First Phase III results for FTY720, a novel oral therapy for MS, show superior efficacy compared to interferon beta-1a

* FTY720 significantly reduced annualized relapse rates by 52% (0.5 mg dose) and 38% (1.25 mg) vs. interferon beta-1a in one-year TRANSFORMS study[1]

* FTY720 generally well-tolerated and safety profile in line with previous experience[1]

* Regulatory submissions for FTY720 in US and EU on track for end of 2009; FREEDOMS and FREEDOMS II placebo-controlled Phase III studies continuing

* Multiple sclerosis, a devastating disease causing progressive disability, affects up to 2.5 million people worldwide including many young adults[2]

Basel, December 12, 2008 - Initial results from the one-year Phase III TRANSFORMS study show the investigational oral compound FTY720 (fingolimod) has superior efficacy to a current standard of care for patients with relapsing-remitting multiple sclerosis (MS). Patients on oral FTY720 experienced significantly fewer relapses than those treated with the injectable medicine interferon beta-1a (Avonex®*)[1].

The study, the first one-year head-to-head Phase III trial against a standard of care in MS, met its primary endpoint for both doses of FTY720.

The annualized relapse rate at one year for patients given FTY720 0.5 mg was 0.16, representing a 52% reduction compared to a relapse rate of 0.33 for interferon beta-1a (p<0.001). The FTY720 1.25 mg dose also showed a significant reduction in relapses with a rate of 0.20 representing a 38% reduction against interferon beta-1a (p<0.001). No statistically significant difference was seen between the two FTY720 doses[1].
Comprehensive analyses of the TRANSFORMS study data are ongoing, and detailed results are planned to be presented at a leading scientific congress in 2009. Regulatory submissions remain on track to be completed in the US and EU at the end of 2009.
"We are encouraged by the early results from TRANSFORMS, which represent a major step towards delivering an effective oral treatment for people with relapsing-remitting MS," said Trevor Mundel, MD, Global Head of Development at Novartis Pharma AG. "These positive results reinforce the potential for FTY720 to provide a significant advance in the future treatment of this devastating disease."

MS is a chronic autoimmune neurodegenerative disease of the central nervous system associated with irreversible progression of disability[3]. As many as 2.5 million people worldwide are affected by the condition[2] that typically begins in early adulthood between the ages of 20 and 40 years when patients are in the prime of life[4].

TRANSFORMS (TRial Assessing injectable interferoN vS FTY720 Oral in RrMS) is the first of three studies to report results in one of the largest Phase III clinical programs ever conducted in MS, involving more than 3,400 patients around the world.
As a head-to-head trial against interferon beta-1a, TRANSFORMS was designed to assess the efficacy of FTY720 compared to an established disease-modifying therapy in reducing relapse rates in patients with relapsing-remitting MS, the most common form of the disease. Two other studies - FREEDOMS and FREEDOMS II - are two-year placebo-controlled Phase III studies to assess the impact of FTY720 in reducing the frequency of relapses and slowing the progression of disability, and to further characterize the benefit-risk profile. Data from these studies to support regulatory submissions are expected in 2009.

TRANSFORMS was a one-year worldwide double-blind, double-dummy study that enrolled 1,292 patients. The study had three arms: oral FTY720 0.5 mg and 1.25 mg once-daily, and the active comparator interferon beta-1a given once-weekly by intra-muscular injection. The patient population in TRANSFORMS was consistent with the demographics and disease state seen in Phase III clinical trials for other disease-modifying treatments for relapsing-remitting MS[5].

The safety profile of FTY720 seen in TRANSFORMS was in line with previous clinical experience. The compound was generally well-tolerated with 87% of FTY720-treated patients completing the study on treatment. The proportion of patients discontinuing therapy was 10% in the FTY720 0.5 mg group, 15% in the FTY720 1.25 mg group, and 12% in the interferon beta-1a group[1].

The most commonly reported adverse events, seen in more than 10% of patients in all three study arms, were headache, nasopharyngitis and fatigue. Influenza-like symptoms were reported in 37% of patients treated with interferon beta-1a and in 4% of patients treated with FTY720[1].

Adverse effects seen in FTY720-treated patients included transient reductions in heart rate at the start of treatment, minor increases in blood pressure, and elevations in liver enzymes (also seen with interferon beta-1a). Macular edema (swelling of the center of the retina) was detected in less than 1% of FTY720-treated patients[1]. Seven cases of localized skin cancer were diagnosed in FTY720-treated patients (four basal cell carcinoma and three melanoma), while one case of squamous cell carcinoma was seen in the interferon beta-1a group. All of these localized skin lesions were successfully removed[1].

As previously reported, two fatal herpes infections occurred in patients treated with FTY720 1.25 mg. Both cases involved confounding factors impacting the outcome, but a role for FTY720 could not be excluded given its immunosuppressive effect.

In general, the safety profile of the FTY720 0.5 mg dose appeared to be better than that of the 1.25 mg dose, including lower rates of infections and bradycardia. Further analyses of the TRANSFORMS data and results from the ongoing Phase III studies will help to provide a more comprehensive assessment of FTY720's benefit-risk profile.

Disclaimer
The foregoing release contains forward-looking statements that can be identified by terminology such as "on track," "planned," "encouraged," "potential," "to assess," "to further characterize," "expected," "appeared to be," "will," or similar expressions, or by express or implied discussions regarding potential regulatory submissions or marketing approvals for FTY720 or regarding potential future revenues from FTY720. You should not place undue reliance on these statements. Such forward-looking statements reflect the current views of management regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results with FTY720 to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that FTY720 will be submitted for approval in any market by the end of 2009 or at any time. Nor can there be any guarantee that FTY720 will ever be approved for sale in any market. Neither can there be any guarantee that FTY720 will achieve any particular levels of revenue in the future. In particular, management's expectations regarding FTY720 could be affected by, among other things, unexpected clinical trial results, including unexpected new clinical data (including the upcoming results of the FREEDOMS and FREEDOMS II trials) and unexpected additional analysis of existing clinical data (including the results of the ongoing additional analyses of the TRANSFORMS clinical data); unexpected regulatory actions or delays or government regulation generally; competition in general; the company's ability to obtain or maintain patent or other proprietary intellectual property protection; government, industry and general public pricing pressures; the impact that the foregoing factors could have on the values attributed to the Novartis Group's assets and liabilities as recorded in the Group's consolidated balance sheet, and other risks and factors referred to in Novartis AG's current Form 20-F on file with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Novartis is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

About Novartis
Novartis AG provides healthcare solutions that address the evolving needs of patients and societies. Focused solely on healthcare, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, cost-saving generic pharmaceuticals, preventive vaccines, diagnostic tools and consumer health products. Novartis is the only company with leading positions in these areas. In 2007, the Group's continuing operations (excluding divestments in 2007) achieved net sales of USD 38.1 billion and net income of USD 6.5 billion. Approximately USD 6.4 billion was invested in R&D activities throughout the Group. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 97,000 full-time associates and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com.

References

[1.] Novartis. Data on file.
[2.] World Health Organization. Neurology atlas, 2004. http://www.who.int/mental_health/neurology/neurogy_atlas_review_references.pdf (Accessed 30 November 2008).
[3.] Confavreux C, Vukusic S. Accumulation of irreversible disability in multiple sclerosis: from epidemiology to treatment. Clin Neurol Neurosurg 2006;108:327-32.
[4.] Confavreux C, Aimard G, Devic M. Course and prognosis of multiple sclerosis assessed by the computerized data processing of 349 patients. Brain 1980;103:281-300.
[5.] Cohen J, et al. Oral fingolimod (FTY720) versus interferon beta-1a in relapsing-remitting multiple sclerosis: baseline patient demographics and disease characteristics from a Phase III trial (TRANSFORMS). Abstract at WCTRIMS, April 2008.
[*] Avonex® is a registered trademark of Biogen Idec.

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FTY720, a novel oral therapy in development for MS, shows sustained benefits for the majority of patients after three years of treatment

Phase II study extension shows 68-73% of patients with multiple sclerosis remained relapse-free after three years of treatment with oral FTY720[1]

New data demonstrate 89% of patients free from active brain lesions - the injury caused by MS - three years after starting treatment[1]

MS, a devastating disease causing progressive disability, affects 2.5 million people worldwide including many young adults[2]
FTY720 regulatory filings planned before end of 2009 in US and EU

Basel, April 15, 2008 - The investigational oral therapy FTY720 (fingolimod) continues to demonstrate sustained benefits in patients with multiple sclerosis (MS) after three years of treatment, according to new clinical data presented today from an ongoing Phase II study extension[1].

Results showed that 73% of patients who began the study on FTY720 5 mg remained free from relapses after three years, and 68% of those who began the study on FTY720 1.25 mg remained relapse-free[1]. The figures after two years of treatment were 77% and 75% respectively[3]. On the basis of comparable efficacy and a better safety profile, all patients have been transferred to FTY720 1.25 mg in the study extension.

The 36-month data also showed an average annualized relapse rate of 0.20[1], equivalent to one relapse in five years, while 89% of patients were free of the active brain lesions characteristic of MS as measured by magnetic resonance imaging (MRI)[1] three years after starting treatment.

The results were presented at the 60th annual meeting of the American Academy of Neurology (AAN) in Chicago, USA.

"These new data demonstrate the exciting potential for FTY720 to reduce relapse rates in MS patients with a convenient once-daily pill," said Professor Giancarlo Comi, Professor of Neurology at the University Vita-Salute San Raffaele in Milan, Italy. "An effective oral treatment would be a significant breakthrough in the management of MS. That is why these results are encouraging - because we are seeing substantial benefits of FTY720 maintained over time in this clinical trial."

FTY720 is a novel, once-daily, oral treatment in worldwide Phase III clinical development for the treatment of relapsing-remitting MS, the form of the disease that affects approximately 85% of people diagnosed with MS[4].

More than 2.5 million people worldwide are affected by MS[2], the most common non-traumatic cause of neurological disability in young people[5]. Regulatory filings for FTY720 are expected in the US and EU before the end of 2009.

"The FTY720 Phase III program is the largest conducted in MS to date, and demonstrates our long-term commitment to the field of MS therapy," said Trevor Mundel, MD, Head of Global Development Functions at Novartis Pharma AG. "It is especially encouraging to see that FTY720 continues to demonstrate sustained efficacy by helping the majority of patients to remain free of relapses as the study progresses."

FTY720 has the potential to be the first in a new class of therapies for MS that act on inflammation by modulating sphingosine-1-phosphate receptors (S1P-R), reducing the number of inflammatory immune cells, called lymphocytes, from reaching the brain. In addition, FTY720 reaches the brain and S1P-Rs are present on central nervous system (CNS) tissue, so FTY720 may have a direct beneficial effect on MS within the CNS. This additional potential mechanism of action is supported by new preclinical data being presented at AAN[6],[7].

The Phase II study presented at AAN began with a six-month placebo-controlled phase in which 281 patients with relapsing MS received placebo, FTY720 1.25 mg or FTY720 5 mg once-daily. This was followed by a long-term extension in which all patients took FTY720. At the end of three years, 173 patients were in the extension, which is still ongoing. The study has been conducted in Canada and 10 European countries.

Results from the six-month placebo-controlled trial showed that FTY720 reduced relapse rates by more than 50% compared to placebo[5]. Current first-line therapies for MS reduced relapse rates by 30-35% on average in two-year studies[5].
Among patients originally on placebo who converted to active therapy in the extension, 51% were free of relapses at three years[1]. The figure at two years was 57%[3].

FTY720 has been generally well tolerated throughout the three years of the Phase II study and its extension, with the most common adverse events being nasopharyngitis, headache, fatigue and influenza[1]. Increases in alanine aminotransferase (liver enzymes) were observed in 16% of patients. Dermatological screening of patients was implemented in the extension after a small number of cases of localized skin malignancies were reported.

Novartis continues to study FTY720 in an ongoing, blinded Phase III clinical trial program. This program includes comprehensive monitoring that will further assess and characterize the safety profile of FTY720.

MS is caused by the destruction of myelin, which helps neurons carry electrical signals in the brain[8]. The disease causes problems with muscle control and strength, vision, balance, sensation and mental function[8]. MS typically presents in relapsing forms involving acute self-limiting attacks of neurological dysfunction (or "relapses") followed by complete or partial restoration of functions.

Disclaimer
The foregoing release contains forward-looking statements that can be identified by terminology such as "planned", "potential", "would", "encouraging", "expected", "commitment", "may", "continues", "will", or similar expressions, or by express or implied discussions regarding potential future regulatory filings or marketing approvals for FTY720 or regarding potential future revenues from FTY720. Such forward-looking statements reflect the current views of the Company regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results with FTY720 to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that FTY720 will be submitted to regulatory authorities for approval, or will be approved for sale in any market. Nor can there be any guarantee that FTY720 will achieve any particular levels of revenue in the future. In particular, management's expectations regarding FTY720 could be affected by, among other things, unexpected clinical trial results, including unexpected new clinical data and unexpected additional analysis of existing clinical data; unexpected regulatory actions or delays or government regulation generally; the company's ability to obtain or maintain patent or other proprietary intellectual property protection; competition in general; government, industry and general public pricing pressures, and other risks and factors referred to in Novartis AG's current Form 20-F on file with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Novartis is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

About Novartis
Novartis AG provides healthcare solutions that address the evolving needs of patients and societies. Focused solely on growth areas in healthcare, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, cost-saving generic pharmaceuticals, preventive vaccines and diagnostic tools, and consumer health products. Novartis is the only company with leading positions in these areas. In 2007, the Group's continuing operations (excluding divestments in 2007) achieved net sales of USD 38.1 billion and net income of USD 6.5 billion. Approximately USD 6.4 billion was invested in R&D activities throughout the Group. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 98,200 full-time associates and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com.

References
[1.] Comi G et al. Oral FTY720 (fingolimod) in patients with relapsing multiple sclerosis. 3-year extension shows sustained low relapse rate and MRI activity. Abstract presented at 60th annual meeting of American Academy of Neurology, Chicago 12-19 April 2008.
[2.] National Multiple Sclerosis Society website.
http://www.nationalmssociety.org/about-multiple-sclerosis/who-gets-ms/index.aspx Accessed March 11, 2008.
[3.] Kappos L. et al. Oral fingolimod (FTY720) in relapsing MS: 24-month results of the Phase II study. ECTRIMS 2006.
[4.] National Multiple Sclerosis Society website.
http://www.nationalmssociety.org/about-multiple-sclerosis/what-is-ms/index.aspx Accessed March 11, 2008.
[5.] Kappos L et al. Oral Fingolimod (FTY720) for Relapsing Multiple Sclerosis. N Engl J Med 2006;355, p. 1130.
[6.] Barske C et al. FTY720 (Fingolimod) and S1P-Receptor 1 and 5 specific Agonists Increase the Number of Oligodendrocytes in Vitro. Abstract presented at 60th annual meeting of American Academy of Neurology, Chicago 12-19 April 2008.
[7.] Schubart A et al. FTY720 suppresses ongoing EAE and promotes a remyelinating environment preventing axonal degeneration within the CNS. Abstract presented at 60th annual meeting of American Academy of Neurology, Chicago 12-19 April 2008.
[8.] National Multiple Sclerosis Society website.
http://www.nationalmssociety.org/about-multiple-sclerosis/symptoms/index.aspx Accessed March 11, 2008.

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The information in the press releases on these pages was factually accurate on the date of publication. These press releases remain on Novartis website for historical purposes only. Novartis assumes no duty to update the information to reflect subsequent developments. Readers should not rely upon the information in these pages as current or accurate after their publication dates.

New Preclinical Data Suggests FTY720 May Repair or Reduce Damage Caused by Multiple Sclerosis Through a Direct Effect in the Brain

· Potential beneficial impact on central nervous system in addition to well established action on immune cells

· Recruitment complete for two of three pivotal Phase III trials; recruitment for third study is ongoing and on track

· MS most common neurological disorder in young adults, affecting more than an estimated 2.5 million people worldwide

EAST HANOVER, NJ, October 12, 2007- New preclinical data presented at European Committee for Treatment and Research of Multiple Sclerosis (ECTRIMS) in Prague suggests that FTY720 (fingolimod) directly reduces neurodegeneration and enhances repair of the central nervous system (CNS) damage caused by multiple sclerosis (MS) by interacting with sphingosine-1-phosphate receptors (S1P-R) expressed on brain cells. This mechanism of action may be in addition to the established anti-inflammatory role of FTY720 that is mediated by the reduction of inflammatory immune cells, called lymphocytes, from reaching the brain.

FTY720 is a novel, once-daily, oral treatment currently in worldwide Phase III clinical development to test its safety and efficacy as a disease modifying therapy for relapsing-remitting MS, which affects approximately 85% of people with multiple sclerosis.

The potential direct beneficial effect of FTY720 in the CNS is supported by the results of several preclinical experiments being presented at ECTRIMS, including research in animal models of MS and in vitro studies on CNS cells called oligodendrocytes.

In an animal model of MS (experimental autoimmune encephalomyelitis in rats), the administration of FTY720 directly into the CNS resulted in a statistically significant reduction in disease severity. This decrease in disease activity was seen in the absence of a reduction of lymphocytes in the bloodstream, suggesting that the favorable effect of FTY720 seen in this model is due to a direct effect in the CNS that is independent of the effects on peripheral lymphocytes.

In two experiments presented at ECTRIMS, the modulation of S1P-R by the addition of FTY720 resulted in an increase in the number, growth and survival of oligodendrocytes in cell culture. This effect of FTY720 on oligodendrocytes may help limit destruction of myelin and promote its repair and, thus, may contribute to the effectiveness of FTY720 in MS. Oligodendrocytes are cells in the CNS that make a fatty tissue, called myelin, which is necessary for normal signal transfer along nerve fibers in the CNS. Myelin and oligodendrocytes are typically damaged in MS.

"FTY720 crosses the blood-brain barrier and the drug's target - S1P receptors - are present on brain cells, including oligodendrocytes as shown in animal cell studies," said Jack Antel, Professor, Department of Neurology and Neurosurgery, McGill University, Montreal, Canada. "We are able to confirm that FTY720 directly modulates the S1P receptors on human oligodendrocyte progenitor cells."

FTY720 is currently being investigated in the largest worldwide Phase III clinical trial program to be conducted in MS to evaluate further its efficacy and safety as a disease modifying therapy for relapsing-remitting MS. This comprehensive program includes trials referred to as FREEDOMS, FREEDOMS II and TRANSFORMS. Recruitment is complete for FREEDOMS and TRANSFORMS. Recruitment is ongoing and on track for FREEDOMS II and FTY720 regulatory filing is planned for the second half of 2009. For more information about the clinical trial program, including eligibility criteria and location of U.S. study sites, patients can call the following toll-free number: 866-788-3930, or visit www.MSClinicalTrials.com.

"Novartis has a significant long-term investment and commitment to multiple sclerosis and neuroscience through its extensive research and development program," said Ludwig Hantson, PhD, Senior VP for Commercial Development & Specialty Businesses at Novartis Pharmaceuticals Corporation. "We believe oral FTY720 is an exciting and promising experimental therapy for MS as shown by the compelling Phase II data. As an oral therapy with a novel mechanism of action and promising efficacy, FTY720 has the potential to be a significant and innovative therapeutic advance."


Phase II Study Results

The six-month, placebo-controlled Phase II study conducted in 281 patients with relapsing MS in 11 countries (Europe and Canada) showed that oral FTY720, taken once-daily, reduced relapse rates by more than 50% compared to placebo and reduced MRI (magnetic resonance imaging) measures of inflammation with approximately 80% of patients free of active brain lesions.

In patients continuously treated with FTY720 for up to two years (placebo-controlled study plus the extension trial), up to 77% of patients were relapse-free and more than 80% of patients were free of active brain lesions at two years.

In the six-month placebo-controlled phase of the Phase II study, the most frequent adverse events reported for FTY720 were dose-dependent upper respiratory tract infections (mainly nasopharyngitis) and dyspnea, plus diarrhea and nausea. FTY720 treatment was associated with initial dose-dependent decreases in heart rate and expiratory air flow. Clinically asymptomatic increases in alanine aminotransferase (liver enzyme) and an increase in blood pressure were also observed. No unexpected adverse events emerged in patients treated for up to 24 months compared with the six-month placebo-controlled phase. There was no further elevation of blood pressure with continued treatment beyond the effect seen at six months.

The ongoing Phase III study program includes comprehensive monitoring, which will provide further characterization of the safety profile of FTY720.


Multiple Sclerosis

MS is the most common disorder of the CNS in young adults, affecting more than an estimated 2.5 million people worldwide. It is a progressive and debilitating disorder caused by the destruction of myelin, which helps neurons carry electrical signals in the brain. MS causes problems with muscle control and strength, vision, balance, sensation and mental function. MS typically presents in relapsing forms involving acute self-limiting attacks of neurological dysfunction (or "relapses") followed by complete or partial restoration of functions.


Disclaimer

This release contains certain forward-looking statements relating to Novartis' business, which can be identified by the use of forward-looking terminology such as "may," "suggests," "suggesting," "potential," "promising," "planned" or similar expressions, or by express or implied statements regarding the potential approval of FTY720 by health authorities for marketing, whether or not FTY720 will be the first orally effective MS treatment, the potential health effects or long-term impact of a patient's use of FTY720, or potential future revenue from FTY720. Such forward-looking statements reflect the current views of Novartis regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results with FTY720 to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that FTY720 will be approved for any indications or labeling in any market. Neither can there be any guarantee that, if approved, it will be the first orally effective MS treatment. Neither can there be any guarantee regarding the health effects or long-term impact of a patient's use of FTY720. Neither can there be any guarantees that FTY720 will reach any particular levels of revenue. In particular, management's expectations regarding FTY720 could be affected by, among other things, unexpected clinical trial results, including new clinical trial results and additional analysis of existing results; unexpected regulatory actions or delays or government regulation generally; competition in general; Novartis' ability to obtain or maintain patent or other proprietary intellectual property protection; government, industry and general public pricing pressures, and other risks and factors referred to in Novartis AG's current Form 20-F on file with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Novartis is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.


About Novartis

Novartis has been a leader in the neuroscience area for more than 50 years, having pioneered early breakthrough treatments for Alzheimer's disease, Parkinson's disease, Attention Deficit Hyperactivity Disorder, epilepsy, schizophrenia and migraine, many of which continue to be regarded as "gold standards" to this day. Novartis continues to be at the forefront of research and development of new compounds and is committed to addressing unmet medical needs and to supporting patients and families affected by these disorders.

Novartis Pharmaceuticals Corporation develops, manufactures markets and sells leading innovative prescription drugs used to treat a number of diseases and conditions, including those in the cardiovascular, metabolic, cancer, organ transplantation, central nervous system, dermatological, gastrointestinal and respiratory areas. The company's mission is to improve people's lives by pioneering novel healthcare solutions.

Located in East Hanover, New Jersey, Novartis Pharmaceuticals Corporation is an affiliate of Novartis AG (NYSE: NVS), a world leader in offering medicines to protect health, cure disease and improve well-being. Our goal is to discover, develop and successfully market innovative products to treat patients, ease suffering and enhance the quality of life. We are strengthening our medicine-based portfolio, which is focused on strategic growth platforms in innovation-driven pharmaceuticals, high-quality and low-cost generics, human vaccines and leading self-medication OTC brands. Novartis is the only company with leadership positions in these areas. In 2006, the Group's businesses achieved net sales of USD 37.0 billion and net income of USD 7.2 billion. Approximately USD 5.4 billion was invested in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 100,000 associates and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com .


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Oral Tysabri steps up to the plate

By Anna Lewcock

27/06/2007 - With a number of companies competing in the race to develop the first oral treatment option for multiple sclerosis, UCB and Biogen Idec's oral version of the infamous Tysabri has entered Phase II trials.

The two companies' candidate, currently going by the name CDP323, is an oral VLA-4 antagonist (as is Tysabri) intended for the treatment of relapsing-remitting multiple sclerosis (MS). The Phase II trials are expected to yield results by the end of 2008.

Biogen Idec hopped on board to partner with UCB in developing and commercialising the small molecule compound back in October last year, following encouraging Phase I trials. The two companies are initially investigating the compound for the treatment of MS, but will also be considering its use in treating other autoimmune disease indications.

UCB and Biogen are co-developing and co-commercialising the compound, with all commercialisation costs and profits to be shared equally. Over $200m (€149m) will be added to UCB's coffers courtesy of the Biogen deal.

CDP323 is one of the few oral alpha-4 integrin antagonists according to UCB, and it's hoped that by tapping Biogen's expertise in multiple sclerosis the two companies can come up with a competitive product.

Biogen is already responsible for the market-leading MS drug worldwide, Avonex (interferon beta-1a), which brought the company revenues of around $1.7bn over 2006. However, the company ahs taken a few punches over the last few years regarding an existing injectable MS treatment, Tysabri (natalizumab).

Tysabri, also a VLA-4 antagonist, was approved by the US Food and Drug Administration (FDA) for relapsing-remitting forms of MS back in 2004, however was hastily withdrawn three months later after several cases of patients developing a life-threatening viral infection of the brain.

The occurrence of progressive multifocal leukoencephalopathy (PML) in certain patients held Tysabri of the market for a significant period of time, only returning with stringent guidelines in June last year.

Damage to Biogen and Tysabri partners Elan's potential revenues was significant, with original analyst estimates for the treatment predicting annual revenues of up to $3bn, but following its withdrawal and late relaunch the drug only managed to generate $74m over 2006 - split between Elan and Biogen.

Although the companies have initiated risk management plans in the US and Europe to facilitate the correct use of Tysabri, the firms clearly recognise that the damage have may have already been done, with Biogen foreseeing "many rumours and speculation regarding Tysabri and suspected cases of PML" in the future.

Despite the unfavourable aura surrounding the existing version of Tysabri, a spokesperson for UCB told in-PharmaTechnologist.com that the two companies "strongly believe an oral solution is worthwhile exploring," and that the product could potentially become one of the firm's bigger products.

A 24-hour oral formulation of the drug could have significant advantages over the current monthly version of Tysabri in that it could reduce the likelihood of PML taking hold in a patient, as well as the more obvious non-invasive aspect of drug administration.

It's perhaps unsurprising that Biogenis hoping to catch the next big wave in MS treatment by successfully producing an oral formulation whilst simultaneously reaffirming its position in the MS market and hopefully demonstrating the safety of a Tysabri-like treatment option.

In addition to this, the MS market is growing fairly rapidly, and the first non-invasive oral treatment to become available would earn itself a particularly favourable position and at least a temporary monopoly while competitors catch up.

Several firms are fighting to be the first on the market with a non-invasive treatment option for MS sufferers. Only earlier this month Teva and partners Active Biotech announced their oral candidate was entering Phase II trials, and Novartis' hotly tipped oral MS treatment (FTY720, fingolimod) is on track for submissions in 2009.

Preclinical Studies Suggest FTY720 Mechanisms In Multiple Sclerosis May Include Direct Activity In The Brain

New preclinical data, presented at the American Academy of Neurology (AAN) annual meeting in Boston, reflect the expanding understanding of FTY720's (fingolimod) mechanism of action in multiple sclerosis (MS), suggesting direct beneficial effects in the brain. The data suggest that FTY720 may have the potential to reduce neurodegeneration and enhance repair of the central nervous system (CNS) by modulating S1P receptors expressed on brain cells. Separately, new clinical data presented from the six-month Phase II study found that the proportion of patients with clinical depression was significantly lower in the FTY720 groups compared to placebo.

These new preclinical data add to a growing body of evidence that FTY720 has multiple, specific mechanisms of action. The ongoing Phase III clinical development program includes comprehensive monitoring to further understand the clinical and safety implications of these mechanisms of action.

MS is a progressive and debilitating disorder of the CNS that frequently affects young people, women twice as often as men. It is caused by the destruction of myelin, which helps neurons carry electrical signals in the brain. MS is the most common inflammatory and neurodegenerative disorder of the CNS, causing problems with muscle control and strength, vision, balance, sensation and mental function. MS typically presents in relapsing forms involving acute self-limiting attacks of neurological dysfunction (or "relapses") followed by complete or partial restoration of functions.

Preclinical studies

FTY720's previously known activity is based on its ability to bind to the sphingosine 1-phosphate receptor-1 (S1P-R1) on circulating lymphocytes (white blood cells). This activity reversibly traps a proportion of lymphocytes in the lymph nodes, reducing the number of inflammatory T-cells circulating in the bloodstream and in the CNS.

One of the preclinical studies presented at AAN evaluated FTY720's ability to activate S1P receptors on astrocytes in cell culture. Astrocytes are known to play an active role in nervous tissue repair, and to regulate the permeability of the blood brain barrier. The study findings indicate that FTY720 activates S1P receptors on astrocytes, stimulating intracellular pathways that regulate a variety of functions, such as cell proliferation and migration. (Muellershausen et al)

A second study, also conducted in cell culture, demonstrated that FTY720 improved the survival and increased the number of immature and mature oligodendrocytes - cells that help form myelin in the CNS. Stimulation of S1P receptors on oligodendrocytes may help limit demyelination and/or promote myelin repair. (Barske et al)

In the third study, conducted in an established animal model of MS [experimental autoimmune encephalomyelitis (EAE) in rats], researchers found that FTY720 directly administered in the rat brain significantly suppressed the severity of clinical EAE, suggesting additional mechanisms of action independent of lymphocyte depletion. In imaging studies, enhanced myelination and axonal protection associated with the clinical effects were confirmed in animals receiving oral FTY720. (Schubart et al)

Clinical results in depression (Kappos et al)

Data from the six-month placebo-controlled Phase II study of once-daily oral FTY720 in patients with MS found that the proportion of patients with clinical depression was significantly lower in the FTY720 groups at six months compared to placebo. Depression is a common co-morbid condition in people with MS; the presence of depression in MS may reduce adherence to disease-modifying therapy and lead to higher rates of treatment discontinuation.

The Phase II study included 281 patients, randomized to receive FTY720 1.25 mg, FTY720 5 mg, or placebo. Depression was evaluated in 239 patients using the Beck Depression Inventory - Second Edition (BDI-II). BDI-II scores of 14 or more suggest clinical depression. At baseline, mean BDI-II scores were 9.3 for patients randomized to receive FTY720 1.25 mg, 8.0 for patients randomized to receive FTY720 5 mg, and 9.1 for patients randomized to receive placebo. At month six, patients receiving FTY720 1.25 mg had the most improvement in depression symptoms (BDI-II = 7.9, mean change from baseline = -1.45). Patients receiving FTY720 5 mg had no change in mean BDI-II scores, and patients receiving placebo showed worsening (BDI-II=10, mean change from baseline = +0.94). The proportions of patients with BDI-II scores indicating clinical depression were significantly lower in both FTY720 groups when compared with the placebo group at month six: 33% of patients receiving placebo versus 17% of patients receiving FTY720 1.25 mg (p=0.0176) and 19% of patients receiving FTY720 5 mg (p=0.0407).

About FTY720

FTY720 is a novel oral drug that is currently in a worldwide Phase III clinical development program as a once-daily, disease modifying therapy for relapsing MS. Previously reported Phase II results showed that patients treated with FTY720 had a significant reduction in relapses and in inflammation as measured on Magnetic Resonance Imaging (MRI) compared to placebo at six months and that low disease activity was maintained over two years. Up to 77% of patients remained relapse free and more than 80% of patients were free from lesions showing active inflammation on MRI after two years of continuous FTY720 treatment. Patients who received placebo for the first six months of the study also experienced a marked improvement after switching to FTY720 in the extension, and low disease activity was sustained through month 24.

The Phase III clinical trials program includes FREEDOMS (FTY720 Research Evaluating Effects of Daily Oral therapy in Multiple Sclerosis), a 24-month, randomized, double-blind, placebo-controlled study program that plans to include over 2,000 patients worldwide with the relapsing-remitting form of MS, and TRANSFORMS (TRial Assessing injectable interferoN vS FTY720 Oral in RrMS), an international 12-month, randomized, double-blind study comparing FTY720 to Interferon-beta-1a (Avonex®, i.m. once weekly). For more information about the clinical trial program, including eligibility criteria and location of U.S. study sites, patients can call the following toll-free number: 866-788-3930, or visit www.MSClinicalTrials.com.

In the six-month placebo-controlled phase of the Phase II study, the most frequent adverse events reported for FTY720 were dose-dependent upper respiratory tract infections (mainly nasopharyngitis) and dyspnea, plus diarrhea and nausea. FTY720 treatment was associated with initial dose-dependent decreases in heart rate and expiratory air flow. Clinically asymptomatic increases in alanine aminotransferase (liver enzyme) and an increase in blood pressure were also observed. No unexpected adverse events emerged in patients treated for up to 24 months compared with the six-month placebo-controlled phase. There was no further elevation of blood pressure with continued treatment beyond the effect seen at six months. The ongoing Phase III study program includes comprehensive monitoring, which will provide further characterization of the safety profile of FTY720.

Disclaimer

This release contains certain forward-looking statements relating to Novartis' business, which can be identified by the use of forward-looking terminology such as "may," "suggest," "suggesting," "potential," "growing body of evidence," "plans to include" or similar expressions, or by express or implied statements regarding the potential approval of FTY720 by health authorities for marketing, whether or not FTY720 will be the first orally effective MS treatment, the potential health effects or long-term impact of a patient's use of FTY720, or potential future revenue from FTY720. Such forward-looking statements reflect the current views of Novartis regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results with FTY720 to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that FTY720 will be approved for any indications or labeling in any market. Neither can there be any guarantee that, if approved, it will be the first orally effective MS treatment approved. Neither can there be any guarantee regarding the health effects or long-term impact of a patient's use of FTY720. Neither can there be any guarantees that FTY720 will reach any particular levels of revenue. In particular, management's expectations regarding FTY720 could be affected by, among other things, unexpected clinical trial results, including new clinical trial results and additional analysis of existing results; unexpected regulatory actions or delays or government regulation generally; competition in general; Novartis' ability to obtain or maintain patent or other proprietary intellectual property protection; government, industry and general public pricing pressures, and other risks and factors referred to in Novartis AG's current Form 20-F on file with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Novartis is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.

About Novartis

Novartis Pharmaceuticals Corporation develops, manufactures, markets and sells leading innovative prescription drugs used to treat a number of diseases and conditions, including those in the cardiovascular, metabolic, cancer, organ transplantation, central nervous system, dermatological, gastrointestinal and respiratory areas. The company's mission is to improve people's lives by pioneering novel healthcare solutions.

Novartis has been a leader in the neuroscience area for more than 50 years, having pioneered early breakthrough treatments for Alzheimer's disease, Parkinson's disease, Attention Deficit Hyperactivity Disorder, epilepsy, schizophrenia and migraine, many of which continue to be regarded as "gold standards" to this day. Novartis Neuroscience continues to be at the forefront of research and development of new compounds, is committed to addressing unmet medical needs and to supporting patients and families affected by these disorders.

Located in East Hanover, New Jersey, Novartis Pharmaceuticals Corporation is an affiliate of Novartis AG (NYSE: NVS), a world leader in offering medicines to protect health, treat disease and improve well-being. Our goal is to discover, develop and successfully market innovative products to treat patients, ease suffering and enhance the quality of life. Novartis is the only company with leadership positions in both patented and generic pharmaceuticals. We are strengthening our medicine-based portfolio, which is focused on strategic growth platforms in innovation-driven pharmaceuticals, high-quality and low-cost generics, human vaccines and leading self-medication OTC brands. In 2006, the Group's businesses achieved net sales of USD 37.0 billion and net income of USD 7.2 billion. Approximately USD 5.4 billion was invested in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 101,000 associates and operate in over 140 countries around the world.

Novartis to launch its own branded version of a leading multiple sclerosis therapy through agreement with Bayer Schering Pharma

A Novartis-branded version of interferon beta-1b to be launched in first half 2009

Move strengthens Novartis multiple sclerosis (MS) portfolio ahead of on-track submission in 2009 of once-daily oral therapy FTY720, currently in Phase III trials.

Novartis will transfer manufacturing responsibility for Bayer Schering Pharma's interferon beta-1b (marketed as Betaseron®[1]) to Bayer Schering Pharma.

Bayer Schering Pharma to pay approximately USD 200 million for transfer of production equipment, inventory and leasing of buildings at California site.

Novartis to continue receiving royalties from global sales of Bayer Schering Pharma's Betaseron until October 2008.

Basel, March 26, 2007 - Novartis has signed an agreement with Bayer Schering Pharma AG that will provide Novartis the opportunity to introduce in the first half of 2009 its own branded version of interferon beta-1b for patients with the debilitating neurological disease multiple sclerosis (MS).

The planned launch of a Novartis-branded version, which requires approval from regulatory authorities, will give Novartis an increasing presence in helping patients with MS ahead of the anticipated submission in 2009 of its oral once-daily therapy FTY720 (fingolimod), which is currently in Phase III trials.

Bayer Schering Pharma will support Novartis in the regulatory filing process of a Novartis-branded version of interferon beta-1b. They will also assume manufacturing responsibility for its interferon beta 1b from Novartis and supply Novartis with this product for its own branded version in return for a double-digit royalty payment. Novartis has the right to further develop new formulations and presentations of its branded version of this medicine.

"This agreement gives us an opportunity to strengthen our Neuroscience portfolio and build our presence in multiple sclerosis while preparing for the submission of FTY720 as planned for 2009," said Thomas Ebeling, CEO of Novartis Pharma AG. "As a truly new treatment approach with once-daily oral dosing, we believe FTY720 can offer significant therapeutic benefits to MS patients."

Under the terms of the agreement, Novartis will transfer manufacturing responsibility for interferon beta-1b to Bayer Schering Pharma, which will purchase the related equipment and lease certain buildings at a Novartis site in Emeryville, California, for a one-time cash payment of approximately USD 110 million. Bayer Schering Pharma will also purchase related interferon beta-1b product inventory for an estimated USD 90 million cash, which is subject to adjustment at closing.

Bayer Schering Pharma will continue to pay Novartis royalties on worldwide net sales of Betaseron® until October 2008 when the original regulatory filing, development and supply agreement expires.

Novartis plans to maintain in Emeryville the operations of its Vaccines and Diagnostics division, including the headquarters for its diagnostics business, as well as pharmaceutical research conducted by the Novartis Institutes for Biomedical Research (NIBR).

This agreement with Bayer Schering Pharma is subject to regulatory approvals, including antitrust review, and is expected to be completed by the third quarter of 2007.

Multiple sclerosis is estimated to affect more than 2.5 million patients worldwide and is one of the leading causes of neurological disability in young adults. This disease typically presents in relapsing forms involving acute self-limiting attacks of neurological dysfunction (or relapses), followed by complete or partial restoration of function.[2]

Betaseron is marketed by Bayer Schering Pharma AG, which Bayer AG acquired in 2006. In 1993 Bayer Schering Pharma signed an agreement covering the regulatory filing, development and supply of Betaseron with Chiron, which Novartis acquired in 2006. Novartis assumed Chiron's rights to this product, and since then has continued to produce Betaseron.

Disclaimer
This release contains certain forward-looking statements relating to the business of Novartis, which can be identified by the use of forward-looking terminology such as "to launch", "to be launched", "on track", "will", "to pay", "to continue", "to introduce", "planned", "anticipated", "to further develop", "believe", "plans", "expected", or similar expressions, or by express or implied discussions regarding the potential regulatory approval and completion of the announced agreement with Bayer Schering, or regarding potential future regulatory submissions or approvals or regarding potential future revenues from interferon beta-1b, new formulations or presentations of interferon beta-1b, or FTY720. Such forward-looking statements reflect the current views of Novartis regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results with interferon beta-1b or FTY720 to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that the announced deal will receive the necessary regulatory approvals, or if approved, will be completed, or that interferon beta-1b, new formulations or presentations of interferon beta-1b, or FTY720 will be submitted for approval or will be approved for sale for any indications or labeling in any market. Nor can there be any guarantee that interferon beta-1b, new formulations or presentations of interferon beta-1b, or FTY720 will achieve any sales or any particular level of sales. In particular, management's expectations could be affected by, among other things, unexpected clinical trial results, including additional analysis of existing clinical data or new clinical data; unexpected regulatory actions or delays or government regulation generally; competition in general; government, industry and general public pricing pressures; Novartis' ability to obtain or maintain patent or other proprietary intellectual property protection, and other risks and factors referred to in Novartis AG's current Form 20-F on file with the US Securities and Exchange Commission. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, believed, estimated or expected. Novartis is providing the information in this press release as of this date and does not undertake any obligation to update any forward-looking statements contained in this press release as a result of new information, future events or otherwise.


About Novartis
Novartis AG (NYSE: NVS) is a world leader in offering medicines to protect health, cure disease and improve well-being. Our goal is to discover, develop and successfully market innovative products to treat patients, ease suffering and enhance the quality of life. We are strengthening our medicine-based portfolio, which is focused on strategic growth platforms in innovation-driven pharmaceuticals, high-quality and low-cost generics, human vaccines and leading self-medication OTC brands. Novartis is the only company with leadership positions in these areas. In 2006, the Group's businesses achieved net sales of
USD 37.0 billion and net income of USD 7.2 billion. Approximately USD 5.4 billion was invested in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 101,000 associates and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com.

References
[1] Marketed as Betaferon® in Europe
[2] Multiple Sclerosis International Federation http://www.msif.org/en/ms_the_disease/index.html

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