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NOVEN ANNOUNCES 2004 FINANCIAL RESULTS |
BackMiami, FL, March
15, 2005 -- Noven
Pharmaceuticals, Inc. (NASDAQ: NOVN) today announced financial results
for the quarter and year ended December 31, 2004, and provided an update
on its business and prospects.
Fourth Quarter Results
Noven’s net revenues for the quarter ended December 31, 2004
(the "current quarter") were $12.7 million compared to $11.8
million for the quarter ended December 31, 2003 (the "2003 quarter").
This 8% increase primarily reflected higher contract revenues, partially
offset by lower unit sales of menopausal hormone therapy (“HT”)
products. Research and development expense for the current quarter
increased 44% to $2.2 million, primarily due to ongoing development
projects and the addition of new personnel. Marketing, general and
administrative expense increased 46% to $5.2 million, primarily due
to company expansion for expected new product launches, as well as
increased professional fees driven in part by the requirements of the
Sarbanes-Oxley Act. Noven recognized $2.5 million in earnings from
the Novogyne joint venture compared to $7.2 million in the 2003 quarter.
Provision for income taxes in the current quarter benefited from a
$0.4 million reduction in accruals for ongoing tax audits due to the
favorable resolution of certain tax matters. Noven’s net income
for the current quarter was $2.8 million ($0.11 diluted earnings per
share), compared to $5.7 million ($0.24 diluted earnings per share)
in the 2003 quarter.
Novogyne’s current quarter net revenues decreased 21% to $24.3
million, reflecting lower sales of CombiPatch due to the continuing
effects of the Women’s Health Initiative (“WHI”)
study and the entry of a new combination patch competitor, as well
as the impact of trade customer purchasing patterns on sales of Vivelle® family
products. Selling, general and administrative expense increased 86%
to $13.1 million, primarily reflecting Novogyne’s accelerated
investment in new HT promotional programs expected to begin in 2005,
a $1.0 million increase in product liability insurance premiums, and
the establishment of a $0.9 million accrual (net of insurance recovery)
associated with previously disclosed HT litigation. Reflecting these
and other factors, current quarter net income at Novogyne decreased
67% to $5.1 million.
Full Year Results
For the year ended December 31, 2004, Noven reported net revenues of
$45.9 million compared to $43.2 million in 2003. This 6% increase primarily
reflected higher contract revenues and increased product sales to Novogyne.
Research and development expense increased 23% to $9.9 million, primarily
attributable to an increase in fentanyl and HT product development
costs. Marketing, general and administrative expense increased 9% to
$17.3 million, primarily due to expansion for expected new product
launches, as well as increased professional fees driven in part by
the requirements of the Sarbanes-Oxley Act. Noven recognized $17.6
million in earnings from Novogyne compared to $17.1 million in 2003,
an increase of 3%. Noven’s 2004 net income was $11.2 million
($0.46 diluted earnings per share), compared to $11.2 million ($0.49
diluted earnings per share) in 2003.
Novogyne’s 2004 net revenues increased 4% to $105.4 million,
primarily reflecting higher sales of Vivelle-Dot™ and increased
sales of Estradot® to Canada, partially offset by lower sales of
Vivelle and CombiPatch®. Novogyne’s results for 2004 and
2003 reflected sales returns allowances of $6.2 million and $7.9 million,
respectively. Selling, general and administrative expense increased
16% to $35.6 million, reflecting in part Novogyne’s accelerated
investment in new HT promotional programs expected to begin in 2005,
a $1.0 million increase in product liability insurance premiums, and
the establishment of a $0.9 million accrual (net of insurance recovery)
associated with HT litigation. Reflecting these and other factors,
2004 net income at Novogyne decreased 2% to $42.2 million.
At December 31, 2004, Noven had $94.0 million in cash and cash equivalents
compared to $83.4 million at December 31, 2003.
HT Prescription Update
Primarily due to the continuing impact of the WHI and related studies,
total prescriptions in the overall U.S. HT market declined 16% in 2004
compared to 2003. For the same period, aggregate total prescriptions
for Novogyne's products (Vivelle, Vivelle-Dot and CombiPatch combined)
decreased just 4%. Vivelle-Dot, which represented approximately 82%
of total prescriptions for Noven’s U.S. products, increased 7%
for the same period, while the estrogen segment of the U.S. HT market
decreased 16%. For the same period, total prescriptions for the Vivelle
product family (Vivelle-Dot and Vivelle combined) decreased 1%. Noven’s
Vivelle-Dot patch remains the most frequently dispensed transdermal
estrogen therapy product in the U.S. and the second most frequently
dispensed estrogen therapy product of any kind in the U.S., behind
only Wyeth’s oral Premarin® product.
Collaborations
"Noven’s strategy is to seek to introduce our industry-leading
transdermal technology into diverse therapeutic categories with strong
industry partners,” said Robert C. Strauss, Noven’s President,
CEO & Chairman. “In 2004, we worked closely with existing
partners to advance three opportunities which we believe have significant
commercial potential, and laid the foundation for new partnerships
that may further enhance our prospects."
Endo Pharmaceuticals. “Our developmental fentanyl patch is intended
to be the generic equivalent of Johnson & Johnson’s Duragesic® product,
and our Abbreviated New Drug Application is under review at the FDA,” said
Strauss. “Over the past several months, Noven and Endo helped
win the battle against citizen petitions intended to block the approval
of generic versions of Duragesic®. If our ANDA is approved and
the product is launched by Endo, we expect to receive a launch-related
milestone payment ranging from $5.0 million to $10.0 million. This
payment will be deferred and recognized as Noven license revenues over
a period of years. Under the terms of our agreement with Endo, we will
manufacture and supply Endo with finished product at our cost and will
share in Endo’s profit generated from U.S. product sales. In
addition to the fentanyl patch, we are working to formulate additional
proprietary patches for Endo, and we made progress on these programs
in 2004.”
Shire Pharmaceuticals. “Noven and Shire Pharmaceuticals Group
plc continue to work together to advance the development of our methylphenidate
patch for ADHD,” said Strauss. “Shire is concluding additional
clinical trials on the product and, if these studies are successful,
we would expect to file an amendment to the pending New Drug Application
mid-year 2005. During 2004, we expanded our collaboration with Shire
to include the development of a transdermal amphetamine patch for ADHD,
which could potentially address another important segment of the stimulant
market for ADHD therapy.”
Procter & Gamble Pharmaceuticals. “We have partnered with
Procter & Gamble Pharmaceuticals (“P&GP”) to develop
follow-on product opportunities for P&GP’s in-licensed investigational
Intrinsa™ testosterone patch designed to help restore desire
in menopausal women with Hypoactive Sexual Desire Disorder (HSDD),” said
Strauss. “In December 2004, P&GP withdrew its New Drug Application
for Intrinsa® following receipt of feedback from an FDA Advisory
Committee, and has stated its intention to file a new Intrinsa® NDA
with additional clinical data. Noven’s first product under this
collaboration is in development, and we earned a $3 million success
fee related to this product in December 2004. If successfully developed
and approved, this product could introduce the benefits of our DOT
Matrix® technology to what may be a significant new commercial
market.”
Other Opportunities. “In addition to the compounds mentioned
above, there is a broad range of compounds that we believe we can deliver
through our DOT Matrix and other delivery technologies,” said
Strauss. “A cross-functional business development group continues
to work to match these compounds with partners who can help fund development
and successfully commercialize products from our pipeline. In this
regard, we have entered into feasibility agreements with major pharmaceutical
companies, and have filed Investigational New Drug Applications with
the FDA. Although they are in early development, we believe that these
and other projects will be the foundation for growth beyond our HT,
fentanyl, methylphenidate and HSDD products, and should help advance
Noven’s diversification strategy for the long term.”
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, March 15. Shortly 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 March 15 at 12:00 Noon Eastern time until March 17 by calling
877-660-6853 (from within the U.S.) or 201-612-7415 (from outside the
U.S.) and entering account number 286 and conference ID number 140929.
The conference call may 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. Noven’s prescription patches
are approved in over 30 countries, and a range of new patches are being
developed in collaboration with Novartis Pharma AG, Shire Pharmaceuticals
Group plc, Procter & Gamble Pharmaceuticals, Endo Pharmaceuticals
Inc. and others. Together with Novartis Pharmaceuticals Corporation,
Noven owns Novogyne Pharmaceuticals, a women’s health products
company with 2004 sales of over $105 million. Among other products,
Novogyne markets and sells Noven’s Vivelle-Dot™ product
– the smallest estrogen patch in the world, and the most dispensed
transdermal estrogen product in the U.S. Noven is committed to expanding
the universe of available transdermal therapies for the benefit of
patients, partners and shareholders. See www.noven.com for additional
information.
Except
for historical information contained herein, the matters discussed
in this press release contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 that involve substantial
risks and uncertainties. When used in this press release, the words “believe,” “should,” “expect,” “intend,” “may,” and
similar expressions identify certain of such forward-looking statements.
Actual results, performance or achievements could differ materially
from those contemplated, expressed or implied by the forward-looking
statements contained herein. These forward-looking statements are
based largely on the current expectations of Noven and are subject
to a number of risks and uncertainties that are subject to change
based on factors which are, in many instances, beyond Noven's control.
By category, these risks and uncertainties include: Technology
Matters – the
possibility that Noven's technologies may not be approvable or suitable
for use in additional therapeutic categories, including those categories
addressed through products developed with Noven's development partners;
Regulatory Matters - uncertainties relating to actions that may be
taken against Noven by the FDA or other regulators, whether relating
to manufacturing processes, suppliers, commercialized products, products
in development or otherwise, and any related costs; uncertainties
related to the FDA's discretion to approve or not approve a product;
the timing of any FDA approval for any of Noven's products in development,
which is outside Noven's control and which may impact the success
of product launch and market penetration; patent or other strategies
by third parties could delay or prevent the launch of Noven's products;
Noven's Partners - the risk that Noven's development partners may
have different or conflicting priorities than Noven's which may adversely
impact their ability or willingness to assist in the development
and commercialization of Noven's products or to continue the partnered
development programs; uncertainties regarding Noven's ability to
attract additional development partners; the possibility that Noven
may be unsuccessful in achieving milestone objectives under Noven's
development programs and may not receive any further payments; the
possibility that Noven's development programs may not proceed on
schedule or as expected, which could, among other things, prevent
Noven from achieving milestone objectives under our development programs
and/or cause delays or cancellations of programs; the possibility
that Noven's current development priorities could render Noven unable
to advance Noven's other development projects or increase the cost
of advancing those projects; Methylphenidate Patch (MTS) - the risk
that planned additional MTS studies may not be completed in a timely
manner, which could delay the filing of an amendment to the MTS NDA;
the possibility that planned additional studies of MTS will not produce
results that support approval or that, even if the additional studies
are completed and are successful, MTS may not ultimately be approved
or commercialized; the timing of the FDA's review of any amended
NDA for MTS as well as any product approval, which are beyond Noven's
control and which may impact the success of product launch and market
penetration; Shire's control over the management of the planned additional
MTS clinical trials, including the risk that Shire may elect to manage
such studies differently than Noven might have, incorrectly or inadequately;
any exercise of Shire's right to terminate the agreement following
its review of the results of the additional studies, including the
risk that, in such event, Noven's right to receive a $50 million
approval milestone would terminate, and that Noven may be unable
or unwilling to proceed with the project or may be unable to license
MTS to a third party or to a party with the resources of Shire on
commercially reasonable terms; and the likelihood that Noven's development
strategy would change if Shire were to terminate the agreement under
certain circumstances, or if MTS were not ultimately approved or
were abandoned; Fentanyl Patch - the risks and uncertainties associated
with the FDA's review of Noven's fentanyl ANDA; the possibility that
milestone payments may be reduced and/or that Endo may exercise its
contractual right to terminate the license agreement if the product
launch is delayed for any reason, including delay in obtaining FDA
approval; the possibility that Noven may be unable to recover significant
costs to manufacture fentanyl patches prior to product launch if
FDA approval is not obtained on a timely basis or at all; the possibility
that, even if approved, Noven's fentanyl patch or other products
may not be successfully commercialized due to competitive market
conditions or other factors, including physician/patient preferences
for other therapies. In addition to the risks and factors identified
above, reference is also made to the other risks and factors detailed
in reports filed by Noven with the Securities and Exchange Commission.
Noven cautions that the foregoing list of factors is not exhaustive.
Noven Pharmaceuticals, Inc.
Statements of Operations Data: Three Months Twelve Months
(amounts in thousands, except Ended Ended
per share amounts) (unaudited) December 31, December 31,
------------------- -----------------
2004 2003 2004 2003
--------- --------- -------- --------
Revenues:
Product revenues - Novogyne:
Product sales $3,740 $4,160 $18,798 $15,932
Royalties 1,295 1,597 5,204 4,978
--------- --------- -------- --------
Total product revenues -
Novogyne 5,035 5,757 24,002 20,910
Product revenues -
third parties 3,041 3,418 12,869 16,206
--------- --------- -------- --------
Total product revenues 8,076 9,175 36,871 37,116
Contract and license
revenues:
Contract 3,606 1,728 5,021 2,024
License 1,023 881 3,999 4,026
--------- --------- -------- --------
Contract and license
revenues 4,629 2,609 9,020 6,050
--------- --------- -------- --------
Net revenues 12,705 11,784 45,891 43,166
Expenses:
Cost of products sold 4,624 5,221 20,101 19,482
Research and development 2,181 1,519 9,911 8,082
Marketing, general and
administrative 5,247 3,593 17,271 15,858
--------- --------- -------- --------
Total expenses 12,052 10,333 47,283 43,422
--------- --------- -------- --------
Income (loss) from operations 653 1,451 (1,392) (256)
Equity in earnings of Novogyne 2,544 7,245 17,641 17,094
Interest income, net 380 154 999 659
--------- --------- -------- --------
Income before income taxes 3,577 8,850 17,248 17,497
Provision for income taxes 823 3,188 6,024 6,301
--------- --------- -------- --------
Net income $2,754 $5,662 $11,224 $11,196
========= ========= ======== ========
Basic earnings per share $0.12 $0.25 $0.48 $0.50
========= ========= ======== ========
Diluted earnings per share $0.11 $0.24 $0.46 $0.49
========= ========= ======== ========
Weighted average number of
common shares outstanding:
Basic 23,457 22,595 23,332 22,544
========= ========= ======== ========
Diluted 24,187 23,150 24,305 22,989
========= ========= ======== ========
As Of
-------------------
Balance Sheet Data: December December
(unaudited) 31, 2004 31, 2003
--------- ---------
Cash and cash equivalents $93,958 $83,381
Investment in Novogyne $26,233 $28,368
Total assets $201,975 $170,984
Deferred license revenues $39,085 $50,005
Stockholders' equity $129,039 $108,823
Contact:
Investor & Media Contact
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.
(305) 253-1916
Copyright © 2005 Noven Pharmaceuticals, Inc. All rights reserved.