendations at beyond the current label at this point in time. And I think over the next couple of weeks to months, we'll get more clarity after any changes that are required.>>

The slide indicated that of the 11 deaths being investigated by the EU 3 were due to cardiac disease. Additionally, the woman who died in the US was reported to be 59 years old and had recently had surgery.

Based on this color the situation may not be as dire as the initial media headlines suggested. I worry that there are entities out there that might influence media to slow Gilenya uptake before competitors release their own oral MS drugs. I'm looking forward to the review committee sort the risks out.

FL

[rajaram46]

Dew,

Curious on your thoughts for the quarter and in general on NVS here.

I like the company and its prospects...as I know you do, too..

-R

[ilpapa]

Down 2 pre market

WSJ

Novartis Cautious on Outlook as Profit Drops 46%
By STEN STOVALL

Switzerland's Novartis AG on Wednesday said its profitability will decline this year because of competition from generic rivals, continued drug price cuts and the need to make further investments in innovative therapies.

The Swiss drug maker, which is trying to balance the sales decline stemming from the expiry of its blockbuster heart drug Diovan, issued the cautious earnings outlook for 2012 as it reported a 46% drop in fourth-quarter net profit, hit by restructuring costs, research and development write-offs, lower drug prices and the strong Swiss franc.

Kicking off the reporting season for European drug makers, Novartis said sales measured in constant currencies are expected to be in line with 2011, while core operating income margin is expected to be slightly below that achieved last year, despite recent restructurings and lucrative new drug launches.

"While productivity measures and margin improvements on products launched since 2007 are important contributions to improving profitability, they are not expected to fully offset the loss of margin from generic competition, price erosion, new investments necessary to sustain growth in new products and the impact of a delayed start-up of [the company's Lincoln, Nebraska consumer health facility.]," the drug maker said.

Novartis, which reports in dollars, has been continually cutting costs since Joe Jimenez took over the helm as chief executive in 2010. Mr. Jimenez on Wednesday said more cost savings of between $1.5 billion and $2.5 billion will be needed this year to keep the company on track.

He also said Novartis's multiple-sclerosis drug Gilenya is expected to remain a growth driver despite worries about the potential blockbuster's prospects after safety concerns were recently raised.

For the latest quarter, the Basel-based pharmaceuticals company recorded net charges totaling $1.5 billion, helping produce a steep decline in net profit for the three months to Dec. 31. It slumped to $1.18 billion from $2.17 billion a year-earlier, missing market forecasts of $1.76 billion.

Sales for the quarter beat views, rising 4.1% to $14.78 billion, helped by the full inclusion of eye care company Alcon. That revenue rise came despite the company's two blockbuster products, Diovan and cancer medicine Femara, being hit hard by generic competition. Analysts had forecast total net sales at $14.63 billion.

The market interpreted the company's news as negative overall, and sold Novartis shares, but analysts said the reaction would probably be short-lived.

Bank Sarasin analyst David Kaegi said the fourth-quarter sales and 2012 guidance were slightly better than expected. "It now only sees core operating profit 'slightly' below last year's level, and that is good news," he said.

Novartis shares in the European morning were down 2.1% at 50.90 Swiss francs ($54.87) in a slightly lower Swiss market.

The company's restructuring plans reflect troubles facing the whole pharma sector which, besides steep drug price cuts in Europe and the U.S., is also smarting from revenue declines due to drug patent expirations. Novartis is the world's second-largest pharmaceuticals company by sales behind Pfizer Inc.

Earlier this month the Swiss group said it will cut nearly 2,000 of its U.S. workforce and will take a $900 million charge after another of its key drugs, blood pressure medicine Rasilez, failed to live up to expectations. The changes are expected to take place in the second quarter of this year. That was in addition to some 2,000 job cuts—mostly in Switzerland and the U.S.—announced in October in a revamp whose costs were booked in the latest quarter.

Write to Sten Stovall at [e-mail]

[flatlander_60048]

Unlike Tsabri, which has a side effect of a rare brain infection, the possible Gilenya cardiac side effects (i.e., bradycardia (a slow heart rate) or atrioventricular block (a problem with the conduction of electricity in the heart)are not as uncommon. Also the NVS instructions for administering the drug are pretty rigorous (see link below). Therefore, the review will need to consider whether all of the requirements were met.

FL

http://www.pharma.us.novartis.com/assets/pdf/REM/Gilenya_HCP_letter.pdf

[Ecomike]

I would wait a little bit, few days, and see if shorts don't push it lower on the news, before going long, unless you day trade it.

[urche]

Drop today is approaching 5%, which seems overdone if just in reaction to investigation of Gilenya over an already identified potential problem. Anyone see this as a ripe buying op?

[DewDiligence]

3% drop today is due to EMA communication on Gilenya:

#msg-71100347, #msg-71100450

[DewDiligence]

NVS starts phase-3 trials for Neupogen/Neulasta FoB’s: #msg-71050940.

[DewDiligence]

Your timing in espousing the Pharma demographic tailwind was perfect since NVS just announced the launch of Galvus and Lucentis in china today.

I commented on this briefly in #msg-71019396.

As you know the FDA request for additional testing on Galvus has been a sore spot with me. The expansion of Galvus to China demonstrates continued worldwide expansion despite the FDA setback. I don't see that Januvia is available in Mainland China, so at least it appears that NVS has beaten Merck to at least one major market!

Galvus could do quite well in China insofar as 10% of adults there are diabetic. However, MRK knows this too, so I don’t expect NVS’ “monopoly” to last long.

[flatlander_60048]

I don't think it is a sign of corp culture deterioration, however there have been several upper management changes at NVS so the JnJ problems have taught me to be vigilant.

Your timing in espousing the Pharma demographic tailwind was perfect since NVS just announced the launch of Galvus and Lucentis in china today. I know you have been promoting this investing theme for quite a while.

As you know the FDA request for additional testing on Galvus has been a sore spot with me. The expansion of Galvus to China demonstrates continued worldwide expansion despite the FDA setback. I don't see that Januvia is available in Mainland China, so at least it appears that NVS has beaten Merck to at least one major market!

FL

[DewDiligence]

I'm watching NVS to see if the Lincoln Neb QA issue is an isolated case or the early signs of a change in corporate culture, such as was observed at JNJ McNeil.

If I thought the latter were true, I would have sold already. However, I do not detect any change in the corporate culture, and I am not unduly concerned on this matter.

[flatlander_60048]

I keep convincing my self that there should be a premium for being an innovator. Pharma, biotech had a long standing premium valuation which has evaporated. I agree with the PBM comment, as a society we need to value companies that bring cures to patients rather than the ones that squeeze margins. The PBM game is already hitting the point of diminishing returns. Walgreens pushing back against ESRX is just the start. Any company who's business model is to go out year after year and try to squeeze margins in the distribution channel is going to hit resistance at some point. Kudos to Walgreen for fighting back.

I'm watching NVS to see if the Lincoln Neb QA issue is an isolated case or the early signs of a change in corporate culture, such as was observed at JnJ McNeil.

If this period of multiple contraction continues, I believe that Pharma is closer to the end of the multiple contraction than many other market segments.

FL

[DewDiligence]

I saw an interesting graphic which broke down health care costs as a percentage of GDP and then looked at which components of the health care industry have fared better over the past 5 years. The insurers come out ahead of pharma and the device makers.

I expect this will reverse during the next 5 years—regardless of whether ObamaCare passes muster with the US Supreme Court. Several Big Pharma are a screaming buy, IMO, and you will probably do ok with any of them. I would avoid heath-insurance and related companies such as the PBM’s. Large/midsized medical-device companies vary greatly and should be evaluated on their individual merits. (I have a small position in ZMH.)

I'll maintain my core position in NVS but I continue to look elsewhere for growth and excitement.

You do not need to have a lot of exciting names for your gains to be exciting! If you look at the stock picks in my iHub profile, only a few of them could be characterized as exciting; however, in the aggregate, these names have roughly doubled in value since the Mar 2009 low.

[flatlander_60048]

I have touted NVS growth in emerging markets for the past 5 or more years on the Yahoo board. In that time I've watched the earnings double and the PE get halved. A frustrating period indeed! NVS has diversified considerably with a much stronger presence in growth areas including vision care, vaccines and most recently FOB/Biogenerics. Yet it gets viewed by Wall Street as a pharma with the bulk of its products going off patent. I though NVS hiring Symonds as CFO would be able to change the perceptions since he came from Goldman with lots of Wall Street contacts. However, it has not mattered and the PE multiple has continued to contract.

At the present time the emerging market tailwind is is largely being offset by the pricing pressures coming from developed countries with older populations which require many drugs. This trend is likely to continue for a time since austerity programs are spreading.

What I can't understand is how so much of the pricing pressure is focused on the solutions providers such as big pharma whereas the health care insurance companies are largely immune from these pressures. I saw an interesting graphic which broke down health care costs as a percentage of GDP and then looked at which components of the health care industry have fared better over the past 5 years. The insurers come out ahead of pharma and the device makers.

Unfortunately, my investing psych would rather reward the solutions providers rather than the middleman. I'll maintain my core position in NVS but I continue to look elsewhere for growth and excitement.

Regards

FL

[ilpapa]

Agree totally. I was just trimming sails to prevailing winds, not making a judgment of longterm NVS attractiveness.

The only other large pharma I own is ABT. I also own AMGN, which started off as a trade over a month ago but now has snuggled up and is making itself at home.

[DewDiligence]

The biggest driver for NVS during the next few years, IMO, will be a higher P/E ratio stemming from more widespread appreciation by investors of The Global Demographic Tailwind (#msg-70784846). By comparison, other issues—including the ones you and ilpapa are concerned about—are essentially round-off error.

[ilpapa]

I was looking at that range, but it never got below 55. For next week, I'd like to see the S&P storm blow over - which I think it will. Investment committees are probably meeting right now to relax the AAA only straitjackets. What are they going to buy - more U.S. Treasuries? A few more Bunds may get sold, I suppose.

[urche]

I intend to get back in next week after the S&P opera buffa gets absorbed.
Wondering if you have a limit price in mind. I was thinking anything under $55 would be good for either long term hold or trading on a core position. But with the nearly pan European downgrade, maybe even lower should be sought.
Urche

[ilpapa]

I was spooked by the manufacturing problems, even though they had been accepted with relative equanimity, on the theory that what starts bad often ends worse. I intend to get back in next week after the S&P opera buffa gets absorbed.

[urche]

NVS valuation

I am curious about your reason for selling this past week. Was it valuation? Certainly the fact that Diovan is going off patent should be well priced into the stock price and I would think the near demise of Tekturna is by now also priced in. So, I was actually thinking of buying more NVS on weakness, expecting some slow increase in value prior to the annual dividend. Of course, there is still a lot to worry about with European bond and debt problems, which is a macro trend likely to suck NVS into some volatile tailwinds. That, in my mind, is a significant risk to holding NVS in the short term.

Urche

[ilpapa]

I was very lucky - sold on Tuesday at 56.86 and resisted temptation to go back in yesterday.

[DewDiligence]

NVS cuts 2,000 jobs—drops Elinogrel and oral calcitonin:

#msg-70844708

[DewDiligence]

End of the line for Rasilez/Tekturna?

#msg-70119323

It sure sounds that way.

[DewDiligence]

Afinitor’s blowout PFS results in breast cancer:

#msg-69720426

This could move the needle even for a company as large as NVS.

[flatlander_60048]

I noticed the same. For some reason the NVS share price has been very sensitive to these credit crises. If early 2009 is any indication this is a great time to add shares. In early 2009 NVS did not exhibit any earnings issues and increased the div by 20%. At some point the market will award an appropriate multiple to the secular growth NVS has exhibited. In the meantime the dividend yield continues to move upward.


Regards
FL

[DewDiligence]

NVS (51.72) hit an 18-month low. Being perceived as a European company seems to be weighing on the share price even though NVS’ businesses are not actually more Eurocentric than those of US-based Big Pharma.

[ilpapa]

ZURICH—Novartis AG Tuesday launched a major job and cost-cutting program as the Swiss pharma giant reported a weaker-than-expected 7.9% rise in third-quarter net profit.

The Basel-based pharmaceuticals firm said net profit for the three months to the end of September rose to $2.46 billion, up from $2.28 billion a year earlier but well below market forecasts of $2.81 billion. Revenues rose 18% to $14.84 billion in the latest quarter, up from $12.58 billion a year earlier.

Novartis said profits were hurt by the franc's strength and drug price cuts, and last year's multi-billion-dollar acquisition of eye-care company Alcon only partly offset the impact of the strong franc.

Novartis said it plans to cut about 2,000 positions, mostly in the U.S. and Switzerland, and close two sites in Switzerland and one in Italy.

The measures, which will be partially offset by the creation of 700 new positions in countries with lower costs, are scheduled to occur over the next three to five years. Novartis had around 120,000 full-time associates at the end of 2010.

"To strengthen our future, we have accelerated actions to reduce our cost base over the next few years," Novartis Chief Executive Joe Jimenez said in a statement. "These actions are necessary to ensure that we adapt our organization to continue delivering on our mission of bringing innovative new drugs to patients."

The layoffs at Novartis come against the backdrop of massive job cuts in Switzerland, where export-oriented companies across all industries have come under particular strain because of the strength of the Swiss franc.

Although the Swiss National Bank has successfully capped the franc against the euro in early September, more jobs are feared to be lost as the franc is still considered to be overvalued, making it more difficult to sell goods and services out of the country.

Novartis, which reports in dollars, operates two large plants in Switzerland and runs a huge research facility at its headquarters in Basel.

The revenue number met analysts' forecasts of $14.8 billion, even as the company's blockbuster heart drug Diovan and cancer medicine Femara continued to face generic competition. Revenues benefited from the franc's strength as well as the full inclusion of Alcon, which last year was only consolidated for the month of September,

Novartis, which last week along with Johnson & Johnson Inc. became the target of a European Commission investigation into a possible breach of antitrust rules by preventing generic players from entering a segment of the Dutch drug market—has been struggling for months with the strong Swiss currency. The company is also facing increased generic pressure as Novartis' blockbuster drugs are set to lose patent protection.

Write to Goran Mijuk at [e-mail]

[flatlander_60048]

Sprycel and potentially serious lung complication could be good news for gleevec and tasigna.

http://www.fda.gov/Drugs/DrugSafety/ucm275155.htm

[urche]

Kudos to NVS for the integrity to publish a negative study it funded.

[hptaxis]

Breast-Cancer Adjuvant Therapy with Zoledronic Acid


Coleman RE, Marshall H, Cameron D, et al. Breast-Cancer Adjuvant Therapy with Zoledronic Acid. New England Journal of Medicine. http://www.nejm.org/doi/full/10.1056/NEJMoa1105195

BACKGROUND - Data suggest that the adjuvant use of bisphosphonates reduces rates of recurrence and death in patients with early-stage breast cancer. We conducted a study to determine whether treatment with zoledronic acid, in addition to standard adjuvant therapy, would improve disease outcomes in such patients.

METHODS - In this open-label phase 3 study, we randomly assigned 3360 patients to receive standard adjuvant systemic therapy either with or without zoledronic acid. The zoledronic acid was administered every 3 to 4 weeks for 6 doses and then every 3 to 6 months to complete 5 years of treatment. The primary end point of the study was disease-free survival. A second interim analysis revealed that a prespecified boundary for lack of benefit had been crossed.

RESULTS - At a median follow-up of 59 months, there was no significant between-group difference in the primary end point, with a rate of disease-free survival of 77% in each group (adjusted hazard ratio in the zoledronic acid group, 0.98; 95% confidence interval [CI], 0.85 to 1.13; P=0.79). Disease recurrence or death occurred in 377 patients in the zoledronic acid group and 375 of those in the control group. The numbers of deaths — 243 in the zoledronic acid group and 276 in the control group — were also similar, resulting in rates of overall survival of 85.4% in the zoledronic acid group and 83.1% in the control group (adjusted hazard ratio, 0.85; 95% CI, 0.72 to 1.01; P=0.07). In the zoledronic acid group, there were 17 confirmed cases of osteonecrosis of the jaw (cumulative incidence, 1.1%; 95% CI, 0.6 to 1.7; P<0.001) and 9 suspected cases; there were no cases in the control group. Rates of other adverse effects were similar in the two study groups.

CONCLUSIONS - These findings do not support the routine use of zoledronic acid in the adjuvant management of breast cancer. (Funded by Novartis Pharmaceuticals and the National Cancer Research Network; AZURE Current Controlled Trials number, ISRCTN79831382.)

[DewDiligence]

…why this drug has a new name instead of just reformulated Gleevec?

Dual brand names according to indication are pretty common in the pharma industry; other examples are AMGN’s Prolia/Xgeva, NVS’ Afinitor/Certican, GSK’s Wellbutrin/Zyban, and PFE’s Viagra/Revatio.

[urche]

Seems a small benefit from QT1571

Even though this study was powered to reach statistical significance on a primary endpoint (I don't know if there was more than one primary end point), the benefit in terms of patient outcomes seems pretty trivial---ability to walk 100 ft further in 6 minutes.

patients treated with QTI571 increased their mean 6MWD by 31.8 meters compared with placebo (p=0.002)

With no effect on mortality or rehospitalization, the price of the drug may be important in how much it is used.

By the way, anyone know why this drug has a new name instead of just reformulated Gleevec?

Urche

[hptaxis]

Novartis study shows QTI571 significantly improved walking distance in patients with life-threatening pulmonary arterial hypertension
http://www.novartis.com/newsroom/media-releases/en/2011/1549437.shtml

Phase III IMPRES study demonstrates potential benefits of QTI571 in patients who remain symptomatic despite treatment with two or more PAH therapies[1]

Evidence indicates that QTI571 targets an underlying cause of PAH by counteracting uncontrolled growth of arterial smooth muscle cells[2]

PAH is a debilitating disease of the heart and lungs affecting up to 260,000 people worldwide[3] leading to heart failure and death[4],[5]

[DewDiligence]

Swiss pharma swallow strong franc for Basel’s benefits: #msg-67139709.

[DewDiligence]

Slides from NVS’ half-day webcast on Alcon acquisition today

Also see #msg-65051727.


Overview of “new” Novartis:
http://www.novartis.com/downloads/investors/event-calendar/2011/1_delivering-on-our-strategic-objectives-joseph-jimenez.pdf (32 slides)

Novartis financials:
http://www.novartis.com/downloads/investors/event-calendar/2011/2_our-integrated-approach-to-create-value-jonathan-symonds.pdf (21 slides)

Alcon overview and competitive analysis:
http://www.novartis.com/downloads/investors/event-calendar/2011/3_alcon-the-global-leader-in-eye-care-kevin-buehler.pdf (19 slides)

Alcon’s financials:
http://www.novartis.com/downloads/investors/event-calendar/2011/4_alcon-creating-value-robert-karsunky.pdf (19 slides)

Alcon’s commercial portfolio:
http://www.novartis.com/downloads/investors/event-calendar/2011/5_alcon-uniquely-positioned-in-eye-care-stuart-raetzman.pdf (32 slides)

Alcon’s pipeline:
http://www.novartis.com/downloads/investors/event-calendar/2011/6_alcon-r-d-glimpse-into-the-future-sabri-markabi.pdf (27 slides)

[DewDiligence]

Is this the type of tumor that Jobs has?

Yes—it’s a very small market.

[hptaxis]

Novartis gets European approval for Afinitor
http://www.marketwatch.com/story/novartis-gets-european-approval-for-afinitor-2011-09-05

[Is this the type of tumor that Jobs has?]

LONDON (MarketWatch) -- Swiss drug company Novartis AG CH:NOVN -1.98% said Monday that the European Commission has approved its Afinitor tablets for the treatment of neuroendocrine tumors of pancreatic origin. Novartis said the approval was based on Phase III trial data that showed treatment with Afinitor more than doubled the time without tumor growth to a median of 11 months from 4.6 months and reduced the risk of cancer progression by 65% when compared with placebo. The decision applies in all 27 European Union member states, plus Iceland and Norway.

[DewDiligence]

Thanks, urche (eom).

[urche]

Maybe the eyeball isn't the whole reason.

I am inclined to think that the mood in Europe had more to do with the NVS move today than the possible boost to Lucentis sales.

http://blogs.barrons.com/focusonfunds/2011/08/31/european-etf-gains-as-royal-dutch-shell-novartis-hsbc-climb-2/?mod=yahoobarrons

The Vanguard MSCI Europe ETF (VGK) is up 1.6% .....

It isn’t a key holding in the broadly based ETF. But VGK’s largest name, Royal Dutch Shell (RDSB), is up nearly 2%. Other big names in the portfolio include: HSBC Holdings (HBC), which is also ahead by 2%; and Novartis (NVS), which is up 2.4%.

By the way, NVS share price YTD is a bit better than S&P 500 even before considering the nice dividend.

Urche

[DewDiligence]

Why NVS is up today: #msg-66695097.

[DewDiligence]

FDA Issues CRL for Ilaris in Gouty Arthritis: #msg-66616782.

[DewDiligence]

NICE rejects almost all expensive new drugs.

[ilpapa]

WSJ

By GORAN MIJUK

The U.K. health-care watchdog, in draft guidance, Friday recommended against reimbursing for Novartis AG's multiple-sclerosis medicine Gilenya because of uncertainties over the drug's clinical effectiveness for certain patients.

The move, which could deal a potential blow to the Swiss pharmaceutical giant's efforts to increase sales of the drug, drew fire from the U.K.'s Multiple Sclerosis Society, which said the regulator's assessment was disappointing.

Gilenya, which has been approved in the U.S., Europe and elsewhere, is one of Novartis's most promising medicines, expected to reach annual peak sales of more than $3 billion. The relatively high price for the pill—more than $40,000 per patient per year—has been considered justified because it is easier to use than standard treatments that require injections or infusions.

The U.K.'s National Institute for Health and Clinical Excellence, or NICE, while acknowledging that trial data showed that Gilenya benefits patients with highly active relapsing-remitting multiple sclerosis, said it was unclear how much the drug may help patients with other relapse forms.

NICE has rejected expensive drugs in the past, something analysts say is due to efforts to bring down health-care costs. Other countries such as Germany, Greece and Spain, have urged drug companies to curb prices. On average, austerity measures in Europe and the U.S. have shaved off more than 2% of drug sales in the first half of 2011, pharmaceutical companies have said.

"Unfortunately, our independent committee wasn't given sufficient evidence to show that Gilenya could reduce relapses considerably better than the other treatments," said Carole Longson, director of NICE's Health Technology Evaluation Center. "Based on the available clinical evidence and economic analysis, our independent committee concluded that Gilenya would not be effective good use of resources."

Novartis said it believes that Gilenya is a highly efficacious and cost-effective treatment for patients with multiple sclerosis and remains committed to engaging with NICE to ensure that patients will have access to the drug. Novartis in the past has offered alternative price plans to NICE.

NICE, whose independent committee will meet in October to review the consultation comments, said it expects to publish its final guidance on Gilenya in December. Until then, the drug will continue to be reimbursed, NICE said.

"This is disappointing news for people with multiple sclerosis," said Simon Gillespie, chief executive of the Multiple Sclerosis Society. "Access to treatments in the U.K. is very poor—in fact, people with multiple sclerosis would be better off living almost anywhere else in Europe." Around 100,000 people in the U.K. suffer from multiple sclerosis.

Write to Goran Mijuk at [e-mail]