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NOVEN REPORTS FIRST QUARTER 2005 FINANCIAL RESULTS |
BackMiami, FL, April
28, 2005 -- 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 ended March
31, 2005 and provided an update on its business and prospects.
"Noven's strategy is to build upon our base hormone therapy ("HT")
business by introducing our patented transdermal technology into diverse
therapeutic categories through collaborations with strong industry
partners," said Robert C. Strauss, Noven’s President, CEO & Chairman.
"With continued strong prescription demand for our Vivelle-Dot™ estrogen
patch, and progress made toward commercialization of our partnered
fentanyl and methylphenidate products, we are off to a good start in
2005."
First Quarter Results
Noven’s net revenues for the quarter ended March 31, 2005 (the
"current quarter") increased 5% to $11.7 million compared to the quarter
ended March 31, 2004 (the "2004 quarter"), primarily due
to receipt of a $1.2 million price adjustment payment related to international
product sales, partially offset by a decline in sales to Novogyne Pharmaceuticals
("Novogyne"), a women's health products company owned
jointly with Novartis Pharmaceuticals Corporation. Noven periodically
receives price adjustment payments relating to international product
sales under its license agreements with Novartis Pharma AG, and did
not receive such a payment in the 2004 quarter. Noven's sales
to Novogyne in the current quarter declined in part due to the timing
of orders by Novogyne for Vivelle-Dot™ samples. In addition,
sales to Novogyne in the 2004 quarter benefited from Estradot stocking
orders related to a planned transition from Vivelle® to
Estradot in Canada. Research and development expense for the current
quarter
increased 33% to $3.0 million, primarily due to an increase in non-clinical
development expenses related to the fentanyl patch. Noven recognized
$0.9 million in earnings from Novogyne, compared to $0.6 million in
the 2004 quarter. Noven reported net income of $0.2 million (or $0.01
diluted earnings per share) for the current quarter, approximately
equal to net income and diluted earnings per share reported in the
2004 quarter.
Novogyne's current quarter net revenues increased 6% to $22.7
million, primarily reflecting increased sales of Noven’s Vivelle-Dot™ product
due to increased product demand and sales price increases. Novogyne’s
selling, general and administrative expense increased 14% to $8.7 million,
primarily due to increased promotional spending in support of Vivelle-Dot™.
Net income increased 8% to $8.0 million. In the current quarter, Novogyne
satisfied the annual $6.1 million preferred return to Novartis required
under the joint venture agreements. As of the end of the current quarter,
Noven believes trade inventory levels for the Vivelle-Dot™ product
were at the low end of the desired two-to-four week range.
At March 31, 2005, Noven had $64.3 million in cash and cash equivalents
and $30.0 million in short-term investments purchased during the current
quarter. At December 31, 2004, Noven had $94.0 million in cash and
no short-term investments. In the current quarter, Noven received cash
distributions of $7.4 million from Novogyne.
HT Prescription Overview
Primarily due to the continuing impact of the WHI and related studies,
total prescriptions in the overall U.S. HT market declined 11% in the
first quarter of 2005 compared to the first quarter of last year. For
the same period, aggregate total prescriptions for Novogyne's products
(Vivelle®, Vivelle-Dot™ and CombiPatch® combined) increased
1%. Total prescriptions for Vivelle-Dot™, which represented approximately
83% of total prescriptions for Noven's U.S. products, increased
10% for the same period, while the estrogen segment of the U.S. HT
market decreased 12%. For the same period, total prescriptions for
the Vivelle® product family (Vivelle-Dot™ and Vivelle® combined)
increased 4%. 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.
Business Update
"In the first quarter, total prescriptions for our U.S. HT patches
increased, in spite of an 11% decline in the overall U.S. HT market,"
said Strauss. "Given these trends and our belief that trade inventory
levels for Vivelle-Dot™ are at the low end of the desired range,
we now expect Novogyne’s revenues and net income for 2005 to
modestly exceed 2004 levels."
"We remain committed to HT, but our strategy for growth is to
expand into additional therapeutic categories," said Strauss. "Of
the products that could diversify our business, we believe our fentanyl
patch for the management of chronic pain is the closest to commercialization.
Together with our partner, Endo Pharmaceuticals, we are working toward
approval of our pending Abbreviated New Drug Application. If approved
and launched, we continue to expect this product to make a significant
contribution to our financial results in 2005 and beyond."
"In addition to the fentanyl patch, we have collaborated with Endo
to develop new transdermal therapies," said Strauss. "Endo
has agreed to fund and manage clinical development of those compounds
that proceed to clinical trials. The targeted compounds are not limited
to the pain category, so we believe this aspect of the Endo collaboration
has the potential to further diversify the markets in which we compete."
Strauss added: "With promising results from recently-completed
clinical studies of our methylphenidate patch for Attention Deficit
Hyperactivity Disorder, Noven and Shire Pharmaceuticals Group plan
to file an amendment to the pending New Drug Application in mid-2005.
We expect that the amendment will receive a six-month review. If approved,
we will earn a $50 million milestone, and could earn up to an additional
$75 million in sales milestones following launch."
"Our collaboration with Shire also includes development of an amphetamine
patch for ADHD, which could potentially address another important segment
of this therapeutic category. We believe this product would support
Shire’s strategy of maintaining its market-leadership position
in ADHD by maintaining a broad range of therapies in its ADHD portfolio."
"To help prepare our organization for future growth, during the
first quarter we nearly doubled our facility space through the lease
of a
newly constructed facility near our existing operations," said
Strauss. "This space will initially be configured for warehousing,
with longer-term plans to build out portions for manufacturing as new
products move toward commercialization."
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, April 28 (click
LINK here). 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 April 28
at 12:00 Noon Eastern time until April 30 by calling 877-660-6853 (from
within the U.S.) or 201-612-7415 (from outside the U.S.) and entering
the access code number 286 and I.D. number 148968. 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. Noven’s prescription patches
are sold in over 30 countries, and a range of new patches are being
developed in collaboration with Novartis Pharma AG, Shire Pharmaceuticals
Group plc, P&G Pharmaceuticals, Endo Pharmaceuticals Inc. and others.
Together with Novartis Pharmaceuticals Corporation, Noven owns Novogyne
Pharmaceuticals, a women's health products company with over
$100 million in annual sales. Among other products, Novogyne markets
and sells Noven’s Vivelle-Dot™ product – the smallest
estrogen patch in the world, and the most dispensed estrogen patch
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,” “could,” “expect,” “plan,” “will,” 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: HT Market –
risks associated with increased competition in the HT market, including
as a result of the 2004 launches of estrogen cream and gel products,
each of which is a new dosage form in this category; 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 Novartis Pharma; uncertainties regarding any future
regulatory developments resulting from those studies; the risk that
Novogyne may not be able to realize the full value of the marketing
rights for Noven’s CombiPatch product; and the risk of losses
from product liability claims resulting from the use of HT products
such as the lawsuits presently pending against Noven and Novartis
with respect to Noven's products, as well as any indemnification
or contribution obligations that Noven may have to Novartis or Novogyne
related to product liability claims; 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; and the risk that Noven’s collaborations with Shire,
Endo and others may not result in the development and successful
commercialization of additional products; Regulatory Matters –
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; Production Matters –
the possibility that estimates of trade inventory levels of Noven’s
products, including trade inventory levels of Vivelle-Dot, may prove
inaccurate; the possibility that Noven's financial results could
fluctuate from period to period or otherwise be affected by trade
inventory levels risks; and uncertainties related to the fact that
Vivelle-Dot comprises a substantial majority of Novogyne’s
aggregate total prescriptions; risks related to the 2004 and 2005
product recalls of Noven’s CombiPatch and Vivelle-Dot products,
including the risk that ongoing stability testing of such products
could indicate that additional recalls may be required and that FDA
could take action relating to such recalls that could materially
affect Noven and Novogyne’s business; 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
cause delays or cancellations of programs; the possibility that Noven’s
current development priorities could render Noven unable to advance
other development projects or increase the cost of advancing those
projects; risks related to Noven’s dependence on Novartis to
perform all of Novogyne’s financial, accounting, inventory,
distribution, revenues and sales deductions functions (including
any asset impairment decisions for Novogyne), including the risk
that Novartis may perform these functions differently than Noven
would have, inadequately or incorrectly; Methylphenidate
Patch –
the possibility that the FDA may determine that the results of the
additional clinical studies of Noven’s methylphenidate patch
do not adequately address the concerns raised in the FDA’s
2003 not approvable letter; the risk that an amendment to the pending
NDA may not be filed on a timely basis or at all, including the risk
that the filing of an amendment to the pending NDA could be delayed
as a result of Shire’s continuing analysis of the study data;
the possibility that Shire’s continuing analysis of the study
data could reveal results that do not support approval of the methylphenidate
patch; the risk that Noven and Shire may not agree on the manner
or timing with which to proceed with the filing of an amendment to
the pending NDA; the timing of the FDA's review of any amended NDA
for Noven’s methylphenidate patch as well as any product approval,
which are beyond Noven's control and which may impact the success
of product launch and market penetration; risks and uncertainties
related to the 2005 study from researchers at the M.D. Anderson Cancer
Center that found adverse chromosomal effects on 12 children treated
with methylphenidate, including risks related to the timing of any
FDA approval of Noven’s methylphenidate patch, the impact on
the market for methylphenidate product (including Noven’s patch,
if approved) and any follow-on or related study finding adverse effects
from methylphenidate use; the possibility that, even if approved,
Noven’s methylphenidate patch may not be successfully commercialized
due to competitive market conditions or other factors, including
physician/patient preferences for other therapies; and the possibility
that Noven's method of accounting for the $25 million received from
Shire could change under certain circumstances, including if the
parties’ product strategy for the methylphenidate patch changes
or if product development is discontinued; and the likelihood that
Noven's development strategy would change if Shire were to terminate
the agreement under certain circumstances, or if Noven’s methylphenidate
patch 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 risk that additional citizen petitions may be
filed with respect to generic fentanyl products; 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; patent or other strategies by third parties (including
Johnson & Johnson’s recent proposed labeling changes for
its Duragesic® product) could delay or prevent the launch of
Noven’s fentanyl patch; 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; and risks and
uncertainties related to the fact that, in recent periods, companies
offering generic drug products have experienced significant product
pricing pressure, often earlier than expected in the product's life
cycle, which has negatively affected the profitability of certain
of their generic products; Financial Guidance –
the inherent uncertainties associated with financial projections;
the possibility that one or
more assumptions underlying Noven’s financial guidance proves
to be incorrect, including the assumption that, during the remainder
of 2005, there will not be any unforeseen material transactions,
changes in Noven’s or Novogyne’s accounting or accounting
principles, developments regarding regulatory matters or clinical
studies, changes in the supply of, demand for, or distribution of
HT products (including any changes resulting from the impact of competitive
HT products that were launched in 2004); changes in Noven’s
business relationships/collaborations; or changes in the economy
or the health care sector generally; Other Matters –
uncertainties arising from fluctuations in quarterly revenues and
research and
development expenses. 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 Ended
(amounts in thousands, except March 31,
per share amounts) (unaudited) -------------------
2005 2004
--------- ---------
Revenues:
Product revenues - Novogyne:
Product sales $4,978 $5,808
Royalties 1,114 890
--------- ---------
Total product revenues - Novogyne 6,092 6,698
Product revenues - third parties 4,038 2,977
--------- ---------
Total product revenues 10,130 9,675
Contract and license revenues:
Contract 595 519
License 1,011 936
--------- ---------
Contract and license revenues: 1,606 1,455
Net revenues 11,736 11,130
Expenses:
Cost of products sold 5,757 5,518
Research and development 3,010 2,255
Marketing, general and
administrative 4,055 3,904
--------- ---------
Total expenses 12,822 11,677
--------- ---------
Loss from operations (1,086) (547)
Equity in earnings of Novogyne 912 637
Interest income, net 503 156
------ ---------
Income before income taxes 329 246
Provision for income taxes 118 88
------- ---------
Net income $211 $158
======= =========
Basic earnings per share $0.01 $0.01
======= =========
Diluted earnings per share $0.01 $0.01
======= ========= Weighted average number of common
shares outstanding:
Basic 23,509 23,066
======= =========
Diluted 23,966 24,281
======= ========= As Of
-----------------------
March 31, December 31,
Balance Sheet Data: 2005 2004
(amounts in thousands) (unaudited) ---------- ------------
Cash and cash equivalents $64,315 $93,958
Short-term investments $29,950 $-
Investment in Novogyne $19,701 $26,233
Total assets $194,630 $201,975
Deferred license revenues $33,394 $39,085
Stockholders' equity $130,143 $129,039
Contact:
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.
(305) 253-1916
Copyright © 2005 Noven Pharmaceuticals, Inc. All rights reserved.