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NOVEN REPORTS SECOND QUARTER EPS OF $0.23 |
BackMiami, FL, July 29,
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 and six months ended June 30, 2004. Noven also provided
an update on its business, prospects and collaborations.
"Our U.S. hormone therapy operations delivered a strong performance
for the quarter, demonstrating that, although our results vary by quarter,
our core hormone therapy (“HT”) products remain a significant
source of funding for Noven,” said Robert C. Strauss, Noven's
President, CEO & Chairman. "Building on this foundation,
we are working to leverage our patented DOT Matrix® transdermal
platform into other therapeutic categories, including pain management,
Attention Deficit Hyperactivity Disorder, and Hypoactive Sexual Desire
Disorder. Together with our industry partners, we made progress in
each of these areas during the second quarter, and moved closer to
our goal of commercializing new prescription patches in diverse markets
with significant commercial potential."
Second Quarter Results
Noven’s net revenues for the quarter ended June 30, 2004 (the
"current quarter") were $12.0 million, largely unchanged from the $12.3
million reported in the quarter ended June 30, 2003 (the "2003
quarter"). Research and development expenses for the current quarter
increased 27% to $2.7 million, primarily due to non-clinical development
expenses for Noven’s fentanyl patch and other pipeline products.
Noven recognized $8.2 million in earnings from Novogyne Pharmaceuticals
(a women's health products company owned jointly by Noven and
Novartis Pharmaceuticals Corporation), more than double the amount
recognized in the 2003 quarter. For the current quarter, Noven reported
net income of $5.7 million ($0.23 diluted earnings per share), an 86%
increase over the $3.1 million ($0.13 diluted earnings per share) reported
in the 2003 quarter.
Current quarter net revenues at Novogyne increased 48% to $32.2 million.
Noven believes Novogyne’s current quarter revenues may have benefited
from restocking orders placed by trade customers replenishing inventories
depleted during the 2004 first quarter. Novogyne’s net income
for the current quarter was a record $17.0 million, more than twice
the $8.2 million reported in the 2003 quarter.
Based on current information, including returns to date related to
the product recall initiated in 2003 and an estimate of product that
may yet be returned in the recall, in the current quarter Noven and
Novogyne reduced their respective allowances for recall-related returns,
which had the effect of increasing current quarter net revenues at
Noven and Novogyne by $0.6 million and $2.4 million, respectively.
Taken together, the reductions in allowances at Noven and Novogyne
had the effect of increasing Noven’s income before income taxes
by $1.7 million in the current quarter.
First Half Results
Noven's net revenues for the six-month period ended June 30,
2004 (the "current period") increased 4% to $23.1 million
compared to the six-month period ended June 30, 2003 (the "2003
period"). This increase resulted in part from lower sales in the
2003 period due to inventory reduction initiatives undertaken by Noven
and Novogyne during that period. Research and development expenses
increased 7% to $5.0 million, primarily due to non-clinical development
expenses for the fentanyl patch and other pipeline products. Noven
recognized $8.9 million in earnings from Novogyne, a 67% increase over
the amount recognized in the 2003 period. Noven reported net income
of $5.8 million ($0.24 diluted earnings per share), a 66% increase
over the $3.5 million ($0.15 diluted earnings per share) reported in
the 2003 period.
Novogyne’s current period net revenues increased 16% to $53.6
million. Novogyne's net income for the current period was $24.4
million, a 39% increase over the $17.6 million reported in the 2003
period.
As described above, in the current period Noven and Novogyne reduced
their respective allowances for recall-related returns, which had the
effect of increasing current period net revenues at Noven and Novogyne
by $0.6 million and $3.1 million, respectively. Taken together, the
reductions in allowances at Noven and Novogyne had the effect of increasing
Noven’s income before income taxes by $2.0 million in the current
period.
At June 30, 2004, Noven had $106.8 million in cash and cash equivalents,
compared to $83.4 million at December 31, 2003. This increase primarily
reflects $12.3 million in distributions from Novogyne, $8.0 million
received upon closing of the Endo transaction, and $5.3 million received
in connection with the exercise of Noven stock options.
Financial Guidance
Confirming guidance first provided in February 2004, for full-year
2004 Noven expects: its net revenues to approximate 2003 results; its
research and development spending to increase compared to 2003; its
fully diluted earnings per share to be in the $0.40 to $0.45 range;
and Novogyne’s 2004 net revenues and net income to approximate
2003 results. This guidance is based on Noven’s current assumptions
and expectations regarding its business and operations for the remainder
of 2004. Noven’s actual financial results could differ materially
if these assumptions or expectations prove to be incorrect.
HT Prescription Overview
"Although the Women’s Health Initiative ("WHI")
and other study results caused the overall hormone therapy market to
decline,
our U.S. HT products have significantly outperformed their respective
market segments in the post-WHI market," said Strauss. "Our
Vivelle-Dot® patch is the only major estrogen therapy product to
increase total prescriptions following WHI.”
Primarily due to the continuing impact of the WHI studies, the overall
U.S. HT market declined 19% in the current quarter compared to the
2003 quarter. For the same period, aggregate prescriptions for Noven's
products (Vivelle®, Vivelle-Dot and CombiPatch® combined) decreased
8%. Vivelle-Dot, which represents approximately 78% of total prescriptions
for Noven’s U.S. products, increased 4% for the same period,
while the estrogen segment of the U.S. HT market declined 19%. For
the same period, prescriptions for the Vivelle product family (Vivelle-Dot
and Vivelle combined) decreased 4.5%.
"Thanks to the efforts of the Novogyne sales team, the Vivelle family
extended its market share lead in the U.S. estrogen patch market to
42% at mid-year 2004," said Neil Jones, Noven’s Vice President – Marketing & Sales,
who leads Novogyne’s sales and marketing program. “With
the most dispensed estrogen patch brand in the U.S. and a sound marketing
strategy, we believe our sales team is well-prepared to defend our
leadership position against the new competitors in the transdermal
HT market."
Development Collaborations
Endo Pharmaceuticals. Strauss
said: "During the second quarter, we continued preparations for the
possible launch of our fentanyl
patch, which was licensed to Endo Pharmaceuticals earlier this year.
Our patch
is intended to be the generic equivalent of Johnson & Johnson’s
Duragesic® fentanyl patch, and our Abbreviated New
Drug Application is under review at the FDA. Based on the current
patent and exclusivity
status of the Duragesic product, we believe the earliest our patch
could be launched is January 2005, assuming FDA approval is received
by that time. We continue to work with Endo to identify compounds
beyond fentanyl for co-development under our collaboration."
P&G Pharmaceuticals. "In
the second quarter, we earned an $800,000 development milestone under
our collaboration with Procter & Gamble
Pharmaceuticals ("P&GP")," said Strauss. “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 human studies
of the first product under our collaboration."
Shire Pharmaceuticals. “Noven and Shire Pharmaceuticals Group
plc continue to work together to address the FDA not approvable letter
received last year on our methylphenidate patch for ADHD,” said
Strauss. “During the second quarter, we met with the FDA to
review the development plan we prepared with Shire that included
protocol
summaries for additional clinical studies believed necessary to obtain
approval. Based on feedback received from the FDA at the meeting,
we intend to proceed with MethyPatch development, and believe we
have
a well-defined strategy with which to advance development. If the
additional studies are successful and completed on schedule, we would
intend to
file an amendment to the pending New Drug Application during 2005."
Strauss continued: "During the second quarter, we also expanded
our collaboration with Shire to include the development of a transdermal
amphetamine patch for ADHD. If successfully developed and commercialized,
this product, along with our developmental methylphenidate patch,
could position us in both segments of the stimulant market for ADHD
therapy."
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, July 29. 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 July 29
at 12:00 Noon Eastern time until July 31 by calling 877-519-4471
(from within the U.S.) or 973-341-3080 (from outside the U.S.) and
entering
the conference ID #4991399. 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 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 2003 sales of over $100 million. 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,"
"could," "intend," 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; the European HT
market may be limited due to pricing pressures and delayed Estradot launches
in certain countries due to labeling issues; and the risk of losses from
product liability claims resulting from the use of HT products as well
as any indemnification or contribution obligations that Noven may have
to Novartis or Novogyne related to product liability claims; 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; 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; uncertainties related to our ability
to comply with DEA regulations related to our purchase, storage and usage
of controlled substances in products we may manufacture, including our
developmental MethyPatch and fentanyl patch products; 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 or to continue the partnered development programs;
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 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;
risks related to Noven’s dependence on Novartis to perform 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; 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 the FDA may determine that Noven’s protocols and/or
clinical strategies do not address the FDA's concerns regarding the approval
of
the MethyPatch product NDA; the risk that planned additional MethyPatch
product studies may not be commenced or completed in a timely manner
due to an inability to enroll a sufficient number of subjects for the
additional studies or otherwise, which could delay the filing of an amendment
to the MethyPatch product NDA past 2005; the possibility that planned
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 timing of FDA’s review of any amended NDA for MethyPatch 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 MethyPatch
product clinical trials, including the risk that Shire may elect to manage
such studies differently than Noven might have, incorrectly or inadequately;
the possibility that the additional studies may be more extensive, lengthier
or more costly than anticipated and may exceed the total amount of license
revenues available to offset such costs and expenses; 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 we may be unable or unwilling to proceed with
the project or may be unable to license MethyPatch to a third party or
to a party with the resources of Shire on commercially reasonable terms;
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; 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 2004,
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 our HT products (including any changes
resulting from the impact of competitive HT products that have been launched
in 2004); changes in our business relationships/collaborations; or changes
in the economy or the health care sector generally; 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:
(amounts in thousands,
except per share amounts) Three Months Ended Six Months Ended
June 30, June 30,
------------------ -----------------
2004 2003 2004 2003
(unaudited) (unaudited)
Revenues:
Product revenues -
Novogyne:
Product sales $4,886 $6,086 $10,694 $9,016
Royalties 1,608 968 2,498 2,199
----------- --------- ----------- -------
Total product revenues -
Novogyne 6,494 7,054 13,192 11,215
Product revenues - third
parties 3,564 3,786 6,541 8,743
----------- --------- ----------- -------
Total product revenues 10,058 10,840 19,733 19,958
License and contract
revenues 1,897 1,421 3,352 2,328
----------- --------- ----------- -------
Net revenues 11,955 12,261 23,085 22,286
Expenses:
Cost of products sold 4,975 6,040 10,493 10,325
Research and development 2,734 2,154 4,989 4,647
Marketing, general and
administrative 3,762 3,293 7,666 7,474
----------- --------- ----------- -------
Total expenses 11,471 11,487 23,148 22,446
----------- --------- ----------- -------
Income (loss) from
operations 484 774 (63) (160)
Equity in earnings of
Novogyne 8,228 3,795 8,865 5,320
Interest income, net 184 198 340 346
----------- --------- ----------- -------
Income before income
taxes 8,896 4,767 9,142 5,506
Provision for income
taxes 3,218 1,717 3,306 1,983
----------- --------- ----------- -------
Net income $5,678 $3,050 $5,836 $3,523
=========== ========= =========== =======
Basic earnings per share $0.24 $0.14 $0.25 $0.16
=========== ========= =========== =======
Diluted earnings per
share $0.23 $0.13 $0.24 $0.15
=========== ========= =========== =======
Weighted average number
of common shares
outstanding:
Basic 23,386 22,493 23,226 22,536
=========== ========= =========== =======
Diluted 24,387 22,937 24,334 22,928
=========== ========= =========== =======
As Of
----------------------
June 30, December 31,
Balance Sheet Data: 2004 2003
--------- -----------
(unaudited)
Cash and cash equivalents $106,810 $83,381
Investment in Novogyne $23,278 $28,368
Total assets $189,413 $169,484
Deferred license revenues $53,179 $50,005
Stockholders' equity $122,738 $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.