Novartis has decided not to pursue further development of the pharmaceuticals pipeline project Aurograb(TM), an add-on therapy to antibiotics that was being assessed for use in treating deep-seated staphylococcal infections, following a review of recent Phase II clinical data showing a lack of efficacy.

Novartis gained the rights to this compound in 2006 through the acquisition of NeuTec Pharma plc. An intangible asset impairment charge of approximately USD 235 million, which reflects the full amount allocated to this project, will be taken in the third quarter of 2008 in the Pharmaceuticals Division.

Phase III clinical trials and submission preparations continue for Mycograb(TM), another development compound acquired with NeuTec that is being assessed as an add-on therapy to antifungal agents in treating invasive candidiasis and other severe fungal infections.

About Novartis
Novartis AG provides healthcare solutions that address the evolving needs of patients and societies. Focused solely on healthcare, Novartis offers a diversified portfolio to best meet these needs: innovative medicines, cost-saving generic pharmaceuticals, preventive vaccines, diagnostic tools and consumer health products. Novartis is the only company with leading positions in these areas. In 2007, the Group's continuing operations (excluding divestments in 2007) achieved net sales of USD 38.1 billion and net income of USD 6.5 billion. Approximately USD 6.4 billion was invested in R&D activities throughout the Group. Headquartered in Basel, Switzerland, Novartis Group companies employ approximately 98,000 full-time associates and operate in over 140 countries around the world. For more information, please visit http://www.novartis.com.