‘Most exciting ever’ Novartis drug points to huge sales

Sales forecasts for Novartis’s new heart failure drug are being ramped up by analysts after strikingly good clinical trial results for a medicine doctors expect to transform treatment of the deadly disease.

Shares in the Swiss drugmaker jumped over 3 percent to a record high today as data for LCZ696 released at the weekend beat expectations, showing the medicine slashed deaths and hospitalisations, worked across all groups of patients, and had no serious side effects.

David Epstein, Novartis' head of pharmaceuticals, said the launch of the drug next year promised to be the company's most exciting ever and profit margins on the medicine would be good. The results of a keenly-awaited clinical trial on LCZ696 were released at the annual meeting of the European Society of Cardiology on Saturday and published in the New England Journal of Medicine with a glowing editorial.

Investigators working on the study and the company itself believe it has potential to replace drugs that have been central to treating heart failure for a quarter of century, opening up a multi-billion dollar sales opportunity. “It will be possibly the most exciting launch the company has ever had,” Epstein told investors.

Earlier, Novartis shares were up 3.3 per cent at 85.1 Swiss francs, after touching a new high of 85.2 francs. Analyst forecasts for LCZ696 have been climbing in recent months and the consensus for sales in 2019 - four years after its expected launch - stood at $1.9 billion at the end of last week, according to Thomson Reuters Cortellis.

That number now looks out of date, with several analysts in research notes on Monday anticipating peak sales of $5 billion or more. There could be more upside too. Jefferies analysts, in common with many others, are not currently including in their $5.2 billion sales estimate a second group of heart failure patients beyond those in the current clinical trial.

The study unveiled in Barcelona targeted heart patients with reduced ejection fraction, where the heart muscle does not contract effectively. However,

Novartis is also starting a trial in a similar-sized group with preserved ejection fraction, where the ventricles do not relax as they should. LCZ696 is a vindication of Novartis’s strategy of stepping up its research efforts outside oncology, according to Epstein, who is keen to build up a broad portfolio when it comes to reinvesting profits from this drug on future research.

"This data further supports our analyses that show Novartis has the world's best R&D engine globally, even better than Roche, " said Liberum analyst Naresh Chouhan.

Reuters