NOVEN ANNOUNCES 2007 FINANCIAL RESULTS |
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Fourth Quarter EPS of $0.04, Adjusted EPS of $0.14
Miami, FL, March
27, 2008 -- Noven
Pharmaceuticals, Inc. (NASDAQ: NOVN), a specialty pharmaceutical company
with transdermal drug delivery expertise, today announced financial results
for the quarter and year ended December 31, 2007. The financial results
announced today are unchanged from the preliminary unaudited financial
information previously announced by Noven on March 12, 2008.
For full-year
2007, Noven reported net revenues of $83.2 million and a net loss (including
an aggregate $106.8 million in special charges described below under
the caption “2007 Charges”) of $45.4 million or $1.84 loss
per share. Excluding the 2007 Charges and related tax effects, Noven
would have reported net income of $23.6 million or $0.94 diluted earnings
per share for 2007, compared to net income of $16.0 million or $0.66
diluted earnings per share for 2006.
As part of its transition from
drug delivery to a broader-based specialty pharmaceutical company,
on August 14, 2007, Noven completed the acquisition of JDS Pharmaceuticals
(now known as Noven Therapeutics), a specialty pharmaceutical company
focused in psychiatry and women’s health. Noven’s 2007
results include the results of operations of Noven Therapeutics from
the acquisition date through December 31, 2007.
“All of our
business units made important contributions to our 2007 operations
and results,” said Jeffrey F. Eisenberg, Noven’s Executive
Vice President & Interim Chief Executive Officer.
“In 2007,
our Novogyne joint venture posted its fourth consecutive year of double
digit growth in net income, and contributed a record $35.9 million
to our results through our equity interest,” said Eisenberg. “Noven
Transdermals, our transdermal development and manufacturing unit, generated
a 55% increase in gross profit compared to 2006, having benefited from
higher product sales and improved gross margins compared to 2006. During
the year, we also completed the acquisition of JDS Pharmaceuticals,
now Noven Therapeutics, which currently sells the oral products Pexeva® and
Lithobid® through a focused psychiatry/CNS sales force.”
Eisenberg
continued: “Looking ahead, we expect Noven Therapeutics to launch
our Stavzor™ product in the second half of 2008, having received
tentative approval from the FDA in December 2007. We also plan to begin
pivotal Phase 3 studies for Mesafem™, our non-hormonal product
for menopausal hot flashes, this year. While Mesafem™ and other
developmental products will require significant investments in research
and development and sales and marketing in the years ahead, we believe
this will advance our mission to establish Noven as a dynamic specialty
pharmaceutical company with diversified prospects, control over the
success of our products, and substantially higher revenue and earnings
growth rates.”
2007 Charges
Noven’s 2007 results included:
(i) a one-time charge of $100.2 million in the third quarter relating
to the portion of the JDS acquisition purchase price allocated to in-process
research and development; (ii) a $3.3 million charge in the third quarter
related to payments to Shire in connection with the voluntary withdrawal
of a portion of Daytrana™ product (the “Withdrawal Charge”);
and (iii) an aggregate $3.3 million charge in the fourth quarter related
to separation arrangements associated with the retirement of certain
executive officers (the “Separation Charge”). Together,
these charges are referred to in this press release as the “2007
Charges.”
Full-Year Results
Including the impact of the 2007
Charges, Noven reported a net loss for 2007 of $45.4 million or $1.84
loss per share compared to net income of $16.0 million or $0.66 diluted
earnings per share in 2006. Excluding the 2007 Charges and related
tax effects, 2007 net income would have been $23.6 million or $0.94
diluted earnings per share.
Noven’s net revenues for 2007 increased
37% from 2006 to $83.2 million, reflecting an aggregate $9.2 million
in sales of Pexeva® and Lithobid®, a full year of Daytrana™ sales,
higher sales of Vivelle-Dot®, and higher license revenues due to
the amortization of Daytrana™ milestone payments received in
2007 and 2006.
Gross margin, as a percentage of product sales, increased
to 37% in 2007 from 24% in 2006, reflecting higher overall product
revenues, greater manufacturing facility utilization, and the margin
contribution of Noven Therapeutics’ products, which have higher
margins than Noven Transdermals’ products. Daytrana™ gross
margin was negatively affected in 2007 by production and yield issues,
a portion of the Withdrawal Charge, and increased quality assurance
activities and costs.
Research and development expenses for 2007 increased
22% from 2006 to $14.0 million, primarily due to higher clinical research
activities at Noven Transdermals and to $1.5 million in research and
development expenses at recently-acquired Noven Therapeutics.
Selling,
general and administrative expenses increased 82% from 2006 to $39.6
million, reflecting the addition of $10.2 million in Noven Therapeutics
expenses ($8.1 million of which were sales and marketing expenses,
including costs associated with the expected launch of Stavzor™),
the $3.3 million Separation Charge, $2.2 million of the Withdrawal
Charge, and a $1.6 million increase in professional fees.
In 2007,
Noven recognized a record $35.9 million in earnings from Novogyne Pharmaceuticals,
the women’s health products company owned jointly by Noven and
Novartis Pharmaceuticals Corporation, representing a 25% increase over
2006.
Novogyne’s net income for 2007 increased 22% from 2006
to $79.8 million. Novogyne’s 2007 net revenues increased 12%
to $148.0 million, primarily due to increased sales of Vivelle-Dot®.
Novogyne's gross margin percentage for 2007, at 79%, was slightly higher
than 2006 levels, and its selling, general and administrative expenses
increased 2% to $38.1 million, primarily due to increased samples expense
and sales force costs in support of Vivelle-Dot®.
2007 Fourth Quarter
Results
Including the impact of the $3.3 million Separation Charge,
Noven’s net income for the quarter ended December 31, 2007 (the “fourth
quarter”) was $1.0 million or $0.04 diluted earnings per share
compared to net income of $7.1 million or $0.29 diluted earnings per
share for the quarter ended December 31, 2006 (the “2006 fourth
quarter”). Excluding the Separation Charge and related tax effects,
fourth quarter 2007 net income would have been $3.4 million or $0.14
diluted earnings per share.
Noven’s net revenues for the fourth
quarter were $23.2 million, a 35% increase from the $17.2 million reported
in the 2006 fourth quarter, primarily reflecting $5.9 million in sales
of Pexeva® and Lithobid®.
Gross margin, as a percentage of
product sales, was 28% in the fourth quarter compared to 30% in the
2006 fourth quarter, reflecting lower transdermal product revenues,
Daytrana™ production and yield issues, and increased quality
assurance activities and costs, partially offset by the margin contribution
of Noven Therapeutics’ products, which have higher margins than
Noven Transdermals’ products.
Research and development expenses
for the fourth quarter increased 44% from the 2006 fourth quarter to
$3.7 million, primarily due to $1.0 million in research and development
expenses at recently-acquired Noven Therapeutics.
Selling, general
and administrative expenses increased to $16.6 million from $5.3 million
in the 2006 fourth quarter, reflecting $6.7 million in Noven Therapeutics
expenses ($5.3 million of which were sales and marketing expenses)
and the $3.3 million Separation Charge.
Noven recognized $10.8 million
in earnings from Novogyne in the fourth quarter, representing a 16%
increase over the 2006 fourth quarter.
Novogyne’s fourth quarter
net income increased 15% from the 2006 fourth quarter to $22.2 million.
Novogyne’s fourth quarter net revenues increased 11% to $40.1
million, primarily due to increased sales of Vivelle-Dot®. Novogyne's
fourth quarter gross margin percentage, at 80%, was slightly improved
over the 2006 fourth quarter, and its selling, general and administrative
expense increased 10% to $10.1 million in the fourth quarter, primarily
due to higher selling and promotional expenses in support of Vivelle-Dot®.
Balance
Sheet
At December 31, 2007, Noven had $14.0 million in cash and cash
equivalents, $21.6 million in short-term investments, and $32.8 million
in other investments (non-current). This compares with $9.1 million in
cash and cash equivalents and $144.5 million in short-term investments
at December 31, 2006. The net decrease primarily reflects the payment
of $130.4 million in the acquisition of JDS Pharmaceuticals, tax payments
of $23.7 million, and $5.1 million used in the third quarter to purchase
shares under Noven’s share repurchase program, partially
offset by the receipt of an aggregate $50.0 million in Daytrana™ milestone
payments, $28.8 million in distributions received from Novogyne, and
$5.9 million received from Shire in connection with Noven’s amphetamine
patch development program.
Noven’s investments at December 31,
2007, consisted of $54.4 million in auction rate securities (“ARS”),
$32.8 million of which have been classified as non-current on Noven’s
balance sheet following failed auctions occurring since mid-February
2008. Noven liquidated approximately $17.6 million in ARS subsequent
to December 31, 2007. Noven believes its ARS are of high credit quality,
as over 75% carry an AAA or AA credit rating, and all are considered
investment grade securities. Noven’s ARS
are collateralized primarily by tax-exempt municipal bonds, and to
a lesser extent, guaranteed student loans. Noven does not hold any
ARS collateralized by mortgages or collateralized debt obligations.
None of Noven’s ARS were classified as impaired at December 31,
2007. Noven continues to monitor the market for ARS and to consider
its impact on the fair market value of Noven’s investments.
2007
Prescription Update
Total prescriptions for Vivelle-Dot® increased
4% in 2007 compared to 2006, and total prescriptions for Novogyne’s
products, taken as a whole, increased 2%. By comparison, the overall
U.S. hormone therapy market declined 8% for the same period.
Total
prescriptions for Daytrana™ (launched in June 2006) increased
165% in 2007 compared to 2006, reflecting the impact of the first full
year of sales. Prescriptions for ADHD stimulant therapies as a class
increased 8% in 2007 compared to 2006. Comparing the fourth quarter
to the 2006 fourth quarter, Daytrana™ prescriptions increased
10%, while prescriptions for the class increased 7% for the same period.
Total
prescriptions for Pexeva® increased 16% for full-year 2007
compared to full-year 2006. Prescriptions for the SSRI class of antidepressants
increased 2% in 2007 compared to 2006. Reflecting ongoing generic substitution,
total prescriptions for Lithobid® decreased 41% in 2007 compared
to 2006.
Non-GAAP Financial Information
Under accounting principles
generally accepted in the United States (“GAAP”), “net
income (loss)” and “diluted earnings (loss) per share” include
all charges for the periods reported. In addition to results determined
in accordance with GAAP, in this press release Noven has provided net
income and diluted earnings per share for the three and twelve month
periods ended December 31, 2007 excluding the 2007 Charges. Noven believes
that comparing Noven’s period-to-period financial results without
giving effect to those items, as appropriate, may be helpful to investors
to permit them to compare Noven’s period-to-period financial
results on a more uniform basis. For the same reasons, management uses
these non-GAAP financial measures to evaluate Noven’s current
performance against its historical performance and to plan its future
business activities. These measures should not be considered alternatives
to measures computed in accordance with GAAP, nor should they be considered
indicators of Noven’s overall financial performance. Adjusted
net income and adjusted diluted earnings per share are limited by the
fact that companies may not necessarily compute them in the same manner,
thereby making these measures less useful than the same measures calculated
in accordance with GAAP.
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 8:30 a.m. Eastern time this
morning, March 27. Thereafter, a rebroadcast of the call will be accessible
at the same website for at least two weeks. A taped replay will be
available beginning March 27 through March 29 by calling 877-660-6853
(from within the U.S.) or 201-612-7415 (from outside the U.S.) and
entering the access code 286 and conference ID number 279741. 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 specialty pharmaceutical company engaged in
the research, development, manufacture, marketing and sale of prescription
pharmaceutical products. Noven’s commercialized transdermal products
utilize its proprietary DOT Matrix® drug delivery technology and
include Vivelle-Dot® (estradiol transdermal system), the most prescribed
estrogen patch in the U.S., and Daytrana™ (methylphenidate transdermal
system), the first and only patch approved for the treatment of ADHD.
Oral products currently offered through the Noven marketing and sales
infrastructure consist of Pexeva® (paroxetine mesylate) and Lithobid® (lithium
carbonate). Developmental products in psychiatry consist of Stavzor™ (delayed
release valproic acid capsule), Lithium QD (once-daily lithium carbonate),
and Stavzor™ ER (extended release valproic acid capsule). The
development program in women’s health consists of Mesafem™ (low-dose
paroxetine mesylate), a non-hormonal product scheduled to enter Phase
3 clinical trials for vasomotor symptoms (hot flashes). See www.noven.com
for additional information.
Safe Harbor Statement under the Private
Litigation Reform Act of 1995
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.
Statements that are not historical facts, including statements that are
preceded by, followed by, or that include, the words "believes," "anticipates," "plans," "expects" or
similar expressions and statements are forward-looking statements.
Noven’s estimated or anticipated future results, product performance
or other non-historical facts are forward-looking and reflect Noven’s
current perspective on existing trends and information. 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: Regulatory Matters - the risk that Noven’s response
to the FDA warning letter that Noven received in January 2008 may not
be acceptable to the FDA or address the FDA’s concerns, and in
such case, the risk that the FDA may take regulatory action against
Noven, which may include fines, product seizures or recalls, injunctions,
suspension of production and/or the withdrawal of product approval;
and the likelihood that any fine or product recall, injunction, seizure,
suspension of production or withdrawal of product approval would have
a material adverse effect on Noven, including the loss of product sales,
potentially significant costs associated therewith and the potential
for litigation related to this matter; Daytrana™ -
the risk that Daytrana™ could be adversely affected by a number of factors,
including: (i) the 2007 market withdrawal of Daytrana™ as well
as any potential continuing issues relating to difficulties in removing
the release liner from the Daytrana™ patch, (ii) if Noven is
unable to adequately resolve the Daytrana-related issues raised by
the FDA in the warning letter and August 2007 Form 483, (iii) new market
entrants, including from other ADHD products marketed or under development
by Shire, (iv) raw material supply interruptions and/or the inability
to obtain the active ingredient methylphenidate, and (v) delays or
inability to obtain necessary DEA methylphenidate procurement quota;
the risk that any adverse effect to the market for Daytrana™ due
to the foregoing or other factors could adversely affect Noven’s
results of operations and/or its financial position, including limiting
Noven’s ability to achieve the additional milestone payments
under its agreement with Shire, and the risk that past Daytrana™ results
may not be indicative of future Daytrana™ results; Noven's
Pipeline - uncertainties as to the cost and success of ongoing
and planned clinical trials and the risk that results from early-stage
clinical trials may not be indicative of results in later-stage trials;
the unproven safety and efficacy of products under development; the difficulty
of predicting FDA approval of Stavzor™ and other products, including timing,
the possibility that the Stavzor™ launch may be delayed, the
risk that any expected period of exclusivity for a new product may
not be realized; unexpected adverse events or side effects or inadequate
efficacy of a product that could delay or prevent regulatory filings,
approval or commercialization, or that could result in recalls or product
liability claims of approved products; the difficulty of predicting
acceptance and demand for new pharmaceutical products; the impact of
competitive products and pricing; the risk that product acceptance
may be less than anticipated as well as risks related to compliance
with extensive, costly, complex and evolving governmental regulations
and restrictions, and reimbursement policies of government and private
health insurers and others; the possibility that patent applications
may not result in issued patents, and that issued patents may not be
enforceable or could be invalidated; and the impact of competitive
responses to Noven’s sales, marketing and strategic efforts,
and 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 development program; Liquidity – liquidity
and investment risks related to Noven’s auction rate securities,
including the risk that Noven’s liquidity will be adversely affected
to the extent that auctions for its auction rate securities experience
further failures and the risk that Noven would be required to record
an impairment charge if Noven determines that it is necessary to lower
the carrying value of its auction rate securities to reflect the prevailing
fair market value; HT Market - risks associated with
increased competition in the HT market; any further impact on Noven’s HT business due
to the announcement of additional negative clinical results or otherwise,
which could reduce or eliminate any profit contribution by Novogyne
to Noven and/or sales of HT products from Noven to Novogyne and Novartis
Pharma; the risk that Novogyne may not be able to realize the full
value of the marketing rights for Noven's CombiPatch® product;
and risks and uncertainties related to the fact that Vivelle-Dot® comprises
a substantial majority of Novogyne's aggregate total prescriptions; Other – risks associated with Noven’s current transition
of executive leadership, including those related to the identification,
recruitment, hiring and ultimate retention of qualified senior executives.
For additional information regarding these and other risks associated
with Noven’s business, readers should refer to Noven’s
Annual Report on Form 10-K as well as other reports filed from time
to time with the Securities and Exchange Commission. Unless required
by law, Noven undertakes no obligation to publicly update or revise
any forward-looking statements, whether as a result of new information,
future events, or otherwise.
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