Noven Announces Second Quarter Financial Results

Reports Second Quarter Earnings Per Share of $0.14

Pre-Tax Income for First Half Increases 63%, Revenues Up 26%

Lower Than Expected International Product Orders to Impact Second Half Results

-- Noven Pharmaceuticals, Inc. (Nasdaq:NOVN) today announced financial results for the quarter and six-month period ended June 30, 2001, and revised its financial forecast for full-year 2001.

Financial Results 2001
Second Quarter

Noven reported net income of $3.2 million ($0.14 diluted earnings per share) for the second quarter of 2001, compared to $3.5 million ($0.15 diluted earnings per share) for the second quarter of 2000. Income before income taxes for the quarter was a record $4.7 million, compared to $3.6 million for the second quarter of last year. Revenues for the 2001 second quarter were $12.6 million, compared to $10.5 million for the same quarter in 2000. Noven's provision for income taxes in the 2001 second quarter increased $1.4 million over the second quarter of 2000, as Noven's income became fully taxable in 2001 for the first time. In the quarter, Noven recognized $3.1 million in earnings from Novogyne Pharmaceuticals, Noven's joint venture with Novartis Pharmaceuticals Corporation, compared to $3.3 million in the second quarter of last year. In the quarter, Novogyne had net revenues of $20.9 million, compared to $15.8 million in the second quarter of last year. Novogyne's net income for the quarter declined to $7.2 million from $8.2 million in the second quarter of 2000, primarily due to increased expenses associated with sales force expansion, product launch activities and the amortization of Combipatch acquisition costs.

2001 First Half
Noven reported net income of $5.9 million ($0.25 diluted earnings per share) for the first half of 2001, compared to $5.3 million ($0.23 diluted earnings per share) for the same period last year. Income before income taxes for the 2001 first half was a record $8.9 million, compared to $5.5 million for the first half of last year. Revenues for the first half were $25.3 million, compared to $20.1 million for the same period in 2000. Noven's provision for income taxes for the first half of 2001 increased $2.9 million over the first half of 2000. In the 2001 first half, Noven recognized $3.7 million in earnings from Novogyne, as it did in the first half of last year. In the first half, Novogyne had net revenues of $34.7 million, compared to $29.1 million in the first half of last year. Novogyne's net income for the half declined to $14.6 million from $15.5 million in the first half of 2000, primarily due to increased expenses associated with sales force expansion, product launch activities and the amortization of Combipatch acquisition costs.

Business Update & Forecast
"With pre-tax income and revenues up 63% and 26% respectively, we were pleased with our results for the first half of 2001," said Robert C. Strauss, Noven's President, Chief Executive Officer and Chairman. "The second half of the year, however, presents a challenge. We have not received certain expected product orders from Novartis Pharma AG that are important to the continued growth of our international business, and we are therefore revising our forecast for the year."

U.S. Business
Strauss continued: "In the hands of Novogyne, Vivelle® family prescriptions continue to increase. We now hold about a 31% share of the U.S. transdermal estrogen market, up from 28.7% at the beginning of the year." In May 2001, Novogyne launched Combipatch™ nationwide, making it the only company in the U.S. offering transdermal therapies for both the estrogen-only and the combination hormone therapy markets. "It is still too early to interpret prescription data, but feedback from the sales force suggests that doctors are receptive to Combipatch. Potential competitors continue to face product approval delays, which extends our opportunity to establish Combipatch as the premier brand in its category."

International Business
"Our international business has not progressed as rapidly as we had hoped," added Strauss. "Novartis Pharma AG licenses our principal international products, Estalis® and Estradot™, in most markets outside the U.S. We expected to receive significant orders for those products as Novartis Pharma purchased supply for planned international launches. To date, orders have been substantially less than we anticipated, and this will significantly affect our second half results."

"We believe that the failure to order at expected levels reflects Novartis Pharma's strategies relating to regulatory approvals and launch timing, not a lack of commitment to commercializing Noven's products. Several recent developments support this belief. In March of this year, our joint venture with Novartis Pharmaceuticals acquired Combipatch, the U.S. version of Estalis. As announced separately today, Novartis Pharma and Noven have entered into an agreement to develop line extensions to the Combipatch/Estalis product line. And Novartis Pharma continues to advance the European mutual recognition process for Estradot. We believe that these developments evidence Novartis Pharma's confidence and commitment to the long-term success of Estalis and Estradot in global markets."

"Product order issues aside, we consider our relationship with Novartis Pharma to be excellent. We are working with our colleagues there to better understand their regulatory and launch strategies, and to determine when additional orders will be received."

MethyPatch Update
"MethyPatch® is advancing toward our supplemental Phase III clinical trials," added Strauss, referring to Noven's once-daily methylphenidate patch for Attention Deficit Hyperactivity Disorder (ADHD). "We have submitted our revised protocol to FDA for comment following a stringent analysis of our prior study results, and we expect to begin our Phase III study in the fall."

Financial Forecast
"Given the lower levels of international orders, we now expect Noven's total revenues for 2001 to be modestly higher than the $42.9 million reported last year," said Strauss. "Noven's pre-tax income should increase 25-35% over the $12.0 million reported for 2000, which at assumed tax rates would yield net earnings per share of $0.40 to $0.45 for 2001."

"Although overseas growth will be constrained, Noven remains a consistently profitable company with leading-edge technology, commercialized products, a robust U.S. business, a strong global partner, a promising product pipeline, outstanding employees, virtually no debt and over $40 million in cash," said Strauss. "In short, we continue to have solid fundamentals and exceptional long-term growth prospects."

Analyst Conference Call
A public telephone conference with management relating to Noven's financial results will be broadcast live via the Internet at www.noven.com beginning at 5:15 p.m. Eastern time this afternoon, August 2. 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 2 at 9:00 p.m. Eastern time until the evening of August 4 by calling 800-475-6701 (from within the U.S.) or 320-365-3844 (from outside the U.S.) and entering the access code 597166. This conference call will contain forward-looking information in addition to that contained in this press release.

                      Noven Pharmaceuticals, Inc.


Statements of Operations Data: Three Months Ended  Six Months Ended
(amounts in thousands, except      June 30,             June 30,
per share amounts)            ------------------- --------------------
                                2001      2000      2001       2000
                              --------- --------- ---------  ---------
                            (Unaudited)(Unaudited)(Unaudited)(Unaudited)
Revenues:
     Product sales            $ 11,842  $ 10,335  $ 23,864   $ 19,791
     License revenue               752       146     1,419        293
                              --------- --------- ---------  ---------

     Total revenues             12,594    10,481    25,283     20,084

Expenses:
     Cost of products sold       5,894     4,512    10,710      9,023
     Research and development    2,410     3,555     4,637      5,380
     Marketing, general
      and administrative         3,176     2,307     5,836      4,389
                              --------- --------- ---------  ---------

     Total expenses             11,480    10,374    21,183     18,792
                              --------- --------- ---------  ---------

    Income from operations       1,114       107     4,100      1,292

Equity in earnings of Novogyne   3,137     3,253     3,732      3,730
Interest income, net               482       267     1,101        467
                              --------- --------- ---------  ---------

Income before income taxes       4,733     3,627     8,933      5,489

Provision for income taxes       1,510       153     3,043        188
                              --------- --------- ---------  ---------

Net income                     $ 3,223   $ 3,474   $ 5,890    $ 5,301
                              ========= ========= =========  =========

Basic earnings per share        $ 0.14    $ 0.16    $ 0.26     $ 0.24
                              ========= ========= =========  =========

Diluted earnings per share      $ 0.14    $ 0.15    $ 0.25     $ 0.23
                              ========= ========= =========  =========

Weighted average number
 of common shares outstanding:

           Basic                22,335    21,797    22,286     21,740
                              ========= ========= =========  =========
           Diluted              23,561    22,895    23,585     22,862
                              ========= ========= =========  =========


                                              As Of
                                ----------------------------------
                                    June 30,         December 31,
Balance Sheet Data:                  2001                2000
                                --------------      --------------

     Cash and cash equivalents     $ 42,060            $ 40,976

     Working capital               $ 49,833            $ 46,734

     Investment in Novogyne        $ 21,763            $ 15,431

     Total assets                  $143,975            $104,031

     Deferred license revenue      $ 29,301            $ 27,220

     Stockholders' equity          $ 74,634            $ 65,277

About Noven
Noven Pharmaceuticals, Inc., headquartered in Miami, Florida, is a leader in the development of transdermal and transmucosal drug delivery technologies and products. Together with Novartis Pharmaceuticals Corporation, Noven owns a 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, Noven is committed to becoming the world's premier developer, manufacturer and marketer of transdermal and transmucosal drug delivery systems. For additional information on Noven, visit the company's web site at www.noven.com. For information on Noven's Vivelle and Vivelle-Dot products, visit www.vivelledot.com.

Forward looking statements contained in this release are qualified by and subject to the risks and uncertainties specified in Noven's most recent filings with the Securities and Exchange Commission, including the risk that results for future periods may be materially different than anticipated because of, among other factors, competitive market conditions affecting Noven's hormone replacement patches and other products, the inability to develop new products, delays in the launch of Estalis by Novartis Pharma in certain countries, delays in the launch of Estradot abroad due to the failure to receive regulatory approvals or other factors, lower than expected orders of Estalis and/or Estradot by Novartis Pharma, the failure of Novogyne to successfully market Combipatch, fluctuations in research and development and other expenses, the failure of MethyPatch® clinical studies, delays in filing a MethyPatch® New Drug Application, the inability of Noven to receive FDA approval to market MethyPatch® or its developmental HRT patches and/or to successfully commercialize such products, and the failure of Noven to reach the development milestones in the Novartis Pharma development agreement.

Investor & Media Contact:
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.
305-253-1916