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NOVEN REPORTS THIRD QUARTER EARNINGS PER SHARE OF $0.10 |
BackNine-Month Pre-Tax Income Increases 38% to $12.9 Million
Novogyne Quarterly Profit Contribution Nearly Doubles to $5.3 Million
Miami, FL, November
1, 2001 -- Noven Pharmaceuticals, Inc. (NASDAQ: NOVN), today announced
financial results for the quarter and nine-month period ended September
30, 2001.
2001 Third Quarter
Noven reported net income of $2.5 million ($0.10 diluted earnings per
share) for the third quarter of 2001 (the "current quarter"),
compared to $3.6 million ($0.15 diluted earnings per share) for the third
quarter of 2000 (the "2000 quarter'"). Income before income
taxes for the current quarter was $4.0 million, compared to $3.9 million
for the 2000 quarter. Current quarter revenues were $10.4 million, compared
to $11.2 million for the 2000 quarter. Noven's provision for income taxes
in the current quarter increased $1.3 million over the 2000 quarter, as
Noven's income became fully taxable in 2001 for the first time. In the
current quarter, Noven recognized $5.3 million in earnings from Novogyne
Pharmaceuticals, Noven's joint venture with Novartis Pharmaceuticals Corporation,
East Hanover, New Jersey ("Novartis"), compared to $2.7 million
in the 2000 quarter.
Novogyne's current
quarter net revenues more than doubled to $28.5 million from $13.5 million
due to increased sales of Vivelle-Dot™ and the addition of CombiPatch®
in March 2001. Novogyne's selling, general and administrative expenses
increased to $9.7 million for the current quarter from $5.1 million in
the 2000 quarter, primarily due to the relaunch of CombiPatch and expansion
of the Novogyne sales force. Novogyne amortized $1.5 million of CombiPatch
acquisition cost during the current quarter. Novogyne's net income for
the current quarter was $12.0 million, an 85% increase over the $6.5 million
reported in the 2000 quarter.
2001 First Nine
Months
Noven reported net income of $8.3 million ($0.35 diluted earnings per
share) for the first nine months of 2001 (the "current period"),
compared to $8.9 million ($0.39 diluted earnings per share) for the first
nine months of 2000 (the "2000 period"). Income before income
taxes was $12.9 million, compared to $9.4 million for the 2000 period.
Current period revenues were $35.7 million, compared to $31.2 million
for the same period in 2000. Noven's provision for income taxes for the
current period increased $4.1 million over the 2000 period.
In the current period,
Noven recognized $9.0 million in earnings from Novogyne, compared to $6.4
million in the 2000 period, an increase of 41%. In the current period,
Novogyne net revenues increased to $63.2 million from $42.6 million in
the 2000 period, an increase of 48%. Novogyne's selling, general and administrative
expenses increased to $22.9 million from $14.6 million in the 2000 period,
primarily due to the CombiPatch relaunch and the Novogyne sales force
expansion. Novogyne amortized $3.1 million of CombiPatch acquisition cost
during the current period. Current period net income at Novogyne increased
to $26.6 million from $22.0 million in the 2000 period.
Business Update
& Forecast
"The third
quarter was marked by strong growth at Novogyne, progress regarding our
international products licensed to Novartis Pharma AG, Basel, Switzerland
("Novartis Pharma"), and advances in the development of new
products intended to increase the base of revenues that we control,"
said Robert C. Strauss, Noven's President, CEO and Chairman.
U.S. Business
- Novogyne
"Novogyne Pharmaceuticals, our highly profitable women's health company
jointly owned with Novartis, continues to be Noven's principal growth
driver. In September, the Vivelle® family of transdermal
estrogen patches held a 32.1% share of the U.S. transdermal estrogen market,
an increase of about 4% in the last 12 months." The Vivelle family
is led by Vivelle-Dot, the smallest estrogen patch in the world. An application
seeking a new low-dose and an osteoporosis indication for Vivelle-Dot
is pending at the Food & Drug Administration.
Strauss continued:
"With the relaunch of CombiPatch in May of this year, Novogyne became
the only company in the U.S. offering transdermal therapies for both the
estrogen-only and combination hormone replacement therapy ("HRT")
markets. During the 12 months leading up to the relaunch, CombiPatch's
share of the total prescription market had declined slightly. Since relaunch,
its market share has stabilized, but we have not seen a meaningful increase.
The Novogyne sales force continues to deliver the CombiPatch message to
its customers, and we anticipate growth for the product in 2002 and beyond
as that message takes hold."
International
Business
"In August, we announced that orders for our international products
had been substantially less than we expected, and that we would be working
with Novartis Pharma to accelerate product roll-out. To this end, senior
representatives from both companies have held cooperative and productive
sessions in Basel, in Miami, and by telephone conference. We remain in
near-daily contact, from the country product manager level to senior Novartis
Pharma executives."
"Novartis Pharma
has taken steps that confirm its commitment to HRT and to Noven's products,"
said Strauss. "Last month, they expanded internal resources to strengthen
global HRT marketing. In the third quarter, they launched Estradot in
Canada. They have moved Estradot® through to the concluding
stages of the European mutual recognition procedure. In addition, senior
management has assured us that planning for 2002 Estradot launches is
a priority project, and Noven is working side-by-side with Novartis Pharma
to develop an effective, aggressive launch plan for Estradot."
"Ever since
Novartis Pharma first licensed the product, we have been hopeful that
they would rapidly convert their existing transdermal estrogen business
to Estradot. We know that active conversion is an option under consideration
in the launch planning process, and we are doing everything possible to
influence the outcome. We must recognize the fact that, without broad
conversion, launches may not be as robust or rapid as we would like. At
this time, we understand that Novartis Pharma has not reached a decision
on conversion strategy or timing," said Strauss.
"Estalis orders
by Novartis Pharma in the second half of 2001 have been much lower than
in the first half, and forecasted orders for 2002 are lower than 2001.
Novartis Pharma has advised that its inventory levels for Estalis are
high. We also understand that Novartis Pharma plans to seek approval of
a second Estalis dosage strength in European countries where only one
strength is presently approved, and that they have initiated a supporting
clinical study. We do not expect renewed growth in our sales of Estalis
until the second dosage is approved."
MethyPatch®
Update
"The delays in commercialization of our international products by
our licensee reinforce the need to develop and market products ourselves,"
said Strauss. "Once-daily MethyPatch®, our transdermal
methylphenidate system for Attention Deficit Hyperactivity Disorder, is
central to this strategy. Recently, we completed investigator training
and began patient screening for a multi-center double-blind placebo-controlled
trial scheduled to conclude in the 2002 first quarter. A successful trial
would lead to a MethyPatch New Drug Application in mid-2002 and ultimately
a new, Noven-controlled revenue source beginning in late 2003."
Financial Guidance
"We expect 2001 fourth quarter revenues to be in line with the quarter
that we just completed," said Strauss. "Fourth quarter diluted
earnings per share should be in the $0.10 to $0.12 range. Pre-tax income
for full year 2001 is expected to increase in the 40% range compared to
2000. We expect to earn $0.45 to $0.47 per share for full-year 2001, which
represents an increase over our prior full year guidance of $0.40 to $0.45
per share. This increase is largely due to lower than planned expenses
in the 2001 fourth quarter."
Strauss continued:
"As indicated, we have seen a significant decline in Estalis orders,
and we expect that decline to continue at least through 2002. Estradot
orders in 2002 are expected to be insufficient to offset Estalis declines.
As a result, we expect our international sales to decline substantially
in 2002 compared to 2001. Noven's target for 2002 calls for sales growth
in Vivelle-Dot and CombiPatch sufficient to offset this international
decline. If met, we would expect 2002 revenues to be comparable with 2001
full-year revenues, and 2002 diluted earnings per share to be in the $0.45
to $0.55 range."
"For the balance
of this year and into 2002, we will be working diligently to enhance U.S.
growth, to accelerate launches abroad, to advance new products that we
can market ourselves, and to resume our high growth rate. We are committed
to success on each of these fronts."
Analyst Conference
Call
A public telephone conference with management relating to Noven's financial
results will be broadcast live via the Internet at http://www.noven.com
beginning at 5:00 p.m. Eastern time this afternoon, November 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 November
1 at 9:00 p.m. Eastern time until the evening of November 3 or by calling
800-475-6701 (from within the U.S.) or 320-365-3844 (from outside the
U.S.) and entering the access code 607357. This 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 leader in the development of transdermal and transmucosal
drug delivery technologies and 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 and
transmucosal drug delivery systems. For additional information on Noven,
visit http://www.noven.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; the failure
of Novartis Pharma to launch and support Estalis due to inventory levels,
regulatory strategies or other factors; delays in the launch of Estradot
abroad due to the failure of Novartis Pharma to receive regulatory approvals,
uncertainty regarding Novartis Pharma's conversion strategy or other factors;
lower than expected orders of Estalis and/or Estradot by Novartis Pharma;
the failure of Novogyne to successfully commercialize CombiPatch; fluctuations
in research and development, sales and marketing and other expenses; the
failure of MethyPatch®
or other clinical studies; delays in filing a MethyPatch New Drug Application;
and the inability of Noven to receive FDA approval to market MethyPatch
or its developmental HRT patches and/or to successfully commercialize
such products.
Noven Pharmaceuticals, Inc.
Statements of
Operations Data: Three Months Ended Nine Months Ended
(amounts in September 30, September 30,
thousands, except 2001 2000 2001 2000
per share amounts) (Unaudited) (Unaudited)(Unaudited)(Unaudited)
--------- --------- --------- ---------
Revenues:
Product sales $ 9,705 $ 11,016 $ 33,569 $ 30,807
License revenue 698 147 2,117 440
--------- --------- --------- ---------
Total revenues 10,403 11,163 35,686 31,247
Expenses:
Cost of products
sold 4,982 4,928 15,692 13,951
Research and
development 3,716 3,307 8,353 8,687
Marketing, general
and administrative 3,383 1,980 9,219 6,369
--------- --------- --------- ---------
Total expenses 12,081 10,215 33,264 29,007
--------- --------- --------- ---------
Income (loss) from
operations (1,678) 948 2,422 2,240
Equity in earnings
of Novogyne 5,278 2,653 9,010 6,383
Interest income, net 398 306 1,499 773
--------- --------- --------- ---------
Income before income
taxes 3,998 3,907 12,931 9,396
Provision for income
taxes 1,542 282 4,585 470
--------- --------- --------- ---------
Net income $ 2,456 $ 3,625 $ 8,346 $ 8,926
========= ========= ========= =========
Basic earnings per
share $ 0.11 $ 0.16 $ 0.37 $ 0.41
========= ========= ========= =========
Diluted earnings per
share $ 0.10 $ 0.15 $ 0.35 $ 0.39
========= ========= ========= =========
Weighted average
number of common
shares outstanding:
Basic 22,427 22,042 22,334 21,841
========= ========= ========= =========
Diluted 23,542 23,586 23,571 23,104
========= ========= ========= =========
As Of
-----------------------------
September 30, December 31,
Balance Sheet Data: 2001 2000
------------ ------------
Cash and cash
equivalents $ 47,070 $ 40,976
Working capital $ 46,686 $ 46,697
Investment in
Novogyne $ 27,041 $ 15,431
Total assets $140,215 $104,031
Deferred license
revenue $ 28,492 $ 27,109
Stockholders'
equity $ 77,439 $ 65,277
Investor &
Media Contact:
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.
(305) 253-1916
Copyright © 2001 Noven Pharmaceuticals, Inc. All rights reserved.