Novartis Q3 Beat on Strong Cosentyx Sales, Pluvicto Falls Short

Novartis reported a strong performance in the third quarter, surpassing analyst expectations primarily due to robust U.S. sales of Cosentyx. On Tuesday, the company announced its third-quarter financial results, showcasing a 10% year-over-year increase in net sales and once again raising its full-year earnings forecast, powered by the strong showing of its prescription medications.

The Swiss-based pharmaceutical giant achieved over $12.8 billion in net sales for the quarter, exceeding the consensus forecast by 1%. Core earnings-per-share (EPS) reached 2.06, which was 6% higher than analyst predictions and represented a 20% increase from the same period last year. The company’s third-quarter net income was almost $3.2 billion, and it generated nearly $6 billion in free cash flow.

According to Jefferies analyst Peter Welford, Novartis' impressive Q3 performance can be attributed to the success of Cosentyx (secukinumab), an anti-IL-17A antibody used to treat psoriasis, ankylosing spondylitis, and psoriatic arthritis. Cosentyx saw a 28% increase, bringing in $1.7 billion, which surpassed consensus estimates by 7%.

Novartis also pointed out that its heart failure medication Entresto (sacubitril/valsartan) was a significant growth factor in the third quarter, with $1.86 billion in net sales, reflecting a 26% year-over-year growth. However, Welford noted that Entresto’s performance was slightly disappointing, missing analyst forecasts by 2%. Additional key contributors to Novartis' success included the breast cancer treatment Kisqali (ribociclib) and the multiple sclerosis drug Kesimpta (ofatumumab).

Pluvicto (lutetium (177Lu) vipivotide tetraxetan), a targeted prostate cancer therapy from Novartis, experienced a 50% year-over-year growth, bringing in $386 million during the quarter. This figure was inflated by a one-time revenue adjustment in Europe, and without it, Pluvicto would have seen a 36% increase in sales, which some analysts believe did not fully meet expectations.

Despite the positive financial results, Novartis' stock saw a 3% decline in Tuesday morning trading following the Q3 results. Nevertheless, the company remains optimistic about its business outlook for the remainder of the year. Novartis has raised its forecast for net sales growth, now predicting an increase in the low-double-digit range. The previous guidance had estimated growth in the high single to low double digits. Furthermore, the company now expects core operating income growth to be in the high teens range.

Regarding its pipeline, Novartis announced that additional follow-up time would be required to determine the appropriate regulatory path for its BET inhibitor pelabresib. This drug candidate became part of Novartis' portfolio in February 2024 when the company acquired MorphoSys for $2.9 billion. Novartis is conducting a Phase III MANIFEST-2 study on pelabresib in combination with Jakafi (ruxolitinib) for treating myelofibrosis. In connection with this acquisition, Novartis reported an $800 million impairment in the third quarter.