New data show telbivudine superior to lamivudine in treatment of Chinese patients with chronic hepatitis B

- Regulatory submission completed in China following US and EU filings
- Potential new standard of care for over 120 million patients in China estimated to be infected with hepatitis B virus

Shanghai, China, March 27, 2006 - Novartis has announced new clinical data demonstrating that telbivudine - an oral, once-daily nucleoside analogue in development for the treatment of chronic hepatitis B (CHB) - provides both superior antiviral and clinical efficacy in Chinese patients with this disease after one year of use when compared with the commonly used treatment lamivudine.

The results from this Phase III trial in China, a country estimated to have more than 120 million people infected with hepatitis B, were consistent with the findings from the GLOBE study. This study, the largest registration trial ever conducted for chronic hepatitis B, showed that telbivudine provided a rapid and profound viral suppression.

The new data were included in the recent regulatory submission of telbivudine to Chinese health authorities together with the one-year data from the GLOBE study. China is the latest in a series of filings for marketing approval of telbivudine following earlier submissions in the US and EU.

The study results were presented today at the biennial meeting of the International Liver Congress in Shanghai by Dr. Jinlin Hou, Director and Professor of the Hepatology Unit and Department of Infectious Diseases at Nanfang Hospital, Southern Medical University, Guangzhou, China.

“Telbivudine displayed statistically superior efficacy compared to lamivudine on the key viral and clinical markers, including statistically superior viral suppression, a higher percentage of patients with normalization of liver enzymes and a higher proportion of patients with HBeAg loss at one year,” said Dr. Hou. “This data suggests that telbivudine could become an important new first-line treatment option for the millions of Chinese patients suffering from this potentially life-threatening disease.”

“In China alone, this devastating disease accounts for nearly 10 percent of all the chronic hepatitis B cases worldwide,” said Dr. James Shannon, Global Head of Development, Novartis Pharma AG. “We are very pleased about these positive results and look forward to working with the Chinese authorities to make telbivudine available to patients as fast as possible. Despite advances in chronic hepatitis B treatment, a high unmet need remains for potent therapies. Novartis is committed to developing innovative and more effective therapies such as telbivudine to treat this disease.”

About one-year results of Chinese Phase III trial[1]
This trial is an ongoing, randomized, double-blinded, double-dummy trial comparing two years of treatment with telbivudine or lamivudine in 332 Chinese adults with chronic hepatitis B. The majority of patients in this trial were HBeAg-positive (290).

After one year of treatment, telbivudine displayed statistically superior antiviral and clinical efficacy compared with lamivudine. Telbivudine significantly reduced virus levels (HBV DNA) by 6.22 log10, or more than 1 million-fold, compared with 5.4 log10 for lamivudine (p=0.0004). In addition, undetectable virus levels were achieved by significantly more often in telbivudine-treated patients compared to lamivudine-treated patients (70 and 43 percent, respectively; p<0.0001). Therapeutic response (defined as a reduction of HBV DNA to below 5 log10 copies/mL with HBeAg loss or ALT normalization) was achieved by a significantly higher percentage of telbivudine-treated patients compared with lamivudine-treated patients (87 and 64 percent, respectively; p<0.0001).

More telbivudine-treated patients achieved normalization of liver enzymes (ALT) compared to lamivudine-treated patients (89 and 76 percent respectively; p=0.0033). In addition, HBeAg loss (in HBeAg positive patients only and an indicator of a potential durable response to treatment) occurred in a statistically significantly higher percentage of telbivudine-treated patients compared with lamivudine-treated patients (31 and 20 percent, respectively; p=0.0473). Seroconversion rates (in HBeAg positive patients only) were 25 percent for telbivudine and 18 percent for lamivudine. Resistance rates were 4.5 percent for telbivudine and 10 percent for lamivudine.

Data from this trial support a favorable safety profile for telbivudine. The overall safety profiles for telbivudine and lamivudine in this study closely resemble the recently-reported results from the GLOBE trial. The rate of clinical adverse events was low and similar between the telbivudine and lamivudine treatment groups with nasopharyngitis, upper respiratory tract infection and fatigue occurring most commonly. As seen in the GLOBE study, serum ALT elevations were more common in lamivudine-treated patients compared to telbivudine-treated patients and creatine kinase elevations, not requiring treatment modification, were more common with telbivudine-treated patients compared to lamivudine-treated patients.

About the GLOBE study
The GLOBE study is an ongoing two-year Phase III clinical trial comparing telbivudine with lamivudine in the treatment of 1,367 adults with chronic hepatitis B. The study is being conducted at 112 clinical centers in 20 countries worldwide, including France, Germany, Italy, Spain and the United Kingdom. GLOBE is also the first international hepatitis B study to include clinical sites and patients in China: in fact, more than 25% of the patients enrolled in the GLOBE study (373 patients) were from China with another 25% of Asian patients coming from other countries.

About chronic hepatitis B (CHB)
Chronic hepatitis B is the tenth leading cause of death worldwide[2] with approximately 350 million people chronically infected (lifelong infection)[3]. Additionally, chronic hepatitis B is responsible for up to 80 percent of the world’s primary liver cancer[4], and annually an estimated 1.2 million individuals die from chronic hepatitis B-related liver disease[2]. China has the largest population affected by the hepatitis B virus of any nation with 120 million infected (9.8 percent of the total population) and, of those infected, 30 million of them have chronic disease[5].

Novartis/Idenix collaboration
Idenix is developing its hepatitis B clinical product candidates, telbivudine and valtorcitabine, in collaboration with Novartis Pharma AG under a development and commercialization arrangement established in May 2003. The collaboration arrangement further provides that Novartis Pharma AG and Idenix will co-promote telbivudine and valtorcitabine and other product candidates that Novartis Pharma AG has licensed, if successfully developed and approved for marketing, in the United States, France, Germany, Italy, Spain and the UK. Novartis Pharma AG holds the exclusive license to commercialize telbivudine and valtorcitabine in the rest of the world. The collaboration also provides Novartis Pharma AG with an exclusive option to license and collaborate with Idenix in the development and commercialization of other product candidates in Idenix’s portfolio, including valopicitabine (NM283), a direct antiviral for the treatment of chronic hepatitis C.

About Novartis
Novartis (NYSE: NVS) is 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 and leading self-medication OTC brands. In 2005, the Group’s businesses achieved net sales of USD 32.2 billion and net income of USD 6.1 billion. Approximately USD 4.8 billion was invested in R&D. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 91,000 people and operate in over 140 countries around the world. Please visit http://www.novartis.com for information.

This release contains certain “forward-looking statements”, relating to the Group’s business, which can be identified by the use of forward-looking terminology such as “potential”, “will”, “option,” “suggests”, “could become”, “is committed to”, or similar expressions, or by express or implied discussions regarding the potential approval of telbivudine by regulatory authorities, or regarding potential future sales of telbivudine. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results with telbivudine to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that telbivudine will be approved for sale in any market, or that it will reach any particular level of revenue. Management’s expectations regarding telbivudine could be affected by, among other things, uncertainties relating to clinical trials, including new clinical data and 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; Idenix’s dependence on its collaboration with Novartis Pharma AG; Idenix’s ability to obtain additional funding required to conduct its research, development and commercialization activities; competition in general; government, industry, and general public pricing pressures; as well as other risks and factors referred to in the Company’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.

References:
1. Hou JL, Yin YK, Xu DZ, et al. A phase III comparative trial of telbivudine and lamivudine for treatment of chronic hepatitis B in Chinese patients: first-year results. Abstract presented at International Liver Congress March 27, 2006
2. Lavanchy D. J Viral Hepat. 2004 Mar 11 (2): 97-107
3. WHO Hepatitis B Fact Sheet #204
4. World Health Organization. Expanded programme on immunization hepatitis B vaccine - making global progress
5. Nexis: BBC Monitoring Asia Pacific- Political October 24, 2004

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