NOVEN ANNOUNCES FIRST QUARTER 2008 FINANCIAL RESULTS |
BackNoven
Reports Quarterly EPS of $0.11
Novogyne Joint Venture Reports
Quarterly Net Income of $23 Million
Miami, FL, May 8, 2008 -- Noven Pharmaceuticals, Inc. (NASDAQ: NOVN)
today announced financial results for the quarter ended March 31, 2008
(the "2008 Quarter"). For the 2008 Quarter, Noven reported
net revenues of $21.5 million, net income of $2.6 million, and diluted
earnings per share of $0.11.
Peter Brandt, Noven's recently-appointed
President and Chief Executive Officer, commented: "Noven's
first quarter results illustrate the earnings power of our Novogyne Pharmaceuticals
joint venture. Compared to the first quarter of last year, Novogyne's
net revenues increased 19% to $39.5 million, and its net income increased
42% to $23.0 million. Our quarterly results also illustrate, however,
the challenges facing our Noven Transdermals business, with production
and quality issues significantly reducing this unit’s revenues
and profitability. Addressing these issues is a top priority of the organization."
Brandt was appointed President, CEO and director of Noven on April 29,
2008. Previously, he served as President of Pfizer's U.S. Pharmaceuticals
Operations, having spent 28 years in the Pfizer organization.
Noven First
Quarter Results
Noven's financial results for the 2008 Quarter
included the results of operations of Noven Therapeutics (formerly JDS
Pharmaceuticals, LLC), a specialty pharmaceutical company acquired by
Noven in August 2007. Noven Therapeutics is an integral part of Noven’s
ongoing transition from primarily a transdermal drug delivery company
to a broader-based specialty pharmaceutical company.
For the 2008 Quarter,
Noven reported net income of $2.6 million or $0.11 diluted earnings per
share, compared to net income of $5.0 million or $0.20 diluted earnings
per share for the quarter ended March 31, 2007 (the "2007 Quarter").
Noven’s net revenues for the 2008 Quarter were $21.5 million, 11%
higher than the $19.3 million reported in the 2007 Quarter. This increase
reflects the addition of $5.7 million in Pexeva® and Lithobid® product
sales, as well as increased license and contract revenues, primarily
due to amortization of deferred revenue from additional Daytrana™ sales
milestones received in 2007. These increases were largely offset by lower
transdermal product revenues, primarily due to production issues in transdermal
manufacturing.
Gross margin, as a percentage of net product revenues,
was 30% in the 2008 Quarter compared to 43% in the 2007 Quarter. Quarterly
gross margin was adversely affected by inventory write-offs primarily
related to an equipment failure in transdermal manufacturing, as well
as increased quality assurance activities and costs, primarily related
to Daytrana™ production, both of which served to offset the impact
of higher gross margins reported by Noven Therapeutics. The equipment
failure has been corrected.
Some patients and caregivers continue to
have difficulty removing the release liner of some Daytrana™ patches,
similar to the concerns that led to the September 2007 voluntary market
withdrawal of a portion of Daytrana™ product. Noven and Shire continue
to review and monitor release liner complaints and the manufacturing
process to determine whether modifications to the product or process
can improve the long-term ease of use and address the issues raised by
the FDA in the pending warning letter. There is no assurance that there
will be a satisfactory resolution to this issue.
Research and development
expenses in the 2008 Quarter decreased 4% to $3.3 million. Selling and
marketing expenses in the 2008 Quarter increased to $4.8 million from
$0.2 million in the 2007 Quarter, primarily due to the addition of Noven
Therapeutics. General and administrative expenses increased $1.8 million,
or 36%, due to increased accounting and other professional fees, related
in part to the addition of Noven Therapeutics.
In the 2008 Quarter, Noven
recognized $8.3 million in earnings from Novogyne, an increase of 69%
compared to the 2007 Quarter.
Novogyne First Quarter Results
Novogyne's
net income for the 2008 Quarter increased 42% to $23.0 million, compared
to $16.2 million in the 2007 Quarter. Net revenues at Novogyne increased
19% to $39.5 million, primarily due to increased pricing and, to a lesser
extent, increased unit sales of Vivelle-Dot®. Novogyne's
gross margin percentage for the 2008 Quarter increased slightly to 80%.
Selling, general and administrative expenses decreased 11%, reflecting
lower samples expense due to timing of sample shipments from Noven. In
the 2008 Quarter, Novogyne satisfied the $6.1 million annual preferred
profit distribution to Novartis Pharmaceuticals Corporation (Noven’s
joint venture partner) required by the joint venture agreements, as it
did in the 2007 quarter.
Noven Balance Sheet
At March 31, 2008, Noven had $27.7 million
in cash and cash equivalents, $12.7 million in short-term investments,
and $22.9 million in other investments (non-current). This compares with
$14.0 million in cash and cash equivalents, $21.6 million in short term
investments and $32.8 million in other investments (non-current) at December
31, 2007.
Noven’s investments at March 31, 2008 consisted of auction
rate securities (“ARS”) with a fair value of $35.6 million,
$22.9 million of which have been classified as non-current on Noven’s
balance sheet following failed auctions occurring since mid-February
2008. 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.
Noven believes its ARS are of high credit quality, as over 80% carry
an AAA or AA credit rating, and all are considered investment grade securities.
As of March 31, 2008, Noven recorded a temporary change in fair value
of $0.5 million relating to its ARS. Subsequent to March 31, 2008, Noven
liquidated $12.7 million of its ARS at par value, bringing the total
ARS liquidated by Noven since mid-February to $30.2 million, all liquidated
at par value.
Prescription Update
Total prescriptions for Vivelle-Dot® increased
7% in the 2008 Quarter compared to the 2007 Quarter, and total prescriptions
for Novogyne’s products, taken as a whole, increased 4%. By comparison,
the overall U.S. hormone therapy market decreased 6% for the same period.
Total prescriptions for Daytrana™ (launched in June 2006) decreased
5% in the 2008 Quarter compared to the 2007 Quarter. Prescriptions for
ADHD stimulant therapies as a class increased 7% for the same period.
Total prescriptions for Pexeva® increased 5% in the 2008 Quarter
compared to the 2007 Quarter, and total prescriptions for the SSRI class
of antidepressants increased 1% for the same period.
The Year Ahead
"In
the balance of 2008, we will be focused on advancing and improving the
three key areas of Noven’s business," said Brandt. "Novogyne
will be working to extend the market leadership position of Vivelle-Dot® in
the transdermal estrogen market and to continue to gain share of the
overall estrogen therapy market. At Noven Transdermals, significant resources
will remain committed to addressing the production, quality and FDA issues
facing that unit. At Noven Therapeutics, we are planning the expected
launch of Stavzor™ for bipolar disorder, migraine therapy and epilepsy,
as well as the commencement of Phase 3 studies for Mesafem™, our
non-hormonal therapy for menopausal symptoms."
"With respect
to Mesafem™, we recently received feedback from the FDA on our
revised protocol for proposed Phase 3 clinical trials," said Brandt.
"This feedback provides clarity on the FDA’s expectations
for the clinical program, and we expect to begin the Phase 3 program
in 2008."
Brandt
continued: "In addition to the specific objectives of our three
business units, we will be analyzing all areas of investment and spending
at Noven to determine whether they appropriately advance our goal of
enhancing value for shareholders."
Conference Call
A conference
call with management relating to Noven's financial results will be webcast
live at www.noven.com beginning at 8:30 a.m. Eastern time this morning,
May 8. 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 May 8 through May 10 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 282673. The conference call is expected
to contain forward-looking information in addition to that contained
in this press release.
About Noven
Noven Pharmaceuticals, Inc. is a specialty
pharmaceutical company engaged in the research, development, manufacture,
marketing and sale of prescription pharmaceutical products. Noven's
business and operations are focused in three principal areas – transdermal
drug delivery, the Novogyne joint venture, and its Noven Therapeutics
specialty pharmaceutical unit.
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 and not necessarily listed in order
of priority, 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 adequately 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
and/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) issues relating
to difficulties in removing the release liner from the Daytrana™ patch,
including if Noven is unable to improve the long-term ease of use of
use of the product or adequately resolve the Daytrana-related issues
raised by the FDA in the warning letter and August 2007 Form 483, (ii)
new market entrants, including from other ADHD products marketed or under
development by Shire, (iii) raw material supply interruptions and/or
the inability to obtain the active ingredient methylphenidate, and (iv)
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, timing and success of ongoing and planned
clinical trials, including with respect to Mesafem, 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; the impact of competitive responses
to Noven’s sales, marketing and strategic
efforts, and the risk that Noven's development partners may have priorities
that are different from or conflict with those of Noven, 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 additional 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.
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 for the year ended December 31, 2007 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.
Contact:
|
Copyright © 2008 Noven Pharmaceuticals, Inc. All rights reserved.