On January 30, 2019 TG Therapeutics, Inc. (NASDAQ: TGTX) reported the publication of results from the multicenter Phase 1 triple combination trial of ublituximab (TG-1101), the Company’s anti-CD20 monoclonal antibody, umbralisib (TGR-1202), the Company’s oral once-daily PI3K delta inhibitor, and ibrutinib, the oral Bruton’s tyrosine kinase (BTK) inhibitor, in The Lancet Haematology (Press release, TG Therapeutics, JAN 30, 2019, View Source [SID1234532958]).

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The paper includes safety and efficacy information from patients with relapsed or refractory B-cell malignancies, including 23 patients with chronic lymphocytic leukemia (CLL) or small lymphocytic lymphoma (SLL) and 23 patients with non-Hodgkin lymphoma (NHL). Safety data was available from all 46 patients and the triple combination of ublituximab, umbralisib, and ibrutinib was well tolerated with a manageable adverse event profile, and no maximum tolerated dose achieved for the combination. Efficacy data was available from 44 patients and showed the triple combination to be highly active. The overall response rate (ORR) amongst all evaluable patients was 84%, with 100% (22 of 22) of patients with CLL/SLL achieving a response, including 36% achieving a Complete Response (CR). Among patients with NHL, 68% (15 of 22) achieved a response, including a 71% Overall Response Rate (ORR) in follicular lymphoma (FL) (n=7), a 100% ORR in marginal zone lymphoma (MZL) (n=3), and a 100% ORR in mantle cell lymphoma (MCL) (n=6).

These data are described further in the manuscript entitled, "Tolerability and activity of ublituximab, umbralisib, and ibrutinib in patients with chronic lymphocytic leukemia and non-Hodgkin lymphoma: a phase 1 dose escalation and expansion trial," which was featured as the cover article in the February issue of The Lancet Hematology published yesterday. The online version of the article can be accessed at https://www.thelancet.com/journals/lanhae/article/PIIS2352-3026(18)30216-3/fulltext

Michael S. Weiss, the Company’s Executive Chairman and Chief Executive Officer, stated "We want to thank Dr. Loretta Nastoupil and the MD Anderson Cancer Center, as well as each of the participating trial sites and most importantly the patients who participated in this study. Umbralisib has demonstrated unique combinability with other targeted agents, and the data included in this publication further support our goal of developing a proprietary triple combination of ublituximab, umbralisib and our own BTK inhibitor, TG-1701, for which we target commencing clinical trials later this year."

On January 30, 2019 Castle Biosciences, Inc., a skin cancer diagnostics company providing personalized genomic information to improve cancer management decisions, reported publication of data supporting clinical use of the DecisionDx-Melanoma test to inform decisions for use of sentinel lymph node biopsy (SLNB), a surgical procedure used to help stage melanoma (Press release, Castle Biosciences, JAN 30, 2019, View Source [SID1234532957]). The study found that the DecisionDx-Melanoma test result can be used with clinicopathologic factors to inform patient discussions and recommendations for SLNB in line with national melanoma clinical practice guidelines. The study was published in Future Oncology.

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Key Study Findings:

National guidelines recommend the SLNB surgical procedure to assess prognosis of melanoma patients whose tumor features suggest at least a 5% likelihood of sentinel lymph node (SLN) positivity. The guidelines do not generally recommend the procedure if a patient has a likelihood of SLN positivity of less than 5% because of the false negative rate of the surgical procedure, associated complication risks and cost.
This study was designed to determine if the DecisionDx-Melanoma 31-gene expression profile (GEP) test could help identify patients with a low risk of SLN positivity (<5%) and validate this intended use.
Predictive modeling indicated the DecisionDx-Melanoma test in combination with tumor depth (T category) and patient age could predict SLN positivity, and this strategy was validated in two independent, prospective, multicenter cohorts totaling 1,421 patients. Patients had a median age of 63 years, median Breslow depth of 1.16 millimeters and 21.4% had ulceration present.
For patients with T1-T2 tumors (≤2.0 millimeters in depth) and a Class 1A test result (lowest risk of recurrence), the risk of SLN positivity was 4.6%. For the subgroup of patients who were 55 years or older the risk decreased to 2.8% and 1.6% for those 65 years or older. Guidelines generally do not recommend the SLNB surgical procedure for patients whose SLN positivity risk is below 5%.
For patients of all ages with T1-T2 tumors who had a Class 2B test result (highest risk of recurrence), the risk of SLN positivity was 18.8%. Guidelines suggest that the SLNB surgical procedure should be offered to patients whose SLN positivity risk exceeds 10%.
To estimate the clinical outcomes of Class 1A patients who would not undergo the SLNB surgical procedure based on a low likelihood for a positive result, a retrospective dataset of 690 patients with long-term follow-up was used. Importantly, at 5 years, Class 1A patients with T1-T2 tumors had a melanoma-specific survival rate of 99.6%, overall survival rate of 98.2%, and distant metastasis-free survival rate of 95.3%.
"The GEP test result, along with tumor thickness and patient age, can help identify a group of patients with melanoma who may avoid the SLNB procedure based on national clinical melanoma guidelines," said the study lead author John Vetto, M.D., Professor of Surgery, Division of Surgical Oncology and Director of the Cutaneous Oncology Program at the Department of Surgery, Oregon Health & Science University. "Providing physicians with accurate risk information to better inform patient discussions about SLNB options is an important advance in the management of melanoma, which can help us better direct resources to patients that really need them."

The full published study results can be accessed at the Future Oncology website.

Sentinel Lymph Node Biopsy Background

SLNB is a surgical procedure generally recommended to assess prognosis in cutaneous melanoma patients. The procedure provides prognostic information and can determine eligibility for adjuvant therapies, but can be associated with complications, adding a significant economic burden to the healthcare system.

Current guidelines recommend that clinicians discuss and/or offer the SLNB procedure with patients who have a 5% or greater likelihood of SLN positivity, and do not recommend the procedure if a patient has a less than 5% likelihood of a positive SLN. For patients who are SLNB eligible, the DecisionDx-Melanoma test can inform SLNB decision-making by identifying a group of patients with low-risk tumor biology who are less than 5% likely to be SLN positive, and thus can safely avoid the procedure.

About DecisionDx-Melanoma

The DecisionDx-Melanoma test uses tumor biology to predict individual risk of melanoma recurrence and sentinel lymph node positivity independent of traditional factors and has been studied in over 2,900 patients. Using tissue from the primary melanoma, the test measures the expression of 31 genes. The test has been validated in three multi-center studies that have included 690 patients and have demonstrated consistent results. Performance has also been confirmed in five prospective studies including over 780 patients. The consistent high performance and accuracy demonstrated in these studies, which combined have included over 1,470 patients, provides confidence in disease management plans that incorporate DecisionDx-Melanoma test results.

Prediction of the likelihood of sentinel lymph node positivity has also been validated in two prospective multicenter cohorts that included over 1,400 patients. Impact on patient management plans for one of every two patients tested has been demonstrated in multi-center and single-center studies. More information about the test and disease can be found at www.SkinMelanoma.com.

On January 30, 2019 Stemline Therapeutics, Inc. (Nasdaq: STML), a commercial-stage biopharmaceutical company focused on the development and commercialization of novel oncology therapeutics, reported that the European Medicines Agency (EMA) has completed its validation of the Marketing Authorization Application (MAA) for ELZONRIS (tagraxofusp-erzs) (Press release, Stemline Therapeutics, JAN 30, 2019, View Source [SID1234532956]). Validation of the MAA confirms that the submission is sufficiently complete to begin the formal review process. Stemline submitted the MAA earlier this month seeking approval of ELZONRIS for the treatment of adult patients with blastic plasmacytoid dendritic cell neoplasm (BPDCN). In November 2018, the MAA was granted accelerated assessment.

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Under European Union legislation, a medicinal product of major public health interest may be reviewed under an accelerated assessment procedure. Accelerated assessment can significantly reduce the timeframe for the EMA Committee for Medicinal Products for Human Use (CHMP) to review an MAA.

ELZONRIS was approved by the U.S. Food and Drug Administration (FDA) on December 21, 2018 for the treatment of adult and pediatric patients, two years and older, with BPDCN. ELZONRIS is currently commercially available in the U.S.

"The validation of our MAA by the EMA represents another major step forward in our effort to provide patients with BPDCN in Europe access to ELZONRIS as expeditiously as possible," said Ivan Bergstein, M.D., Chief Executive Officer of Stemline Therapeutics. "With ELZONRIS now commercially available in the U.S., we remain committed to increasing access for patients with BPDCN who may benefit from ELZONRIS treatment, worldwide."

About BPDCN
BPDCN is an aggressive hematologic malignancy with historically poor outcomes and an area of unmet medical need. The BPDCN cell of origin is the plasmacytoid dendritic cell (pDC) precursor. BPDCN typically presents in the bone marrow and/or skin and may also involve lymph nodes and viscera. The diagnosis of BPDCN is based on the immunophenotypic diagnostic triad of CD123, CD4, and CD56. For more information, please visit the BPDCN disease awareness website at www.bpdcninfo.com.

About ELZONRIS
ELZONRIS (tagraxofusp), a CD123-directed cytotoxin, was approved by the Food and Drug Administration (FDA) on December 21, 2018 for the treatment of adult and pediatric patients, two years and older, with blastic plasmacytoid dendritic cell neoplasm (BPDCN). For full prescribing information in the U.S., visit www.ELZONRIS.com. In November 2018, the European Medicines Agency (EMA) granted ELZONRIS accelerated assessment to the marketing authorization application (MAA), which was submitted to, and validated by, the EMA in January 2019. ELZONRIS is also being evaluated in additional clinical trials in other indications including chronic myelomonocytic leukemia (CMML), myelofibrosis (MF) and other diseases.

On January 30, 2019 Novartis reported that "In 2018 we reimagined Novartis (Press release, Novartis, JAN 30, 2019, View Source [SID1234532955]). We took major steps towards becoming a medicines company that focuses its capital on developing, launching, and creating global access to breakthrough medicines. Together with delivering strong accretive growth, we also advanced our strategic priorities including building new advanced therapy platforms, ramping up productivity and digital efforts, and creating a new culture. Looking ahead, we expect to sustain top and bottom line growth driven by the strength of our in line brands and our exciting lineup of 10 potential blockbuster launches by 2020."

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1 Constant currencies (cc), core results and free cash flow are non-IFRS measures. An explanation of non-IFRS measures can be found on page 53 of the Condensed Financial Report. Unless otherwise noted, all growth rates in this Release refer to same period in prior year. 2 Advanced Accelerator Applications; 3 Transaction is subject to closing conditions; 4 Sandoz US dermatology and oral solids portfolio announced to be sold to Aurobindo subject to closing considtions 5Forecast assumption that no Gilenya generics enter in 2019; however, generic competitors may still launch at risk
6 Removes Alcon and the Sandoz US dermatology and oral solids portfolio from both 2019 and 2018. 7 Assumes Alcon and the Sandoz US dermatology and oral solids portfolio remain in Novartis group for FY19

Strategy Update

Our long-term strategy is to focus Novartis as a leading medicines company with five priorities: embrace operational excellence, deliver transformative innovation, go big on data and digital, build trust with society, and build a new culture by unleashing the power of our people.

During 2018, we took actions that reflect this strategy and our capital allocation priorities. We concluded the strategic review of Alcon and expect to spin-off the division in H1 2019. Alcon is positioned for sustainable long term top line growth and margin expansion as demonstrated by the strong 2018 results. We agreed to sell the Sandoz US oral solids and dermatology portfolio. Our planned Sandoz transformation is expected to enable us to compete in a more challenging environment by increasing our share of higher-margin differentiated products while driving efficiency with a geographic focus and a lean cost structure. Additionally we sold our stake in the GSK consumer healthcare joint venture for USD 13.0 billion. This capital was re-deployed to drive long term growth through cutting edge advanced therapy platforms, including acquiring AveXis gene therapy, AAA and Endocyte radioligand therapies and expanding global manufacturing capacity for cell therapy Kymriah.

Operationally, four additional drugs reached USD 1.0 billion and three more potential blockbusters were launched, Lutathera, Aimovig and Kymriah in DLBCL. Innovative Medicines margin increased by 1.0 percentage point to 32.0% of sales, and we expect this margin to expand further. Our culture is transforming to become more open, empowered and collaborative. We advanced an enterprise-wide digital transformation including the launch of the first digital cognitive therapy, reSET, and an artificial intelligence program to drive salesforce effectiveness by optimizing visits to healthcare professionals. We continue our journey to rebuild trust with society. For all our new medicines, we will systematically integrate access strategies in our research and development efforts and we are working to develop innovative treatments for under treated diseases. Additionally, Novartis improved to the number 2 ranking in the Access to Medicines Index for 2018.

Executive committee appointment
Susanne Schaffert was appointed CEO, Novartis Oncology and became a member of the Novartis Executive Committee as of January 1, 2019. Susanne joined Novartis more than 20 years ago and has spent the last six years in the Oncology business in various leadership roles, including five years as Europe Region Head and most recently as President of AAA, our radioligand therapy business.
Fourth quarter financials

Net sales were USD 13.3 billion (+3%, +6% cc) in the fourth quarter driven by volume growth of 9 percentage points (cc), mainly from Cosentyx, Entresto, Oncology including AAA, and Alcon. Strong volume growth was partly offset by the negative impacts of pricing (-2 percentage points) and generic competition (-1 percentage point).

Operating income was USD 1.3 billion (-37%, -29% cc) declining mainly due to higher restructuring and impairment charges, and the impacts from M&A transactions and growth investments, partly offset by continued strong sales growth.

Net income was USD 1.2 billion, (-40%, -32% cc) mainly due to the lower operating income. EPS was USD 0.52 (-39%, -32% cc) due to the lower net income.

Core operating income was USD 3.4 billion (+5%, +11% cc) mainly driven by higher Innovative Medicines sales and improved gross margin in all divisions, partly offset by growth and launch investments, including AveXis. Core operating income margin in constant currencies increased by 1.2 percentage points; currency had a negative impact of 0.7 percentage points, resulting in a net increase of 0.5 percentage points to 25.5% of net sales.

Core net income was USD 2.9 billion (+2%, +8% cc) as growth in core operating income was partly offset by the discontinuation of core income from the GSK consumer healthcare joint venture. Core EPS was USD 1.25 (+3%, +9% cc) driven by higher core net income.

Free cash flow amounted to USD 2.9 billion (+20% USD) compared to USD 2.5 billion in prior year mainly driven by higher cash flows from operating activities and lower investments in intangible and financial assets.

Innovative Medicines net sales were USD 9.0 billion (+5%, +9% cc) in the fourth quarter, as Pharmaceuticals BU grew 8% (cc) driven by Cosentyx and Entresto, and Oncology BU grew 11% (cc), driven by AAA including Lutathera, Promacta/Revolade and Tafinlar + Mekinist. Volume contributed 11 percentage points to sales growth. Pricing had a negative impact of 1 percentage point and generic competition a negative impact of 1 percentage point.

Sandoz net sales were USD 2.5 billion (-5%, -2% cc) in the fourth quarter with 7 percentage points of price erosion mainly in the US, partially offset by volume growth of 5 percentage points. Excluding the US, net sales grew 3% (cc). Global sales of Biopharmaceuticals grew 29% (cc) mainly driven by Rixathon (rituximab) and Erelzi (etanercept) in Europe, and Zarxio (filgrastim) in the US.

Alcon net sales were USD 1.8 billion (+2%, +4% cc) in the fourth quarter. Surgical growth of 6% (cc) was driven by continued double-digit growth of advanced technology IOLs (AT-IOLs), as well as continued growth in consumables. Vision Care sales grew 3% (cc), including continued double-digit growth of Dailies Total1 and strong Systane performance.

Full year financials

Net sales were USD 51.9 billion (+6%, +5% cc) in 2018 driven by volume growth of 9 percentage points (cc), mainly driven by Cosentyx, AAA and four additional products reaching blockbuster status (Promacta/Revolade, Tafinlar + Mekinist, Entresto and Xolair). Strong volume growth was partly offset by the negative impacts of pricing (-2 percentage points) and generic competition (-2 percentage points).

Operating income was USD 8.2 billion (-5%, -5% cc), mainly due to the impacts from M&A transactions, higher restructuring and net impairment charges, and growth investments, partly offset by higher sales.

Core operating income was USD 13.8 billion (+8%, +8% cc) driven by higher sales and gross margin, partly offset by growth investments, including AveXis. Core operating income margin in constant currencies increased by 0.7 percentage points; currency had a negative impact of 0.3 percentage points, resulting in a net increase of 0.4 percentage points to 26.6% of net sales.

Free cash flow amounted to USD 11.7 billion (+12% USD) compared to USD 10.4 billion in prior year driven by higher cash flows from operating activities, which includes the receipt of a GSK sales milestone from the divested Vaccines business, partly offset by higher net investments in intangible assets.

Innovative Medicines net sales were USD 34.9 billion (+8%, +8% cc) in the full year. Pharmaceuticals BU grew 7% (cc), driven by Cosentyx reaching USD 2.8 billion and Entresto USD 1.0 billion. Oncology BU grew 9% (cc), driven by AAA including Lutathera, both Promacta/Revolade and Tafinlar + Mekinist reaching USD 1.2 billion and Jakavi. Volume contributed 11 percentage points to sales growth. Generic competition had a negative impact of 2 percentage points. Pricing had a negative impact of 1 percentage point.

Sandoz net sales were USD 9.9 billion (-2%, -3% cc) in 2018 with 8 percentage points of price erosion mainly in the US, partially offset by volume growth of 5 percentage points. Excluding the US, net sales grew by 4% (cc). Global sales of Biopharmaceuticals grew 24% (cc) mainly driven by Rixathon (rituximab) and Erelzi (etanercept) in Europe, and Zarxio (filgrastim) in the US.

Alcon net sales were USD 7.1 billion (+6%, +5% cc) for the full year. Surgical sales grew 7% (cc), with growth across all key product categories, driven mainly by AT-IOLs and consumables. Vision Care sales grew 3% (cc), mainly driven by growth in contact lenses with continued double-digit growth of Dailies Total1.

Key growth drivers (Q4 performance)

Underpinning our financial results in the fourth quarter is a continued focus on key growth drivers including:
·
Cosentyx (USD 806 million, +33% cc) delivered strong volume growth across all indications in the US and EU. In the US sales grew 34% (cc), while in the rest of the world sales grew 32% (cc).
·
Entresto (USD 318 million, +76% cc) continued strong sales growth across all regions. New data from the landmark PIONEER trial shows that initiating Entresto in the hospital setting is safe and provides better outcomes than enalapril.
·
Lutathera (USD 81 million) launch in the US is progressing well, with over 100 centers actively treating. Sales from all AAA brands were USD 135 million in the quarter.
·
Promacta/Revolade (USD 330 million, +32% cc) grew at a strong double-digit rate across all regions driven by increased use in chronic immune thrombocytopenia.
·
Tafinlar + Mekinist (USD 313 million, +31% cc) continued strong double-digit growth due to increased demand in metastatic melanoma and NSCLC across all regions and strong uptake in adjuvant melanoma from our launch in the US and Europe.
·
Jakavi (USD 256 million, +17% cc) continued double-digit growth across all regions driven by the myelofibrosis and polycythemia vera indications.
·
Kisqali sales were USD 60 million (+71% cc). In the US, demand is partly driven by the label extension based on the MONALEESA 3/7 trials, also approved in Europe in December.
·
Kymriah sales were USD 28 million with the US as the main driver. Progress was made on access in Europe with commercial orders in five countries, and Australia approved both indications in December. EMA approved wider commercial specifications in Q4 and a corresponding FDA submission was completed. Additionally, we are expanding global manufacturing including multiple collaborations and doubling the capacity at Morris Plains.
·
Biopharmaceuticals (biosimilars, biopharmaceutical contract manufacturing and Glatopa) grew 29% (cc) to USD 390 million. In Europe, growth was mainly driven by Rixathon (rituximab), Erelzi (etanercept) and the recent launch of Hyrimoz (adalimumab). Additionally Zessly (infliximab) and Ziextenzo (pegfilgrastim) launched during the quarter. In the US growth was mainly driven by Zarxio (filgrastim).
·
Emerging Growth Markets, which comprise all markets except the US, Canada, Western Europe, Japan, Australia and New Zealand, sales declined 1% in USD and grew 7% in cc.

Strengthen R&D – Key developments from the fourth quarter

New approvals and regulatory update
·
Promacta received FDA approval for first-line treatment of severe aplastic anemia (SAA) and Breakthrough Therapy designation for low platelet counts in people exposed to radiation.
·
Luxturna was approved in the EU. Luxturna is a one-time gene therapy to restore vision and prevent blindness in patients with biallelic RPE65 mutations. Novartis licensed Luxturna ex-US rights from Spark Therapeutics.
·
Gilenya was approved in the EU for the treatment of MS in pediatric patients based on the results of the PARADIGMS study.
·
SEG101 (crizanlizumab) received FDA Breakthrough Therapy designation for the prevention of vaso-occlusive crises in sickle cell disease.
·
Sandoz launched reSET digital therapeutic for treatment of patients with Substance Use Disorder (SUD) and obtained FDA clearance for reSET-O digital therapeutic for patients with Opioid Use Disorder (OUD). Part of the partnership with Pear Therapeutics, they are the first FDA-authorized prescription digital therapeutics for SUD and OUD.
·
Sandoz biosimilar Ziextenzo (pegfilgrastim, Amgen’s Neulasta) was approved and launched in Europe. Ziextenzo is the eighth Sandoz biosimilar to be approved and the fifth major approval in the last two years.
Regulatory submissions and filings
·
Zolgensma1 (AVXS-101) filed in the US with priority review, in the EU under accelerated assessment, and in Japan with Sakigake designation. Zolgensma represents the first in a proprietary platform to treat rare, monogenic diseases using gene replacement therapy – technology that replaces a missing or defective gene with a functional copy to correct the underlying cause of genetic disease. US and Japan launches on track for H1 2019, EU launch on track for H2 2019.
Results from ongoing trials and other highlights
·
Endocyte acquisition completed, to expand expertise in radiopharmaceuticals and build on our commitment to transformational therapeutic platforms. Acquisition adds 177Lu-PSMA-617, a potential first-in-class radioligand therapy in Phase III development for metastatic castration-resistant prostate cancer (mCRPC).
·
Entresto PIONEER HF trial data presented at AHA showed a 46% reduction in the serious clinical outcomes endpoint, primarily by reducing death and heart failure re-hospitalization, compared to enalapril over 8 weeks in pre-specified exploratory analysis.
·
RTH258 (brolucizumab) two-year data presented at AAO reaffirmed positive year one findings of non-inferiority versus aflibercept and superior reductions in retinal fluid, an important marker of disease activity in patients with neovascular age-related macular degeneration.2
·
INC280 (capmatinib) phase II GEOMETRY mono-1 trial data presented at ESMO (Free ESMO Whitepaper) showed overall response rate of 72.0% and 39.1%, respectively, in treatment-naive and previously treated patients with advanced MET exon-14 skipping mutated non-small cell lung cancer.
·
BYL719 (alpelisib) phase III SOLAR-1 trial data presented at ESMO (Free ESMO Whitepaper) showed BYL719 plus fulvestrant nearly doubles median Progression Free Survival in patients with PIK3CA mutated HR+/HER2- advanced breast cancer compared to fulvestrant alone.
·
Aimovig (erenumab) LIBERTY study was published in The Lancet. The full data show that more than twice as many patients who had failed 2-4 prior preventive treatments had their migraine days cut by 50% or more as compared to placebo, almost three times as many patients on Aimovig saw a 75% reduction and 6% of patients on Aimovig were completely migraine free.

1 The brand name Zolgensma has been provisionally approved by the FDA for the investigational product AVXS-101 (onasemnogene abeparvovec-xxxx), but the product itself has not received marketing authorization or BLA approval from any regulatory authorities.
2 As previously announced, Brolucizumab met its primary endpoint of non-inferiority versus aflibercept in best corrected visual acuity (BCVA) and exhibited superiority in key retinal outcomes at year one (48 weeks). Secondary endpoints at year two (96 weeks) reaffirmed superiority of brolucizumab 6 mg verses aflibercept in reduction intra-retinal fluid (IRF) and/or sub-retinal fluid (SRF) [24% for brolucizumab 6 mg vs. 37% for aflibercept in HAWK (P=0.0001); 24% vs. 39%, respectively, in HARRIER (P<0.0001)].

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.

In 2018, Novartis repurchased a total of 23.3 million shares for USD 1.9 billion on the SIX Swiss Exchange second trading line under the CHF 10 billion share buyback authority approved at the 2016 Annual General Meeting. This included 9.3 million shares (USD 0.8 billion) under the new up-to USD 5 billion share buyback announced in June 2018 and 14.0 million shares (USD 1.1 billion) to mitigate dilution related to participation plans of associates. In addition, 1.2 million shares (USD 0.1 billion) were repurchased from associates. In 2018, 15.2 million treasury shares for USD 1.2 billion were delivered as a result of options being exercised and physical share deliveries related to equity-based participation plans. Other share sales resulted in an increase of 3.0 million shares outstanding (USD 0.3 billion). Consequently, the total number of shares outstanding decreased by 6.3 million versus December 31, 2017. These treasury share transactions resulted in an equity decrease of USD 0.5 billion and a net cash outflow of USD 1.3 billion.

As of December 31, 2018, the net debt decreased by USD 2.8 billion to USD 16.2 billion versus December 31, 2017. The decrease was mainly driven by the USD 13.0 billion inflow from the sale of the stake in the GSK consumer healthcare joint venture and the USD 11.7 billion free cash flow in 2018. These inflows were partially offset by the USD 7.0 billion annual dividend payment, M&A transactions of USD 13.9 billion (mainly AveXis Inc., Advanced Accelerator Applications S.A. and Endocyte Inc., all net of cash acquired) and a net cash outflow for treasury share transactions of USD 1.3 billion. As of year-end 2018, the long-term credit rating for the company is A1 with Moody’s Investors Service and AA- with S&P Global Ratings.

2019 Outlook

Barring unforeseen events

New focused medicines company guidance*
Excluding Alcon and the Sandoz US oral solids and dermatology business from both 2018 and 2019

·
Group net sales in 2019 are expected to grow mid-single digit (cc).
·
From a divisional perspective, we expect net sales performance (cc) in 2019 to be as follows:
o
Innovative Medicines: grow mid single digit
o
Sandoz: broadly in line with prior year
·
Group core operating income in 2019 is expected to grow mid to high single digit (cc).

Current Group structure guidance*
Assuming Alcon and the Sandoz US oral solids and dermatology business remain part of Novartis for the full year 2019

·
Group net sales in 2019 are expected to grow low to mid single digit (cc).
·
From a divisional perspective, we expect net sales performance (cc) in 2019 to be as follows:
o
Innovative Medicines: grow mid single digit
o
Sandoz: decline low single digit
o
Alcon: grow low to mid single digit
·
Group core operating income in 2019 is expected to grow mid single digit (cc).
o
Alcon core operating income margin expected to expand in 2019

*All guidance above includes the forecast assumption that no Gilenya generics enter in 2019. However, generic competitors may still launch at risk

Foreign Exchange impact

If late-January exchange rates prevail for the remainder of 2019, the currency impact for the year would be negative 2 percentage point on net sales and negative 3 percentage point on core operating income. The estimated impact of exchange rates on our results is provided monthly on our website.

Efforts towards the proposed 100% spin-off of the Alcon eye care division are progressing with the Novartis Board of Directors providing final endorsement of the potential transaction. Novartis shareholders will vote on the proposed spin-off at the Novartis at the Annual General Meeting of Shareholders (AGM) on February 28, 2019 (see below).

A brochure for Novartis shareholders on the proposed Alcon spin-off published today offers an indicative timeline for completion of the transaction during the second quarter of 2019.

In addition to shareholder approval, completion of the proposed Alcon spin-off remains subject to certain conditions precedent, such as no material adverse events, receipt of necessary authorizations as well as tax rulings and opinions.

If all necessary approvals are secured and steps completed, the spin-off would be implemented through the distribution of a dividend-in-kind of Alcon shares to Novartis shareholders and ADR (American Depository Receipt) holders. The distribution is expected to be tax neutral on a US and Swiss income tax basis. If the distribution is approved at the Novartis shareholder meeting and the conditions precedent for it are met, shareholders will receive the following:

The Novartis shareholder brochure also provided the names and biographies of the individuals who will comprise the future Alcon Board of Directors to be led by Chairman Designate, Mike Ball. The Directors are as follows: Lynn Bleil, Arthur Cummings, M.D., David J. Endicott, Thomas Glanzmann, D. Keith Grossman, Scott Maw, Karen May, Ines Pöschel and Dieter Spälti.

The Novartis shareholder brochure for the proposed Alcon spin-off can be accessed here: View Source

Annual General Meeting

Proposed spin-off of the Alcon eye care division
The Novartis Board of Directors has provided final endorsement of the proposed spin-off of the Alcon eye care division. Shareholders will vote on this potential transaction at the 2019 Annual General Meeting of Shareholders to be held on February 28, 2019.

Dividend proposal
The Novartis Board of Directors proposes a dividend payment of CHF 2.85 per share for 2018, up 2% from CHF 2.80 per share in prior year, representing the 22nd consecutive dividend increase since the creation of Novartis in December 1996. Shareholders will vote on this proposal at the 2019 Annual General Meeting.

Reduction of Share Capital
The Board of Directors proposes to cancel 23,250,000 shares repurchased under the seventh share repurchase program in 2018 and reduce the share capital accordingly by CHF 11,625,000, from CHF 1,275,312,410 to CHF 1,263,687,410.

Further Share Repurchase Program
The Board of Directors proposes to launch an eighth share repurchase program up to a maximum of CHF 10 billion until 2022.

Nomination for election to the Board of Directors
The Novartis Board of Directors announced today that it is nominating Mr. Patrice Bula for election to the Board at the 2019 Annual General Meeting. As the Head of Strategic Business Units, Marketing & Sales, as well as Chairman of Nespresso, Mr. Bula is a member of the Executive Board of Nestlé SA, a position he took up in 2011. Before that he held multiple senior leadership positions across Nestlé on three continents, including Market Head of Nestlé Greater China Region, Market Head of Nestlé Germany and Regional Head of Nestlé Southern African Region. With his business focus and many years of experience as a leader in the consumer goods industry across established and emerging markets, Mr. Bula will deepen the Board’s strategy as well as digital and general marketing expertise.

Re-elections of the Chairman and the members of the Board of Directors
The Novartis Board of Directors proposes the re-election of Joerg Reinhardt, Ph.D. (also as Chairman of the Board of Directors), Nancy C. Andrews, M.D., Ph.D., Ton Buechner, Srikant Datar, Ph.D., Elizabeth Doherty, Ann Fudge, Andreas von Planta, Ph.D., Charles L. Sawyers, M.D., Enrico Vanni, Ph.D., Frans van Houten, and William T. Winters as members of the Board of Directors, each until the 2020 Annual General Meeting.

Dimitri Azar, M.D., has decided not to seek another term of office. The Board and management team of Novartis thank Dr. Azar for many years of distinguished services on the Novartis Board of Directors.

Re-elections and election to the Compensation Committee
The Novartis Board of Directors proposes the re-election of Srikant Datar, Ph.D., Ann Fudge, Enrico Vanni, Ph.D., and William T. Winters as members of the Compensation Committee, each until the 2020 Annual General Meeting. In addition, it is proposed to elect Patrice Bula as a member of the Compensation Committee.

On January 29, 2019 Genetic Immunity, a clinical stage biotechnology company, is reported that it is expanding its collaboration with JSC Pharmadis by granting licenses to twenty cancer indications of its trans-dermally delivered pDNA-based vaccine technology (Press release, Genetic Immunity, JAN 29, 2019, View Source [SID1234554012]).

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The new indications cover twenty different cancer types including vaccines for the treatment of: prostate cancer, glioblastoma, colon & rectal cancer, Non-Hodgkin lymphoma, endometrial cancer, stomach cancer, bladder cancer, cervical cancer, lung cancer, thyroid cancer, leukemia, breast cancer, kidney cancer, ovarian cancer, liver cancer, myeloma, lip-oral cavity cancer, oesophagus cancer, brain cancer and gallbladder cancer.

"We are gratified to have expanded our collaboration with Pharmadis with the license of a tremendous portfolio of potential cancer immunotherapies. Closely following our HIV vaccine deal, the management of Pharmadis felt it would be a tremendous opportunity for them to have access to a broad range of possible treatment breakthroughs. Once they understood the basis of our platform technology, it was an easy next step for us to expand our collaboration and work with a single pharma player in Russia," stated Viktor Rozsnyay, CEO of Genetic Immunity.

"I think this is a singular collaboration, as to my knowledge, no-one has ever licensed such a broad range of product candidates based on a single product platform. We are excited for this opportunity and bring to market a revolutionary array of cancer treatments that can affect the lives of millions of people," added Rozsnyay.

Under terms of the new agreement, Pharmadis received rights to market all twenty cancer vaccines in Russia and the Commonwealth of Independent States. Genetic Immunity and Pharmadis will jointly develop all vaccines and seek Russian marketing approval. Clinical trials will be conducted beginning with prostate cancer and glioblastoma. Upon approval Genetic Immunity will receive double-digit royalties on sales.

The DermaVir immunotherapy vaccine platform contains a novel plasmid DNA that encodes disease specific antigens. The first product to demonstrate this technology is Genetic Immunity’s HIV vaccine that Pharmadis licensed in 2018. For cancer vaccines based on the technology platform the disease specific pDNA will be used with appropriate antigens coded. The vaccine is topically administered using the DermaPrep medical device.

"Upon completing our HIV vaccine license with Genetic Immunity, we continued discussion to see how we may use other products in Russia. As we became familiar with the Company’s pDNA platform technology we felt it would make sense to propose an extension to our licensing agreement to cover as many cancer types as possible. Genetic Immunity’s management agreed with our proposal and we are happy to further our collaboration. The next two to three years will be of paramount importance as we hope to bring to market a number of revolutionary cancer vaccines to combat the disease," stated Nikolai Kovalev, Managing Director of Pharmadis.

The design of pDNA needed for prostate cancer and glioblastoma is already underway. Once completed, an investigator sponsored trial will be conducted in Moscow, Russia, at the European Medical Center. The first indication will cover glioblastoma, an aggressive brain cancer, with principal investigator Professor Alexey Krivoshapkin, a world-renowned neurosurgeon.

Plasmid DNA based vaccines have been proven safe, but poorly immunogenic in human subjects. Genetic Immunity has developed several technologies to improve the immunogenicity of DNA-encoded antigens, including:

Antigeneering of plasmid DNA to safely and authentically express most of the antigens of HIV or other pathogens, including cancer.
The formulation of plasmid DNA to a pathogen-like nanoparticle called NanoComp. These nanoparticles target professional antigen-presenting cells, such as Langerhans cells and dendritic cells.
A targeted transdermal delivery device called DermaPrep. It has been shown that topical DermaPrep administration results in antigen expression in the lymph nodes by dendritic cells.