Novartis' (NVS) Lung Cancer Drug Gets Positive CHMP Opinion

Novartis (NYSE:NVS) recently announced that the Committee for Medicinal Products for Human Use (CHMP) of the European Medicines Agency (EMA) has recommended the approval of a label expansion of Zykadia (ceritinib) to include the first-line treatment of patients with advanced non-small cell lung cancer (NSCLC) whose tumors are anaplastic lymphoma kinase (ALK)-positive.

Upon approval, Zykadia will provide a new treatment option for previously untreated and newly diagnosed patients with ALK-positive advanced NSCLC.

Novartis’ has outperformed the Zacks classified industry year to date. The stock has rose 11.5% compared with the Large Cap Pharmaceuticals industry’s gain of 8.6%.

We note that Zykadia is currently approved in the European Union (EU) for the treatment of adult patients with ALK-positive advanced NSCLC previously treated with crizotinib.

The European Commission will take the CHMP recommendation while reviewing the application but is not bound by it. A decision from the EC is expected within two months.

Earlier in the year, the FDA granted Zykadia Breakthrough Therapy designation for first-line treatment of patients with ALK-positive NSCLC with metastases to the brain. The application is under priority review in the U.S.

In Oct 2016, the FDA approved Merck & Co., Inc.’s (NYSE:MRK) Keytruda for the treatment of patients with metastatic NSCLC whose tumors express PD-L1 as determined by an FDA-approved test. The approval was the first FDA approval of a checkpoint inhibitor for first-line treatment of lung cancer.

We remind investors that Novartis broadened its oncology portfolio by acquiring GlaxoSmithKline plc’s (NYSE:GSK) certain oncology products and pipeline compounds in Mar 2015 after having divested its Animal Health Division to Eli Lilly and Company (NYSE:LLY) .

Going forward, we expect approval of new drugs and label expansion of existing ones to bode well for Novartis. Also, strong performance of growth products should be able to offset the impact of generic competition for Gleevec.

Zacks Rank

Novartis currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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