Good morning and good afternoon, and welcome to the Novartis Q3 2018 Results Release Conference Call and Live Audio Webcast. Please note that during the presentation, all participants will be in listen only mode and the conference is being recorded. A recording of the conference call, including the Q and A session, will be available on our website shortly after the call With that, I would like to hand over to Mr. Samir Shah, Global Head of Investor Relations. Please go ahead, sir.
Thank you very much, and good morning and good afternoon, everybody. Before we start, I just wanted to read to you the Safe Harbor statement. The information presented today contains forward looking statements and involve known and unknown risks, uncertainties and other factors that may cause actual results to be materially different from any future results, performance or achievements expressed or implied by such statements. Please refer to the company's Form 20 F on file with the U. S.
Securities and Exchange Commission for a description of some of these factors. In addition, just wanted to point out that the information presented in respect of the proposed Endocyte transaction may be deemed to be solicitation material. In connection with the proposed Endocyte transaction, Novartis and Endocyte intend to file relevant materials with the U. S. SEC.
We urge you to read these materials, including a proxy statement of Endocyte and all other relevant documents filed with the SEC when such documents become available and which will be available for free. The proposed Endocyte transaction has not been completed and there can be no guarantee that the proposed Endocyte transaction will be completed or that it will be completed as currently proposed or at any particular time. And with that, I'll now hand across to Vas.
Thank you, Sameer, and thanks everyone for joining today's conference call. We're very pleased with our performance in quarter 3 where we continued our journey to be a leading focused medicines company powered by breakthrough innovation in data and digital technologies. When you go to Slide 4, you can see that our group performance was strong with sales growing 6% in constant currency and core operating income, up 9% in constant currency. Harry will go through the numbers in a bit more detail. We're also quite pleased with our innovation milestones the quarter and I'll go through these in the upfront section.
But with AVX-one hundred and one filing in U. S, Europe and Japan, BAP-three twelve filed in U. S. And Europe, the approval of Kymriah in multiple geographies and the proposed acquisition of Endocyte. I think we're also demonstrating we have the innovation power and the innovation to continue to drive growth well into the future.
So if you go to Slide 5, when you look at the underlying drivers for that strong performance, you can see that Cosentyx and Entresto continue to perform well. I'll go into each of those in a bit more detail. But I also wanted to point out our oncology growth drivers are tracking extremely well, Promacta, Tafenar and Mekanist as well as Jakavi. And I'll say a bit more about Lutathera. It's become a bright I think a real bright point for us as we now see this as a potential blockbuster medicine.
I'll show you a little bit more data about where we see Lutathera trending right now. Now when you move to the next slide and you look at Cosentyx, I think as we've hopefully now shown, it's really established as the leading differentiated IL-17A inhibitor and had outstanding performance in the quarter. You can see the 37% growth, really strong momentum by Paul and his team across all indications and geographies. Importantly, we surpassed HUMIRA and TRx and psoriatic arthritis in the United States. And then we have recent 5 year data, which similar to what we've shown in psoriasis, shows that in PSA and NAS, we showed sustained benefit complementing our long term data, as I said, in psoriasis.
I think that really builds out the profile of Cosentyx as the leading IL-17A inhibitor on the one hand in psoriasis. And then in rheumatology really being unique in the mechanistic approach it has to treating the underlying joint disease that are really prominent in these two conditions. So going a little bit deeper on psoriasis on Slide 7, you can see that we continue to gain market share in psoriasis in a very competitive market. I think Paul could say more about this. There's a few reasons for this.
One, we continue to believe that within the physician mindset and the payer mindset, there are 2 classes here they're thinking about in terms of the new drugs, IL-17A and IL-twelvetwenty three. We are the leading IL-17A with some really important unique data sets including that we can treat multiple manifestations of psoriatic disease including scalp, nail, palmar planter and joint involvement. And 2 thirds of patients have those additional sources of the disease. And then on top of that, when you look at our real world evidence data sets we've been putting out into the community, they consistently confirm the safety and efficacy benefits of Cosentyx. So we're quite pleased and really looking for Cosentyx to continue its strong trajectory into the coming years.
Now moving to Slide 8. Entresto as well had a very strong performance in the quarter, doubling versus Q3 2017. You can see both U. S. And ex U.
S. Sales were nicely up. I think importantly here, we're starting to roll out data sets from trials that we began in 2015 to really build out the profile of Entresto. Both TRANSCION and PIONEER are taken together will hopefully enable us to really show that Entresto can be used in the hospital setting. The transition study has already read out and the PIONEER study will be something we'll be presenting as a late breaker at in November.
That will enable us to ensure that patients are getting Entresto at the right time in the hospital. In addition, the PARAGON study continues its plan following the interim analysis that we talked about earlier this year with results expected in mid-twenty 19. I would also note the PARAGISE study, which is in pre heart failure post MI patients is also enrolling according to plan. So overall, the interest of PICTURE looking strong and we continue to see solid momentum around the world with this medicine. I mentioned Lutathera and I wanted to show on Slide 9 the kind of really explosive performance we're seeing now in Lutathera.
It's off to a strong start in the U. S. You can see here number of doses per quarter and this trend is really, I think, very encouraging. And we're now starting to roll out the medicine in Europe. In the U.
S, we have 85 centers that are actively prescribing. We have 70 percent coverage of the relevant lives. And in the UK now, we have 18 centers actively prescribing. And I think seeing the strength of the performance in Lutathera, feeling now that it's a potential blockbuster medicine, seeing this outperform our deal case is part of the rationale when we come to the Endocyte deal for the confidence we had in taking the step to acquire Endocyte. And I'll talk more about that in a few slides.
Now moving to Sandoz on Slide 10. Think Sandoz continues to perform well in a difficult environment, both in the U. S. But also around the world. When you look at Q3 2018 performance, the U.
S. Impact continued at the industry wide pricing pressure, but we were able to grow sales ex U. S. At 2%. And importantly, our biosimilars portfolio is growing at 21%.
And when you think about how we're going to drive Sandoz moving forward, a lot of it is about we we announced that our planned sale of the core GX business to Aurobindo. And then we're also expanding rapidly in biosimilars in Europe and Richard can speak more about that. But both Rixathon and ORELZY are performing well. We have the approval for our adalimumab biosimilar and our infliximab biosimilar. And I would note that we are now in the market with our adalimumab biosimilars in 4 countries.
And we have a positive CHMP opinion for pegfilgrastim, which should enable a launch, we hope, in Q4 assuming approval. So overall, I think it's Sandoz on the right track, challenging environment, but I think we're taking the steps necessary to put the division in a place where it can succeed. So moving to Slide 11, Alcon continues its strong sales growth, and I think that's really the key point of the Alcon story. We need to keep generating that strong sales growth across segments and we did that in the quarter. You can see 7% sales growth in surgical, 3% sales growth in Vision Care.
Core operating income grew 1%. And we had always known that the margin story for Alcon and this year was going to be a little bit choppy coming out of the trough 2017 margins. David Endicott is here and he can provide more perspective. But when you look at the year to date performance in Alcon, we have core operating income growing at 14%, the core ROTH at 18.6%. So business is on the right direction and is continuing its trajectory as we've stated and we remain confident as Harry can discuss further in the overall trajectory of the margins.
Now when you go to Slide 12, just to say a word in the quarter, we had a number of key data readouts and regulatory milestones. And I don't want to go through all of these, but a few I wanted to highlight on this slide. I will talk about AVX-one hundred and one and Endocyte specifically, but I did want to note that PAS-three twelve was filed in SPMS in both U. S. And Europe.
We will be presenting the BYL-seven nineteen study results at the President's presentation in ESMO over the weekend and we'll be holding an investor call around that so everybody can understand better that data. And we're importantly driving our in line brands really across the various brands, whether it's Gilenya, Kisqali, Aimovig, Tafmec. We continue to generate data to support these important growth drivers at the company. Now before moving off the side, I wanted to give an update on ACZ885. Yesterday, we received a complete response letter from the FDA regarding the filing in cardiovascular disease.
As we had said last year, we were focused all along on trying to get the hsCRP responder group as the primary primary driver in the label so that we could make sure the relevant patient population would get treated and there would be appropriate access to the medicine. We presented our case to the FDA. The FDA has asked additional questions and have requested additional data with respect to the responder population and we're evaluating now what would be the appropriate next steps. I would want to highlight that we continue on track with our ACZ-eight eighty five studies in lung cancer, where we're enrolling studies in adjuvant lung, first line metastatic lung and second line metastatic lung, and we're on track for readouts of those studies between 2020 2022. So moving to Slide 13, diving a bit more on AveXis.
There's been a lot of discussion, I think, given the competitive dynamics in the SMA around the AVX-one hundred and one program. So I wanted to again level set everyone on the extraordinary results that you see with this medicine in SMA Type 1. I think whether you look at the videos that are posted by the NIH Director or if you look at other testimonials for patients, this is simply extraordinary medicine where you have patients who would otherwise be expected to die, many of them out now beyond 4 years of age developing normally. So I think a few key points to highlight here. First I think whenever you're looking at results in SMA, it's important to look at the baseline study population because there's a lot of variability in the baseline characteristics of these patients.
When you look at the efficacy, we had 100% of patients alive and without need for permanent medilatory support. And if you can imagine a parent wanting to treat their infant, they're certainly not going to want to take the risk that there's some percentage of patients that die with respect to a given therapy. So we believe this is quite material and quite important when you look at treating infants for a devastating disease. We had 9 out of 10 achieve a CHOP INTEND score of greater than 40 at 8 months, 11 out of 12 greater than 50 during the 24 month study, and 11 out of 12 achieving a sitting unassisted during the 24 month study. And when you look actually at the CHOP INTEND scores, we're getting patients in that relevant period of time where you can measure CHOP INTEND into the high 50s or low 60s for their CHOP INTEND scores.
CHOP INTEND is less relevant after the 1st year of life, but I think that shows you not only the efficacy benefit from a mortality standpoint, but also the functional benefit you get with these patients. Strong durability, we continue to achieve major milestones with this therapy out beyond 4 years for the patients we've been able to track 2 years in the reported data. I think again, I'd want to highlight to those patients who we've disclosed in previous congresses that are tracked for even longer than 2 years, only a portion of them have received other therapies. There's also a portion of them that received no other therapies and continue to do extremely well. When you think about that mechanistically, we know that motor neurons don't divide.
You have your maximal motor neurons as an infant. When you receive an IV gene therapy, you would expect all of the most of the motor neurons, we hope perhaps all the motor neurons to have the appropriate gene inserted. So the mechanistic rationale for waning of effect is not there in our view. Now there could be other things that happen as we do longer term follow-up. But I think it's important that we stick to the science and stick to the data when you're looking at these kinds of medicines.
Lastly, I would point out on the right hand side, when you look at the speed of response, the speed of response is quite striking with respect to AVX-one hundred and one and other relevant therapies. I think that will be important for SMA Type 2, 3. And I'll talk a little bit more about where we are on those studies in a moment. So moving to the next slide, when you look at SMA type 1, we have successfully filed now in U. S, Europe and Japan, all ahead of schedule for SMA Type 1 with AVX-one hundred and one.
We have a potential approval, we believe, in the U. S. In the first half of twenty nineteen. We do have a breakthrough therapy designation there. In the EU, we have we believe the approval at mid-twenty 19.
We do have prime designation in the EU. And we initiated submission in Japan in mid September. We anticipate the completion by year end of the full file. And again, we expect approval in the first half given that we have SAKIGAKE designation, one of the first medicines to receive this designation in Japan. So we're quite pleased with the progress in SMA Type 1, truly transformational foundational therapy for these patients.
Now on Slide 15, give you a little bit of an update on where we are on the trials, because I know there have been some questions and some misinformation regarding this. When you look at where we are, the START study, which is a long term follow-up for the estimate type 1 patients, we have 12 patients enrolled. When you look at the STR1VE study, which is a single IV dose confirmation study, patient enrollment is complete. When you look at the STRIDE EU study, we have 6 patients enrolled and patients it's enrolling very well. We expect to complete enrollments shortly.
When you look at the SMA Type 2, Type 2, 3 study with intrathecal dosing, patient enrollment is complete. And when you look at the pre symptomatic SMA studies, which are being conducted under the rubric of newborn screening, there's 6 patients enrolled and we're seeing very heavy demand for that study as well. So altogether, clinical program is on track to continue to expand beyond SMA1 into Q3 and then eventually into newborn screening. So going to Slide 16, I want to say a word now about a few slides about Endocyte. The acquisition we announced earlier today, which really builds on the earlier acquisition we've made with Advanced Accelerator applications.
As I've tried to articulate to all of you, we're on a journey to focus our company as a medicines company. And within being a medicines company, along with our appropriate diversification and therapeutic areas to build leadership in 3 platforms, which we believe are advanced therapy platforms that will drive differential growth. Cell therapy, we have Kymriah and then building beyond that. Gene therapy, we acquired AveXis and are building out our portfolio there. And finally, in radiopharmaceuticals or radioligand therapy in this case.
Now when you look at the specific asset that we have here in Endocyte, which we would plan to bring into our advanced accelerator operations, Prostate cancer is expected to be an $11,000,000,000 market globally in 2024. This medicine is expected to provide an additional treatment option for prostate cancer. And I'll talk more about that because I think there's some misunderstanding in some of the notes I've seen over the course of today as to what exactly we are treating here versus other therapies that are on the market. This is a first to market potential product in a PSMA radioligand therapy. The enrollment of Phase 3 has been initiated and is on track.
FDA feedback, which we reviewed is very clear that radiographic PFS can be used as the endpoint, which should enable a relatively rapid, we believe, timeline for the Phase 3 study. It's a significantly derisked profile when you look at the Lancet paper that's been published on the strong Phase 2 data. There's extensive preclinical data as well as various other investigator initiated study data that we reviewed, which gives us confidence in the overall profile of the medicine. Now importantly, this expands our nuclear medicines platform following the launch of Lutathera. It gives us a second radioligand therapy.
It allows us to eventually move this PSMA-six seventeen therapy into earlier lines of therapy and then we have opportunities to expand the platform in the future. One thing not noted in this slide, this also would enable us to have new manufacturing capabilities that we could then apply to our radioligand portfolio in the future. So when you go to Slide 17, what exactly do we talk about here? And this is I think a very important point and I hope investors will take a moment. This is a therapy as is the case with Lutathera where we link a radioactive particle to a ligand and this ligand has high specificity for a given tumor cell type.
And that way we can target the radiation directly to the relevant cancer. So it's a very targeted approach. We do that with neuroendocrine tumors and here we do it with PSMA in prostate cancer. This high affinity targeting allows us to really manage, I think improve the efficacy and also manage the safety profile. Now other therapies available in the market are simply infusions of Radium that are actually just used for bone metastases, not for metastatic prostate cancer.
So as you look at your benchmarks for what are the appropriate sales potential, please ensure you're using relevant benchmarks when you do this. Now once this is bound, the particles are bound together, they get internalized and you would expect that the cancers then ultimately respond and that's the can see on the left hand side. We had a solid trend in these patients who had failed multiple lines of therapy in PFS as well as in overall survival. And we've seen similar data from other smaller study sets in IITs as well. So when you go to the next slide, you can see our Phase III VISION trial, which currently enrolling, takes a 2 to 1 randomization, takes patients with metastatic prostate cancer.
They have to have a positive PSMA scan and then have had a prior taxane or a prior novel androgen access drug. And after that, then they're randomized into either the PSMA drug or to best supportive care and then we'll see we have 750 patients enrollment initiated. And as I said, FDA has agreed to the endpoints on both primary and secondary. So when you go to Slide 20, you can see that some of the deal characteristics, I can certainly happy to answer any questions, but I think it's relatively straightforward. We funded through cash.
We don't expect dilution with respect to this deal. We expect it to start contributing to group sales in 2021. Our overall financial expectations is the medicine has a blockbuster potential and if we were able to get it into earlier lines of therapy, we can have even higher sales potential with this medicine, which would generate an attractive IRR to the company. And of course, all of this is subject to the appropriate approvals from Endocyte shareholders and the relevant regulatory agencies. So if you go to Slide 21, the expected next steps the deal, of course, we'll continue to generate the data and provide additional information as it becomes available.
We have filed the proxy statement we will file the proxy statement with the SEC and we are hopeful to have closing in the first half twenty nineteen subject to the various considerations. So moving to Slide 22, last slide before I'll turn it over to Harry. We are going to hold an R and D and investor update on November 5. We'll have a deep dive on AVX-one hundred and one. We'll have some of the key scientists there, so investors can speak to the team directly on where we are in that program.
And then we'll have a number of other detailed updates on a range of programs. A few that I would want to call out that are beyond what we traditionally talked about QAW-thirty nine, our CRTH2 antagonist for severe asthma, where we may now start to move towards study readout. We really want to make sure everyone understands that we believe substantial potential is for this medicine. We'll go through our multiple sclerosis portfolio, BAF, ofatumumab as well as the status with respect to Gilenya. We'll provide you all the RTH258 2 year data and continue to demonstrate the profile of that medicine as well as provide an update on the oncology late stage portfolio building off of the BYL presentation we will make this weekend and provide an update to you early next week.
So overall, I think a really strong performance and I'll hand it over to Harry to give you some more perspective from a financial standpoint.
Thank you, Bart. Good morning, good afternoon, everyone. So as usual, my comments refer to growth rates in constant currencies unless otherwise noted. So on Slide 24, you see the summary of our quarter 3 year to date performance. We continued to deliver good growth with quarter 3 sales up plus 6% and year to date sales up plus 5%.
This performance drove accretive bottom line growth as well. So core operating income was up 9% in the quarter and 7% year to date. As you can see, free cash flow grew plus 10% the 1st 9 months to US8.8 billion dollars driven by this very strong operating performance. Year to date operating income grew 3%, driven by the quarter 3 operating income declining 13% as we recognized charges for ongoing restructuring programs and the impairment of Icon's iPass. Turning to Slide 25.
We see here the quarter 3 and year to date core margins of the group and each division. Strong sales uptake in Innovative Medicines drove margin expansion for the division and the group. Innovative Medicines margin was up plus 2.1 percent points in the quarter, bringing year to date margin up 1.1% to 32.4% of sales. Group margins improved by 0.8% points in the quarter and plus 0.5% points year to date, driving the margin to 27% of sales. Slide 26, wanted to have a quick view on the Alcon sales and margin progression over the past few years based on September year to date numbers for each of the years.
As you can see, investments in 2016 2017 were necessary to stabilize and then grow again the top line. In 2018, the strong sales growth is driving margin expansion. Year to date core margin improved by over 1 point to 18.6 percent of sales as compared to a trough margin year in 2017. We have always said we expect some quarterly fluctuations in the margin for Alcon and David Endicott clearly can give you some further flavor on that. In quarter 1 2018, the spending was lower and in quarter 3 2018, Alcon increased investments behind some key brands.
In quarter 4, typically margins are lower each year compared to the full year margin due to increases in equipment sales as hospitals finalize their purchases before year end. Hence, it's always important to look at year to date and full year numbers. Clearly, we expect 2018 full year core margin to be up with 2017 full year and then full year margin growth in each of the following years. Importantly, mid- to long term, Alcon remains committed and on track to achieve margins in line with the medical devices industry, I. E, in the range of low to mid-20s.
The margin expansion is expected to be driven by continued strong top line growth, improved gross margin and cost leverage. On Slide 27, just back to the guidance. We are increasing our group sales guidance to grow mid single digit, so at the higher end of what we said before, given our year to date 5% sales growth and we expect that to continue at a nice level in quarter 4. This is driven by the strong performance of the Innovative Medicines division where we also can revise up to full year guidance to grow in the mid- to high single digit range. This guidance includes also when you look at the core operating income, we reconfirm our core operating income guidance as issued in January, expected to grow in the range of mid to high single digit.
And as I mentioned earlier also on the year, the guidance includes Abaxis R and D and pre launch investments. And as you see, this guidance is also very consistent with our year to date performance where we grew sales plus 5% and core operating income plus 7%. On Slide 28, just a quick update on the expected currency impact assuming mid October rates would hold for the future. On full year 2018, the currency impact is expected to be flat on both sales and core operating income. As you can see here, the strength in U.
S. Dollar has a negative impact on half 2, offsetting the positive impacts we have seen in half 1. Should currency stay at the current level throughout 2019, we see a negative effect of minus 2% on sales and minus 3% to minus 4% of core operating income for full year 2019 results. Please, as always, pay close attention to this as you build your models. And as most of you know, we are always updating the expected currency impact each month on our website.
And with that, I turn back to Vas.
Thank you, Harry. So when you
go to Slide 30, I think just neither what we've already told you. We delivered strong accretive growth in the quarter. Pleased with our momentum there. We continue on track towards stated goals with respect to margin expansion and top line growth. The innovation momentum is continuing in the company.
We progressed our advanced therapy platform strategy with the agreement to acquire Endocyte and we're on track to deliver our full year guidance. So with that, we can open up the line for questions.
We have the first question in the line. It's from the line of Graham Parley from Bank of America Merrill Lynch. Please go ahead. You're now unmuted. Great.
Thanks for taking my questions. So firstly on Cosentyx, could you just give us an update on your contracting into 2019? And have you seen less rebating needed to retain first line positions? Or is Olumia and the prospect of risankizumab launch next year skewing that contracting at all? Secondly, on your SMA franchise, could you just give us the best guess on timing of filing in Type IIIII?
Can you file 2020 on the back of the strong data? And also at WMS, there was some data on branoplam, We seem to show worse CHOP INTEND scores than we see with the Roche oral agent or ADXS-one hundred and one. But there was dose reduction and discontinuation of the trial temporarily. So perhaps if you could help us understand how you think that data compares to the other agents in development and in the market and where it fits in your overall strategy going forward? 3rd is biosimilar rituxan.
Could you explain when you expect to refile and why you haven't refiled that yet? And last one, just an update on Afinitor. Looking at court dockets, it looks like you've settled most of the litigation and IPRs there. Could we see some protection there beyond your prior March 2020 guidance? Thank you.
Thank you, Graeme. So first on Cosentyx Contracting. Paul?
So Graham, thank you for the question. Yes, I mean it's too early to announce where we stand for 2019, but the conversations progressed as we would have hoped through the summer. There is definitely a more interesting dynamic for us, a positive dynamic because we're significantly larger asset than we were this time last year when we went into this. So we have more leverage. We're also very pleased with how we got pickup in volume in first line.
So we'll be open minded and thoughtful as you'd expect as we
go into 2019, but I'm very comfortable with the outlook for us as we transition into next year. So with respect to SMA, I'll just quickly confirm on AVX-one hundred and one-two-three, our current stated filing objective is in 2020. Now with respect to branoplim LMI, I'll turn it over to John.
Yes, I didn't can you repeat the question regarding LMI? John,
it was regarding our overall plans with respect to LMI in our portfolio.
Yes, we continue to advance LMI according to our original plans. We look at exploring opportunities in terms of combinations with our VEXUS-one hundred and one. So our current plans are to continue to explore our opportunities moving forward in this space.
And I'd say, Graham, on LMI, I mean, we had some early studies, right, that I think were disclosed at WMS. So we feel good about the overall profile. I would say that our hope is that gene therapy will be foundational. And I think the question of whether or not supplementation will be required at all is something that clinical trials will ultimately have to determine. But orals will certainly have a role for patients who have antibodies at baseline or patients who have maternal antibodies prior to being able to get a foundational gene therapy is how we sort of overall see this space evolving.
Now with respect to biosimilar Rituxan, Richard?
Thanks for the question. So obviously, we've been working closely with the FDA and had discussions on a path forward for rituximab. We are currently awaiting their written feedback just to clarify the next steps. And once we'll have that we'll come back to
you and let you know.
And then finally, with respect to Afinitor, Liz?
Yes. Sure. Hi, it's Liz Barrett with Oncology. Afinitor, we do expect generic competition in Europe beginning at the beginning of 2019 and then limited generic competition the end of 2019 in the U. S.
And beyond that, we really just can't do any other information.
Thank you, Liz. Thanks, Graham. Next question?
The next question comes from the line of Andrew Baum from Citigroup. Please go ahead.
Thank you. A couple of questions. Given the appointment of a new Chief Legal Counsel and given your focus on upgrading the standards which Novartis holds its compliance, I would imagine you'd be seeking to close out the numerous ongoing investigations, particularly in the U. S. With the Diavan State of the Attorney General.
Could you give us some indications of what kind of timing we might expect in order to reach enclosure here? And if there's anything you feel you can add at all on the financial settlement, I'd be interested, but I understand that may be challenging. 2nd, in relation to Cigna, which was obviously lighter than I think the Street was looking for the quarter, could you break down exactly why that was? Was it discontinuation as a function of the data? Was it increased rebating or prior authorization or other factors?
That would be helpful. Thank you.
Thank you, Andrew. So with respect to the first question, we're pleased that we have Claus Musmeyer joining us as Chief Ethics and Risk Officer from Siemens. He has a deep expertise in managing global organizations and really elevating their capabilities on ethics, risk and compliance. And of course, we are thrilled Shannon Klinger, our Chief Legal Counsel as well now being elevated up on the team. So I think overall, we have the right team in place.
Now in terms of the various litigations around the world, I can't provide I think specific details. What I would say is we are looking to try to accelerate closing these matters so that we can move forward given the new culture at the company, which is one that on the one hand wants to be much more empowered and curious for our people and on the other hand wants to have an uncompromising approach with respect to integrity, ethics. And so I think once we have better clarity on any of those matters, we'll give you information. But certainly, my aspiration is to try to close off these matters so the company can move ahead in new strategy and new direction. Now with respect to Cigna, Liz?
Yes, hi. Actually, there were several factors that contributed to the Cigna decline. I think it's really important first to note that we actually had growth in markets except for the U. S. And the emerging growth markets.
The emerging growth market is really a phasing, so the majority of the decline is in the U. S. There were three factors that contributed to that. One is actually there was a reduction in inventory. So that was about half of the decline in the U.
S. And then to your point, it was around the TFR. I think the great news for patients that we delivered at ASCO and presented was around patients' ability to come off drug. And I think that's something that both physicians and patients are excited about. But as patients come off, we didn't replenish the funnel at the same rate.
And so we've seen some of that. And then the third factor is really around competitive pressure in the market and what we've done. And I think the most important thing is in reaction to that, we've we're really refining our message as a focus on efficacy, both in first line and in second line, because you've also seen an increase in imatinib generic. So we want to focus our message and those failures beyond imatinib. So I do think that we felt like it will the decline has stayed will stabilize and we will return to growth in 2019.
So it's not something we expect to continue.
Thanks, Andrew. So next question please.
Your next question comes from the line of Matthew Weston from Credit Suisse. Please go ahead.
Thank you very much. Three questions, if I can, please. The first on AveXis launch dynamics of us. Clearly, you've set out the timeline that points to the middle of next year. Can you give us some comfort around the manufacturing supply that should be available at launch if you were to see 3 global approvals?
And also, given expectations for launch timings of drugs sometimes go awry, can you give us your view as to how you see the rollout? Is there a strong bolus that you expect will very rapidly get rolled out? Or this is something where reimbursement dynamics and really the first gene therapy out there means the uptake will be slower? Secondly, on Votrient, another drug in oncology where we saw a slowdown in 3Q. Liz would be interested in whether there was anything specific behind that dynamic?
And then finally, Vas, on Endocyte, the one thing that slightly surprised us, the deal structured as a merger rather than as a tender, which often suggests there are competition concerns. And so it's whether or not you're prepared to comment as to whether or not you expect competition commission scrutiny and whether that's around their CAR T platform or whether that's around the Lutetium platform and how you see that playing out?
Great. Thanks, Matthew. So first on AVX 101 supply and then the global rollout. I'll hand it to Paul.
Yes. So there's been a it's been a great pleasure to get to the AveXis team in more detail. And one of the real impressive things beyond the science has been their commitment to world class manufacturing around a significant scale. And as we got deeper into being credible partners with them, it's quite clear that we can match with the IV and SMA1, whatever the demand may be. So we're comfortable there.
In terms of rollout, really, it'll be we've gone for the breakthroughs in all three Vas said. And as they go online, we'll be there to match the demand. And as for boluses, I think you mentioned, whilst there is a little bit of a bolus, I'm sure we again are ready to treat whatever presents and supported by physician and Bayer.
And I would note as well as we get further along with AVX, it's important to note that the intrathecal dose is significantly lower than the IV dose and then supply considerations become much more much less central. With respect to Votrient, Liz?
With respect to Votrient, we're actually on where we expected to be at this time. I think it's important to note that the dynamics of what's happening in RCC, particularly in the first line treatment with I O I O in May and as well as the impending data that's coming at ESMO around the IOTKI data. So I think it's fair to say that in the U. S. And Europe, we expect to continue to see some declines, which is exactly what we projected.
I think it's also important to note that we are seeing very strong growth in Latin America, Japan and emerging growth markets and recently received reimbursement in China. So we actually have some growth markets that are not offsetting the decline that we are seeing in U. S. And Europe, but it is showing strong growth in other markets.
And then lastly, with respect to Endocyte and the structure of the deal, Harry?
Yes. Thank you, Matthew. So there are no specific concerns here, just the structure that both parties agreed upon to a 1 step merger versus a tender offer. So nothing specifically to read into that.
Okay. Next question. Thank you, Matthew.
Your next question comes from the line of Tim Anderson from Wolfe Research. Please go ahead.
Thank you. On Cosentyx, 2nd biggest drug now, competitive area, and we've got the J and J ECLIPSE trial, supposed to report out fairly soon head to head versus your drug. Can you talk about how J and J is the sponsor of that trial may have optimized that trial to increase the odds that it hits? And also your expectations on the odds that it will be a positive trial. If it does happen, what's going to be Novartis' talking points in defense of Cosentyx?
And are you going to say it won't have any real commercial impact on the product? And then the second question, just to clarify on formulary positioning for Cosentyx. You guys kind of got beat up earlier in the year when you rebated, changed rebate structure on Cosentyx to try to get out of the rebate trap on first line psoriasis. Has that had success in moving you up into first line access? And what do you expect on that particular front in terms of access restrictions in 2019?
Great. So I think for both of those Eclipse and the formulary situation to Paul.
So thank you, Justin, for the question. When you sit down with dermatologists in the clinic, clear is clear. And this debate about my PASI is bigger than your PASI is a little bit less relevant. Now it matters the patient to to make sure that they had some differentiation. Our confidence in not worrying too much about the outcome is because we think it will be mainly a campaign or marketing message.
Maybe it will add to the data set, maybe it will tell us more about their medicine. More importantly, I think is worth evaluating the ARROW study, the more mechanistic study that we have in play because the real unanswered questions in dermatology are about the extra manifestations. I think in one of our backup sites, you can see on the VIN that we care greatly about advancing the understanding, Slide 33 accelerated the understanding and advancing the understanding for the dermatology community. And 2 thirds of these patients have other complications where predominantly IL-17A is the driver. So you have to recognize that the real news will be ARO.
Yes, there'll be some marketing impact, I'm sure, of Eclipse depending on how it reads out, but we're comfortable with that. As for the rebasing and looking let's look back first, it's the last 2 years that we've said that we will be thoughtful about our rebasing on Cosentyx that we trade access enough to grow volume faster than the additional rebate to run a successful business. And I think we've proven clearly that we've done that and very pleased by the way with our Q3 performance. We don't dig deeper and share data on the first line setting, but it performed exactly as we hoped it would do. And it sets us up very nicely for 2019.
I said in answer to a question earlier, I think from Graham that we have got ourselves set up very nicely for 2019. Whilst we haven't advertised what we've achieved, we're confident with the position and the strategies deployed in the couple of years.
Okay. Thank you, Paul. Thanks for the questions. Next question, operator?
Next question comes from the line of Richard Vosser from JPMorgan. Please go ahead.
Hi, Richard Vosser, JPMorgan. Thanks for taking my questions. Just a question on the Endocyte deal, first of all. Just first of all, could you give us some help in terms of the proportion of prostate cancer patients that express their PSMA protein on them? And also thinking about the initial indication that you're doing the Phase III trial and it looks like it might be post a taxane.
So does that mean you have to fail Taxotere first? Just some thoughts on the positioning there. And perhaps you could give us an idea of whether the royalty payments still stand to ABX post the transaction on a low standard? And also on the manufacturing, you talked about that being important. Perhaps you could update us and think about the capacity that it brings along with that?
And second area, just thinking about the CLL on generic Advair, perhaps you could update us there. And final question on Alcon. You've helpfully given us a 2023 timeframe for margins in Alcon to hit the low to mid-20s, but perhaps you could give us an idea of the pace of that improvement in margins? Thanks very much.
Great. Thank you, Richard. So the first question on just the overall landscape for prostate cancer, PSMA, etcetera, Liz? Yes, sure.
There are about 70% to 80% of patients express PSMA. And to answer question directly, yes, in the trial that we have shown you, you do have to fail at least one taxane. It doesn't have to be taxateer, but it has to be one taxane. And I think our goal is in the future to move it earlier into the treatment paradigm. So we will begin to think about that post close.
And as far as I don't think we're commenting as far as the royalty is concerned at this point. And then lastly, around the manufacturing, there's different types of manufacturers as direct and indirect. And the method that they have is really just gives us the capability of being able to generate less waste and have a more purified therapy. So we're looking at how we leverage that technology and that expertise over to our to AAA. And, I think, from that perspective, that sort of answers the question on what we think is, the benefit of the manufacturing.
They are currently using a CRO. So I think that our ability post close to look at the total manufacturing and see the best way forward was we'll look at that post close.
And it's certainly our aspiration to drive that synergy given Thanks for the question. So,
really to reach Thanks for the question. So really to reiterate what we said on the previous earnings call, we've had good discussions and communications with the FDA. We believe we understand what is necessary to get the generic Advits to the market. And we stick with the timelines we communicated earlier where we see this coming to the market at the back end of next year.
Great. And then with respect to the pace of Alcon margin improvement, David?
Yes. I'll just start with saying that the 2017 is sorry, just starting with 2017, obviously, the trough year, 2018 will be up, 2019 will be up on that. We haven't really commented on the pace, but we intend to have our Capital Markets Day in November December. We'll have an opportunity to take you through the margin progression, how we see that. It obviously moves a great deal on our products like our ATI wells, our manufacturing productivity and then leveraging our cost structure.
So we feel good about where we're going long term.
Great. Thank you. Thanks Richard for the questions. Next question operator.
Next question comes from the line of David Evans from Kepler Cheuvreux. Please go ahead.
Thanks very much for taking my question. It's David Evans from Kepler Cheuvreux. Just on Lutathera, the initial launch, as you point out, has been excellent. Certainly faster than I think probably most people would have modeled. Can you possibly just give us a little bit more of a view on the shape of the launch, and how you expect that to look?
Are there any kind of sticking points in terms of getting access to sensors and training sensors up? Or should we expect a typical fast linear pharma oncology launch in the U. S? And equally, Europe, I would imagine, should be a lot slower. Is that fair?
Thank you. So I'll do the thorough launch, Liz.
Yes, sure. I think you said it appropriately. I think we are seeing what you would normally see in a traditional pharma launch. And I think that we were very pleasantly pleased with that. We have over 85 centers in the United States as Vas showed earlier.
And we expect that to continue. So we don't we would I would say you could look at it like you would a traditional model. And I think in Europe, you're correct that we do expect the slower uptake of the centers. It is really important to note that it could take up to a year for a center to really understand and be prepared for this therapy. So I think the team is doing a phenomenal job.
We're also just starting to see reimbursement in Europe. So while we do expect it to be slower than you would. So I think than the U. S. So I think the majority of the revenue going forward in the next over the next period will be will mainly be coming from the U.
S, but we're really pleased with the uptake so far.
And also Liz's team's plan is to get this global over time as well. So next question, operator?
Your next question comes from the line of Florent Cespedes from Societe Generale. Please go ahead.
Good afternoon, gentlemen. Thank you very much for taking my questions. Three quick ones. First, on Affinitor, could you give us more color on why the product declined in Q3 versus the slight growth in H1? Is it due to the fact that we are approaching the end of its patent life?
And second question on canakinumab. Could you give us could you share with us a little bit more regarding the requirements from the FDA? Is there a new large outcome trial needed in cardio for the future of this product in cardio? Or could you provide the data or more information to the FDA based on the trials available so far? And last question for Richard and Sandoz.
Europe looks a bit soft this quarter after a 7% growth in H1. There is only 1% growth in Q3. Is there any reasons beyond that? Thank you.
Thanks, Florence. Liz, on Afinitor.
Afinitor is really driven by the CDK market and in breast our breast cancer market. So that's what's driving that the performance there. As you see in the United States, since the CDK market has actually penetrated more, we saw leveling off of Afinitor. But now that you're seeing the increase of penetration of CDK in Europe and other markets, then you're seeing the subsequent decline in Afinitor. So we expect the same dynamic to likely happen as the CDK market begins to penetrate in earlier lines and in those markets as well.
And then John, with respect to the canakinumab CRL.
Yes, regarding the canakinumab CRL, as we saw from the CANTOS trial, we knew that the patients who achieved HSCRP less than 2 received the most benefit. And as we continue, we had we explore additional information based on the information that we received from the FDA and we'll have further understanding as we move forward.
Yes. So
we'll provide updates on that as we go. And then, Richard, on the EU generics?
Yes. Thanks for the question, Florent. So yes, there was a softening of the performance in the European business. And let me sort of outline what drove that. So firstly, it's worth noting that we did lap our bio launches that we had in quarter 3 last year.
So the prior year was a pretty big year for us with the launches of RALZI and Rixitat. And then on the retail side, you're aware that we withdrew Valsartan, and so that had an impact on us, as well as some seasonal buying patterns, which are constantly varying across quarters in some years. And so we felt the impact of that. Now, so I remain confident about the European business. As you know, it's performed well.
And going forward, obviously, we have a number of launches coming up in the near term. This week, we launched adalimumab into Europe in a number of markets, as Vas mentioned, as well as we're optimistic about Paypal Grass and coming to the European business pretty soon as well as infliximab. So I hope that answers your question, Florence. Thank you, Florent.
Next question, operator.
Your next question comes from the line of Steve Scala from Cowen. Please go ahead.
Thank you. Several questions. Kymriah in follicular lymphoma, the filing has been delayed. The company previously has said manufacturing issues would not delay filings. Is there a change in that?
Secondly, Paul, you previously have said 1,000 of type 1 patients would want AVXS-one hundred and one upon launch, which implies multi $1,000,000,000 in revenue in 2019 fueled by, as you have said previously, time is neurons. The answer to Matthew's question was a bit more muted than that very positive portrayal in the past. And I'm wondering if you could amplify. Then lastly for Richard, biosimilar Humira in the EU, what do you think the slope of adoption will be? For instance, can biosimilars get 25% molecule share in the 1st year or more?
Thank you.
So I think first on Kymriah, Liz?
No. In Kymriah, currently our manufacturing, we've just announced a slowdown on trials, but we have not noticed any ending of a trial or expecting that we would delay any trial because of the manufacturing. So I think that's the only thing we want to add at this point.
So I mean our aspiration is to keep FL as well as the other D cell and the edge cancers on track with respect to Kymriah. Now, Paul, on type 1 SMA?
So Steve, I'm sorry if I was somewhat muted. It wasn't my intention. I was trying to respond to the question, which I'm comfortable with. The SMA community is desperate for gene therapy. We do believe it's going to be foundational across all SMA types.
Our first indication will be in newborns and we expect to have a significant demand for that patient population and we will be ready to match that demand. I should have perhaps mentioned earlier about our North Carolina manufacturing side that we made a big investment into triple our capacity. So we're preparing very well for whatever is there and we do hope that there is a significant number of patients as much for the patients as for the business.
Thank you, Paul. And biosimilar HUMIRA, Richard?
Yes. Thanks for the question. So, to answer your question about what market share and what penetration there will be. I think it's an interesting question. And what I would say is if you look at it historically, every biosimilar that comes to the market in Europe, I think, changes the adoption and moves it upwards.
And we saw that obviously last year with rituximab coming to the market and you see the penetration levels there. So and we've also got obviously a few competitors coming to the market with us. I think that drives me to be optimistic about the biosimilar penetration over the 1st year. And I'll sort of stand with that. I won't get too specific about numbers, but I do feel the European market is ready for this and most definitely the health authorities
need to be
looking at opportunities to save money. So very positive.
Thank you, Richard. Thank you, Steve. Next question.
Your next question comes from the line of Erik Lieberikout from Bryan Garnier. Please go ahead.
Yes, good afternoon. Three questions, please. The first one relates to margins in Pharma and Sandoz. And the way sales to other segments and other revenues are contributing to the margin increase in the quarter, could you maybe, at least for Innovative Medicine, where it contributed more than 100 basis points out of the 190, explain what is behind, especially the sharp increase in other revenues? And also if sales to other segments, if there's been any shift from corporate into the various divisions?
Because it looks like there is a double digit increase where there is a significant decrease in corporate. And second point on Lutatera, perhaps again, 3 questions. 1st, to understand how is it used and whether it's very late in lines like second, third line? Mainly, 2nd, why it has no impact on Sandostatin as I guess it's additive to Sandostatin? And then maybe to remind us what your plans are to move it in earlier lines in the future?
And 3rd, on Sandoz Europe, again, just to understand how the trajectory of the biosimilars could be in year 2? Because we can understand that now rituximab, for instance, in Europe is getting into the 2nd year. So how does it look like? Are you able to increase volume? Are you facing significant price decrease?
Are you keeping your market share? Because we see the brand name still going down. But if it looks more flat for the biosimilars, then probably there is some explanation behind it.
First on other revenues, Harry?
Yes. So on the other revenues, as you mentioned, mainly driven by Innovative Medicines, this is basically profit split and royalties behind Aimovig and Xolair. So from that standpoint, kind of marketing and sales true up from the profit split where we have marketing and sales efforts in the SG and A line and then some true up and limited royalties on other revenues as well as Solaire royalties from U. S. Profit split.
So that's the main part driving the other revenues up. There's no change in the structure of how we work between corporate and respective divisions. We have seen, you may have seen this in the corporate line that vaccines IP related royalties have come down significantly and therefore an increase in the corporate cost line and core corporate expenses.
Thank you, Harry. Lutathera?
Yes, sure. Lutathera is indicated for second line in neuroendocrine tumors and that's where our growth is. And as traditionally seen and typically seen in this market, obviously, some of the patients initially have been through even more than the two lines who've seen the layered line, but we do expect to become standard of care in second line. We haven't seen an impact on sandostatin because there's a couple of things happen with the dynamics of, of Lutathera. One, you do have to come off of sandostatin temporarily, but the trials were done followed by Sandostatin.
So once the Lutathera treatment is complete, the patients go back on to tandasandostatin. And I think that we believe that sandostatin will continue to be first line standard of care, but we are considering looking and investigating elutathera in earlier lines of therapy.
And then lastly, Sandoz bisamargine, your picture?
Yes. Thank you for the question. So, to answer your question, how you think how we should think about the growth rate. So first, I'd like to point out, obviously, for the quarter, we had a 21% growth rate in biosimilars. Now of that, the base business, which we sort of call the non launch business in Europe also performed very well.
And we continue to see good uptake on both rituximab as well as etalucet. As we move forward, I still think there's good opportunity to continue to keep growing these products. Obviously, the biosimilar penetration hasn't maxed out. But at the same time, we do see some fighting back of the originator and that generally is in the form of prices. So that gives some variability, but we still see these as growth brands as we move into next year.
So hoping that answers your question.
Thank you, Richard. Thanks, Eric. Next question, please.
Your next question comes from the line of Mike Lauchten from UBS. Please go ahead.
Thank you. Two questions, please. One on Aimovig. For patients that are coming off the free drug program, I wondered if you had any data to show what happens to those. Are they all converted onto commercial?
Is there some leakage? Any color would be helpful, even though it's early days. And then a question on Alcon. Given the Saipas withdrawal, I was wondering how you measure the potential impact on Alcon Surgical given that the business has spent a lot of time rebuilding trust to the physicians community, the surgeon community? Is there any way you can quantify touch points, any collateral damage for the business, if any?
Thank you.
Great. Thank you, Michael. Paul on Aimovig.
So firstly, we're delighted with the uptake of Aimovig in the U. S. And indeed it beats across very nicely to what we think will happen in Europe. So there's rolling reimbursement in Europe, the unprecedented demand bodes well, the choices made. As for we're not sharing data yet for the conversion.
I think you'll appreciate clearly that our objective early on in the launch was to give physician and patient the earliest opportunity to use the medicine unencumbered, find out if they're a responder and just how great a responder. And that's proven out to be exactly as we thought with the significant uptake. It's also worth mentioning as well because as we get through the end of the year into next year and we start talking about our partners start talking about the U. S. Dollar sales that we are running both a hub for high touch for neurologists and a retail approach.
So we feel that we'll be unique in offering both channels to get drug to patients. So we feel good about how we're going to convert and when we're going to convert, but I'm not going to share that data right now.
Great. Thank you, Paul. And on CyPass situation, David?
Yes. On CyPass, probably the best way to think about the impact is long term relationship with the surgeons. I think we feel really good about what we did around how we handled this. It was done with a lot of scientific advice from folks we know well, but also in conjunction with the agencies. We've exposed all the data at EFCRS.
We'll show it again at AAO. We've made it available to people on our website. And obviously, we continue to work with the agencies around the world to do the next thing we can to see what we can do around the product long term. The important part on this is that the surgical business grew 7% in the quarter. It also continues to benefit from a lot of ATIOL push, which I think kind of is your best metric on how we're doing with the surgeons.
I think surgeons appreciated our proactive and assertive response to the signals we saw.
Great. Thank you, David. Thank you, Michael. Next question, please.
Your next question comes from the line of Carey Holford from BNP Paribas. Please go ahead.
Thank you. Yes, just two questions left for me. Kimrayer, just interested to get your view on the sales ramp so far. Is that delivered how is that delivered versus your internal expectations? Are you comfortable with the current consensus forecast for over $200,000,000 next year?
And also just to understand why you've taken on board the 3rd party manufacturing for this asset in China with Cellular Biomedicines Group to supply the local market only? And then on Gilenya, just following the positive IPR ruling last July, just can you remind us of the next steps here in terms of timeline? Thank you.
Thanks, Carrie. On Kymriah, Liz?
I mean, sure. Thanks for the questions. On Kymriah, where we are today, to be honest with you, we're actually above our expectations given the manufacturing challenges that we've had. I think that's actually response to physicians really being excited about the opportunity to bring Kymriah to their patients. So, it's hard to tell where we would be if we didn't have the challenges, but I think that what we've seen is that centers have continued to order Kymriah, despite this and because they really think it's important for their patients to get Kymriah.
So we've been able the good news is we've actually been able to deliver the therapy to most of the patients. So we're really pleased to be able to bring this therapy to patients. On China, as you say, it's because we do need to have manufacturing in China based on China law. And we also expect that they'll be able to assist us in gaining access to patient population in China. So I think what you've seen over the last few months is we've expanded our footprint for cell therapy manufacturing around the world.
I think that shows that we're committed to providing access to this important medicine around the world.
Maybe I'll just add on Kymriah. When you look longer term, I mean, we really see this as a long term play We're quite confident in the profile of the medicine, which is why we invest in resolving the manufacturing issue in the U. S. We announced a deal with Cell ProCure in France. We announced we will be building a facility here in Switzerland.
We announced the China facility to really give us the global supply chain that we need. And the reason we do that, as Liz points out, is Kamaria has a pretty unique profile we're learning. It's a profile that hits the sweet spot between strong efficacy and solid safety can be used in the outpatient setting. And when you think longer term about this evolution of this space, it's really going to be about moving to earlier lines of therapy where the T cells are less exhausted and you can generate stronger responses and you want a very safe profile medicine in order to be able to do that. So our aspiration with this is to get across B cell lineage cancers, get into earlier lines, have global manufacturing scale and be able then to really make this into a significant medicine for Novartis.
Now with respect to the Gilenya IPR, there's no new updates from what we've told, I think, you in the last quarter. We have filed the lawsuits against the relevant parties. We're waiting now the next steps with respect to the various court cases and what these various parties might do. As soon as we have any further updates, of course, we'll keep you all aware. Thank you, Carey.
Next question please.
Your next question comes from the line of Seamus Fernandez from Guggenheim Securities. Please go ahead.
Thanks very much for the question. So just a couple here. I don't know if anybody has any questions on IMOVEG yet, but it's just interested to know a little bit of how we should be thinking about the evolution of gross to net and pricing in this area. Obviously, we're seeing some spectacular uptake of the products, but there's speculation and awareness that a lot of free drug is obviously entering the market because payers have not really supported yet. So just wondering how Aimovig is going to evolve in terms of gross to net pricing in the U.
S. And how you feel once that occurs, how the market is likely to shift in terms of the uptake? And then the second question is actually on QAW. I noticed that the first two trials that Novartis has reading out for QAW are on FEV1. The benefits that we've seen on FEV1 so far have been somewhat limited with the antibodies.
Just trying to understand how your team has actually managed to or is managing those trials for success given what we've seen on the FEV1 endpoint in that in the high eosinophilic type area. So thanks so much for the questions.
Thank you, Seamus. So on Aimovig, Paul?
Yes, I think, clearly, I'm not going to comment on the gross to net and an impact just to be clear, Amgen take the lead on that decision ultimately in the U. S. I don't think we should get confused about free drug and trialing with what that means ultimately for gross to net. Again, we were launching several months ahead of competition that were coming thick and fast. Again, we wanted to make sure patients got to try it.
It wasn't about coverage or commercial insurance, it was about trial. And you'll have also seen as recently as yesterday an update from Express Scripts about the fact that we are already part of their plan. It wasn't just recently, it was from the beginning. So we know over time that the volume has to be converted to commercial patients and we feel again very confident in how to do that and we have the plans in place to do it. So I probably wouldn't have much to add.
I think that's apart from that.
And John on the QAV QAW pivotals.
Yes. Thanks for the question, Stephen. Regarding what we saw in Phase 2, as you know, fevipiprant or QAWs are is the only DP2 antagonist to show improvement in FEV1, asthma control and reduction in sputum eosinophils. And we have our ongoing Phase 3s, which are LUSTR1 and LUSTR2. We expect to see results in the Q2 of next year.
And we have that currently powered at greater than 90% for 40% relative risk reduction in the rate of moderate to severe asthma exacerbations. So we're looking forward to seeing the results and the exacerbations for next year.
And just to be clear, where we try to position QAW is really ahead of the monoclonal antibodies and we know we need to show exacerbation reductions that will enable that to happen. But our absolute aspiration is that this drug will demonstrate it can be used before biologics. And also then use in children where we also have a program to ensure that there's pediatric dosing available over time so that we can really cover the space of severe syphilis asthma. So thank you, Seamus. Next question, please.
Your next question comes from the line of Maria Tamyanya from Prime Avenue. Please go ahead.
Yes, thank you very much for taking my question. It's Marietta from Prime Avenue. Just a few points of clarification left really. One is following up on Carrie's question on Kymriah. I mean, how should we think long term about payaways to third parties?
In terms of China, should we think of your partner as more of a glorified CMO or someone who gets meaningful royalties or something potentially even approaching a profit split? And as we look into the really long term and think about Kymriah potentially being a mega blockbuster, what sort of royalty rate pay away should we assume for the various regions? Also a couple of questions on the Endocyte deal, please. The first is in terms of the positioning. I understand that it's going to be much broader than the radiopharmaceuticals currently going into prostate cancer.
But ultimately in the bone med space, is my understanding correct you would still be competing because you wouldn't be giving 2 radiopharmaceuticals, one treating just the bone met and one treating effectively the bone meds plus something else? And then the second question on that is also, I mean, given the somewhat checkered history of radiopharmaceuticals in prostate cancer, would you say that you don't expect any similar problems for your product because it's much more of an endosized product because it's much more targeted? Or are there any particular learnings for your own clinical program, in particular any tumor settings or patient segments that you won't go after? And then just a small point of clarification on AveXis-one hundred and one. So, that's your earlier comment that gene therapy is likely to be foundational.
Were you saying that you expect orals to show lesser efficacy in the vast majority of patients and therefore the gene therapy should remain or should become standard of care for the foreseeable future? Or was that comment really just related to the pent up demand and the bold patients and you're effectively saying that you think if you look at the cumulative commercial opportunity longer term, most of that will have gone to the gene therapies before the orals actually hit the market? Thank you very much.
Yes,
Yes, sure. I mean, I think the way that you should look at it is that we're committed as Vas explained to bringing this important therapy
around the world.
I don't think that there's any additional royalty or other On the CBMG and partnership in China, I think we've On the CBMG and partnership in China, I think we look at it very much as a partnership. They will be manufacturing for us and they will also work with us to gain access there. But it's we're not expecting any type of profit share there. So I think that pretty much answers that question. It's really important, again, as Vas said before, to understand that we're in the long game with cell therapy and particularly with Kymriah.
And we've seen and we feel like our key stakeholders, the physicians and patients are excited about Kymriah and we actually continuously get requests from around the world to have access to this medicine. So it's important that we do it, but we also do it in the right way and we're planning to do that. Moving to the prostate and to endocyte, I do think there's again a little bit of a misunderstanding. This therapy is for all patients to treat prostate cancer. I think that's the most the clearest way that I can explain it.
It's not to treat a side effect or any other part of prostate cancer, it's to treat prostate cancer. And what's happening in prostate cancer, I think it's really important to think about the evolution of happened in prostate cancer. With anti androgen therapies, particularly the novel anti androgen therapies are moving into the non metastatic setting. So you're seeing the need for more therapies in the metastatic setting. And so we see that this will be an important medicine for all prostate patients with PSMA, which as I noted before, is about 70% to 80% of the patient population.
I think we've demonstrated with through the launch of Lutathera and that we can bring this important therapy to patients and that physicians and centers and nuclear medicine physicians are interested in and excited about bringing these types of therapies to patients. So I think we feel very good about the prospects for the prostate cancer area. It's a large market and that these patients are in need of additional therapies.
Maybe how do you do? Can I
just clarify on that point because I thought that the vast majority of metastatic patients, the first metastases that develop or the main metastases are the bone met? So, are you basically expecting to be as good on bone met as other therapies, but have the broader application or would this be completed separately?
Let me try one more time, Amira. So when you think about radiopharmaceuticals as traditionally conceived, you're infusing a radioactive compound systemically IV and those radioactive compounds have certain affinities. So radium has infinity in places where there's calcium. So radium builds up in the bones, but you have systemic side effects and you don't have a very targeted approach to all of where you find the relevant cancer because this is really infusing a radioactive agent. Radioligand therapy, which is what we do with advanced accelerator applications and what we do here with Endocyte, links a scientifically well understood ligand that's specific to a specific cancer that's linked to a radioactive particle through conjugation chemistry.
In the case of prostate cancer, there is a well understood antigen called prostate specific membrane antigen, PSMA, which is used as a diagnostic and ultimately used for treating the cancer. So what our aspiration is based on all the science that we understand is that these PSMA are over expressed on prostate cancer cells. So wherever you find prostate cancer in the body, you will be able to treat with radioligand therapy as that conceived by Endocyte. Our expectation is we will be able to work well in bone mets, but more importantly, we will work well for anywhere in the body that you find prostate cancer. And then we hope to create overall survival benefits and progression free survival benefits in the indication of prostate cancer.
All right. That's clear. Thank you.
Thank you. And then on AVX-one hundred and one as a foundational therapy, really what we believe and we have to ultimately generate the data to show this in SMA2, 3. But on SMA1, we've clearly shown this is the foundational therapy, potentially lifelong, clear and compelling efficacy, remarkable efficacy. And so far, what we've seen over now patients beyond 4 years consistent effect. Now in SMA2-three, we have the studies running mechanistically.
We believe correcting the SMN1 gene fundamentally is what you want to do here and that's what we're trying to do with this and that should enable the speed of action and the hopeful clinical benefit that you want to see in SMA Type 2, 3. Now we need to show that, but then we believe gene therapy would become foundational in those patients as well. I think we always have to remind ourselves here that this is an absolutely terrible disease. If you meet patients who have this disease, if you meet their parents, this is an absolutely devastating condition. So having benefits that are quick, saving what motor neurons are available still in the body, enabling function has a huge, huge impact.
So when we look at this from a distance, it starts to say, well, these things look all very similar. Actually, these differences matter massively to the patients involved. And so I think that's what we believe will ultimately carry the day with respect to one time gene therapy for these patients. So next last question.
The question comes from the line of Prigu Parekh from Goldman Sachs. Please go ahead.
Thank you. I have two questions, please. The first one, Paula was, how would you categorize the recent pricing comments from J and J on kind of the inflammatory information market? And secondly, just more broadly on the pricing theme, kind of can you talk a bit about what are you seeing as it relates to kind of the IL-seventeen product market and kind of then on the migraine side, obviously we saw headlines from Express yesterday choosing to leave off certain products of that category. Just colleagues, will you describe for us what you're seeing in that market?
And then secondly, as I look at your early stage clinical trials, it feels like you've got a bunch of assets now for looking at NASH. How would you categorize your interest in that space? And then conversely, what's quite unique is not a lot of IO assets on your early stage clinical trial. Is that now a deprioritized area from your perspective or are they just kind of further along? Thank you.
So with respect to pricing in IL-seventeen and CGRP, Paul, any comments you want to make?
I'm not aware of any comments that have been made externally. I think just a couple of observations. We work very hard at affordability and to make sure that those that need the medicine get the medicine. I think that's where our priority is. And I think we have been shown to be skillful in our work with payers and PBMs alike.
So perhaps I'm looking more to add than that.
Yes. On NASH, we have a lead called LJN-four fifty two tropifexor, which is a FXR agonist synthetic, which we believe has a best in class profile. We've completed 2 steps of the Phase IIb study for now and a final dose escalation. We believe because of the profile of the product, we can avoid pruritus, we can avoid LDL elevations and get the dose effective dose much higher than other established therapies. Given that we have that product, we've announced collaborations with a few external parties on combinations as well as our own deal with for emricasen from Conatus where we have a combination trial ongoing as well as rights to some of their compounds, we also have an alliance with Allergan to do a combination trial there.
Our belief is in having that linch pin molecule for having the FXR will enable us to hopefully combine with multiple other agents. We play a long game here. We know there's many other companies in Phase 3. We think understanding the underlying biology and then having the real best in class agent is the way forward in NASH. So stay tuned as we get more results.
With respect to IO, I wouldn't say there's a change in strategy. What I'd say is we in observing the external environment, have held iOS or iOS to a very high standard, and we want to ensure that we see either single agent activity or a situation where we're confident that the activity we see can be attributed to our IO compound. I would note with canakinumab, we have a pretty large Phase III IO program that is validated based on studies and analysis of a 10,000 patient study published in the New England Journal of Medicine, where we're in adjuvant lung cancer first line and second line lung cancer. We, of course, are also in CAR T cell therapies. We continue our work across the full range of IO assets that we brought in.
I think by last count, we have either tied or leading number of IO assets that are in the early stage clinic. But from my perspective, we want to hold them to a high bar. We want to really ensure we see single agent activity and then in combination really be sure that the additional agent is giving a benefit so that we're really creating value for patients and for the healthcare system. So I think that's the last question. I appreciate everyone joining the call.
And I of course appreciate your interest in investing all of you who invest in our company. We appreciate your support. So thank you again and have a great day.