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NOVEN REPORTS THIRD QUARTER EPS OF $0.11 |
BackMiami, FL, November
9, 2004 -- Noven Pharmaceuticals, Inc. (NASDAQ: NOVN) ) today announced
financial results for the quarter and nine months ended September 30,
2004, provided an update on its business, and confirmed prior financial
guidance for full-year 2004.
"Third quarter results at our Novogyne joint venture reflect our continued
leadership position in the transdermal hormone therapy ("HT")
market," said Robert C. Strauss, Noven's President, CEO & Chairman. "Our
strategy is to leverage the platform technology underlying our HT success
across diverse therapeutic categories with strong industry partners.
Since mid-year, we advanced that strategy through progress in our collaborations
with Endo Pharmaceuticals, Shire Pharmaceuticals, and Procter & Gamble
Pharmaceuticals, and through business development efforts that we hope
will further diversify our prospects and help sustain long-term growth."
Third Quarter Results
Noven's net revenues for the quarter ended September 30, 2004 (the "current
quarter") were $10.1 million, an 11% increase over the $9.1 million
reported in the quarter ended September 30, 2003 (the "2003 quarter").
Net revenues for the 2003 quarter reflected the establishment of
a $0.9 million allowance for recall-related returns. Research and
development
expenses for the current quarter increased 43% to $2.7 million. Noven
recognized $6.2 million in earnings from Novogyne Pharmaceuticals,
Noven's women's health products company owned jointly with Novartis
Pharmaceuticals Corporation, 38% higher than the $4.5 million recognized
in the 2003 quarter. Noven reported net income of $2.6 million ($0.11
diluted earnings per share), a 31% increase over the $2.0 million
($0.09 diluted earnings per share) reported in the 2003 quarter.
Current quarter net revenues at Novogyne increased 15% to $27.5 million.
Noven believes that the increase in Novogyne's current quarter net
revenues was primarily due to the timing of orders from trade customers
and increased product pricing. Novogyne's net income was $12.7 million,
29% higher than the $9.8 million reported in the 2003 quarter. Novogyne's
results for the current quarter and the 2003 quarter reflected sales
return allowances of $3.7 million and $4.6 million, respectively.
Nine-Month Results
Noven's net revenues for the nine-months ended September 30, 2004
(the "current
period") increased 6% to $33.2 million compared to the $31.4 million
reported in the nine-months ended September 30, 2003 (the "2003
period"). A significant portion of that increase related to
the establishment and adjustment of recall related allowances. Research
and development expenses increased 18% to $7.7 million. Noven recognized
$15.1 million in earnings from Novogyne, a 53% increase over the
$9.8
million recognized in the 2003 period. Noven reported net income
of $8.5 million ($0.35 diluted earnings per share), a 53% increase
over
the $5.5 million ($0.24 diluted earnings per share) reported in the
2003 period.
Novogyne's current period net revenues increased 15% to $81.1 million.
Noven believes that the increase in Novogyne's current period net
revenues was primarily due to increased product pricing as well as
the timing
of orders from trade customers. Novogyne's net income was $37.1 million,
a 35% increase over the $27.4 million reported in the 2003 period.
Novogyne's results for the current period and the 2003 period reflected
sales return allowances of $4.0 million and of $5.3 million, respectively.
Cash
At September 30, 2004, Noven had $100.3 million in cash and cash
equivalents compared to $83.4 million at December 31, 2003. This
increase primarily
reflects $12.3 million in distributions from Novogyne, $8.0 million
received upon closing of the Endo transaction, and $5.6 million received
in connection with the exercise of Noven stock options, partially
offset by $6.7 million of direct expenses incurred in pursuit of
Noven's methylphenidate
patch for ADHD.
Financial Guidance
Noven continues to expect its fully diluted earnings per share for
2004 to be in the $0.40 to $0.45 range, its 2004 net revenues to
approximate 2003 results, and its research and development spending
to increase
compared to 2003. Novogyne's 2004 net revenues and net income are
expected to approximate 2003 results. This guidance is based on Noven's
current
assumptions and expectations regarding Noven and Novogyne's business
and operations for the remainder of 2004. Actual financial results
could differ materially if these assumptions or expectations prove
to be incorrect.
Noven's stability testing program recently identified a stability
failure caused by moisture-related crystals in one lot of CombiPatch.
Noven
estimates that very little product from this lot remains in the trade
channel, and believes the cost of the recall of this lot will not
be material to its business. Noven is testing to determine whether
other
lots of CombiPatch are affected. If additional CombiPatch recalls
are required, Noven's 2004 financial results would be adversely affected.
HT Prescription Overview
"Although the Women's Health Initiative ("WHI") and other
study results caused the overall hormone therapy market to decline,
our U.S. HT products have significantly outperformed their respective
market segments in the post-WHI market," said Strauss.
Primarily due to the continuing impact of the WHI studies, total
prescriptions in the overall U.S. HT market declined 13% in the current
quarter compared
to the 2003 quarter. For the same period, aggregate total prescriptions
for Novogyne's products (Vivelle®, Vivelle-Dot and CombiPatch® combined)
decreased just 2%. Vivelle-Dot, which represents approximately 80%
of total prescriptions for Noven's U.S. products, increased 8% for
the same period, while the estrogen segment of the U.S. HT market
decreased 13%. For the same period, total prescriptions for the Vivelle
product
family (Vivelle-Dot and Vivelle combined) increased 0.5%.
Noven's Vivelle-Dot patch remains the most dispensed transdermal
estrogen therapy product in the U.S. and the second most dispensed
estrogen
therapy product of any kind in the U.S., behind only Wyeth's oral
Premarin® product.
Development Collaborations
Endo Pharmaceuticals. "Our developmental fentanyl patch, licensed
to Endo Pharmaceuticals, is our nearest-term potential growth driver," said
Strauss. "Our patch is intended to be the generic equivalent of
Johnson & Johnson's Duragesic® patch, and our Abbreviated
New Drug Application is under review at the FDA. Based on the current
patent
and exclusivity status of the Duragesic product, the earliest our
patch could be launched is January 24, 2005, assuming FDA approval
is received
by that time. We continue to prepare our facilities for a possible
launch and, although pre-approval manufacturing is not without risk,
in October we commenced manufacturing the product. While we cannot
predict the timing of an approval, if the product is approved and
commercialized in the January 2005 timeframe, we would expect Noven's
revenues and
net income in 2005 to increase significantly over 2004 levels."
Shire Pharmaceuticals. "Noven and Shire Pharmaceuticals Group
plc continue to work together to advance development of our methylphenidate
patch for ADHD," said Strauss. "During the third quarter,
Shire commenced additional clinical studies on the product. If these
studies prove successful, we would expect to file an amendment to
the pending New Drug Application, which should receive a six-month
review
by the FDA. Earlier this year, we expanded our collaboration with
Shire to include the development of a transdermal amphetamine patch
for ADHD,
which could potentially address another important segment of the
stimulant market for ADHD therapy."
Procter & Gamble Pharmaceuticals. "We continue to work on
new prescription patch therapies for Hypoactive Sexual Desire Disorder
("HSDD") as part of our collaboration with Procter & Gamble
Pharmaceuticals ("P&GP")," said Strauss. "The
products under development explore follow-on product opportunities
for P&GP's in-licensed investigational Intrinsa™ testosterone
patch designed to help restore desire in menopausal women with HSDD.
The first product under our collaboration is in human studies. If successfully
developed and approved, this product could introduce the benefits of
our DOT Matrix® technology to what may be a significant commercial
market."
Analyst Conference Call
A conference call with management relating to Noven's financial results
will be broadcast live via the Internet at http://www.noven.com beginning
at 11:00 a.m. Eastern time this morning, November 9. Shortly 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 9 at 12:00 Noon Eastern time until November 11 by calling
877-660-6853 (from within the U.S.) or 201-612-7415 (from outside
the
U.S.) and entering account #1628 and conference ID #119983. The conference
call may 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 approved in over 30 countries, and a range of new patches are
being
developed in collaboration with Novartis Pharma AG, Shire Pharmaceuticals
Group plc, Procter & Gamble Pharmaceuticals, Endo Pharmaceuticals
Inc. and others. Together with Novartis Pharmaceuticals Corporation,
Noven owns Novogyne Pharmaceuticals, a profitable women's health products
company with 2003 sales of over $100 million. Among other products,
Novogyne markets and sells Noven's Vivelle-Dot® product
– the smallest estrogen patch in the world, and the most dispensed
transdermal
estrogen product in the U.S. Noven is committed to expanding the
universe of available transdermal therapies for the benefit of patients,
partners
and shareholders. See http://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," "expect," "could," "intend," 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, including
as a result
of the 2004 launches of estrogen cream and gel products, each of
which is a new dosage form in this category; 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 Novartis
Pharma; uncertainties regarding any future regulatory developments
resulting from those studies; the risk that Novogyne may not be able
to realize the full value of the marketing rights for Noven's CombiPatch
product; the European HT market may be limited due to pricing pressures
and delayed Estradot launches in certain countries due to labeling
issues; and the risk of losses from product liability claims resulting
from the use of HT products such as the lawsuits presently pending
against Noven and 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 relating to actions that may be
taken against Noven by the FDA or other regulators, whether relating
to manufacturing
processes, suppliers, commercialized products, products in development
or otherwise, and any related costs; uncertainties related to the
FDA's discretion to approve or not approve a product; 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; and uncertainties related to our ability
to comply with Drug Enforcement Administration regulations related
to
our purchase, storage and usage of controlled substances in products
we may manufacture, including Noven's developmental MethyPatch and
fentanyl patch products; Production Matters - risks
related to Noven's reliance on suppliers for the availability and
quality of raw materials
used in Noven's products; risks related to Noven's reliance on a
single supplier for certain raw materials and compounds used in Noven's
products;
uncertainties regarding the timing and magnitude of any product recalls,
including those which may be related to the CombiPatch stability
issue discussed in this press release; the impact of the recalls
or related
issues on Novartis' or other partners' strategy for the commercialization
of Noven's products; the possibility that Noven's estimates of the
impact of future returns and charges may prove inaccurate, incomplete
or otherwise incorrect; the impact of detected or undetected product
stability failures or other product defects on Noven's ability to
estimate Noven's reserves for sales returns and other associated
accounting
consequences; 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 partnered development programs; uncertainties regarding Noven's
ability to attract additional development partners; the possibility
that Noven's technologies may not be approvable or suitable for use
in additional therapeutic categories, including those categories
addressed through products developed with Noven's development partners;
the possibility
that Noven may be unsuccessful in achieving milestone objectives
under Noven's development programs and may not receive any further
payments;
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 our 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 Novogyne's financial, accounting, inventory,
distribution,
revenues and sales deductions functions (including any asset impairment
decisions for Novogyne), including the risk that Novartis may perform
these functions differently than Noven would have, inadequately or
incorrectly; risks and uncertainties related to the fact that Vivelle-Dot
comprises a substantial majority of Novogyne's aggregate total prescriptions;
and the possibility that Noven's financial results could fluctuate
from period to period or otherwise be affected by Novartis' monitoring
of trade inventory levels for Novogyne and its decisions related
thereto; MethyPatch® -
the risk that the FDA may determine that Noven's protocols and/or
clinical strategies do not address the FDA's
concerns
regarding
the approval of the MethyPatch product NDA; the risk that planned
additional MethyPatch product studies may not be commenced or completed
in a timely
manner due to an inability to enroll a sufficient number of subjects
for the additional studies or otherwise, which could delay the filing
of an amendment to the MethyPatch product NDA; the possibility that
planned additional studies of MethyPatch will not produce results
that support approval or that, even if the additional studies are
completed
and are successful, MethyPatch may not ultimately be approved or
commercialized; the timing of the FDA's review of any amended NDA
for MethyPatch as
well as any product approval, which are beyond Noven's control and
which may impact the success of product launch and market penetration;
Shire's control over the management of the planned additional MethyPatch
product clinical trials, including the risk that Shire may elect
to manage such studies differently than Noven might have, incorrectly
or inadequately; the possibility that the additional studies may
be
more extensive, lengthier or more costly than anticipated and may
exceed the total amount of license revenues available to offset such
costs
and expenses; any exercise of Shire's right to terminate the agreement
following its review of the results of the additional studies, including
the risk that, in such event, Noven's right to receive a $50 million
approval milestone would terminate, and that we may be unable or
unwilling to proceed with the project or may be unable to license
MethyPatch
to a third party or to a party with the resources of Shire on commercially
reasonable terms; the possibility that Noven's method of accounting
for the $25 million received from Shire could change under certain
circumstances, including if the parties' MethyPatch product strategy
changes or if Noven's MethyPatch product development is discontinued;
and the likelihood that Noven's development strategy would change
if Shire were to terminate the agreement under certain circumstances,
or if Noven's MethyPatch product were not ultimately approved or
were
abandoned; Fentanyl Patch - the risks and uncertainties
associated with the FDA's review of Noven's fentanyl ANDA; the risk
and uncertainties
associated with citizen petitions, including the citizen petitions
that have been filed with respect to generic fentanyl patches; 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 for any reason, including delay
in obtaining FDA approval; patent or other strategies by third parties
could delay or prevent the launch of Noven's fentanyl patch or other
products; the possibility that Noven may be unable to recover significant
costs to manufacture fentanyl patches prior to product launch if
FDA
approval is not obtained on a timely basis or at all; 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, including physician/patient preferences for other
therapies; and risks and uncertainties related to the fact that,
during 2004, companies offering generic drug products have experienced
significant
product pricing pressure, often earlier than expected in the product's
life cycle, which has negatively affected the profitability of certain
of their generic products; Financial Guidance -
the inherent uncertainties associated with financial projections;
the possibility that one or
more assumptions underlying Noven's financial guidance proves to
be incorrect, including the assumption that, during the remainder
of 2004,
there will be no additional recalls of CombiPatch beyond the one
lot discussed in this press release, there will not be any unforeseen
material
transactions, changes in Noven's or Novogyne's accounting or accounting
principles, developments regarding regulatory matters or clinical
studies, changes in the supply of, demand for, or distribution of
our HT products
(including any changes resulting from the impact of competitive HT
products that have been launched in 2004); changes in our business
relationships/collaborations; or changes in the economy or the health
care sector generally; Other Matters - expected
fluctuations in quarterly revenues and research and development expenses;
and uncertainties
regarding Noven's beliefs regarding the timing of trade customer
orders. In addition
to the risks and factors identified above, reference is also made
to the other risks and factors detailed in reports filed by Noven
with
the Securities and Exchange Commission. Noven cautions that the foregoing
list of factors is not exhaustive.
Noven Pharmaceuticals, Inc.
Statements of Operations Data: Three Months Ended Nine Months Ended
(amounts in thousands, except September 30, September 30,
per share amounts) (unaudited) -------------------- -----------------
2004 2003 2004 2003
---------- --------- -------- --------
Revenues:
Product revenues - Novogyne:
Product sales $4,364 $2,756 $15,058 $11,772
Royalties 1,411 1,182 3,909 3,381
---------- --------- -------- --------
Total product revenues -
Novogyne 5,775 3,938 18,967 15,153
Product revenues - third
parties 3,287 4,045 9,828 12,788
---------- --------- -------- --------
Total product revenues 9,062 7,983 28,795 27,941
License and contract revenues 1,039 1,113 4,391 3,441
---------- --------- -------- --------
Net revenues 10,101 9,096 33,186 31,382
Expenses:
Cost of products sold 4,984 3,936 15,477 14,261
Research and development 2,741 1,916 7,730 6,563
Marketing, general and
administrative 4,358 4,791 12,024 12,265
---------- --------- -------- --------
Total expenses 12,083 10,643 35,231 33,089
---------- --------- -------- --------
Loss from operations (1,982) (1,547) (2,045) (1,707)
Equity in earnings of Novogyne 6,232 4,529 15,097 9,849
Interest income, net 279 159 619 505
---------- --------- -------- --------
Income before income taxes 4,529 3,141 13,671 8,647
Provision for income taxes 1,895 1,130 5,201 3,113
---------- --------- -------- --------
Net income $2,634 $2,011 $8,470 $5,534
========== ========= ======== ========
Basic earnings per share $0.11 $0.09 $0.36 $0.25
========== ========= ======== ========
Diluted earnings per share $0.11 $0.09 $0.35 $0.24
========== ========= ======== ========
Weighted average number of
common shares outstanding:
Basic 23,416 22,506 23,290 22,526
========== ========= ======== ========
Diluted 24,361 22,949 24,344 22,935
========== ========= ======== ======== As Of
--------------------
Balance Sheet Data: Sept. 30, Dec. 31,
(unaudited) 2004 2003
---------- ---------
Cash and cash equivalents $100,347 $83,381
Investment in Novogyne $29,510 $28,368
Total assets $191,848 $170,984
Deferred license revenues $46,800 $50,005
Stockholders' equity $125,882 $108,823
Contact:
Investor & Media Contact
Joseph C. Jones
Vice President – Corporate Affairs
Noven Pharmaceuticals, Inc.
(305) 253-1916
Copyright © 2004 Noven Pharmaceuticals, Inc. All rights reserved.