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NOVEN REPORTS THIRD QUARTER EARNINGS PER SHARE OF $0.12 |
BackMiami, FL, October
31, 2002 -- Noven Pharmaceuticals, Inc. (NASDAQ: NOVN) today announced
financial results for the quarter and nine-month period ended September
30, 2002.
2002 Third Quarter
Noven reported net income of $2.8 million ($0.12 diluted earnings per
share) for the third quarter of 2002 (the "current quarter"),
compared to $2.5 million ($0.10 diluted earnings per share) for the third
quarter of 2001 (the "2001 quarter"). Current quarter revenues
increased 27% to $13.2 million, largely due to higher Vivelle®
family sales to Novogyne Pharmaceuticals, Noven's joint venture with Novartis
Pharmaceuticals Corporation of East Hanover, New Jersey ("Novartis"),
and sales of Estradot® to Novartis Pharma AG ("Novartis
Pharma"). Noven recognized $2.0 million in earnings from Novogyne,
compared to $5.3 million in the 2001 quarter.
Compared to the 2001 quarter, Novogyne's current quarter net revenues
declined 24% to $21.5 million, reflecting higher returns for the original
Vivelle estrogen patch (which is no longer promoted) and the impact of
the Women's Health Initiative (WHI) and other recent studies (the "July
studies") on demand for hormone replacement therapy (HRT) products.
Vivelle returns principally relate to product that has reached or is approaching
its expiration date. (Vivelle represents less than 20% of Novogyne's total
U.S. prescriptions.) Novogyne increased its provision for sales allowances
and returns to $9.4 million (from $4.3 million in the 2001 quarter) in
recognition of higher returns for Vivelle and diminished demand for HRT
products following the July studies. Novogyne's selling, general and administrative
expenses remained largely unchanged at $9.8 million. Novogyne amortized
$1.5 million of CombiPatch® acquisition cost during the
current quarter. Novogyne s net income for the current quarter was
$4.2 million, compared to $12.0 million in the 2001 quarter.
2002 First Nine Months
Noven reported net income of $10.9 million ($0.46 diluted earnings per
share) for the first nine months of 2002 (the "current period"),
compared to $8.3 million ($0.35 diluted earnings per share) for the first
nine months of 2001 (the "2001 period"). Current period revenues
increased 18% to $42.1 million, mostly due to higher Vivelle family sales
to Novogyne. In the current period, Noven recognized $10.7 million in
earnings from Novogyne, compared to $9.0 million in the 2001 period.
Compared to the 2001 period, Novogyne net revenues increased 30% to $81.9
million, largely due to higher Vivelle family sales and the addition of
CombiPatch in March 2001. For the 2002 period, Novogyne increased its
provision for sales allowances and returns to $20.4 million (from $10.2
million in the 2001 period) in recognition of higher Vivelle returns and
lower demand for HRT products. Novogyne s selling, general and administrative
expenses increased to $30.7 million from $22.9 million in the 2001 period,
mostly due to CombiPatch promotional expenses and a sales force expansion
implemented after CombiPatch was acquired. Novogyne amortized $4.6 million
of CombiPatch acquisition cost during the current period. Current period
net income at Novogyne increased to $29.3 million from $26.6 million in
the 2001 period.
At September 30, 2002, Noven s cash and cash equivalents increased
to $59.8 million from $49.4 million at December 31, 2001.
Business Update
"WHI significantly disrupted demand for HRT products," said
Robert C. Strauss, Noven's President, CEO & Chairman. "It also
increased awareness of and interest in transdermal therapy. We remain
focused on advancing our transdermal message, managing the impact of diminished
HRT demand, and positioning ourselves with new products in large non-HRT
markets that utilize our industry leading patch technology."
U.S. HRT Business
"As the U.S. market leader in transdermals, we stand to benefit as
physicians and patients consider alternatives to oral HRT in the wake
of the July studies," said Strauss. "Our products are different
from the leading oral HRT products, although there are no studies demonstrating
they are safer." (See Transdermal Difference below.)
"Since the July studies, prescription data suggest that the market
recognizes this difference and the benefits of our patch products,"
said Strauss. "Total U.S. prescriptions for the leading oral combination
HRT product (Prempro®) declined 34.0% in the 2002 third
quarter compared to the 2002 second quarter. Total prescriptions for our
CombiPatch product, the only transdermal alternative to Prempro, were
down 15.1%. Total prescriptions for the leading oral estrogen product
(Premarin®) were down 14.1% in the same period, while Vivelle-Dot®,
our principal U.S. growth driver, saw no decline in total prescriptions,
and saw new prescriptions increase 1.1%."
"In September, the Vivelle family increased its share of the U.S.
transdermal estrogen market to 36.4%, up 1.5% from June 2002," said
Strauss. "This puts us in a good position to benefit should transdermals
rebound."
Strauss continued: "Our immediate challenge is to align inventory
with current demand. We believe trade inventories for our original Vivelle
product are significantly higher than justified in the current market,
and that Novogyne's inventories are higher than desirable. Together with
Novartis, we are taking aggressive action to correct this. In the third
quarter, Novogyne increased its provision for sales allowances and returns
by over $5 million. In addition, Novogyne is reducing Vivelle shipments
to trade customers, and Noven is deferring shipments to Novogyne. These
steps will impact our financial results in the 2002 fourth quarter and
the first quarter of next year. Our goal is to substantially align inventories
with prescription demand by mid-year 2003."
International HRT Business
"Noven's business extends beyond the U.S. HRT market," said
Strauss. "Our third quarter revenues included significant sales of
Estradot to Novartis Pharma, the licensee of our international HRT products.
Estradot is the international version of Vivelle-Dot, and Novartis Pharma
has launched the product in Germany and in a number of other smaller countries.
We are pleased to see that Estradot is gaining market share in each of
these markets. In addition, in October we received a $1.0 million milestone
payment from Novartis Pharma relating to the continuing development of
our next-generation transdermal estrogen/progestin patch product."
New Product Pipeline
"We are working to diversify our business into non-HRT markets,"
said Strauss. "The FDA is currently reviewing our New Drug Application
for MethyPatch®, our developmental methylphenidate patch
for ADHD. MethyPatch targets a growing $1.4 billion U.S. market. If approved
in a timely fashion, we expect that it will be commercialized in the second
half of 2003. We believe that peak U.S. sales for the product could exceed
$100 million."
Strauss added: "We are also developing a number of undisclosed non-HRT
patch products. The two lead candidates address separate U.S. markets
that together exceed $1 billion annually. During the third quarter, one
of these undisclosed molecules successfully completed an early clinical
trial. The other is being readied for clinicals, and should be the first
transdermal formulation in an otherwise oral market. We continue to market
our patented technologies to potential partners seeking to extend the
life cycles of their proprietary molecules. While we expect to remain
a leader in transdermal HRT, our goal is to build a portfolio of products
and partnerships that offer growth opportunity in a number of other large
commercial markets."
Transdermal Difference
Noven's transdermal HRT products are different from the leading oral HRT
products, although there are no studies demonstrating they are safer.
Noven's patches use a plant-derived estradiol that is identical to a woman's
own estrogen, not conjugated estrogens derived from horse urine. Patches
deliver hormones through the skin and directly into the bloodstream, avoiding
first pass liver metabolism, permitting continuous release of hormones,
and delivering much less drug to achieve therapeutic blood levels. Noven's
Vivelle-Dot estrogen patch line offers one of the broadest dose ranges
and lowest doses available, and Noven s CombiPatch estrogen/progestin
product uses a different progestin than the one used in the leading oral
combination product.
Conference Call
A 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, October 31. 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 October 31 at
8:00 p.m. Eastern time until the evening of November 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. #46268. 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. 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 "believe",
"will", "hope", "should", "expect",
"our goal", 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: MethyPatch may not be
approved in a timely fashion or at all, or, if approved, that it may not
be the first transdermal ADHD therapy on the market or that it may not
be successfully commercialized due to competitive market conditions or
other factors, including physician/patient preferences for other ADHD
therapies; developmental patches using undisclosed molecules may not advance
on a timely basis, or may not be approved by FDA or successfully commercialized;
Noven may not be successful in licensing its technologies to third parties;
the market for Noven's HRT products could decline significantly as a result
of the July 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 July 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; Noven may be unable to diversify
its sources of revenues beyond HRT due to the inability to develop or
commercialize non-HRT products; Noven s estimates of inventory levels
may be inaccurate, whether as a result of inaccurate third party data
or otherwise; Noven and Novogyne may be unable to align inventories with
demand as soon as hoped because of inaccurate estimates, lack of cooperation
of third parties or otherwise; the decline in the demand for HRT products
after the July studies could further exacerbate the effect of high product
inventory levels and delay any return to growth. 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 July studies) could have a material adverse impact on Noven s
liquidity, results of operations and business prospects.
Noven Pharmaceuticals, Inc.
Statements of
Operations Data: Three Months Ended Nine Months Ended
(amounts in
thousands, except September 30, September 30,
----------------------- -----------------------
per share amounts) 2002 2001 2002 2001
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Revenues:
Product sales $12,317 $9,705 $39,585 $33,569
License revenue 881 698 2,504 2,117
----------- ----------- ----------- -----------
Total revenues 13,198 10,403 42,089 35,686
Expenses:
Cost of products
sold 5,111 4,982 17,032 15,692
Research and
development 2,585 3,716 9,267 8,353
Marketing,
general and
administrative 3,492 3,383 10,104 9,219
----------- ----------- ----------- -----------
Total expenses 11,188 12,081 36,403 33,264
----------- ----------- ----------- -----------
Income (loss) from
operations 2,010 (1,678) 5,686 2,422
Equity in earnings of
Novogyne 2,010 5,278 10,657 9,010
Interest income, net 223 398 625 1,499
----------- ----------- ----------- -----------
Income before income
taxes 4,243 3,998 16,968 12,931
Provision for income
taxes 1,480 1,542 6,109 4,585
----------- ----------- ----------- -----------
Net income $2,763 $2,456 $10,859 $8,346
=========== =========== =========== ===========
Basic earnings per
share $0.12 $0.11 $0.48 $0.37
=========== =========== =========== ===========
Diluted earnings per
share $0.12 $0.10 $0.46 $0.35
=========== =========== =========== ===========
Weighted average
number of common
shares outstanding:
Basic 22,549 22,427 22,523 22,334
=========== =========== =========== ===========
Diluted 23,127 23,542 23,424 23,571
=========== =========== =========== ===========
As Of
-----------------------
Sept. 30, Dec. 31,
Balance Sheet Data: 2002 2001
----------- -----------
(Unaudited) (Unaudited)
Cash and cash
equivalents $59,760 $49,389
Investment in
Novogyne $30,973 $32,043
Total assets $136,084 $136,228
Deferred
license
revenue $30,327 $32,758
Stockholders'
equity $93,585 $81,898
Contact:
Joseph C. Jones
Vice President, Corporate Affairs
Noven Pharmaceuticals, Inc.
(305) 253-1916
Copyright © 2002 Noven Pharmaceuticals, Inc. All rights reserved.