Q2 results preview – what to watch for this week [Novartis, Johnson & Johnson]

Second-quarter earnings season kicks of this week, with Johnson & Johnson and Novartis both reporting their results on Tuesday. Here's what we will be watching for with most interest…

Novartis

The key narrative at Novartis is revenue replacement, with generic erosion to Gleevec the notable headwind that is widely expected to drive a marginal year-on-year decline in sales in Q2. Shareholder focus is therefore sharpened on a number of recently launched products and late-stage pipeline opportunities…see Spotlight On Interview: Novartis CEO – our pipeline has been overlooked

Key products/pipeline updates to watch

Investors will be keen to assess the growth trajectory of heart failure treatment Entresto and any management update on revenue and market-access expectations for the drug in the second half of 2017.

Novartis should also provide an update on initial utilisation trends for its CDK4/6 inhibitor Kisqali in the US breast cancer market where entrenched competition in the form of Pfizer's Ibrance is notable – Physician Views Poll Results: Ibrance to remain in pole position, but Novartis' Kisqali looks primed for oncologist adoption

The anti-IL-17a monoclonal antibody Cosentyx has emerged as a critical growth driver for Novartis; performance updates will focus on the emergence of same-in-class competitor threats for the treatment of psoriasis and momentum for Cosentyx in the psoriatic arthritis and ankylosing spondylitis segments – ViewPoints: Novartis CEO – Cosentyx continues to deliver on all front and Physician Views Poll Results: Cosentyx emerges as a preferred psoriasis brand with momentum on its side

An FDA advisory committee recently voted unanimously to recommend approval of the CAR-T treatment tisagenlecleucel-T for paediatric and adolescent acute lymphoblastic leukaemia (ALL). Analysts will be looking for any additional details they can squeeze out of management regarding Novartis' commercialisation strategy – KOL Views Results: Inevitable approval of tisagenlecleucel-T an important first step to revolutionising blood cancer therapy, says leading oncologist

Novartis recently confirmed that canakinumab, in combination with standard-of-care therapy, reduced the risk of major adverse cardiovascular events in patients with prior myocardial infarction in the Phase III CANTOS study. Results will be presented in full later this year and analysts will be keen to read management body language on the magnitude of benefit shown – Physician Views Poll Results: Cardiologists outline expectations for Novartis' canakinumab

Another recent top-line announcement to whet the appetite, brolucizumab (also known as RTH258) may hold the potential that allows Novartis to become an even bigger player in the age-related macular degeneration market – Physician Views Poll Results: Novartis' new AMD data viewed as compelling by ophthalmologists but real-world metrics are blurry

Johnson & Johnson

Johnson & Johnson's pharma sales are likely to come under pressure in Q2 as a result of both biosimilar and branded headwinds. In response, management can point to a strong legacy in novel approvals and a catalyst-rich remainder of 2017. Sales could also exceed expectations following earlier than expected closure of the Actelion acquisition – Spotlight On: J&J uses ‘pharma review’ to outline plan to overcoming near-term patent cliff

Key products/pipeline updates to watch

Analysts predict that Darzalex could become a cornerstone therapy in multiple myeloma and approval in second-line patients was granted by the FDA last November. Has the company seen any meaningful traction in the second quarter?

In the psoriasis market, Stelera faces competition from new biologic rivals from Novartis, Eli Lilly and Valeant Pharmaceuticals (Cosentyx, Taltz and Siliq, respectively). How is Stelara's performance holding up and will management lay out any expectation for its newly approved agent Tremfya? ViewPoints: Tremfya provides Johnson & Johnson a chance to double down in psoriasis

Diabetes treatment Invokana recently became the second SGLT-2 inhibitor to demonstrate a cardiovascular outcomes benefit, but also appears to have a weaker side-effect profile versus same-class competitors. Will Q2 results show a deceleration in sales growth for the drug? – KOL Views Results: CANVAS results bolster SGLT-2 class but the spoils won’t be distributed evenly, says leading diabetologist

Can Johnson & Johnson leverage new data showing additional benefit for its prostate cancer treatment Zytiga and boost sales as the product enters the twilight period of patent exclusivity? – KOL Views Results: New Phase III data are a big problem for Xtandi but clock is ticking for Johnson & Johnson to capitalise, according to leading urologist

Results from the COMPASS study (evaluating the oral anticoagulant Xarelto in coronary artery disease and peripheral artery disease) will be presented next month. With competition from Bristol-Myers Squibb and Pfizer's Eliquis intensifying, this could represent a significant opportunity for upside – ViewPoints: Having hit the doldrums, COMPASS may chart a course to new growth for Bayer, Johnson & Johnson’s Xarelto

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