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Novartis (NVS - Analyst Report) recently announced that the US Food and Drug Administration (FDA) rendered Breakthrough Therapy designation to its pipeline candidate LDK378.

The Breakthrough Therapy designation includes all the features involved in a fast track program in addition to a more intensive FDA guidance. This designation from the FDA expedites the development and review of drugs for the treatment of life-threatening diseases provided the therapy is able to show substantial improvement over an available therapy on at least one clinically significant endpoint.

Novartis is developing LDK378 for the treatment of patients with anaplastic lymphoma kinase positive (ALK+) metastatic non-small cell lung cancer (NSCLC). These patients were intolerant to Pfizer’s (PFE - Analyst Report) crizotinib.

The phase I study of LDK378 demonstrates preliminary clinical response in ALK+ NSCLC patients who were previously treated with crizotinib.

Subsequently, Novartis initiated two phase II studies to further evaluate the compound. The company intends to commence several phase III studies on the candidate for the above indication later in 2013. The first regulatory filing is anticipated by early 2014.

A prevalent form of lung cancer, NSCLC affects 85%–90% of all lung cancer patients. We note that Sandoz, the generic arm of Novartis, launched Docetaxel in the US in 2011, a generic version of Sanofi’s (SNY - Analyst Report) Taxotere  which is indicated for breast, ovarian and NSCLC.

Earlier in the month, the European Commission (EC) approved Novartis’ llaris (canakinumab, ACZ885) for an additional indication. The EC cleared llaris for treating adults suffering from gouty arthritis (gout) - a serious, chronic and progressive inflammatory disease.

Ilaris is already approved for treating children and adults suffering from cryopyrin associated periodic syndrome (CAPS) in the EU, US, Switzerland and Japan.

However, the approval process of Ilaris in the US has been bumpy. In Aug 2011, Novartis received a Complete Response Letter (CRL) from the FDA asking for additional information to evaluate the risk benefit profile in refractory gout patients. Novartis continues to work with the FDA to determine the next steps for llaris in the gout indication.

Novartis carries a Zacks Rank #3 (Hold). Right now, Shire plc (SHPG - Analyst Report) looks attractive with a Zacks Rank #2 (Buy).

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