Miami, FL, August 1, 2002
Noven Achieves Record Results For Second Quarter
Noven Quarterly EPS Doubles to Record $0.28
Novogyne Quarterly Earnings and Profit Contribution Increase Over 100%
-- Noven Pharmaceuticals, Inc. (NASDAQ: NOVN) today announced financial results for the three and six month periods ended June 30, 2002, and provided an update on its business and prospects. "For the 2002 second quarter and first half, both Noven and Novogyne Pharmaceuticals reported record financial results," said Robert C. Strauss, Noven's President, CEO & Chairman.
2002 Second Quarter
Noven's net income more than doubled to $6.6 million ($0.28 diluted earnings per share) for the quarter ended June 30, 2002 (the "current quarter"), compared to $3.2 million ($0.14 diluted earnings per share) for the same period in 2001 (the "2001 quarter"). Revenues increased 28% to $16.2 million from $12.6 million in the 2001 quarter, primarily due to Estradot® sales abroad and higher sales of Vivelle® family products in the U.S. Noven recognized $7.1 million in earnings from Novogyne Pharmaceuticals, Noven's joint venture with Novartis Pharmaceuticals Corporation, a 127% increase over the $3.1 million recognized in the 2001 quarter.
Novogyne's quarterly net revenues increased 58% to $33.0 million, primarily due to increased Vivelle® family sales, and its quarterly net income increased 117% to $15.5 million.
2002 First Half
Noven's net income increased 37% to $8.1 million ($0.34 diluted earnings per share) for the six-month period ended June 30, 2002 (the "current period"), compared to $5.9 million ($0.25 diluted earnings per share) for the same period last year (the "2001 period"). Current period revenues increased 14% to $28.9 million, compared to $25.3 million for the 2001 period. Noven recognized $8.6 million in earnings from Novogyne, a 132% increase over the $3.7 million recognized in the first half of last year.
Novogyne's net revenues for the first half increased 74% to $60.4 million, primarily due to increased Vivelle® family sales and the addition of CombiPatch® in March 2001, and its first half net income increased 72% to $25.1 million.
At June 30, 2002, Noven's cash and cash equivalents increased to $53.4 million from $49.4 million at December 31, 2001.
Hormone Replacement Therapy (HRT)
"We began the second half of the year with considerable momentum in our HRT business," said Strauss. "However, the recent publication of studies examining HRT health risks has caused significant uncertainty about our principal market. These studies are proving to be catalysts for physicians and patients to reconsider whether, when, and in what form HRT is appropriate for an individual woman. As this analysis is taking place, we are positioned with the industry's leading transdermal HRT product line, a proven and well trained domestic HRT sales force, and a strong global partner with leadership in transdermal HRT."
"Our HRT patches are very different from the most commonly prescribed
and studied oral products, and the Novogyne sales force has been delivering
that key message to physicians since well before the recent studies were
– Noven's patches use plant-derived estradiol (which is identical to a woman's own estrogen), not conjugated estrogens derived from pregnant mare's urine;
– Noven's patches deliver hormones through the skin and directly into the bloodstream, thereby avoiding first pass metabolism. This delivery method provides continuous release of hormones into the system, and requires that much less drug be put into the body to achieve the desired therapeutic blood levels;
– Noven's combination HRT patch uses a different progestin than the one used in the studied oral combination product."
"While HRT patches differ from oral HRT products in these and other ways, there have been no head-to-head safety studies comparing these products. This may make therapy selection less clear cut for doctors and patients."
Strauss continued: "We believe our products will receive full consideration by doctors and patients as they evaluate the new studies and all available therapies. We can position our products at the center of the debate, but we cannot predict the final outcome at this early stage. Going forward, there is risk as well as opportunity for HRT. As soon as we have sufficient prescription and other data upon which to base a financial forecast, we intend to offer public guidance on our revenue and earnings expectations for the coming quarters."
New Product Pipeline
Strauss continued: "Noven's HRT pipeline products should keep us ahead of evolving trends in HRT therapy. We expect that lower doses of HRT may become more desirable. Later this month, Novogyne is scheduled to launch the new low dose 0.025 mg/day. Vivelle-Dot® patch in the U.S., and with our partner, we are developing lower dose versions of our combination HRT patch. Together, these two efforts are expected to help round out our low dose HRT range."
"Looking out to 2003 and beyond, we expect to expand our business well beyond HRT and into other large therapeutic categories like central nervous system disorders. In the 2002 second quarter, we filed our New Drug Application for once-daily MethyPatch®, our transdermal methylphenidate patch for Attention Deficit Hyperactivity Disorder. The FDA is now reviewing our application, and we are completing our market research with physicians and parents across the country. Our preliminary market research has been very positive. Also, we continue to advance patch versions of two undisclosed non-HRT molecules towards early clinical trials, as well as several other potential new patch products in various stages of development. And while we expect to remain a leader in transdermal HRT, these ongoing efforts should help Noven diversify its business and growth prospects into other therapeutic areas."
A public telephone conference with management to discuss Noven's financial results will be broadcast live via the Internet at www.noven.com beginning at 5:00 p.m. Eastern time this afternoon, August 1. 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 August 1 at 8:00 p.m. Eastern time until the evening of August 3 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. #38657. The conference call will contain forward-looking information in addition to that contained in this press release.
Noven Pharmaceuticals, Inc. Statements of Operations Data: (amounts in thousands, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, ---------------------- --------------------- 2002 2001 2002 2001 ---------------------- --------------------- (Unaudited)(Unaudited)(Unaudited)(Unaudited) Revenues: Product sales $ 15,277 $ 11,842 $ 27,268 $ 23,864 License revenue 879 752 1,623 1,419 ----------- ---------- ---------- ---------- Total revenues 16,156 12,594 28,891 25,283 Expenses: Cost of products sold 6,021 5,894 11,921 10,710 Research and development 3,313 2,410 6,682 4,637 Marketing, general and administrative 3,679 3,176 6,612 5,836 ----------- ---------- ---------- ---------- Total expenses 13,013 11,480 25,215 21,183 ----------- ---------- ---------- ---------- Income from operations 3,143 1,114 3,676 4,100 Equity in earnings of Novogyne 7,132 3,137 8,647 3,732 Interest income, net 195 482 402 1,101 ----------- ---------- ---------- ---------- Income before income taxes 10,470 4,733 12,725 8,933 Provision for income taxes 3,827 1,510 4,629 3,043 ----------- ---------- ---------- ---------- Net income $ 6,643 $ 3,223 $ 8,096 $ 5,890 =========== ========== ========== ========== Basic earnings per share $ 0.29 $ 0.14 $ 0.36 $ 0.26 =========== ========== ========== ========== Diluted earnings per share $ 0.28 $ 0.14 $ 0.34 $ 0.25 =========== ========== ========== ========== Weighted average number of common shares outstanding: Basic 22,528 22,335 22,510 22,286 =========== ========== ========== ========== Diluted 23,687 23,561 23,571 23,585 =========== ========== ========== ========== As Of ----------------------- June 30, December 31, Balance Sheet Data: 2002 2001 ---------- ------------ (Unaudited) (Unaudited) Cash and cash equivalents $ 53,401 $ 49,389 Investment in Novogyne $ 28,963 $ 32,043 Total assets $ 135,903 $ 136,228 Deferred license revenue $ 31,135 $ 32,758 Stockholders' equity $ 90,752 $ 81,898
Noven Pharmaceuticals, Inc., headquartered in Miami, Florida, is a leading developer of advanced transdermal drug delivery technologies and prescription transdermal products. Together with Novartis Pharmaceuticals Corporation, Noven owns a highly profitable women's health products company called Novogyne Pharmaceuticals. Noven's existing products include advanced estrogen transdermal delivery systems (including Vivelle-Dot®, licensed to Novogyne, and Estradot®, licensed to Novartis Pharma AG) and combination estrogen/progestin transdermal delivery systems (including CombiPatch®, licensed to Novogyne, and Estalis®, licensed to Novartis Pharma AG). With a range of additional products in development, including MethyPatch®, Noven is committed to becoming the world's premier developer, manufacturer and marketer of transdermal drug delivery systems. For additional information on Noven, visit the company's web site at www.noven.com.
This release contains forward-looking statements related to the business of Noven that can be identified by the use of forward-looking terminology such as "may make", "believe", "predict", "intend", "should keep", "expect", "scheduled", "should help" and similar words and phrases. Such statements are qualified by and subject to the risks and uncertainties specified in Noven's most recent filings with the Securities and Exchange Commission and those specified herein, including the risk that: the market for Noven's HRT products could decline significantly as a result of the HRT studies, either as physicians withdraw patients from HRT or as women elect to discontinue HRT on their own; health care regulators could, as a result of the HRT studies, modify the permitted use of Noven's products by mandatory product label changes, remove the products from the market, delay approval of new HRT products, or require that any new HRT products be subject to more extensive testing prior to being approved; Novartis could, as a result of the studies or otherwise, change its strategies or launch schedules relating to the commercialization of Noven's products; Noven could be named as a defendant in product liability lawsuits relating to its HRT products; physicians and patients may not consider or select HRT patches as desirable alternatives to oral HRT because of the lack of head-to-head safety data or otherwise; evolving HRT prescribing trends may make Noven's product line less attractive than other therapies; Noven's new low dose patches may not be successfully commercialized and, in the case of the lower dose combination patches, may not complete development or be approved by regulatory authorities; and Noven may be unable to diversify its sources of revenues beyond HRT due to the inability to develop or commercialize non-HRT products. Currently, Noven's liquidity, results of operations and business prospects are almost entirely dependent on sales of transdermal HRT products. Accordingly, any adverse change in the market for HRT products (including any adverse changes resulting from the HRT studies) could have a material adverse impact on Noven's liquidity, results of operations and business prospects.
Investor & Media Contact:
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.