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

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* 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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