Press Release: Novartis maintains growth momentum -3-

Afinitor/Votubia 125 -49 -44 406 -47 -43

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Kymriah 134 -8 0 397 -11 -4

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Top 20 brands total 8 037 -3 4 24 260 0 6

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R&D update - key developments from the third quarter

New approvals

Scemblix Approved in the EU for adult patients with Philadelphia

chromosome-positive CML in chronic phase, previously

treated with two or more tyrosine kinase inhibitors

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Regulatory updates

Biosimilar FDA and EMA accepted sBLA/MAA for proposed first-of-a-kind

natalizumab multiple sclerosis biosimilar natalizumab. The application

includes all indications of the reference medicine

Tysabri(R) (natalizumab)

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Biosimilar FDA accepted for review sBLA for high concentration

adalimumab formulation of biosimilar Hyrimoz (adalimumab-adaz).

The application includes the indications of the reference

medicine Humira(R) (adalimumab) not protected by orphan

exclusivity

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Ganaplacide/ FDA granted Fast Track Designation and Orphan Drug

Lumefantrine Designation for ganaplacide and lumefantrine (combination),

which is being co-developed with Medicines for Malaria

Venture, for acute, uncomplicated malaria

Results from ongoing trials and other highlights

Iptacopan In October, Ph3 APPLY-PNH trial met its two primary

endpoints for superiority vs anti-C5 treatment in

adult paroxysmal nocturnal hemoglobinuria (PNH) patients

with residual anemia despite prior anti-C5 treatment

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Cosentyx Positive results from two parallel, pivotal Ph3 trials

(SUNSHINE and SUNRISE) demonstrated Cosentyx 300 mg

resulted in rapid and sustained relief from signs

and symptoms of moderate-to-severe hidradenitis suppurativa

(HS). A statistically significant proportion of patients

achieved HiSCR with Cosentyx 300 mg dosed every two

weeks vs placebo at Week 16 in both trials. Cosentyx

300 mg dosed every four weeks was superior to placebo

for achieving HiSCR in SUNRISE, but not statistically

significantly different in SUNSHINE. Available data

support the sustained efficacy delivered by Cosentyx

over continuous treatment up to 52 weeks. Safety results

were consistent with the well-established Cosentyx

safety profile. Data presented at EADV 2022

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Kisqali New large pooled exploratory analysis from MONALEESA-2,

-3 and -7 reinforces OS benefit (median OS of 63.4

months) with Kisqali + endocrine therapy (ET) vs ET

alone (median OS of 51.8 months), in HR+/HER2- aBC

patients with visceral metastases, which are typically

associated with a poor prognosis. Data presented at

ESMO 2022

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Tislelizumab Ph3 RATIONALE 301 trial demonstrated non-inferior

OS for tislelizumab vs sorafenib (median OS: 15.9

months vs 14.1 months) in patients with previously

untreated unresectable hepatocellular carcinoma. Tislelizumab

demonstrated a favorable safety profile with fewer

grade >=3 adverse events (AEs) and fewer AEs leading

to discontinuation. Data presented at ESMO 2022

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Canakinumab Ph3 CANOPY-A trial did not meet its primary endpoint

of disease-free survival in the adjuvant setting in

patients with stages II-IIIA and IIIB completely resected

NSCLC. No unexpected safety signals were observed

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Branaplam Temporarily suspended dosing of study drug in the

Ph2b VIBRANT-HD trial in adults with Huntington's

Disease, based on a recommendation from the independent

Data Monitoring Committee, following a planned data

review. Decision based on findings suggestive of potential

peripheral neuropathy in some participants. Study

update to be provided following assessment

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Denosumab Integrated Ph1/3 clinical trial ROSALIA met primary

endpoints, confirming proposed biosimilar denosumab

matches reference product in terms of pharmacokinetics,

pharmacodynamics, efficacy, safety and immunogenicity

in postmenopausal women with osteoporosis

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UNR844 Interim analysis of the Ph2b dose ranging study evaluating

safety and efficacy in patients aged 45-55 years with

presbyopia did not meet its primary endpoint of demonstrating

a statistically significant dose response at Month

3. Based on these results, Novartis has taken the

decision to discontinue the Ph2b study and UNR844

program

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Capital structure and net debt

Retaining a good balance between investment in the business, a strong capital structure and attractive shareholder returns remains a priority.

During the first nine months of 2022, Novartis repurchased a total of 94.2 million shares for USD 8.1 billion on the SIX Swiss Exchange second trading line, including 83.3 million shares (USD 7.2 billion) under the up-to USD 15 billion share buyback announced in December 2021 and 10.9 million shares (USD 0.9 billion) to mitigate dilution related to participation plans of associates. In addition, 1.3 million shares (for an equity value of USD 0.1 billion) were repurchased from associates. In the same period, 11.6 million shares (for an equity value of USD 0.7 billion) were delivered as a result of options exercised and share deliveries related to participation plans of associates. Consequently, the total number of shares outstanding decreased by 83.9 million versus December 31, 2021. These treasury share transactions resulted in an equity decrease of USD 7.5 billion and a net cash outflow of USD 7.9 billion.

As of September 30, 2022, net debt increased to USD 7.7 billion compared to USD 0.9 billion at December 31, 2021. The increase was mainly due to the USD 7.5 billion annual dividend payment and net cash outflow for treasury share transactions of USD 7.9 billion, partially offset by USD 8.4 billion free cash flow during the first nine months of 2022.

As of Q3 2022, the long-term credit rating for the company is A1 with Moody's Investors Service and AA- with S&P Global Ratings.

2022 outlook

Barring unforeseen events; growth vs prior year in cc

Innovative Medicines Sales expected to grow mid single digit

Core operating income expected to grow mid to high

single digit, ahead of sales

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Sandoz Sales expected to grow low to mid single digit (revised

upwards from low single digit growth)

Core operating income expected to grow low single

digit (revised upwards from broadly in line)

Group Sales expected to grow mid single digit

Core operating income expected to grow mid single

digit

Our guidance assumes that we see a continuing return to normal global healthcare systems, including prescription dynamics, and no Sandostatin LAR generics enter in the US.

In June 2022, an appeals court held the Gilenya US dosing regimen patent invalid. Novartis will file a petition seeking further review with the US Supreme Court, which denied a motion to stay the issuance of the formal appeal mandate while further review is ongoing. FDA-approved Gilenya generics now launched in the US. In Q3, Gilenya US sales were USD 326 million.

Foreign exchange impact

If late-October exchange rates prevail for the remainder of 2022, the foreign exchange impact for the year would be negative 7 percentage points on net sales and negative 8 percentage points on core operating income. The estimated impact of exchange rates on our results is provided monthly on our website.

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October 25, 2022 01:00 ET (05:00 GMT)