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NOVEN REPORTS SECOND QUARTER 2005 FINANCIAL RESULTS |
BackMiami, FL, August
4, 2005 -- Noven Pharmaceuticals, Inc. (NASDAQ: NOVN), a leading developer
of advanced
transdermal drug delivery technologies and prescription transdermal
products, today announced financial results for the three-month and
six-month periods ended June 30, 2005, and provided an update on its
business and prospects.
"Our Novogyne joint venture had a very good quarter, and prescriptions
for our Vivelle-Dot™ estrogen patch continued to increase," said
Robert C. Strauss, Noven's President, CEO & Chairman. "Total
prescriptions for Vivelle-Dot™ grew 13% compared to the second
quarter of last year, and aggregate total prescriptions for Novogyne’s
three products grew 6%," said Strauss. “With a solid business
at Novogyne, two products pending at the U.S. Food and Drug Administration,
other products in development, and continued activity in our business
development program, we believe we are making good progress toward
our goal of growth from diversified sources."
Second Quarter Results
Noven’s net revenues for the quarter ended June 30, 2005 (the
"current quarter") were $11.8 million compared to $12.0 million for
the quarter ended June 30, 2004 (the "2004 quarter"), reflecting
lower contract and license revenues, partially offset by higher product
revenues. Research and development expenses for the current quarter
increased 15% to $3.1 million, primarily due to higher non-clinical
development expenses related to Noven’s fentanyl transdermal
patch. Marketing, general and administrative expenses increased 11%
to $4.2 million, primarily reflecting increased costs associated with
expansion for anticipated new product launches, as well as increased
professional fees. Noven recognized $8.1 million in earnings from Novogyne
Pharmaceuticals (a women's health products company owned jointly
by Noven and Novartis Pharmaceuticals Corporation), slightly lower
than the $8.2 million recognized in the 2004 quarter. For the current
quarter, Noven reported net income of $5.1 million ($0.21 diluted earnings
per share), a 10% decrease from the $5.7 million ($0.23 diluted earnings
per share) reported in the 2004 quarter.
Current quarter net revenues at Novogyne decreased 1% to $31.9 million,
reflecting increased sales returns and allowances, partially offset
by increased sales of Vivelle-Dot™. Novogyne’s selling,
general and administrative expense increased 12% to $7.8 million, reflecting
increased insurance costs and sales force expenses. Novogyne’s
net income for the current quarter was $16.9 million, slightly lower
than the $17.0 million reported in the 2004 quarter.
First Half Results
Noven’s net revenues for the six-month period ended June 30,
2005 (the "current period") were $23.5 million compared to
the $23.1 million reported for the six-months ended June 30, 2004 (the
"2004 period"), reflecting higher product revenues, partially offset
by lower contract and license revenues. Research and development expenses
increased 23% to $6.2 million, primarily due to higher non-clinical
development expenses related to Noven’s fentanyl transdermal
patch. Marketing, general and administrative expenses increased 8%
to $8.2 million, primarily reflecting increased costs associated with
expansion for anticipated new product launches, as well as increased
professional fees. Noven recognized $9.0 million in earnings from Novogyne,
slightly higher than the $8.9 million recognized in the 2004 period.
Noven reported net income of $5.3 million ($0.22 diluted earnings per
share), a 9% decrease compared to the $5.8 million ($0.24 diluted earnings
per share) reported in the 2004 period.
Novogyne's current period net revenues increased 2% to $54.6
million, reflecting increased sales of Vivelle-Dot™, partially
offset by lower sales of Novogyne’s other products. Novogyne’s
selling, general and administrative expense increased 13% to $16.4
million, primarily due to increased Vivelle-Dot™ promotional
expenses. Novogyne’s net income for the current period was $24.9
million, slightly higher than the $24.4 million reported in the 2004
period.
At June 30, 2005, Noven had an aggregate $77.9 million in cash and
cash equivalents and short-term investments. At December 31, 2004,
Noven had $94.0 million in cash and cash equivalents and no short-term
investments. Net cash used in operating activities for the first six
months of 2005 reflected payment of amounts owed to Shire Pharmaceuticals
in connection with development of Noven’s methylphenidate patch,
as well as purchases of fentanyl and other inventory, partially offset
by distributions received from Novogyne. Noven’s working capital
at June 30, 2005 was $95.9 million compared to $97.3 million at December
31, 2004.
HT Prescription Overview
Total prescriptions in the overall U.S. hormone therapy ("HT")
market declined 8% in the second quarter of 2005 compared to the second
quarter of 2004. For the same period, aggregate total prescriptions
for Novogyne's products (Vivelle®, Vivelle-Dot™ and CombiPatch® combined)
increased 6%. Total prescriptions for Vivelle-Dot™, which represented
approximately 84% of total prescriptions for Noven’s U.S. products,
increased 13% for the same period, while the estrogen segment of the
U.S. HT market decreased 8%. For the same period, total prescriptions
for the Vivelle® product family (Vivelle-Dot™ and Vivelle® combined)
increased 9%. Noven's Vivelle-Dot™ patch remains the most
frequently prescribed transdermal estrogen therapy product in the U.S.
Business Update
Strauss said: “Given recent prescription trends for Vivelle-Dot™ and
our belief that trade inventory levels for that product were within
the desired range at the end of the 2005 second quarter, we continue
to expect Novogyne’s revenues and net income for 2005 to modestly
exceed 2004 levels.”
"Together with Endo Pharmaceuticals, we are working to obtain approval
of our pending Abbreviated New Drug Application for our transdermal
fentanyl system," said Strauss. “We are also working with
Shire Pharmaceuticals to advance our methylphenidate patch for ADHD
toward commercialization. In late June, Noven and Shire submitted an
amendment to the pending New Drug Application that included new data
from our most recent clinical trials. The amendment was accepted for
filing by the FDA and is currently undergoing what we expect will be
a six-month review."
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 10:00 a.m. Eastern time this morning, August 4. 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 4
at 12:00 Noon Eastern time until August 6 by calling 877-660-6853 (from
within the U.S.) or 201-612-7415 (from outside the U.S.) and entering
the access code number 286 and I.D. number 162121. 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 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 prescribed estrogen patch
in the U.S. 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,” “could,” “expect,” “plan,” “will,” 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; 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 the risk of product liability
claims resulting from the use of HT products, such as the lawsuits
pending against Novartis with respect to Noven's 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 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. 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 development programs;
uncertainties regarding Noven’s ability to attract additional
development partners; 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 Noven’s 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
all of Novogyne’s financial, accounting, inventory, distribution,
revenues and sales deductions functions; risks and uncertainties
related to the fact that Vivelle-Dot™ comprises a substantial
majority of Novogyne’s aggregate total prescriptions. Fentanyl
Patch – risks and uncertainties associated with the FDA's review
of Noven’s fentanyl patch ANDA; risks and uncertainties relating
to Noven’s manufacture of fentanyl patch inventories in advance
of regulatory approval, including the possibility that Noven may
be unable to recover significant costs if FDA approval is not obtained
or if all or a portion of Noven’s existing fentanyl inventory
cannot be sold due to insufficient remaining shelf-life; the possibility
that Noven may be unable to recover from Endo their agreed upon portion
of the production costs of the launch quantities of Noven’s
fentanyl patch that Noven has produced; risks related to the FDA’s
recently issued public advisory that it is investigating reports
of death and other serious side effects from overdoses involving
both the branded and generic fentanyl patches, including the possibility
that this investigation could materially and adversely affect the
market for all fentanyl patch products and could delay or prevent
approval of pending ANDAs for fentanyl, including Noven’s pending
application; the impact of overhead and other expenses associated
with the development and production of Noven’s fentanyl patch
on Noven’s profitability if the fentanyl patch continues to
be delayed or is never approved; patent or other strategies by third
parties could delay or prevent the launch of Noven’s fentanyl
patch or other products; 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;
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. Methylphenidate
Patch – the possibility that FDA will determine that Noven’s
amended NDA for Noven’s methylphenidate patch does not support
approval or that Noven’s methylphenidate patch may not ultimately
be approved or commercialized; risks and uncertainties related to
the 2005 study by researchers at the M.D. Anderson Cancer Center
of the effects of oral methylphenidate therapy on 12 children; any
exercise of Shire’s right to terminate Noven’s methylphenidate
patch development agreement; and the likelihood that Noven’s
development strategy would change if Shire were to terminate the
agreement under certain circumstances, or if Noven’s methylphenidate
patch were not ultimately approved or were abandoned. Other
Matters – expected
fluctuations in quarterly revenues and research and development expenses
and risks related to estimated trade inventory levels. For additional
information regarding these and other risks associated with our business,
readers should refer to Noven’s Annual Report on Form 10-K
for the year ended December 31, 2004 as well as other reports filed
from time to time with the Securities and Exchange Commission.
Noven Pharmaceuticals, Inc.
Statements of Operations Data: Three Months Six Months
(amounts in thousands, except per Ended Ended
share amounts) (unaudited) June 30, June 30,
--------------- ----------------
2005 2004 2005 2004
------- ------- ------- --------
Revenues:
Product revenues - Novogyne:
Product sales $4,714 $4,886 $9,692 $10,694
Royalties 1,713 1,608 2,827 2,498
------- ------- ------- --------
Total product revenues - Novogyne 6,427 6,494 12,519 13,192
Product revenues - third parties 3,933 3,564 7,971 6,541
------- ------- ------- --------
Total product revenues 10,360 10,058 20,490 19,733
Contract and license revenues:
Contract 429 853 1,024 1,372
License 982 1,044 1,993 1,980
------- ------- ------- --------
Contract and license revenues 1,411 1,897 3,017 3,352
Net revenues 11,771 11,955 23,507 23,085
Expenses:
Cost of products sold 5,124 4,975 10,881 10,493
Research and development 3,145 2,734 6,155 4,989
Marketing, general and
administrative 4,189 3,762 8,244 7,666
------- ------- ------- --------
Total expenses 12,458 11,471 25,280 23,148
------- ------- ------- --------
Income (loss) from operations (687) 484 (1,773) (63)
Equity in earnings of Novogyne 8,101 8,228 9,013 8,865
Interest income, net 593 184 1,096 340
------- ------- ------- --------
Income before income taxes 8,007 8,896 8,336 9,142
Provision for income taxes 2,886 3,218 3,004 3,306
------- ------- ------- --------
Net income $5,121 $5,678 $5,332 $5,836
======= ======= ======= ========
Basic earnings per share $0.22 $0.24 $0.23 $0.25
======= ======= ======= ========
Diluted earnings per share $0.21 $0.23 $0.22 $0.24
======= ======= ======= ========
Weighted average number of common
shares outstanding:
Basic 23,565 23,386 23,537 23,226
======= ======= ======= ========
Diluted 24,068 24,387 24,017 24,334
======= ======= ======= ========
As of
----------------
Balance Sheet Data: June 30, Dec. 31,
(amounts in thousands) (unaudited) 2005 2004
---------------
Cash and cash equivalents $33,333 $93,958
Short-term investments 44,600 -
Investment in Novogyne 24,863 26,233
Total assets 188,385 201,975
Deferred license revenues 32,270 39,085
Stockholders' equity 135,585 129,039
Contact:
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.
(305) 253-1916
Copyright © 2005 Noven Pharmaceuticals, Inc. All rights reserved.