| NOVEN REPORTS RECORD FINANCIAL RESULTS FOR 2002 |
BackRevenues,
Pre-Tax Income and Cash Increase for Fifth Consecutive Year
U.S. Prescriptions for Noven Hormone Therapy Patches Increase 6%
in 2002
Vivelle-Dot Prescriptions Increase 28% Over 2001
Miami, FL, February
27, 2003 -- 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, 2002.
"Noven's revenues, pre-tax income and cash increased for
the fifth consecutive year," said Robert C. Strauss,
Noven's President, CEO & Chairman. "For the
year, revenues and net income increased 21% and 15%, respectively,
which are very respectable growth rates considering the disruption
in the hormone therapy market following the announcement of
early termination of the Women’s Health Initiative (WHI)
studies. We believe that the expected launch of MethyPatch
in the second half of 2003, a stabilizing U.S. hormone business,
and the advancement of new development projects, together will
position Noven for growth in the years ahead."
Full Year Results
Noven. For the year ended December
31, 2002, Noven reported revenues of $55.4 million, compared
to $45.9 million in 2001.
Noven recognized $14.4 million in earnings from Novogyne Pharmaceuticals,
Noven's U.S.-based joint venture with Novartis Pharmaceuticals
Corporation of East Hanover, New Jersey ("Novartis"),
compared to $14.0 million in 2001. Net income was $13.9 million
($0.60 diluted earnings per share) for 2002, compared to $12.1
million ($0.51 diluted earnings per share) for 2001.
Novogyne. Novogyne revenues increased 14% to $102.5 million
in 2002, reflecting increased sales of Vivelle-Dot® and
the full-year contribution of CombiPatch®. Novogyne’s
selling, general and administrative expenses increased to $33.1
million from $27.3 million in 2001, reflecting higher promotional
expenses and the full-year effect of a larger Novogyne sales
force. Novogyne amortized $6.2 million of CombiPatch acquisition
cost during 2002. Net income at Novogyne was $37.4 million,
slightly lower than the $37.9 million reported in 2001.
Year-Over-Year Prescriptions. "In
2002, Noven’s
U.S. hormone therapy products significantly outperformed their
respective markets, illustrating the strength of our products
and marketing efforts," said Strauss. The overall HRT
market declined 11.3% in 2002 compared to 2001, due principally
to the publication of the WHI studies in mid-2002. For the
same period, aggregate prescriptions for Noven's products
(Vivelle, Vivelle-Dot and CombiPatch) increased 5.9%.
Vivelle family prescriptions increased 10.7% in 2002, while
the estrogen segment of the HRT market declined 9.2%. Vivelle-Dot,
which represents approximately two-thirds of total prescriptions
for Noven’s U.S. products, increased 28.5%. At the end
of 2002, the Vivelle family held a 37.7% share (Vivelle-Dot
30.5%; Vivelle 7.2%) of total prescriptions in the estrogen
segment, compared to a 33.1% share (Vivelle-Dot 23.8%; Vivelle
9.3%) at the end of 2001, extending Vivelle family’s
lead as the most dispensed estrogen patch brand in the U.S.
Noven's CombiPatch declined 9.3% in 2002, while the fixed
combination hormone therapy segment declined 17.6%. At the
end of 2002, CombiPatch had increased its share of total prescriptions
in the fixed combination segment to 3.9% from 2.7% at the end
of 2001.
Fourth Quarter Results
Noven. Revenues for the quarter
ended December 31, 2002 (the "current quarter") were $13.3
million, compared to $10.3 million for the quarter ended December
31,
2001 (the "2001 quarter"),
largely reflecting higher international sales. In the current
quarter, Noven recognized $3.7 million in earnings from Novogyne,
compared to $5.0 million in the 2001 quarter. Net income was
$3.0 million ($0.13 diluted earnings per share) in the current
quarter, compared to $3.7 million ($0.16 diluted earnings per
share) in the 2001 quarter.
Novogyne. Novogyne's current quarter
revenues decreased 23% to $20.5 million, principally reflecting
the impact of
WHI. Its selling, general and administrative expenses decreased
to $6.2 million from $7.6 million in the 2001 quarter. Novogyne
amortized $1.5 million of CombiPatch acquisition cost in
the current quarter. Net income at Novogyne decreased 28% to
$8.1
million.
Sequential Quarter Prescriptions. "In
the current quarter, Noven’s U.S. products showed signs
of stabilization – and in some cases growth – following
WHI," said Strauss.
Total prescriptions for HRT products declined 10.4% in the
current quarter compared to the third quarter of 2002. For
the same period, aggregate prescriptions for Noven's
products (Vivelle, Vivelle-Dot and CombiPatch as a group)
increased 0.3%. The estrogen segment of the market declined
7.9% in the
current quarter, while the Vivelle family increased 1.2%
and Vivelle-Dot increased 3.7%. Compared to the 2002 third
quarter,
the fixed combination segment declined 20.3%, while Noven’s
CombiPatch declined 3.3%.
Recent Developments
MethyPatch Transaction. Concurrently
with this release, Noven announced the signing of an agreement
granting global rights
to market MethyPatch (methylphenidate transdermal system)
to Shire Pharmaceuticals for payments of up to $150 million
and
ongoing manufacturing revenues. "The Shire transaction
is a further validation of the value of Noven's technology,"
said Strauss. "Shire is the U.S. market share leader in ADHD
therapy, and its existing ADHD products address the large
market for amphetamine-based ADHD therapies. We are proud
that MethyPatch
represents Shire’s entry into the large market for
methylphenidate-based ADHD products."
Shire has agreed to pay Noven $25 million upon closing of
the transaction, $50 million upon final FDA approval, and
sales
milestone payments of up to $75 million. Payments will be
deferred and recognized as license revenue over a period
of years. The
Shire transaction is expected to close within 45 days, subject
to expiration of any regulatory waiting period under the
Hart Scott Rodino Antitrust Improvements Act of 1976.
Noven filed a New Drug Application for MethyPatch in late
June 2002. "Under the Prescription Drug User Fee Act, the
FDA is obligated to provide its initial response to our application
in late April 2003, ten months after filing, and we remain
hopeful that MethyPatch will be approved by the FDA and launched
in the second half of 2003," said Strauss.
Outlook
2003 First Quarter. "Noven and
Novogyne’s
fourth quarter results reflect the impact of a previously-announced
inventory management initiative intended to align inventory
with post-WHI demand," said James Messiry, Noven's
Chief Financial Officer. "Novogyne has initiated actions
to reduce inventories, and we continue to expect to match
inventories with demand by mid-2003."
"As part of this initiative, Noven expects to ship less U.S.
product in the 2003 first quarter than in the 2002 fourth
quarter," said
Messiry. "Also, as required by our agreements, Novogyne
will pay Novartis the first $6.1 million of Novogyne profit.
As a result, we expect Noven’s first quarter revenues
to be in the $10 million range, and Noven’s net income
to be approximately breakeven. As is customary due to payment
of Novartis’ preferred distribution, we expect the
first quarter to be the weakest quarter of the year."
Full Year 2003. Messiry continued:
"Assuming the Shire transaction closes and MethyPatch is
approved this year, Noven
expects to receive $75.0 million from Shire in 2003. Because
we will recognize a portion of the Shire payment as revenue
and will not incur significant MethyPatch launch costs, the
transaction will be immediately accretive to Noven's
earnings. In addition, Noven expects Shire to place launch
orders around the time of MethyPatch product approval, which
would further contribute to Noven’s 2003 revenue and
net income."
Future Growth. Strauss offered
a concluding comment: "Some may remember 2002 as the year
Noven was impacted by the findings
of WHI, but it was much more than that. We achieved meaningful
growth in the face of business adversity, significant clinical
achievement, and the filing of a MethyPatch New Drug Application.
We expect 2003 achievements to include the MethyPatch launch,
further clinical advancements, and the formation of additional
strategic relationships that leverage Noven's industry-leading
patch technology. We believe these initiatives, together
with expected improvement in our profitable hormone therapy
business,
will fuel growth and encourage a fair valuation of our prospects
by the financial markets."
Analyst Conference Call
A conference call with management relating to Noven's
financial results will be broadcast live via the Internet
at www.noven.com beginning at 11:00 a.m. Eastern time this
morning,
February 27. 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 27 at 1:00
p.m. Eastern time until March 1 by calling 877-660-6853 (from
within the U.S.) or 201-612-7415 (from outside the U.S.)
and entering the access code 1628 and I.D. # 58943. The conference
call will contain forward-looking information in addition
to
that contained in this press release.
About Noven
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 successful 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 www.noven.com.
This release
contains forward-looking information related to the business of Noven that
can
be identified by the use of forward-looking
terminology
such as "may", "expect", "will", "should", "hope", "believe", "our
goal", and similar words and phrases. 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: MethyPatch may not be approved
or, if approved, that it may not be successfully commercialized by Shire
due to competitive market conditions or other factors, including physician/patient
preferences for other ADHD therapies; MethyPatch may not be the first
transdermal ADHD therapy on the market; the timing of FDA approval is
outside the control of Noven; the FDA could place limits on permitted
marketing claims that could negatively impact MethyPatch's sales
potential; the availability of other once-daily ADHD therapies could
negatively impact MethyPatch's market penetration; Noven and Shire
may not expand their relationship beyond MethyPatch; Shire may not reach
the sales levels necessary to trigger some or all of the milestone payments;
the transaction may not close within 45 days or at all, whether because
of failure to receive antitrust clearance or otherwise; Shire may not
promote MethyPatch at the expense of its other products; Noven has never
manufactured MethyPatch on a commercial scale, and Noven may be unable
to supply Shire with its requirements for MethyPatch; if Noven is unable
to successfully scale up production of MethyPatch, it may be unable to
achieve satisfactory gross margins; the timing of FDA approval may impact
the success of the product launch and affect market penetration; Shire
may not fund or conduct additional clinical studies involving MethyPatch
or next generation products; the announcement of this transaction may
not attract additional development partners to Noven; Noven and Novogyne
may be unable to align inventories with demand as soon as hoped because
of inaccurate estimates, lack of cooperation of third parties or otherwise;
unexpected sales deductions or higher product returns at Novogyne could
negatively impact Novogyne’s earnings; the U.S. hormone business
may be further impacted because of mandated product label changes, the
announcement of additional negative clinical results or other reasons;
product development is inherently risky and Noven may be unable to advance
its other development projects; Noven’s hormone therapy business
may not improve, whether as a continuing result of the WHI and other
studies announced in 2002 or otherwise; granting exclusive marketing
rights to MethyPatch represents a departure from Noven’s announced
strategy of marketing MethyPatch with its own sales force, and there
can be no assurance that Noven will utilize the funds expected to be
received in the transaction in a manner that will increase long-term
shareholder value.
Noven Pharmaceuticals, Inc.
Statements of Operations Data: Three Months Twelve Months
Ended Ended
(amounts in thousands, except December 31, December 31,
-----------------------------------
per share amounts) 2002 2001 2002 2001
-----------------------------------
(Unaudited)(Unaudited)
Revenues:
Product sales $12,401 $9,527 $51,986 $43,096
License revenue 882 734 3,386 2,851
--------- --------- -------- --------
Total revenues 13,283 10,261 55,372 45,947
Expenses:
Cost of products sold 5,941 4,684 22,973 20,376
Research and development 2,367 2,620 11,634 10,973
Marketing, general and
administrative 4,153 2,335 14,257 11,554
--------- --------- -------- --------
Total expenses 12,461 9,639 48,864 42,903
--------- --------- -------- --------
Income from operations 822 622 6,508 3,044
Equity in earnings of Novogyne 3,711 5,003 14,368 14,013
Interest income, net 197 271 822 1,770
--------- --------- -------- --------
Income before income taxes 4,730 5,896 21,698 18,827
Provision for income taxes 1,710 2,151 7,819 6,736
--------- --------- -------- --------
Net income $3,020 $3,745 $13,879 $12,091
========= ========= ======== ========
Basic earnings per share $0.13 $0.17 $0.62 $0.54
========= ========= ======== ========
Diluted earnings per share $0.13 $0.16 $0.60 $0.51
========= ========= ======== ========
Weighted average number of
common shares outstanding:
Basic 22,557 22,468 22,532 22,367
========= ========= ======== ========
Diluted 23,014 23,331 23,321 23,511
========= ========= ======== ========
As Of
-------------------
December December
31, 31,
Balance Sheet Data: 2002 2001
--------- ---------
Cash and cash equivalents $58,684 $49,389
Investment in Novogyne $34,684 $32,043
Total assets $137,702 $136,228
Deferred license revenue $29,445 $32,758
Stockholders' equity $96,741 $81,898
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Contact:
Investor & Media Contact
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.
(305) 253-1916
Copyright © 2003 Noven Pharmaceuticals, Inc. All rights reserved.