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NOVEN REPORTS FIRST QUARTER 2004 FINANCIAL RESULTS |
BackMiami, FL, April
30, 2004 -- 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, 2004, affirmed its prior public financial guidance,
and provided an update on its business, prospects and collaborations.
"Noven’s
strategy is to build shareholder value by commercializing our patented DOT Matrix® platform
and other transdermal technologies across diverse markets with strong partners,"
said
Robert C. Strauss, Noven's President, CEO & Chairman. "We made
progress toward this goal in the first quarter by establishing an important new
industry collaboration and advancing several others, and we continue to expect
to report full year earnings per share in the $0.40 to $0.45 range."
First Quarter Results
Noven’s net revenues for the quarter ended March 31, 2004 (the
"current quarter") increased 11% to $11.1 million compared
to the quarter ended March 31, 2003 (the "2003 quarter"). Net revenues
were lower in the 2003 quarter due in part to steps taken by Noven in
early 2003 to reduce inventories
at Novogyne Pharmaceuticals, Noven’s joint venture with Novartis Pharmaceuticals
Corporation ("Novartis"), which reduced Noven’s product sales
to Novogyne for that quarter.
Noven's research and development expenses for the current quarter decreased
10% to $2.3 million, primarily due to decreased MethyPatch® product development
costs. Noven’s investment in research and development for full-year 2004
is expected to exceed 2003 levels due to product development initiatives expected
to begin in the balance of 2004.
In the current quarter, Noven recognized $0.6 million in earnings from Novogyne
compared to $1.5 million in the 2003 quarter. Noven reported net income of
$0.2 million ($0.01 diluted earnings per share), compared to $0.5 million ($0.02
diluted
earnings per share) in the 2003 quarter.
Novogyne’s current quarter net revenues decreased 13% to $21.4 million.
Noven believes that the timing of orders for Vivelle Dot® patches by trade
customers adversely affected Novogyne’s first quarter sales. Novogyne’s
sales are expected to increase in the second quarter of 2004 compared to first
quarter levels. Net income was $7.4 million compared to $9.4 million in the
2003 quarter. In the current quarter, Novogyne satisfied the annual $6.1 preferred
profit distribution to Novartis required under the joint venture agreements.
At March 31, 2004, Noven had $101.9 million in cash and cash equivalents
compared to $83.4 million at December 31, 2003. The increase primarily reflects
receipt
of $8.0 million from Endo Pharmaceuticals Inc. ("Endo") upon closing
of the fentanyl license transaction, a $6.0 million cash distribution from
Novogyne, and $5.2 million received in connection with the exercise of Noven
stock options.
HT Prescription Overview
"Although the Women’s Health Initiative and other study results caused
the overall HT market to decline, our U.S. HT products have significantly outperformed
their respective market segments," said Strauss. "In fact, our
Vivelle Dot patch is the only major estrogen therapy product to increase
total prescriptions
since WHI."
Primarily due to the continuing impact of the WHI studies, the overall
U.S. HT market declined 20% in the first quarter of 2004 compared
to the first quarter
of last year. For the same period, aggregate prescriptions for Noven's
products (Vivelle®, Vivelle Dot and CombiPatch® combined)
decreased just 6%.
Vivelle Dot, which represents approximately 75% of total prescriptions
for Noven’s
U.S. products, increased 6% for the period, while the estrogen segment of the
U.S. HT market declined 19%. Prescriptions for the Vivelle® product
family (Vivelle Dot and Vivelle combined) decreased 2.6%. At the end of
the current
quarter, the Vivelle family held a 41% share of total prescriptions in
the estrogen patch segment, compared to a 38% share at the end of the 2003
quarter.
"The U.S. estrogen therapy market continues to represent an opportunity of well
over $1.0 billion,” said Neil Jones, Noven’s Vice President – Marketing & Sales. “We
see room for Vivelle Dot to grow, and we are committed to extending that
product’s
market-leading position through efficient marketing and sales strategies
at Novogyne.”
Collaborations
"During the first quarter, we advanced several aspects of our industry
collaborations,” said
Strauss. “If successful, these collaborations could drive
substantial growth in 2005 and thereafter."
"In February, we licensed our developmental generic fentanyl patch to Endo,"
said Strauss. "Our patch is intended to be the generic equivalent
of
Johnson & Johnson’s
Duragesic® fentanyl patch. Based on the current
patent and exclusivity status of the Duragesic product, we believe
that
the earliest our
patch could be launched
is January 2005, assuming FDA approval is received by that time.
We also established a collaboration with Endo to develop new
transdermal therapies,
and we expect
to undertake feasibility studies for selected compounds in 2004."
Strauss continued: "In the first quarter, we received a $400,000 development
milestone under our collaboration with P&G Pharmaceuticals, a subsidiary
of The Procter & Gamble Company (“P&GP”). The products under
development explore follow-on product opportunities for P&GP’s in-licensed
investigational Intrinsa™ testosterone patch designed to help restore desire
in menopausal women who have Hypoactive Sexual Desire Disorder. P&GP has
initiated studies of the first product in humans. Potential development milestones
totaling $4.4 million remain to be received under the P&GP
collaboration, a portion of which is expected to be received
in the remainder of
2004."
"Noven and Shire Pharmaceuticals Group plc ("Shire") continue to work
together to address the not approvable letter received in April
2003 from the FDA on our developmental MethyPatch methylphenidate transdermal
system for Attention
Deficit Hyperactivity Disorder. We have been in dialogue with
the FDA regarding our development strategy, and we expect to meet with them during
the 2004 second
quarter in this regard. Assuming we can reach agreement with
the FDA on an appropriate strategy, Noven and Shire expect to undertake additional
MethyPatch product clinical
studies during 2004. Noven’s costs incurred in pursuit
of approval are expected to be offset against deferred revenue
previously received
from Shire,
so these costs are not expected to impact our research and development
expenses in 2004."
"Industry demand for our technology remains high, and we are working diligently
to establish additional collaborations," said Strauss.
"We believe we are the partner of choice for transdermal drug
development, and we have earned
that reputation based on our technology and on the performance
of products like Vivelle Dot. This reputation should serve us
well as we seek to further diversify
our business through new products and alliances, and as we advance
our goal of leading the industry in the development of new prescription
patches,” said
Strauss.
Financial Guidance
Confirming prior guidance provided in its 2003 financial results
press release, for full-year 2004 Noven expects: net revenues
to approximate
2003 results;
research and development spending to increase compared to 2003;
and fully diluted earnings
per share to be in the $0.40 to $0.45 range. Noven also expects
Novogyne’s
2004 net revenues and net income to approximate 2003 results.
Novogyne’s operating results are expected to fluctuate by quarter in part
due to the timing of orders placed by trade customers. Novogyne’s 2004
second quarter contribution to Noven’s profit is expected to be higher
than in the 2004 first quarter, due in part to the satisfaction in the first
quarter of the $6.1 million preferred return to Novartis, and to the timing of
orders placed by trade customers, which Noven believes had a negative impact
on Novogyne’s 2004 first quarter sales.
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 30. 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 30 at 12:00 Noon Eastern
time until May 2 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. #101482.
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 profitable 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.
With the most
advanced and broadly applicable transdermal technology in its
class, 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,” “expect,” “see,” “will,” “should,” “would” 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 European HT
market may be limited due to pricing pressures and delayed Estradot
launches in certain countries due to labeling issues; 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; and 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, risks related
to Noven’s reliance on suppliers for the availability and quality
of raw materials used in Noven’s products; risks related to
Noven’s reliance on a single supplier for certain raw materials
and compounds used in Noven’s products; uncertainties regarding
the timing and magnitude of any product recalls; the impact of the
recalls or related issues on Novartis’ or other partners’ strategy
for the commercialization of Noven’s products; the possibility
that Noven’s estimates of the impact of future returns and
charges may prove inaccurate, incomplete or otherwise incorrect;
the impact of detected or undetected product stability failures or
other product defects on Noven’s ability to estimate Noven’s
reserves for sales returns and other associated accounting consequences;
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; uncertainties
regarding Noven’s ability to attract additional development
partners; 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; 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;
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; risks
related to Noven’s dependence on Novartis to perform Novogyne’s
financial, accounting, inventory, distribution 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; and the possibility
that Noven’s financial results could fluctuate from period
to period or otherwise be affected by Novartis’ monitoring
of trade inventory levels for Novogyne and its decisions related
thereto; MethyPatch®,
the risk that FDA may determine that Noven’s
proposed protocols and/or proposed clinical strategies are not acceptable
or do not address the FDA's concerns regarding the approval of the
MethyPatch product NDA; the possibility that additional MethyPatch
product studies may not be commenced in a timely manner or at all
due to FDA concerns or otherwise; Shire’s control over the
management of any additional MethyPatch product clinical trials,
including the risk that Shire may elect to manage any such studies
differently than Noven might have, incorrectly or inadequately; the
possibility that any additional studies of MethyPatch will not produce
results that support approval or that, even if the additional studies
are completed and are successful, MethyPatch may not ultimately be
approved or commercialized; the availability of non-stimulant or
other once-daily ADHD therapies could negatively impact market penetration
of MethyPatch; the possibility that the cost of any additional MethyPatch
product study and related expenses may be higher than anticipated
and may exceed the total amount of license revenues available to
offset such costs and expenses; the possibility that Noven’s
method of accounting for the $25 million received from Shire could
change under certain circumstances, including if the parties' MethyPatch
product strategy changes or if Noven’s MethyPatch 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 MethyPatch product 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; patent or other strategies
by third parties could delay or prevent the launch of Noven’s
fentanyl patch or other products; 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; and 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; Other
Matters,
expected fluctuations in quarterly revenues and research and development
expenses; and uncertainties regarding Noven’s beliefs regarding
the timing of trade customer orders. 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) -----------------------
2004 2003
----------- -----------
Revenues:
Product revenues - Novogyne:
Product sales $5,808 $2,930
Royalties 890 1,231
----------- -----------
Total product revenues - Novogyne 6,698 4,161
Product revenues - third parties 2,977 4,957
----------- -----------
Total product revenues 9,675 9,118
License and contract revenues 1,455 907
----------- -----------
Net revenues 11,130 10,025
Expenses:
Cost of products sold 5,518 4,285
Research and development 2,255 2,493
Marketing, general and administrative 3,904 4,181
----------- -----------
Total expenses 11,677 10,959
----------- -----------
Loss from operations (547) (934)
Equity in earnings of Novogyne 637 1,525
Interest income, net 156 148
----------- -----------
Income before income taxes 246 739
Provision for income taxes 88 266
----------- -----------
Net income $158 $473
=========== ===========
Basic earnings per share $0.01 $0.02
=========== ===========
Diluted earnings per share $0.01 $0.02
=========== ===========
Weighted average number of common
shares outstanding:
Basic 23,066 22,581
=========== ===========
Diluted 24,281 22,920
=========== ===========
As Of
-----------------------
March 31, Dec. 31,
Balance Sheet Data: 2004 2003
(unaudited) ----------- -----------
Cash and cash equivalents $101,942 $83,381
Investment in Novogyne $22,961 $28,368
Total assets $184,599 $169,484
Deferred license revenues $55,422 $50,005
Stockholders' equity $116,987 $108,823
Contact:
Investor & Media Contact
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.
(305) 253-1916
Copyright © 2004 Noven Pharmaceuticals, Inc. All rights reserved.