Novartis (NYSE:NVS) is preparing for a crucial period as investors look beyond its quarterly earnings release on Tuesday and focus on three major clinical trial results expected later this year that could determine the company's long-term growth trajectory.
The Swiss pharmaceutical group's upcoming studies are widely viewed as key to supporting its premium market valuation, particularly as the industry prepares for significant patent expirations over the coming years.
Analysts believe the outcomes for cardiovascular treatment pelacarsen, multiple sclerosis candidate remibrutinib and genetic disease therapy del-desiran will play an important role in shaping Novartis' product portfolio well into the next decade.
"Markets can be unforgiving in R&D…with even a small shortfall in clinical trials being punished heavily, whilst knockout results are treated with relief," said Ketan Patel, a fund manager at London-based Novartis investor Whitefriars.
The importance of successful drug development has been highlighted across the pharmaceutical sector. Earlier this month, AstraZeneca shares declined after a late-stage trial setback involving a treatment for a neurological disease with potential cardiovascular applications.
Chief Executive Vas Narasimhan, who has led Novartis for the past eight years, has previously stated that the company expects to continue growing despite what he has described as the largest wave of patent expirations in its history.
"Management's body language on those (trial) readouts will be very much a focus," said Barclays analyst James Gordon.
According to analyst estimates, the three experimental medicines could collectively generate more than $10 billion in peak annual revenue, helping to offset expected patent expirations for key products including psoriasis and arthritis treatment Cosentyx and breast cancer medicine Kisqali later this decade.
Meanwhile, heart failure drug Entresto is already facing generic competition, with analysts forecasting sales could decline by around $4 billion this year.
Some analysts caution that investor expectations are already reflected in Novartis' valuation, with the company trading at roughly 16 times forward earnings. Its shares have climbed approximately 11% this year and around 25% over the past 12 months.
"At 16 times, you do need those growth levers to come through," said Jefferies analyst Michael Leuchten.
Source: Yahoo Finance Top News — This article was automatically imported from the source. Read full article at original source →
