NOVEN REPORTS THIRD QUARTER 2007 FINANCIAL RESULTS |
BackMiami, FL, November
8, 2007 -- Noven Pharmaceuticals, Inc. (NASDAQ: NOVN) today announced
financial results for the three-month and nine-month periods ended
September 30, 2007.
On August 14, 2007, Noven completed the acquisition
of JDS Pharmaceuticals, LLC (“JDS”), a specialty pharmaceutical
company focused in psychiatry and women’s health. Noven’s
results reported today include the results of operations for JDS from
that date through September 30, 2007.
The three-month and nine-month
periods also include (i) a one-time $100.2 million charge for the JDS
purchase price allocated to in-process research and development (the “IPR&D
Charge”), which is required under applicable accounting rules,
and (ii) a net $3.3 million charge related to reimbursements to Shire
plc in connection with the voluntary withdrawal of a portion of Daytrana™ product
in the trade channel (the “Withdrawal Charge” and, together
with the IPR&D Charge, the “Charges”).
“We are
pleased to report the first quarter of combined financial results following
our acquisition of JDS, which marked our strategic transition from
primarily drug delivery to fully-integrated specialty pharmaceutical
company,” said Robert Strauss, Noven’s President, CEO & Chairman. “Excluding
the IPR&D and Withdrawal Charges, we posted substantial increases
in net income and earnings per share for both the three and nine month
periods. Notably, our Novogyne joint venture contributed a record $10.9
million to Noven’s quarterly pre-tax income, underscoring the
continuing value of that asset and the current earnings power of our
transdermal hormone therapy business.”
2007 Third Quarter Results
Including the impact of the Charges, for
the quarter ended September 30, 2007 (the "current quarter"),
Noven reported a net loss of $59.0 million ($2.38 loss per share).
Excluding the Charges and the related tax effects, net income for the
current quarter would have been $7.6 million ($0.30 diluted earnings
per share) compared to net income of $5.0 million ($0.20 diluted earnings
per share) for the quarter ended September 30, 2006 (the "2006
quarter"). A reconciliation
of net income and earnings per share to net income and earnings per
share as adjusted to reflect the excluded items is included in an attachment
to this press release.
Noven’s net revenues in the current quarter
were $21.8 million, an increase of 39% compared to the $15.7 million
reported in the 2006 quarter. This increase reflects the recognition
of $3.3 million in net revenues associated with sales of JDS’s
Pexeva® and Lithobid® products for the period from August 14
through September 30, 2007. The increase also reflected higher sales
of Noven’s Vivelle-Dot® estrogen patch and higher license
revenues due to the amortization of deferred revenues from additional
Daytrana™ sales milestones. Daytrana™ product sales to
Shire in the current quarter decreased to $1.4 million from $2.0 million
in the 2006 quarter; the Withdrawal Charge had the effect of reducing
Daytrana™ product sales for the current quarter by $0.8 million
related to allowances for returns.
Noven’s gross margin percentage
in the current quarter was 41% compared to 30% in the 2006 quarter.
Gross margin in the current quarter benefited primarily from higher
overall product revenues, greater transdermal facility utilization,
and the continuing benefit of cost reductions implemented in the 2006
quarter. The current quarter also benefited from a 76% gross margin
percentage on JDS product sales.
Research and development expenses
for the current quarter increased 44% to $3.6 million, primarily attributable
to a $0.8 million increase in clinical research associated with Noven’s
transdermal pipeline and to $0.5 million in JDS-related research and
development expenses. Selling, general and administrative expenses
for the current quarter increased $5.9 million or 98% to $11.9 million,
reflecting the addition of $3.5 million in JDS-related expenses that
include costs associated with JDS’s psychiatry sales force, as
well as $2.1 million in costs associated with the partial Daytrana™ withdrawal.
Noven
recognized a record $10.9 million in earnings from Novogyne in the
current quarter, an increase of 33% compared to the 2006 quarter. Current
quarter net revenues at Novogyne increased 15% to a record $38.7 million,
primarily due to increased sales of Vivelle-Dot®.
Novogyne’s gross margin for the current quarter, at 79%, was
consistent with the 2006 quarter. Selling, general and administrative
expenses decreased 12% due to the timing of samples expense. Novogyne’s
net income for the current quarter increased 32% to $22.5 million,
compared to $17.0 million in the 2006 quarter.
2007 Nine-Month Results
Including the impact of the Charges, for the nine-months
ended September 30, 2007 (the "current period"), Noven reported
a net loss of $46.4 million ($1.87 loss per share). Excluding the Charges
and the related tax effects, Noven would have reported net income for
the current period of $20.2 million ($0.80 diluted earnings per share)
compared to net income of $8.9 million ($0.37 diluted earnings per
share) for the nine-months ended September 30, 2006 (the "2006
period").
Noven’s net revenues in the current period were
$60.0 million, an increase of 38% compared to the $43.4 million reported
in the 2006 period. This increase primarily reflects increases in Daytrana™ product
sales and license revenues and $3.3 million in JDS product sales. Daytrana™ product
sales to Shire, which commenced in the 2006 second quarter, increased
to $11.0 million in the current period compared to $5.7 million in
the 2006 period.
Noven’s gross margin percentage in the current
period was 41% compared to 22% in the 2006 period. As in the
current quarter, gross margin in the current period benefited primarily
from higher overall product revenues, greater transdermal facility
utilization, and the continuing benefit of cost reductions implemented
in the 2006 quarter. The current period also benefited from a 76% gross
margin percentage on JDS product sales.
Research and development expenses
for the current period increased 16% to $10.3 million, primarily attributable
to a $1.6 million increase in clinical research associated with Noven’s
transdermal pipeline and to $0.5 million in JDS-related research and
development. Selling, general and administrative expenses for the current
period increased $6.6 million or 40% to $23.0 million, primarily due
to the addition of $3.5 million in JDS-related expenses as well as
$2.1 million in expenses related to the partial Daytrana™ withdrawal.
Noven
recognized $25.0 million in earnings from Novogyne in the current period,
an increase of 30% compared to the 2006 period. Current period net
revenues at Novogyne increased 12% to $107.9 million, primarily due
to increased sales of Vivelle-Dot®. Novogyne’s gross
margin for the current period, at 79%, was consistent with the 2006
period. Selling, general and administrative expenses were largely unchanged
at $28.0 million. Novogyne’s net income for the current period
increased 25% to $57.7 million, compared to $46.1 million in the 2006
quarter.
Noven Balance Sheet
At September 30, 2007, Noven had an aggregate
$72.4 million in cash and cash equivalents and short-term investments,
compared to $153.6 million at year-end 2006. This decrease reflects
the payment of $130.4 million in the JDS acquisition; tax payments
of $16.2 million; and $5.1 million used to purchase shares under Noven’s
recently-established Share Repurchase Program, partially offset by
the receipt of an aggregate $50.0 million in milestone payments relating
to Shire’s sales of Daytrana™; $18.5 million in distributions
received from Novogyne; and $5.9 million received from Shire in connection
with Noven’s amphetamine patch development program.
Prescription
Update
Total prescriptions for Vivelle-Dot® increased 4% in the
current quarter compared to the 2006 quarter, and total prescriptions
for Novogyne’s products, taken as a whole, increased 2%. By comparison,
the overall U.S. hormone therapy market declined 8% for the same period.
Total prescriptions for Daytrana™ (launched in June 2006) increased
64% in the current quarter compared to the 2006 quarter, while prescriptions
for ADHD stimulant therapies as a class increased 8% for the same period.
Reflecting ongoing generic substitution, total prescriptions for Lithobid® decreased
39% in the current quarter compared to the 2006 quarter. Total prescriptions
for Pexeva® increased 21% in the current quarter compared to the
2006 quarter, while for the same period prescriptions for the SSRI
class of antidepressants were largely unchanged.
Non-GAAP Financial
Information
Under accounting principles generally accepted in the U.S.
(“GAAP”), “net income” and “diluted earnings
per share” include all charges for the periods reported. In addition
to results determined in accordance with GAAP, in this press release
Noven has provided net income and diluted earnings per share for the
periods presented excluding the IPR&D Charge and the Withdrawal
Charge. Noven believes that comparing Noven’s period-to-period
financial results without giving effect to those items may be helpful
to investors to permit them to compare Noven’s period-to-period
financial results on a more uniform basis. For the same reasons, management
uses these non-GAAP financial measures to evaluate Noven’s current
performance against its historical performance and to plan our future
business activities. These measures should not be considered alternatives
to measures computed in accordance with GAAP, nor should they be considered
indicators of Noven’s overall financial performance. Adjusted
net income and adjusted diluted earnings per share are limited by the
fact that companies may not necessarily compute them in the same manner,
thereby making these measures less useful than the same measures calculated
in accordance with GAAP.
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 9:00 a.m. Eastern time this
morning, November 8th. Thereafter, a rebroadcast of the call will be
accessible at the same website for at least two weeks. A taped replay
will be available beginning November 8th through November 10th by calling
877-660-6853 (from within the U.S.) or 201-612-7415 (from outside the
U.S.) and entering the access code 286 and conference ID number 258318.
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, has established itself as a
leading developer of advanced transdermal drug delivery technologies
and prescription transdermal products. Its commercialized transdermal
products include Vivelle-Dot® (estradiol transdermal system), the
most prescribed estrogen patch in the U.S., and Daytrana™ (methylphenidate
transdermal system), the first and only patch approved for the treatment
of ADHD.
With the acquisition of JDS Pharmaceuticals in August 2007,
Noven has become a broader-based specialty pharmaceutical company with
the infrastructure, products and category expertise to market and sell
products itself, and with a substantially enhanced late-stage product
pipeline.
Products currently marketed through the JDS psychiatry sales
infrastructure consist of Pexeva® (paroxetine mesylate) and Lithobid® (lithium
carbonate). Products under development in psychiatry consist of Stavzor™ (delayed
release valproic acid capsule), Lithium QD (once-daily lithium carbonate),
and Stavzor™ ER (extended release valproic acid capsule). Products
under development in women’s health consist of Mesafem™ (low-dose
paroxetine mesylate), a non-hormonal product entering Phase 3 clinical
trials for vasomotor symptoms (hot flashes). 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. Statements
that are not historical facts, including statements which are preceded
by, followed by, or that include, the words "believes," "anticipates," "plans," "expects" or
similar expressions and statements are forward-looking statements. Noven’s
estimated or anticipated future results, product performance or other
non-historical facts are forward-looking and reflect Noven’s current
perspective on existing trends and information. 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: Daytrana™ – the risk that past Daytrana™ results
may not be indicative of future Daytrana™ results; the possibility
that Noven may incur significant costs relating to the Daytrana™ market
withdrawal and the risk that the estimated amount of product subject
to the withdrawal may prove incorrect; the risk that the market for Daytrana™ as
well as future sales of Daytrana™ could be adversely affected by
a number of factors, including as a result of: (i) the market withdrawal
of Daytrana™ as well as any potential continuing issues relating
to difficulties in removing the release liner from the Daytrana™ patch,
(ii) the resolution of the observations made by the FDA in the Form 483
that Noven received in July 2007, (iii) new market entrants, including
from other ADHD products marketed or under development by Shire, (iv)
raw material supply interruptions and/or the inability to obtain the
active ingredient methylphenidate, and (v) delays or inability to obtain
necessary DEA methylphenidate procurement quota; the risk that any adverse
effect to the market for Daytrana™ due to the foregoing or other
factors could adversely affect Noven’s results of operations and/or
its financial position, including limiting Noven’s ability to achieve
the additional milestone payments under its agreement with Shire; 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 risks and
uncertainties related to the fact that Vivelle-Dot® comprises a substantial
majority of Novogyne's aggregate total prescriptions; 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; 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 and/or cause
delays or cancellations of programs; and 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;
JDS Acquisition – the expected benefits of the
acquisition of JDS, including expected revenue growth, may take longer
than anticipated to achieve and may not be achieved in their entirety
or at all; any costs or difficulties that Noven may encounter in the
process of integration of the organization and operations of the acquired
business into Noven’s
existing organization and operations, including the possibility that
such integration may be delayed or more costly or difficult than expected
and may adversely affect Noven’s results of operations and financial
condition; uncertainties as to the future success of ongoing and planned
clinical trials and the risk that results from early-stage clinical trials
may not be indicative of results in later-stage trials; the unproven
safety and efficacy of products under development; the difficulty of
predicting FDA approvals, including timing, and that any expected period
of exclusivity may not be realized; unexpected adverse events or side
effects or inadequate efficacy of a product that could delay or prevent
regulatory filings, approval or commercialization, or that could result
in recalls or product liability claims of approved products; the difficulty
of predicting acceptance and demand for new pharmaceutical products;
the impact of competitive products and pricing; risks relating to new
product development and launch, including the possibility that any product
launch may be delayed or that product acceptance may be less than anticipated
as well as risks related to compliance with extensive, costly, complex
and evolving governmental regulations and restrictions, and reimbursement
policies of government and private health insurers and others; the possibility
that patent applications may not result in issued patents, and that issued
patents may not be enforceable or could be invalidated; and the impact
of competitive responses to Noven’s sales, marketing and strategic
efforts. For additional information regarding these and other risks associated
with Noven’s business, readers should refer to Noven’s Annual
Report on Form 10-K for the year ended December 31, 2006 as well as other
reports filed from time to time with the Securities and Exchange Commission. Unless
required by law, Noven undertakes no obligation to publicly update or
revise any forward-looking statements, whether as a result of new information,
future events, or otherwise.
Noven Pharmaceuticals, Inc. and Subsidiary
Statements of Three Months Nine Months
Operations Data: Ended Ended
(amounts in thousands, September 30, September 30,
except per share amounts) --------------- -----------------
(unaudited) 2007 2006 2007 2006
------- ------- -------- --------
Revenues:
Product revenues - Novogyne:
Product sales $5,801 $5,273 $15,974 $13,990
Royalties 2,100 1,791 5,764 5,138
------- ------- -------- --------
Total product revenues - Novogyne 7,901 7,064 21,738 19,128
Product revenues - third parties 8,789 5,761 25,620 15,648
------- ------- -------- --------
Total product revenues 16,690 12,825 47,358 34,776
Contract and license revenues:
Contract 280 44 179 1,112
License 4,845 2,839 12,432 7,559
------- ------- -------- --------
Contract and license revenues 5,125 2,883 12,611 8,671
Net revenues 21,815 15,708 59,969 43,447
Expenses:
Cost of products sold - Novogyne 4,286 3,702 10,530 10,304
Cost of products sold - third
parties 5,525 5,339 17,522 16,764
------- ------- -------- --------
Total cost of products sold 9,811 9,041 28,052 27,068
Acquired in-process research and development 100,150 -- 100,150 ––
Research and development 3,649 2,527 10,300 8,899 Selling, general and administrative 11,873 6,010 23,003 16,386
------- ------- -------- --------
Total expenses 125,483 17,578 161,505 52,353
------- ------- -------- --------
Loss from operations (103,668) (1,870) (101,536) (8,906)
Equity in earnings of Novogyne 10,948 8,234 25,025 19,323
Interest income, net 1,306 1,168 4,751 2,890
------- ------- -------- --------
Income (loss) before income taxes (91,414) 7,532 (71,760) 13,307
Provision (benefit) for income taxes (32,377) 2,501 (25,335) 4,439
------- ------- -------- --------
Net income (loss) $(59,037) $5,031 $(46,425) $8,868
======= ======= ======== ========
Basic earnings (loss) per share $(2.38) $0.21 $(1.87) $0.37
======= ======= ======== ========
Diluted earnings (loss) per share $(2.38) $0.20 $(1.87) $0.37
======= ======= ======== ========
Weighted average number of common
shares outstanding:
Basic 24,792 23,954 24,787 23,768
======= ======= ======== ========
Diluted 24,792 24,574 24,787 24,142
======= ======= ======== ========
As Of
-------------------------
Consolidated Balance Sheet Data: September 30, December 31,
(amounts in thousands) (unaudited) 2007 2006
------------ ------------
Cash and cash equivalents $ 11,253 $ 9,144
Short-term investments 61,100 144,455
Investment in Novogyne 24,664 23,296
Total assets 288,005 281,365
Deferred license revenues 101,885 89,272
Stockholders' equity 130,971 176,675
Noven Pharmaceuticals, Inc.
Reconciliation of Non-GAAP Measures to GAAP
Statements of
Operations
Data:
(amounts in
thousands, Three Months Ended Nine Months Ended
except per September 30, 2007 September 30, 2007
share amounts)
(unaudited)
-------------------------- --------------------------
Non- Adjust- Non- Adjust-
GAAP(1) ments GAAP(2) GAAP(1) ments GAAP(2)
-------------------------- --------------------------
Net revenues $22,641 $(826) $21,815 $60,795 $(826) $59,969
Expenses:
Cost of
products sold 9,499 312 9,811 27,740 312 28,052
Acquired in-process research and development –– 100,150 100,150 –– 100,150 100,150 Research and
development 3,649 3,649 10,300 10,300
Selling,
general and
admin-
istrative 9,753 2,120 11,873 20,883 2,120 23,003
-------------------------- --------------------------
Total expenses 22,901 102,582 125,483 58,923 102,582 161,505
-------------------------- --------------------------
Income (loss) from
operations (260) (103,408)(103,668) 1,872 (103,408)(101,536)
Equity in
earnings of
Novogyne 10,948 10,948 25,025 25,025
Interest income,
net 1,306 1,306 4,751 4,751
-------------------------- --------------------------
Income (loss) before
income taxes 11,994 (103,408) (91,414) 31,648 (103,408)(71,760)
Provision (benefit) for
income taxes 4,396 (36,773) (32,377) 11,438 (36,773) (25,335)
-------------------------- --------------------------
Net income (loss) $7,598 $(66,635) $(59,037) $20,210 $(66,635) $(46,425)
========================== ==========================
Basic earnings
(loss) per share $0.31 $(2.69) $(2.38) $0.82 $(2.69) $(1.87)
========================== ==========================
Diluted earnings
(loss) per share $0.30 $(2.68) $(2.38) $0.80 $(2.67) $(1.87)
========================== ==========================
Weighted average
number of
common shares
outstanding:
Basic 24,792 24,792 24,787 24,787
========================== ==========================
Diluted(3) 25,028 (236) 24,792 25,263 (476) 24,787
========================== ==========================
(1) Non-GAAP amounts for the three and nine months ended September 30, 2007 exclude IPR&D of $100.2 million which was immediately expensed following the completion of the acquisition of JDS as well as amounts associated with the voluntary market withdrawal of a portion of DaytranaTM product by Shire.
(2) Reflects operating results in accordance with accounting
principles generally accepted in the United States (GAAP). (3) Diluted weighted average number of shares outstanding for the three and nine months ended September 30, 2007 on a non-GAAP basis have been adjusted to include shares that were excluded from the GAAP calculation since such shares were antidilutive on a GAAP basis.
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Copyright © 2007 Noven Pharmaceuticals, Inc. All rights reserved.