UPDATE 3-Novartis boosted by upbeat drug data, divestment

* Gets EMA backing in key leukaemia drug and others

* Sells U.S. rights to bladder drug Enablex

* Divestment seen as sign of portfolio clean-up

* Novartis also boosted by Merck’s MS drug setback in Europe

* Novartis shares up 2 pct, Merck shares down 10 percent

(Recasts, adds EMA news, updates shares)

By Katie Reid

ZURICH, Sept 24 (Reuters) - Novartis AG's NOVN.VX prospects brightened further after a raft of good drug news, a setback for Merck KGaA's MRCG.DE rival MS drug in Europe and a divestment seen as a bid to streamline its portfolio.

European healthcare regulators on Friday backed the extension of the Swiss drugmaker’s licence for cancer drug Tasigna, potentially giving its leukaemia franchise more protection once the patent of older drug Glivec expires.

“Tasigna has now been approved in the first line and Novartis now has five years to switch patients over to Tasigna ahead of Glivec patent expiration,” Helvea analyst Karl-Heinz Koch said.

“It should become the standard of care in newly diagnosed patients and should attract a fair share of Glivec-treated patients based on superiority. It effectively prolongs the life-cycle of Novartis’ $5 billion leukeaemia franchise,” he said.

News that Novartis’ TOBI Podhaler for chronic pulomnary infection as well as its Aflunov and prepandemic H5N1 influenza vaccines had also won European backing also boosted the group’s shares.

At 1520 GMT, shares in Novartis were trading 2 percent higher, outperforming a near flat European healthcare index .SXDP.


Sentiment surrounding Novartis has picked up over recent weeks as positive data have highlighted its promising pipeline, while investors are hopeful it will wrap up its buyout of U.S. eyecare group Alcon Inc ACL.N amicably.

The group was given an extra boost earlier this week when its multiple sclerosis pill Gilenya won backing from U.S. authorities, putting it ahead of Merck in the bid to bring the first oral treatment for the disease to the U.S. market. [ID:nLDE68K0ZS]

Novartis also moved closer to emerging triumphant in Europe after a key European drug panel rejected Merck’s cladribine on Friday, pushing Merck shares down some 10 percent as investors digested another blow to its pipeline. [ID:nLDE68N04J]

“The cladribine news is positive for Novartis as it now looks like Novartis’ Gilenya could reach a monopoly status in the oral MS drug segment in Europe. The EU regulatory decision on Gilenya is expected in early-2011,” Kepler Capital Markets analyst Tero Weckroth said in a note.

The drugmaker also said it was selling the U.S. rights to overactive bladder treatment Enablex to Irish-based pharmaceutical group Warner Chilcott WCRX.O for an upfront payment of $400 million, a move investors welcomed.

“If the Enablex divestment is the first step in the clean-up of Novartis’ portfolio, we could expect further action in sub-scale businesses such as animal health and/or diagnostics,” Weckroth said.

The deal, which also has the potential for additional milestone payments of up to $20 million, is expected to close by the end of October. Novartis will retain the rights to Enablex, or darifenacin, worldwide except in the United States. (Additional reporting by Ben Hirschler in London; Editing by Mike Nesbit and Hans Peters)