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Novartis (NVS - Analyst Report) recently received positive news when the European Commission (EC) approved its ophthalmology drug, Lucentis, for an additional indication.

Lucentis is now approved to treat patients with visual impairment due to choroidal neovascularization (CNV), secondary to pathologic myopia (myopic CNV) in Europe.

We remind investors that EU approval was expected as the Committee for Medicinal Products for Human Use (CHMP) had rendered a positive opinion for the label expansion in May 2013.

The approval was based on encouraging 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 in patients affected with myopic CNV.

Moreover, the study also showed that Lucentis’ safety profile was consistent with other studies.

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

We note that 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%.

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

We note that Valeant Pharmaceuticals' (VRX - Snapshot Report) Macugen is also approved to treat wet AMD.

Novartis currently carries a Zacks Rank #3 (Hold). Right now, Novo Nordisk (NVO - Analyst Report) looks attractive with a Zacks Rank #2 (Buy).

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