(NVS) Novartis AG’s Lung Drug Cleared in US

Novartis AG (NVS) recently announced that its once-daily long-acting beta2-agonist (LABA) Arcapta Neohaler (75 mcg) was cleared by the US Food and Drug Administration (FDA) for the long-term maintenance bronchodilator treatment of airflow obstruction in patients with chronic obstructive pulmonary disease (COPD) including chronic bronchitis and/or emphysema. With the approval, Arcapta becomes the first therapy in the LABA class to be approved for the indication in the US.

Arcapta is already available in 150 and 300 mcg versions, under the brand name of Onbrez Breezhaler (also known as QAB 149), in the European Union. Onbrez Breezhaler (150 mcg) was also cleared in Japan recently for relief of symptoms due to airway obstruction in COPD (chronic bronchitis and emphysema). It is now approved in more than 60 countries and available in more than 30, with launches continuing throughout 2011. In the US, the inhaler is expected to be launched in the first quarter of 2012.

The US approval was based on data from studies which demonstrated improved lung functioning on a sustained basis in patients treated with Arcapta compared to those treated with placebo. The improvement became visible in just 5 minutes after the first dose and was maintained over 12 weeks.

It should be noted that the higher dose (150 mcg) of the Arcapta inhaler was not approved in the US unlike Japan. As a reminder, in early March 2011, an advisory panel of the US regulatory body though recommending approval of Arcapta at 75 mcg dosage, voted against approving the candidate at the 150 mcg dosage. The decision against the 150 mcg version was based on the panel’s belief that treatment with the higher dosage does not result in any additional benefit.

COPD is the third leading cause of death in the US with more than 12 million people afflicted with the disease in this country alone. It is life threatening and can lead to serious long-term disability.

Novartis is banking on new drug approvals and successful label expansions to overcome the adverse impact of the upcoming patent cliff. Positive developments like this can bolster the company’s plans. The inhaler is already doing well in the countries where it is already marketed and the US approval will come as a further fillip for Novartis.

Our Recommendation

Currently, we have a Neutral recommendation on Novartis. The company carries a Zacks #3 Rank (“Hold” rating) in the short run. Though pleased with Novartis’ wide range of products and its efforts to diversify further, as is evident by the acquisition of eye-care company Alcon, we prefer to remain on the sidelines due to the imminent patent cliff faced by the company.

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