New data for FTY720 - aiming to become the first orally effective multiple sclerosis treatment - show sustained benefits over two years

* Phase II results show sustained reduction in relapses and inflammation in MS patients, with low disease activity maintained over two years[1]

* International Phase III clinical trials now under way, with plans to involve more than 3,000 patients

* FTY720 may represent a new approach to treating multiple sclerosis (MS) through its unique mode of action

* MS the most common disorder of the central nervous system in young adults, affecting more than 2.5 million people worldwide[2]

Basel, September 28, 2006 - The developmental oral therapy FTY720 (fingolimod) has demonstrated sustained benefits over two years in patients suffering from relapsing multiple sclerosis (MS), indicating that it could provide an important new option for treating this disabling neurological disease estimated to affect more than 2.5 million people worldwide.

New Phase II data presented today show that up to 77% of patients taking once-daily FTY720 remained free of relapses over two years. They also maintained a low rate of inflammatory disease as measured by magnetic resonance imaging (MRI)[1].

The results were presented at the European Committee for Treatment and Research in Multiple Sclerosis (ECTRIMS) meeting in Madrid. They provide longer-term data regarding the clinical profile of FTY720 following the publication of one-year Phase II data in the New England Journal of Medicine on September 14, 2006[3].

New preclinical data also presented at the congress suggest that FTY720 may work through multiple modes of action. In addition to its anti-inflammatory effects, preclinical data suggest that FTY720 may have the potential to reduce neurodegeneration and enhance repair of the central nervous system affected by MS[4],[5],[6].

MS is a progressive and debilitating disorder of the central nervous system (CNS) that frequently affects young people, women twice as often as men. It is the most common inflammatory and neurodegenerative disorder of the CNS, causing problems with muscle control and strength, vision, balance, sensation, and mental functions[3]. MS typically presents in relapsing forms involving acute self-limiting attacks of neurological dysfunction (or “relapses”) followed by complete or partial restoration of functions.

“The results presented at ECTRIMS are very promising, and if confirmed by Phase III data, FTY720 could contribute significantly to improving the quality of life of patients with relapsing MS,” said Professor Ludwig Kappos, chief trial investigator and head of the Outpatient Clinics Neurology-Neurosurgery at the University Hospital in Basel. “The data show that FTY720 may offer important clinical benefits. In addition, it is given conveniently in the form of a once-daily pill.”

Conventional first-line therapies for MS offer an average reduction in relapse rates in the range of 30-35% in two-year studies. These medicines require frequent injections, ranging from daily to weekly, and are often associated with skin reactions at the site of the injection[7],[8],[9].

FTY720 a new approach to treating MS
FTY720, the first oral sphingosine 1-phosphate receptor (S1P-R) modulator, may represent a new approach to the treatment of MS through its unique mode of action.

In MS, inflammatory lymphocytes (T-cells) are believed to be responsible for the destruction of the protective myelin coating which surrounds the nerves in key areas of the brain and spinal cord. This destruction hinders the ability of nerves to send electrical signals, resulting in problems with muscle movement, coordination, balance and cognition.

FTY720 binds to the sphingosine 1-phosphate receptor-1 (S1P1) on circulating lymphocytes and reversibly traps a proportion of them in the lymph nodes. As a result, FTY720 lowers the number of activated T-cells circulating in the bloodstream and central nervous system. Preclinical data suggest that FTY720 may also impact the neurodegenerative component of MS and promote endogenous repair.

FTY720 has been developed by Novartis and licensed from Mitsubishi Pharma Corporation.

Phase III clinical trials underway
The positive Phase II results support further evaluation of FTY720 through a large-scale program of Phase III studies in relapsing-remitting MS, which started earlier this year.

This includes a Phase III clinical trials program called FREEDOMS (FTY720 Research Evaluating Effects of Daily Oral therapy in Multiple Sclerosis). This randomized, double-blind, placebo-controlled study program is planned to include over 2,000 patients worldwide aged 18-55 with the relapsing-remitting form of MS. Study participants will be randomized equally to either receive once-daily oral treatment with FTY720 1.25 mg or 0.5 mg or placebo for a period of 24 months.

Novartis has also initiated a 12-month, international, randomized, double-blind study with more than 1,000 patients called TRANSFORMS (TRial Assessing injectable interferoN vS FTY720 Oral in RrMS) comparing once-daily oral treatment with FTY720 1.25 mg or 0.5 mg to interferon beta-1a injected once-weekly.

Details of new Phase II data
The data presented at ECTRIMS are from an 18-month active drug extension of a core six-month placebo controlled study in patients with relapsing MS. The results show that at six months, FTY720 reduced inflammatory disease activity as seen on MRI by up to 80%, and relapse rate by more than 50%, compared to placebo. In the extension phase, placebo patients were switched to active therapy[1].

Over two years of FTY720 treatment, MRI and clinical disease activity remained low, resulting in an annualized relapse rate of 0.2 with up to 77% of patients remaining relapse-free. More than 80% of patients were free from lesions showing active inflammation on MRI. Patients who received placebo for the first six months also experienced a marked improvement after switching to FTY720, and the improvement was sustained through month 24[1].
The large-scale study was conducted at 32 centers in 11 countries in Europe and Canada. In the initial placebo-controlled phase, 281 patients were randomized equally to receive FTY720 (1.25 mg or 5 mg) or placebo once-daily for six months[3]. Of the 255 patients who completed this part of the study, 98% volunteered to continue in the extension phase. Patients in the placebo group were then re-randomized to receive either 1.25 mg or 5 mg of FTY720 in a dose-blinded manner. Those already on FTY720 continued with their original treatment.

In the six-month placebo-controlled phase of the study, the most frequent adverse events reported for FTY720 were dose-dependent upper respiratory tract infections (mainly nasopharyngitis) and dyspnea, plus diarrhea and nausea[3]. 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[3]. 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 the business of Novartis, which can be identified by the use of forward-looking terminology such as “potential”, “may offer”, “may represent”, “may impact”, “could change”, "could contribute, or similar expressions, or by express or implied discussions regarding potential future regulatory submissions or approvals or regarding potential future revenue from fingolimod. 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 fingolimod to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that fingolimod 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 fingolimod will achieve any sales or any particular level of sales. In particular, management’s expectations regarding fingolimod 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; Novartis’ 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 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. Novartis continues to be active in the research and development of new compounds, and is committed to addressing unmet medical needs and to supporting patients and their families affected by these disorders.

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References
1 Kappos L. et al. Oral fingolimod (FTY720) in relapsing MS: 24-month results of the Phase II study. ECTRIMS 2006.
2 Multiple Sclerosis International Federation (http://www.msif.org/en/ms_the_disease/index.html).
3 Kappos L. et al. Oral fingolimod (FTY720) for relapsing multiple sclerosis. N Engl J Med Sept 14 2006; 355; 11: 1124-1140.
4 Balatoni B., Foster A. et al. Oral fingolimod maintains and restores neuronal function in demyelinating models of multiple sclerosis, as assessed by somatosensory and visual evoked potentials. ECTRIMS 2006.
5 Osinde M. et al. The sphingosine-1-phosphate receptor subtype-1 stimulates ERK phosphorylation in astrocytes. ECTRIMS 2006.
6 Soliven B. et al. Pleiotropic actions of FTY720-phosphate in cells of oligodendroglial lineage. ECTRIMS 2006.
7 Jacobs L. D. et al. Intramuscular Inteferon beta-1a for disease progression in relapsing multiple sclerosis. Ann Neurol 1996, 39: 285-294.
8 IFNB Multiple Sclerosis Study Group. Interferon beta-1b is effective in relapsing-remitting multiple sclerosis. I. Clinical results of a multicenter, randomized, double-blind, placebo-controlled trial. Neurology 1993; 43; 655-661.
9 Johnson K.P. et al. Copolymer 1 reduces relapse rate and improves disability in relapsing-remitting multiple sclerosis: Results of a phase III multicenter, double-blind, placebo-controlled trial. Neurology 1995; 45: 1268-1276.

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