Entresto will be available by prescription for patients whose condition is classified NYHA class II to IV, indicated to reduce the risk of cardiovascular death and heart failure hospitalization. It is usually administered in conjunction with other heart failure therapies, in place of an ACE inhibitor or other angiotensin receptor blocker. Entresto is currently undergoing review by health authorities around the world, including in Canada, Switzerland and the European Union.
As a result Credit Suisse has an Outperform rating for Novartis with a $110 price target.
The brokerage firm noted in its report that approval for LCZ696 practically happened overnight. The approval came six weeks ahead of the PDUFA date. The drug will launch shortly with the brand name Entresto. The rapid approval and positive label underpin Credit Suisse’s view that the mid-term underlying margin leverage and EPS growth at Novartis is underappreciated as LCZ696 and Cosentyx drive top line growth.
Credit Suisse forecasts had previously assumed a $9 daily average cost price in the United States. The firm revisited its peak sales assumptions for the announced $12.50 average cost price. It increased the worldwide HF-REF peak sales forecast to $5.1 billion from $4.2 billion.
On its investor call, Novartis stressed that initial U.S. ramp would be limited by formulary NDC blocks for six months post-launch given that 65% of patients will be Medicare Part D. This is in line with prior management commentary and Credit Suisse assumptions for a modest early launch.
Shares of Novartis were relatively flat at $99.10 late on Wednesday. The stock has a consensus analyst price target of $111.00 and a 52-week trading range of $84.17 to $105.82.
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