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Novartis (NVS - Analyst Report) recently received positive news when its arthritis drug Ilaris was approved by the European Commission for an additional indication.

The EC cleared Ilaris for the treatment of active systemic juvenile idiopathic arthritis (SJIA) in patients aged 2 years and above in the EU, who did not respond adequately to previous therapy with non-steroidal anti-inflammatory drugs (NSAIDs) and systemic corticosteroids.

The approval was based on positive results from two phase III trials on SJIA patients aged between 2 and 19 wherein it was observed that a majority of patients treated with Ilaris showed significant improvement. The primary endpoints of both the studies were met.

The EU approval of the Ilaris for the SJIA indication does not surprise us as in Jul 2013, the Committee for Medicinal Products for Human Use gave a positive opinion on the same. Ilaris received approval for the SJIA indication in the U.S. in May 2013.

Ilaris is already approved in the U.S. and the EU for the treatment of Cryopyrin-Associated Periodic Syndromes.

We remind investors that Ilaris was approved in Europe in Mar 2013 for treating patients with acute gouty arthritis who suffer frequent attacks and their symptoms cannot be managed by the available treatment options.

Meanwhile, Ilaris is also being studied for a number of rare autoinflammatory conditions, including tumor necrosis factor receptor-associated periodic syndrome, colchicine-resistant familial mediterranean fever and hyper IgD syndrome.

Ilaris generated sales of $51 million in the first half of 2013, up 46% year over year. The recent approvals for additional indications should boost sales further in our view.

We note that Roche’s (RHHBY - Analyst Report) Actemra is also approved to treat SJIA in the US and EU.

Novartis currently carries a Zacks Rank #3 (Hold). Right now, Jazz Pharmaceuticals (JAZZ - Analyst Report) and Ironwood Pharmaceuticals (IRWD - Analyst Report) look attractive with a Zacks Rank #2 (Buy).

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