Novartis Reports Strong Results for Breast Cancer Drug Kisqali

Novartis Stock at a Glance

• Current Morningstar Fair Value Estimate: $90
• Novartis Stock Star Rating: 4 Stars
• Economic Moat Rating: Wide
• Moat Trend Rating: Stable

Novartis NVS reported favorable top-line data for breast cancer drug Kisqali in the adjuvant setting, but we don’t expect a major change to our fair value estimate for the company as we had already factored in a high probability of success in this expanded indication.

Since Kisqali had shown strong efficacy in the metastatic setting, we already had higher expectations that the drug would work well in the earlier adjuvant setting. Nevertheless, the important data is likely to expand Kisqali’s label into the large adjuvant setting, showcasing the solid innovation that is core to Novartis’ wide moat.

While we still don’t know all the details behind the adjuvant study, the data was trending so positively that the independent data monitoring committee recommended stopping the study early so all patients could benefit from the drug. Full study details will help with gauging the likely market share gains in the adjuvant setting. However, with only one other drug (Eli Lilly’s Verzenio) in the CDK4/6 class having shown positive data in the adjuvant setting, we expect Kisqali will become a major treatment in this earlier treatment setting. Also, since early breast cancer diagnosis rates are relatively high compared with other cancers, we expect adjuvant treatment to represent a large market. Our only lingering concern about Kisqali’s potential in the adjuvant setting is the side effect profile of the drug (some cardiovascular and liver issues), which in the metastatic setting are less concerning than in the earlier adjuvant setting, where patients tend to survive much longer. The final details of the adjuvant study will be important to evaluate the side effects of Kisqali.