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Novartis buys Ziarco and its potential eczema drug

The stock of Swiss multinational pharmaceutical company Novartis Ag (NYSE: NVS) had appreciated by about 6% to $71.77 in the past one week.

To a certain extent, the retail traders were surprised by the uptrend due to the fact that the US President-elect had called for a control over drug prices in early December. However, the details below reflect the reason for the stock to remain bullish.

Last week, Novartis announced that it has acquired privately held UK-based pharmaceutical company Ziarco. The details of the transaction were not disclosed.

However, an unnamed Bloomberg source pegged the value of the deal at $1 billion, which includes milestones and royalties.


Ziarco’s lead investigational drug, referred to as ZPL-389, is a potential oral treatment candidate for eczema. It can be noted that the FDA recently approved Eucrisa, a proprietary eczema drug of pharmaceutical company Anacor, which was acquired by Pfizer in a $4.5 billion deal. Eucrisa is forecasted to be a blockbuster drug in the making. The investors and analysts hope that Novartis would experience a similar success with ZPL-389 drug.

The company also announced that the Committee for Medicinal Products for Human Use (CHMP) has offered its support for the approval of Ilaris drug in Europe. The drug is used for treatment of three rare and distinct Periodic Fever Syndromes. The recommendation was issued based on results from the pivotal Phase III Cluster study. If approved, Ilaris will be the sole approved biologic treatment for Tumor Necrosis Factor-Receptor Associated Periodic Syndrome, Hyperimmunoglobulin D Syndrome/Mevalonate Kinase Deficiency and Familial Mediterranean Fever.

The CHMP has also recommended the EU approval for the drug Votubia (R) to treat refractory partial-onset seizures in patients with tuberous sclerosis complex (TSC). Earlier in the month, Novartis stated that the European Commission has granted approval for Lucentis (ranibizumab) to treat patients with visual impairment. It is the first retinal treatment approved for patients who were visually impaired due to choroidal neovascularization (CNV).

The historic price chart indicates a short-term support for the stock at 71.50. The MACD indicator is rising in the bullish zone. This suggests that the stock is gaining momentum. The positive reading of the Chaikin money flow indicator reflects the flow of money into the stock.

Novartis Stock Price: December 20th 2016

Novartis Stock Price: December 20th 2016

So, a trader can generate profits by investing in a high or above contract, which is valid for a week. The position should be taken only if the stock trades below $72.

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