Novartis announces in-licensing of valopicitabine (NM283), a novel first-in-class treatment for hepatitis C that expands infectious diseases portfolio

* Novartis strengthens infectious disease portfolio and range of hepatitis compounds
* Valopicitabine (NM283) the most advanced oral, direct antiviral compound in development for treatment of hepatitis C
* More than 170 million patients worldwide chronically infected by hepatitis C virus[1]

Basel, Switzerland, March 29, 2006 - Novartis announced today that it has exercised its option from Idenix Pharmaceuticals to in-license the late-stage development compound valopicitabine (NM283) for the treatment of hepatitis C, a condition estimated to affect more than 170 million people worldwide and a major cause of liver disease.

Under the terms of the agreement, Idenix and Novartis will co-promote this compound in the United States and the five major European markets (United Kingdom, Spain, France, Italy and Germany); Novartis will have exclusive rights to market and promote it in the rest of the world. Novartis may pay up to USD 70 million in license fees to Idenix, of which USD 25 million were paid at the time of exercising the option. Further payments may be payable based upon regulatory milestones.

"Novartis is committed to achieving leadership in infectious diseases, building a strong portfolio of innovative compounds with complementary mechanisms of action" said Thomas Ebeling, Chief Executive Officer of Novartis Pharma AG. "Valopicitabine complements our current hepatitis pipeline and represents an important step forward in our mission to bring more effective and safer drugs to patients suffering from hepatitis C".

In addition to valopicitabine, Novartis is developing two compounds for chronic hepatitis B in collaboration with Idenix: telbivudine, an oral antiviral potential best-in-class treatment in Phase III, and valtorcitabine, a Phase II oral antiviral. Novartis is also developing with partner Anadys the first-in-class ANA975, a novel Toll-like receptor 7 agonist for the treatment of both hepatitis C and hepatitis B. ANA975 is potentially synergistic with valopicitabine, and this combination could become the first oral combination therapy available for the treatment of chronic hepatitis C.

About valopicitabine (NM283)
Valopicitabine, a once-daily oral treatment, is intended to block hepatitis C virus (HCV) replication by specifically inhibiting the HCV RNA polymerase. Initial clinical trials have shown that valopicitabine is active in patients infected with the genotype 1 strain of HCV. Preliminary results from clinical trials to date have demonstrated that the antiviral effects of this compound are enhanced when this agent is used in combination with pegylated interferon. Ongoing clinical trials are evaluating the combination of valopicitabine and pegylated interferon in hepatitis C patients who previously failed to respond to antiviral treatment, as well as in patients who have not yet been treated.

About Hepatitis C
Hepatitis C is a liver infection caused by the hepatitis C virus (HCV) which infects and inflames the liver, causing progressive liver damage that can lead to cirrhosis (scarring), liver cancer and death. Hepatitis C is a severe and progressive disease, with 70-85% of patients infected with HCV developing chronic infection, and of whom 20-30% develop cirrhosis.

A major unmet medical need exists in the treatment of chronic HCV since the current standard of care is associated with a high incidence of side effects and has limited efficacy in the most prevalent form (genotype 1), curing only about half the number of patients treated.

Novartis/Idenix collaboration
Idenix is developing its hepatitis B compound telbivudine and valtorcitabine in collaboration with Novartis Pharma AG under a development and commercialization arrangement established in May 2003. This collaboration agreement also granted Novartis an option to in-license valopicitabine, which it is now exercising. The collaboration arrangement further provides that Novartis and Idenix will co-promote in the United States, France, Germany, Italy, Spain and the UK those product candidates that are approved for marketing that Novartis has licensed, which now include telbivudine and valtorcitabine for the treatment of hepatitis B and valopicitabine for the treatment of hepatitis C. Novartis holds the exclusive license to these product candidates in the rest of the world.

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. For more information, please visit http://www.novartis.com.

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 "may", "is potentially", "could", "intend", "will", or similar expressions, or by express or implied discussions regarding the potential approval of telbivudine, valtorcitabine or valopicitabine by regulatory authorities, or regarding potential future sales of telbivudine, valtorcitabine or valopicitabine. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause actual results with telbivudine, valtorcitabine or valopicitabine to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that telbivudine, valtocitabine or valopicitabine will be approved for sale in any market, or that they will reach any particular level of revenue. Management’s expectations regarding telbivudine, valtorcitabine or valopicitabine 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; 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 U.S. 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] World Health Organization. Hepatitis B Fact Sheet Number 204 Available at www.who.int/mediacentre/factsheets/fs204/en/print.html Accessed 12/8/05

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Irina Ferluga

Novartis Pharma Communications

Novartis AG

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