Novartis Corporation and FDA Complete Two-Year Cooperative Research and Development Agreement

East Hanover, NJ, March 31, 2008 – Novartis Pharmaceuticals Corporation announced today the successful completion of a cooperative research and development agreement (CRADA) with the Food and Drug Administration (FDA), one of the first projects conducted under the FDA’s Critical Path Initiative. The Critical Path Initiative was launched by FDA in 2004 to refine the science and processes through which FDA-regulated drugs, biologics, and devices are translated from a discovery or “proof of concept” to a medical product. The research produced under the CRADA led to a number of key achievements that will enhance the development and application of preclinical biomarkers to evaluate drug safety.

“In working together with FDA, we have demonstrated the progress that can be achieved in the biomarker field, and in the science of drug development in general, through public-private partnerships,” according to John Orloff, MD, Senior Vice President, US Medical and Drug Regulatory Affairs at Novartis Pharmaceuticals Corporation. “We have developed both a process for defining biomarkers of safety and real-world data that can support regulatory decision making regarding renal safety.”

The FDA-Novartis CRADA had two primary objectives: 1) To define a process for qualifying preclinical safety biomarkers for regulatory decision making; and 2) to test this pilot process by submitting kidney-related safety biomarkers identified and characterized through preclinical studies to the FDA for qualification.

Efforts conducted under the CRADA have resulted in the publication of the first pilot framework for a preclinical regulatory biomarker qualification process.[1] The development of this process will have a broad impact on the understanding of the qualification of safety biomarkers far beyond this partnership.

In addition, the preclinical data identified thus far have demonstrated evidence for the superiority of new renal biomarkers over the current standards used to assess renal injury in drug testing, namely serum creatinine and blood urea nitrogen (BUN). Further efforts will focus on the extended clinical qualification of biomarkers that could allow clinicians to detect kidney injury in patients earlier than current clinical practice allows.

Relevant safety biomarker data generated by Novartis as part of the CRADA has been shared with the Critical Path Institute’s Predictive Safety Testing Consortium (PSTC). The PSTC is a larger public/private partnership between industry, academia, and regulatory health authorities intended to serve as a neutral body for coordinating activities related to biomarker qualification in drug development.

The CRADA data, together with data generated by other partners in the PSTC has been submitted to FDA and the European Medicines Agency (EMEA) as part of a Voluntary Exploratory Data Submission (VXDS). The two regulators are now considering whether to approve use of these biomarker data in support of particular aspects of regulatory decision making. As a result of this data submission, FDA and EMEA have utilized appropriate internal boards and worked to refine the process to qualify such preclinical safety biomarker data. Further joint evaluation of additional data under the auspices of the PSTC is expected to lead to additional submissions of peripheral biomarkers representing additional renal pathologies.

“The Biomarker CRADA is a significant step in bridging the gap between basic scientific research and the medical product development process,” said Janet Woodcock, Director of the FDA's Center for Drug Evaluation and Research. “The FDA was pleased to work with Novartis to further the development of renal safety biomarkers that can be used to prevent drug-induced kidney damage.”

The data generated by Novartis under the CRADA will continue to have an impact despite the agreement’s conclusion. Novartis intends to submit additional data on genomic- and proteomic-based renal safety biomarkers to FDA and EMEA in the summer of 2008.

Disclaimer

The foregoing release contains forward-looking statements that can be identified by terminology such as “will,” “can,” “could,” “expected,” “intends,” or similar expressions, or by express or implied discussions regarding potential future results from the FDA-Novartis CRADA, or potential future revenues from such discoveries. Such forward-looking statements reflect the current views of the Company regarding future events, and involve known and unknown risks, uncertainties and other factors that may cause actual results with the FDA-Novartis CRADA to be materially different from any future results, performance or achievements expressed or implied by such statements. There can be no guarantee that any products will be brought to any market as a result of the FDA-Novartis CRADA. Nor can there be any guarantee that any such products will result in Novartis achieving any particular levels of revenue. In particular, management’s expectations regarding the FDA-Novartis CRADA could be affected by, among other things, unexpected research results; 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, 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 Pharmaceuticals Corporation researches, develops, manufactures and markets leading innovative prescription drugs used to treat a number of diseases and conditions, including those in the cardiovascular, metabolic, cancer, organ transplantation, central nervous system, dermatological, GI and respiratory areas. The company's mission is to improve people's lives by pioneering novel healthcare solutions.

Located in East Hanover, New Jersey, Novartis Pharmaceuticals Corporation is an affiliate of Novartis AG (NYSE: NVS), which provides healthcare solutions that address the evolving needs of patients and societies. Focused solely on growth areas in healthcare, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, cost-saving generic pharmaceuticals, preventive vaccines and diagnostic tools, and consumer health products. Novartis is the only company with leading positions in these areas. In 2007, the Group’s continuing operations (excluding divestments in 2007) achieved net sales of USD 38.1 billion and net income of USD 6.5 billion. Approximately USD 6.4 billion was invested in R&D activities throughout the Group. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 98,200 full-time associates and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com.

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