Zacks_Analysts' Blog : Novartis' Gilenya Approved in EU - Analyst Blog

Novartis AG (NVS)  received a boost recently when its oral multiple sclerosis drug, Gilenya, was approved in the European Union (EU). The drug is already marketed in the US. The drug was approved by the European Commission for the treatment of patients with highly active relapsing-remitting multiple sclerosis (RRMS) despite treatment with beta interferon, or in patients with rapidly evolving severe RRMS. Gilenya is the first oral multiple sclerosis drug to be cleared in the EU.

The approval was based on data from a large clinical trial which showed that the drug reduced relapses by 52% at one year compared with Biogen’s (BIIB) Avonex. The drug was also significantly efficacious in reducing the risk of disability progression and the number of brain lesions detected by magnetic resonance imaging (MRI), a measure of disease activity.

The European approval was partly expected after Gilenya was recommended for approval in EU by the European Medicines Agency's (EMEA) Committee for Medicinal Products for Human Use (CHMP) in early January this year.

Gilenya recorded revenues of $15 million in 2010. We believe EU approval will boost further sales of this drug.

Our Recommendation

Currently, we have a Neutral recommendation on Novartis, which is supported by a Zacks #3 Rank (short term “hold” rating). We are pleased with Novartis’ wide range of products and its efforts to diversify further as is evident by the acquisition of a majority stake in Alcon (ACL). Novartis is looking to acquire the remaining stake in the eye-care company.  However, we prefer to remain on the sidelines due to the imminent patent cliff faced by Novartis.