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Novartis (NVS - Analyst Report) recently received encouraging news when it obtained a positive opinion from the Committee for Medicinal Products for Human Use (CHMP) for an additional indication for ophthalmology drug Lucentis (ranibizumab).

Novartis is currently seeking European approval of Lucentis for treating patients with visual impairment due to choroidal neovascularization (CNV), secondary to pathologic myopia (myopic CNV).

Lucentis was submitted for regulatory approval for this additional indication in the EU in Sep 2012 and in Japan in Oct 2012.

The CHMP opinion was based on positive data from a phase III study, RADIANCE. It was observed in the study that Lucentis provides superior improvement in visual acuity as compared to Visudyne (verteporfin PDT), in patients affected with myopic CNV.

Approximately 40% of patients treated with Lucentis gained 15 or more letters of visual acuity in the third month as compared to just 15% of patients treated with Visudyne.

We note that Lucentis is already approved for wet age-related macular degeneration (AMD). Lucentis is also approved for the treatment of visual impairment due to diabetic macular edema (DME) and macular edema secondary to retinal vein occlusion (RVO).

Novartis has a collaboration agreement with Roche’s (RHHBY - Analyst Report) Genentech for Lucentis. While Roche holds the commercial rights for Lucentis in the US, Novartis holds the rights to develop and market Lucentis outside the US.

We remind investors that Novartis also pays royalties to Roche on net Lucentis sales outside the US.

Lucentis, one of the key drivers of revenue growth for Novartis in 2012, generated sales of $2.4 billion, up 22% from 2011.

We expect Novartis to gain approval for Lucentis for the above-mentioned indication shortly.

Label expansion for the additional indication will further boost sales of the drug, which bodes well for both Novartis and Roche.

Novartis currently carries a Zacks Rank #3 (Hold). Right now, Salix Pharmaceuticals (SLXP - Analyst Report) and Santarus, Inc. look attractive with a Zacks Rank #1 (Strong Buy).

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