Novartis and Schering-Plough announce collaboration to develop novel once-daily combination therapy for asthma and COPD

* New inhaled therapy will combine the bronchodilator indacaterol (QAB149) of Novartis with Schering-Plough’s inhaled corticosteroid mometasone
* Novel once-daily combination has the potential to help patients by improving on efficacy, convenience and compliance of current medications
* Asthma estimated to cause more than 180,000 deaths worldwide annually[1], while chronic obstructive pulmonary disease (COPD) affects one in 15 smokers[2]
* Agreement marks latest collaboration between the two companies and further strengthens Novartis respiratory portfolio

Basel, August 14, 2006 - Novartis has entered into a global collaboration with Schering-Plough Corporation to develop and commercialize a novel once-daily inhaled fixed-dose combination therapy for the treatment of asthma and chronic obstructive pulmonary disease (COPD), two of the world’s most prevalent and urgent respiratory diseases.

The goal is to develop a new therapy that would combine the therapeutic benefits of the once daily long and fast acting Beta2-agonist QAB149 (indacaterol) of Novartis and Schering-Plough’s once-daily oral corticosteroid mometasone (Asmanex�) in a single inhalation device. The combined product would have the potential to offer patients improved symptom control, convenience and compliance through once-daily dosing.

Combination products containing inhaled corticosteroids and long-acting Beta2-agonists are the largest class within the growing worldwide asthma and COPD market. An inhaled bronchodilator-corticosteroid combination with true 24-hour efficacy and rapid onset of action could be an important new treatment option to help patients suffering from these serious and life-threatening diseases that continue to claim millions of lives annually.

“By working together, we can combine our expertise and commitment in the respiratory field to provide improved treatment options that will potentially benefit millions of patients with asthma and COPD. The combination of indacaterol with mometasone would be a significant addition to our respiratory pipeline, demonstrating our commitment to the development of important new products to improve disease control for patients,” said Thomas Ebeling CEO of Novartis Pharma AG.

James Shannon, MD, Global Head of Development at Novartis Pharma AG, added: “To maximize patient benefits from a novel respiratory medication such as indacaterol, it is essential to consider both flexibility and the optimum inhaler device options for the product. Novartis is planning to develop indacaterol both as a monotherapy and in fixed-dose combinations to provide flexible therapeutic options for physicians and patients.”

The indacaterol-mometasone development is the latest stage in a long-term collaboration between Novartis and Schering-Plough. In November 2002, the two companies announced an agreement granting Schering-Plough exclusive US distribution and marketing rights to the Foradil� Aerolizer� (formoterol fumarate inhalation powder). In April 2003, the companies announced an agreement to jointly develop and market worldwide a novel therapy combining Foradil� (formoterol fumarate) with Schering Plough’s Asmanex�.

Novartis and Schering-Plough will share the costs of developing the indacaterol-mometasone combination product. No initial payments will be made by either party.

Novartis commitment to respiratory diseases
Novartis is committed to the research and development of novel compounds to help patients worldwide with various respiratory diseases This latest agreement with Schering-Plough further strengthens the Novartis respiratory portfolio, which already contains a number of marketed drugs such as Xolair�, Foradil� for asthma and TOBI� for cystic fibrosis as well as late-stage pipeline products such as QAB149 and early-stage compounds for the treatment of diseases such as asthma and COPD.

About asthma and COPD
Asthma is a chronic inflammatory lung disease that affects more than 300 million people worldwide[3], of whom an estimated 15 million suffer from severe disease[4]. The health and quality of daily life for these patients are often severely affected, with more than 180,000 people believed to die from asthma each year throughout the world[1].

COPD (chronic obstructive pulmonary disease) is the world’s fourth leading cause of death. It is an irreversible and chronic obstruction of the airways caused primarily by smoking. About four percent of the population in the US, Europe and Japan are estimated to have the disease, which is estimated to affect at least one in 15 people who smoke tobacco products. Symptoms, which are similar to those found in chronic bronchitis and emphysema, progress slowly and eventually lead to a largely irreversible loss of lung function. COPD is expected to become the third leading cause of death by 2020, while COPD death rates are estimated to be very low for people under age 45, complications and deaths increase steeply with age[2].

Disclaimer
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 “would”, “plan to develop”, “has the potential”, “could be”, “offers the potential” “potentially benefit” or similar expressions, or by express or implied discussions regarding potential marketing approvals or future sales of QAB149 (indacaterol) and/or the fixed dose combination of QAB149 (indacaterol) and Asmanex� (mometasone). Such statements reflect the current views of the Group with respect to future events and are subject to certain risks, uncertainties and assumptions. There can be no guarantee that the announced collaboration between Novartis and Schering-Plough will be successful or that QAB149 and/or the proposed fixed dose combination therapy will be approved for any indications in any market, nor that it will reach any particular sales levels. In particular, management’s expectations regarding commercialization of QAB149 and/or the proposed fixed dose combination therapy could be affected by, among other things, additional analysis of QAB149 and/or Asmanex� (mometasone) clinical data; new clinical data; unexpected clinical trial results; unexpected regulatory actions or delays or government regulation generally; the ability of Novartis and Schering-Plough to obtain or maintain patent or other proprietary intellectual property protection; competition in general; increased government, industry, and general public pricing pressures; and other risks and factors referred to in the 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, 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 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 97,000 people and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com.


References

1. World Health Organisation. Fact sheet no. 206. Revised January 2000, at http://www.who.int/respiratory/asthma/scope/en/index.html
2. Global Initiative for Chronic Obstructive Lung Disease (GOLD), 2005, at http://www.goldcopd.org/Guidelineitem.asp?l1=2&l2=1&intId=989
3. Global Initiative for Asthma (GINA). Global Burden of Asthma Report, at http://www.ginasthma.com/ReportItem.asp?l1=2&l2=2&intId=94
4. American Thoracic Society. Proceedings of the ATS workshop on refractory asthma. Current understanding, recommendations, and unanswered questions. Am J Respir Crit Care Med 2000; 162:2341-2351

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