9.0 Bn 23 000 200 +

42 | Novartis Annual Report 2017 Innovation The Novartis Institutes for BioMedical Research works in concert with our Global Drug Development group to bring innovative treatments to patients around the world. In 2017, we advanced our drug discovery and development efforts by encouraging greater collaboration and out-of-the-box thinking, exploring new approaches that could improve how we work, and investing in promising tools and technologies. We made progress in priority disease areas with high unmet medical needs. We also marked several key milestones, including US FDA approval – the first of its kind – for a type of personalized cell therapy that could change the course of cancer care. 9.0 bn 23 000 200 + Research and development Scientists, physicians and business Projects in clinical development spending in 2017, amounting to professionals working in research 18.3% of net sales (USD) and development worldwide Collaborative Efficient, effective Progress in important science drug development disease areas We are increasing collaboration We are using digital technology We highlight areas of our work where in research as we try to leverage and data analysis to make drug we are driving significant innovation, innovation from a variety of sources. development swifter and more or where we can potentially have an We are also exploring ways to effective. And we are taking steps important impact on patients and harness digital technology in drug to strengthen our pipeline. public health. discovery, as well as new therapeutic k page 46 k Immuno-oncology page 48 approaches such as cell therapies. k Multiple sclerosis page 50 k page 43 k Liver disease page 52 k Ophthalmology page 53 k Asthma page 55 k Malaria page 56 INNOVATION Novartis Annual Report 2017 | 43 Discovery For new treatments, the journey from laboratory to patient Promoting open innovation starts in the discovery phase where researchers try to Our efforts to increase the flow of ideas between identify potentially groundbreaking therapies. When new researchers gained momentum in 2017. We provided new molecules show promise and have been qualified for test- opportunities for our associates to pursue multidis- ing in humans, we organize small-scale proof- of-concept ciplinary projects and collaborate with investigators studies to get an early read on a drug’s safety and effec- inside and outside the company, advancing drug dis- tiveness. If those studies are successful, we decide covery research at Novartis while contributing tools and whether to move experimental therapies into clinical knowledge to the broader scientific community. development for testing in larger patient trials. We launched a new research concept called the In this report, we describe our approach to discovery Genesis Labs, where employees together with external and development, and then provide detail on our R&D collaborators can explore transformative ideas that fall efforts in the areas of immuno-oncology, multiple sclerosis, outside the scope of existing departments at NIBR. Multi- liver disease, ophthalmology, asthma and malaria. Our disciplinary teams pitch ideas to a panel of scientists, pipeline table starting on page 58 gives a broad overview who decide which projects are most promising. In the first of major development projects. year of the program, teams submitted 90 proposals, and five projects ultimately received funding. Discovery The Novartis Institutes for BioMedical Research (NIBR) We launched a new research concept is the innovation engine of Novartis. With a global team of approximately 6 000 scientists, physicians and busi- called the Genesis Labs, where employees ness professionals, NIBR works to discover potential new together with external collaborators can therapies that could improve health outcomes for patients. Collaboration is critical to our success. The standard explore transformative ideas that fall outside tools of biology and chemistry leave many drug targets the scope of existing departments at NIBR – key proteins and nucleic acids known to play a role in disease – out of reach. We are working to expand our toolbox to hit these targets and discover treatments for patients with limited options. This requires breaking down barriers between disciplines and sometimes orga- Members of the selected teams step away from their day nizations. jobs to focus on their new project for six to 18 months. Indeed, exciting new ideas and technologies emerge They’re partnered with NIBR or academic mentors with from unexpected places, and our programs are designed relevant experience. One of the winning projects, for to foster connections with external innovators. NIBR is example, involves a device developed by an engineer a conduit for innovation wherever it arises, leveraging based at the Massachusetts Institute of Technology in discoveries from a variety of sources – internal and external. the US, who is a member of the team. NIBR scientists We are even applying methods pioneered by the techno- will work with members of her lab to investigate ways to logy giants of Silicon Valley to accelerate drug discovery. use the device – which monitors breathing, heart rate, In 2017, NIBR established and expanded programs gait and body elevation remotely – in clinical trials. to spark unconventional thinking by our associates as In 2017, we also announced a collaboration with the well as collaboration across the organization and be University of California, Berkeley, to tackle difficult drug yond. We encourage researchers to make connections targets. Research at the new Novartis-Berkeley Center between different disciplines, build diverse professional for Proteomics and Chemistry Technologies in the US networks, and hunt for promising inventions outside the focuses on proteins that dodge conventional small mole- company. Formal agreements and deals with external cules, the standard ammunition of drug hunters. These investigators, academic institutions and companies elusive proteins seem to be missing the indentations – support these efforts. or pockets – that such small molecules need to bind to proteins and interrupt their work. Researchers from the two organizations use emerging technologies to identify previously hidden binding pockets on proteins as well as Exciting new ideas and technologies starting points for new therapeutics. In addition to entering agreements with academic emerge from unexpected places, and institutions, NIBR encourages collaborations with indivi- our programs are designed to foster dual investigators and labs. In 2017, we streamlined the process by which we provide chemical probes discovered connections with external innovators at Novartis to scientists around the world. 44 | Novartis Annual Report 2017 (continued) Innovation We also expanded our Faculty of Scholars program, has encountered before, even if the angle or lighting is inviting additional academic investigators to participate. different in subsequent photos. It is much better than Each scholar is a prominent researcher with expertise humans at making these connections. in a field that the company is interested in exploring, or Similarly, we are asking computers to predict how in a topic that’s relevant to an active drug discovery proj- new compounds are working, based solely on images of ect. A hematologist from Boston Children’s Hospital and cells that have been treated with them. We train the soft- Harvard Medical School in the US, for example, recently ware on images of cells that have been treated with com- joined the program to advise NIBR teams working on pounds that we already understand. Our team recently treatments for a blood disorder called sickle cell anemia. published a proof-of-concept study detailing its metho- Information flows freely between scholars and NIBR dology in the journal Bioinformatics. The approach has researchers without the need for additional nondis clo- the potential to cut the time required to determine the sure agreements or contracts that have impeded dis- properties and characteristics of new compounds. cussions in the past, while still protecting Novartis intel- Another machine learning project focuses on the lectual property. The academic researchers are exposed interaction between potential drugs and their protein to drug discovery research and platforms, while Novartis targets. We are training software to predict the degree scientists tap the scholars’ knowledge, learning directly to which a compound at a particular concentration will from thought leaders. in teract with its target, reducing the need for lab exper- We seeded the biotechnology community with new iments. inventions by out-licensing drug candidates that, while We are also investigating how to use devices – includ- promising, fall outside our current research strategy. For ing wearable technologies – and apps to improve the instance, we signed an agreement that gives PureTech/ quality of the data that we are collecting in our clinical resTORbio the right to develop two potential treatments trials and to shift data collection away from clinical trial for diseases linked to age-related deterioration of the sites. NIBR researchers are conducting this work immune system. And we penned a deal that gives in colla boration with colleagues in Global Drug Devel- Magenta Therapeutics the right to develop a compound opment as well as external partners. For example, we that boosts the growth of blood stem cells for specific announced a partnership with Pear Therapeutics Inc. – applications. a digital medicine

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