Miami, FL, February 26, 2002
Noven Reports 2001 Earnings Per Share of $0.51
Noven Pretax Income Increases 57% to $18.8 Million
Novogyne Profit Contribution Increases 51% to $14 Million
Initial Estradot® Launch Orders Received
-- Noven Pharmaceuticals, Inc. (NASDAQ: NOVN),a leading developer of advanced transdermal drug delivery technologies and prescription transdermal products, today announced financial results for the quarter and year ended December 31, 2001, and provided an update on its business and prospects.
2001 Full Year Financial Results
For the year ended December 31, 2001, Noven reported revenues of $45.9 million, compared to $42.9 million in 2000. Noven recognized $14.0 million in earnings from Novogyne Pharmaceuticals, Noven's U.S.-based joint venture with Novartis Pharmaceuticals Corporation of East Hanover, New Jersey ("Novartis Pharmaceuticals"), an increase of 51% over 2000. Income before income taxes was $18.8 million, a 57% increase over 2000. Provision for income taxes for 2001 increased $14.3 million over 2000 as Noven became fully taxable for the first time in 2001, which led to lower net income in 2001. Net income was $12.1 million ($0.51 diluted earnings per share) for 2001, compared to $19.6 million ($0.84 diluted earnings per share) for 2000.
Novogyne revenues increased 54% to $90.0 million in 2001, reflecting increased sales of Vivelle-Dot® and the addition of CombiPatch® to Novogyne's product line in March 2001. Novogyne's selling, general and administrative expenses increased to $31.4 million from $21.3 million in 2000, reflecting the CombiPatch relaunch and an approximate 20% increase in the size of the Novogyne sales force. Novogyne amortized $4.6 million of CombiPatch acquisition cost during 2001. In 2001, net income at Novogyne increased 30% to $37.9 million.
2001 Fourth Quarter Financial Results
Revenues for the quarter ended December 31, 2001 (the "current quarter") were $10.3 million, compared to $11.7 million for the quarter ended December 31, 2000 (the "2000 quarter"), reflecting lower overseas sales, partially offset by increases in sales to Novogyne. In the current quarter, Noven recognized $5.0 million in earnings from Novogyne, an increase of 72% over the 2000 quarter. Income before income taxes was $5.9 million, an increase of 124%. Provision for income taxes in the current quarter increased $10.2 million over the 2000 quarter, which led to lower net income in the current quarter. Net income was $3.7 million ($0.16 diluted earnings per share) in the current quarter, compared to $10.7 million ($0.45 diluted earnings per share) in the 2000 quarter.
Novogyne's current quarter revenues increased 68% to $26.8 million. Its selling, general and administrative expenses increased to $8.5 million from $6.7 million in the 2000 quarter, reflecting the CombiPatch relaunch and the Novogyne sales force expansion. Novogyne amortized $1.5 million of CombiPatch acquisition cost in the current quarter. Net income at Novogyne increased 59% to $11.2 million.
Business Update & Forecast
"In 2001, our U.S. hormone replacement therapy ("HRT") business demonstrated the level of success that can be achieved when Noven's DOT Matrix™ patches are offered to physicians and patients who seek the best available therapies,'' said Robert C. Strauss, Noven's President, Chief Executive Officer & Chairman. DOT Matrix technology permits Noven to deliver therapeutic doses of a range of prescription therapies through discreet, comfortable patches that are well suited to active lifestyles. DOT Matrix patents extend through 2014.
The core of Noven's current U.S. business is Novogyne Pharmaceuticals, Noven's joint venture with Novartis Pharmaceuticals. "Novogyne had an excellent year, and remains an important contributor to Noven's bottom line," continued Strauss, who also serves as President of Novogyne.
"In 2001, Novogyne's Vivelle® family of prescription transdermal estrogen patches increased its share of the U.S. transdermal estrogen market by four share points. As of January 2002, the Vivelle family held a 33.5% share of that market -- just a fraction of a share point from being the most prescribed family of estrogen patches in the country."
This market share growth was led by Vivelle-Dot, the smallest estrogen patch in the world. During the fourth quarter, the U.S. Food and Drug Administration ("FDA") issued an approvable letter for a new low-dose and an osteoporosis indication for Vivelle-Dot. "We expect final approval and launch in 2002, giving Vivelle-Dot even broader appeal to physicians and patients," said Strauss.
Novogyne's other main product is CombiPatch, the only combination estrogen/progestin patch in the U.S. With the relaunch of CombiPatch by Novogyne in May 2001, Novogyne became the only company in the U.S. offering transdermal therapies for both the estrogen-only and combination HRT markets.
"We are pleased with the financial impact of the CombiPatch acquisition," said Strauss. "CombiPatch has been accretive to Novogyne's earnings, and CombiPatch revenues helped fund a sales force expansion that contributed to Vivelle family growth. CombiPatch total prescriptions, however, have not meaningfully increased since acquisition. In 2002, one of Novogyne's primary objectives is to help more physicians and patients discover the benefits of CombiPatch therapy, and we are implementing supplemental sales and marketing programs in support of that objective."
"Noven received its first orders for Estradot in the fourth quarter of 2001, and expects to record its first Estradot sales in the first quarter of 2002," said Strauss. Estradot is Vivelle-Dot's sister product, which is licensed to Novartis Pharma AG of Basel, Switzerland ("Novartis Pharma") in most countries outside the U.S. "We expect Novartis Pharma to launch Estradot beginning in the 2002 second quarter, with country-by-country launches continuing through 2003."
In recent months, Noven has participated in Novartis Pharma's pre-launch planning, training and brand positioning exercises for Estradot. Launch schedules and materials, including product logos, trade dress and advertisements, have been introduced to Novartis Pharma's marketing units. "Based on our close interaction with Novartis Pharma on the Estradot launch, we are confident that they recognize Estradot as the world's new gold-standard estrogen patch, and that they are planning initial launches for the second quarter, pending receipt of certain country-specific regulatory approvals," said Strauss. "We are encouraged by the level of preparation, planning and execution that we have seen over the past several months, and we are optimistic about Estradot's long-term prospects abroad."
Once-daily MethyPatch is Noven's transdermal methylphenidate patch for Attention Deficit Hyperactivity Disorder ("ADHD"). "We are pleased to have completed enrollment for our new Phase III MethyPatch trial on schedule," said Strauss. "The trial should conclude in March 2002 and, assuming successful trial results, we plan to file a New Drug Application in the middle of this year. We hope to be on the market in the latter half of 2003 with the only ADHD medication providing physicians and parents with the ability to adjust dose and dosing duration to the unique needs of each patient."
"Based in part on initial Estradot orders, Noven expects 2002 first quarter revenues in the $12 million range, and diluted earnings per share in the $0.04 to $0.07 range," said James Messiry, Noven's Vice President & Chief Financial Officer. "The 2002 first quarter is expected to include the satisfaction of the Novartis preferred distribution by Novogyne, and continued MethyPatch development costs at Noven." Under the Novogyne joint venture agreements, Novartis is entitled to a preferred distribution of the first $6.1 million of Novogyne's annual profits. After satisfaction of that distribution, profits are split based on a formula.
Messiry continued: "With increases in U.S. revenues expected to offset a net decline in international revenues, Noven's 2002 total revenues should increase modestly over 2001. Full-year 2002 diluted earnings per share are expected to be in the $0.45 to $0.55 range, reflecting an increase in the Novogyne profit contribution, offset by increases in sales and marketing expense (as we prepare for the launch of MethyPatch) and in research and development expense (as we initiate clinical trials for new prescription transdermal therapies). Our strategy is to continue to reinvest a significant portion of our profits from Novogyne in research and development and other areas that help build Noven's business for the long term."
Strauss offered a concluding comment: "We believe our success in the U.S. HRT market is a powerful indicator of the value and appeal that our patented DOT Matrix technology brings to prescription transdermal patch therapy. That success bodes well for other geographic and therapeutic markets, beginning with expected launches of Estradot in 2002 and the planned introduction of MethyPatch in 2003.''
Analyst Conference Call
A public telephone conference with management relating to Noven's financial results will be broadcast live via the Internet at http://www.noven.com beginning at 5:00 p.m. Eastern time this afternoon, February 26. Thereafter, a rebroadcast of the call will be accessible at the same website. A taped replay of the conference call will be available by telephone from February 26 at 9:00 p.m. Eastern time until the evening of November 28, or by calling 800-475-6701 (from within the U.S.) or 320-365-3844 (from outside the U.S.) and entering the access code 627458. This conference call will contain forward-looking information in addition to that contained in this press release.
Noven Pharmaceuticals, Inc. Statements of Operations Data: (amounts in thousands, except per share amounts) Three Months Ended Twelve Months Ended December 31, December 31, 2001 2000 2001 2000 -------- -------- -------- -------- (Unaudited) (Unaudited) Revenues: Product sales $ 9,527 $ 11,198 $ 43,096 $ 42,005 License revenue 734 479 2,851 919 -------- -------- -------- -------- Total revenues 10,261 11,677 45,947 42,924 Expenses: Cost of products sold 4,684 5,268 20,376 19,219 Research and development 2,620 4,934 10,973 13,621 Marketing, general and administrative 2,335 2,368 11,554 8,737 -------- -------- -------- -------- Total expenses 9,639 12,570 42,903 41,577 -------- -------- -------- -------- Income (loss) from operations 622 (893) 3,044 1,347 Equity in earnings of Novogyne 5,003 2,911 14,013 9,294 Interest income, net 271 612 1,770 1,385 -------- -------- -------- -------- Income before income taxes 5,896 2,630 18,827 12,026 Provision (benefit) for income taxes 2,151 (8,078) 6,736 (7,608) -------- -------- -------- -------- Net income $ 3,745 $ 10,708 $ 12,091 $ 19,634 ======== ======== ======== ======== Basic earnings per share $ 0.17 $ 0.48 $ 0.54 $ 0.90 ======== ======== ======== ======== Diluted earnings per share $ 0.16 $ 0.45 $ 0.51 $ 0.84 ======== ======== ======== ======== Weighted average number of common shares outstanding: Basic 22,468 22,132 22,367 21,914 ======== ======== ======== ======== Diluted 23,331 23,682 23,511 23,249 ======== ======== ======== ======== As Of Dec. 31, Dec. 31, Balance Sheet Data: 2001 2000 ------- -------- Cash and cash equivalents $ 49,389 $ 40,976 Investment in Novogyne $ 32,043 $ 15,431 Total assets $136,228 $104,031 Deferred license revenue $ 32,758 $ 27,109 Stockholders' equity $ 81,898 $ 65,277
Noven Pharmaceuticals, Inc., headquartered in Miami, Florida, is a leading developer of advanced transdermal drug delivery technologies and prescription transdermal products. Together with Novartis Pharmaceuticals, Noven owns a highly profitable women's health products company called Novogyne Pharmaceuticals. Noven's existing products include advanced estrogen transdermal delivery systems (including Vivelle-Dot®, licensed to Novogyne, and Estradot®, licensed to Novartis Pharma) and combination estrogen/progestin transdermal delivery systems (including CombiPatch®, licensed to Novogyne, and Estalis, licensed to Novartis Pharma). With a range of additional products in development, including MethyPatch®, Noven is committed to becoming the world's premier developer, manufacturer and marketer of transdermal drug delivery systems. For additional information on Noven, visit http://www.noven.com.
This release contains forward-looking statements related to the business of Noven that can be identified by the use of forward-looking terminology such as "expect", "should", "are planning", "are optimistic", "scheduled to", "plan to"', "hope to", "we believe" and "bodes well". Such statements are qualified by and subject to the risks and uncertainties specified in Noven's most recent filings with the Securities and Exchange Commission and those specified herein, including the risk that planned or expected milestones may not be achieved and that results for future periods may be materially different than anticipated because of, among other factors: competitive market conditions affecting Noven's hormone replacement patches and other products; the inability to develop new products; the failure of FDA to issue final marketing clearance for the new Vivelle-Dot indication and the new low dose because, among other reasons, the conditions to approval identified by FDA may not be met and that FDA's review of requested information may result in non-approval; the failure of Novogyne to launch the new Vivelle-Dot low dose for any reason, including actions by the Novogyne management committee that are outside the control of Noven; the failure of Novogyne to increase sales of CombiPatch or continue growing sales of the Vivelle family; the inability of Noven to manufacture and supply Novartis Pharma's Estradot launch orders; delays in the launch of Estradot abroad and/or lower than expected sales of Estradot to Novartis Pharma due to the failure of Novartis Pharma to receive regulatory approvals and uncertainty regarding Novartis Pharma's strategy with regard to marketing Estradot together with competitive products marketed by Novartis Pharma; the failure of MethyPatch clinical trials; delays in filing a MethyPatch New Drug Application; the inability of Noven to receive FDA approval to market MethyPatch in a timely manner or at all and/or to successfully commercialize MethyPatch; the failure of Novartis Pharma to commercialize and support Estalis due to inventory levels, regulatory strategies or other factors; lower than expected orders of Estalis and/or Estradot by Novartis Pharma; the failure of Novogyne to generate sufficient income in the 2002 first quarter to satisfy the Novartis Pharmaceuticals preferred distribution; the failure of Novogyne to generate sufficient income in 2002 for Noven's equity in earnings of Novogyne to increase over 2001; and potential fluctuations in research and development, sales and marketing and other expenses.
Investor & Media Contact:
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.