<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange
- ------ Act of 1934
For the quarterly period ended JUNE 30, 1997
-------------
or
____ Transition Report Pursuant to Section 13 of the Securities Exchange Act of
1934
For the transition period from ____________ to_____________
Commission file number 0-17254
-------
NOVEN PHARMACEUTICALS, INC.
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
STATE OF DELAWARE 59-2767632
------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
11960 S.W. 144TH STREET, MIAMI, FL 33186
- ---------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (305) 253-5099
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No .
----- -----
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the last practicable date.
CLASS OUTSTANDING AT JULY 24, 1997
----- ------------------------------
Common stock $.0001 par value 20,461,284
Page 1 of 14
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NOVEN PHARMACEUTICALS, INC.
---------------------------
INDEX TO FORM 10-Q
PART I - FINANCIAL INFORMATION PAGE NO.
- ------ --------------------- --------
Item 1 - Financial Statements
Statements of Operations and Accumulated Deficit
for the three months ended June 30, 1997 and 1996 3
Statements of Operations and Accumulated Deficit
for the six months ended June 30, 1997 and 1996 4
Balance Sheets as of June 30, 1997 and
December 31, 1996 5
Statements of Cash Flows for the six months ended
June 30, 1997 and 1996 6
Notes to Financial Statements 7 - 8
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 9 - 12
PART II - OTHER INFORMATION
Item 4 - Submission of Matters to a Vote of Security Holders 12 - 13
Item 6 - Exhibits and Reports on Form 8-K 13
SIGNATURES 14
- ----------
Page 2
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PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
NOVEN PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
THREE MONTHS ENDED
-----------------------------
JUNE 30, JUNE 30,
1997 1996
------------ -------------
REVENUES:
Product sales $ 3,918,709 $ 5,151,015
License revenue 56,499 256,499
Interest income 188,501 305,459
Other income -- 36,250
------------ ------------
Total revenues 4,163,709 5,749,223
------------ ------------
EXPENSES:
Cost of products sold 1,581,560 2,696,535
Research and development 2,342,280 1,949,683
Marketing, general and administrative 2,269,003 920,640
------------ ------------
Total expenses 6,192,843 5,566,858
------------ ------------
NET (LOSS) INCOME FOR THE PERIOD (2,029,134) 182,365
ACCUMULATED DEFICIT BEGINNING OF PERIOD (26,806,924) (22,683,286)
------------ ------------
ACCUMULATED DEFICIT END OF PERIOD $(28,836,058) $(22,500,921)
============ ============
NET (LOSS) INCOME PER SHARE $ (0.10) $ 0.01
============ ============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS 19,958,166 21,668,979
============ ============
The accompanying notes are an integral part of this statement.
Page 3
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NOVEN PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
SIX MONTHS ENDED
----------------------------------
JUNE 30, JUNE 30,
1997 1996
----------------- -------------
REVENUES:
Product sales $ 5,265,230 $ 10,323,006
License revenue 137,998 362,998
Interest income 410,435 581,494
Other income 31,325 36,250
------------- -------------
Total revenues 5,844,988 11,303,748
------------- -------------
EXPENSES:
Cost of products sold 2,174,816 5,588,378
Research and development 4,481,840 4,359,287
Marketing, general and administrative 3,977,075 1,793,642
------------- -------------
Total expenses 10,633,731 11,741,307
------------- -------------
NET LOSS FOR THE PERIOD (4,788,743) (437,559)
ACCUMULATED DEFICIT BEGINNING OF PERIOD (24,047,315) (22,063,362)
------------- -------------
ACCUMULATED DEFICIT END OF PERIOD $ (28,836,058) $ (22,500,921)
============= =============
NET LOSS PER SHARE $ ( 0.24) $ ( 0.02)
============= =============
WEIGHTED AVERAGE SHARES OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS 19,921,007 19,772,937
============= =============
The accompanying notes are an integral part of this statement.
Page 4
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NOVEN PHARMACEUTICALS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1997 1996
------------ --------------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 10,673,278 $ 5,456,826
Securities held to maturity 4,873,358 13,692,010
Accounts receivable 2,361,421 3,366,489
Inventories 4,170,101 4,151,020
Prepaid and other current assets 272,777 248,357
------------ -------------
Total current assets 22,350,935 26,914,702
------------ -------------
PROPERTY AND EQUIPMENT, at cost,
net of accumulated depreciation and amortization of
$3,346,383 at June 30, 1997 and $2,873,401 at
December 31, 1996 15,574,930 15,701,474
------------ -------------
OTHER ASSETS:
Patent development costs, net 1,578,240 1,547,434
Deposits and other assets 64,069 65,128
------------ -------------
Total other assets 1,642,309 1,612,562
------------ -------------
TOTAL $ 39,568,174 $ 44,228,738
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued liabilities $ 2,293,107 $ 2,055,780
------------ -------------
DEFERRED LICENSE REVENUE 5,983,017 6,096,015
------------ -------------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY:
Preferred stock - authorized 100,000 shares of $.01 par value;
no shares issued or outstanding
Common stock - authorized 40,000,000 shares, par value
$.0001 per share; issued and outstanding - 19,961,284
shares at June 30, 1997 and 19,831,538 shares at
December 31, 1996 1,996 1,983
Additional paid-in capital 60,126,112 60,122,275
Accumulated deficit (28,836,058) (24,047,315)
------------ -------------
Total stockholders' equity 31,292,050 36,076,943
------------ -------------
TOTAL $ 39,568,174 $ 44,228,738
============ =============
</TABLE>
The accompanying notes are an integral part of this statement.
Page 5
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NOVEN PHARMACEUTICALS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
--------------------------------
JUNE 30, JUNE 30,
1997 1996
-------------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,788,743) $ (437,559)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 553,012 532,094
Decrease in accounts receivable 1,005,068 2,263,920
Increase in inventories (19,081) (228,862)
(Increase) decrease in prepaid and other current assets (24,420) 110,471
Increase (decrease) in accounts payable and accrued
liabilities 237,327 (1,176,021)
Decrease in deferred license revenue (112,998) (112,998)
------------- ------------
Cash flows provided by (used in) operating activities (3,149,835) 951,045
------------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Maturity (purchase) of securities, net 8,818,652 (6,522,564)
Purchase of fixed assets, net (346,438) (638,531)
Payments for patent development costs (110,836) (175,451)
Refund of deposits 1,059 600
------------- ------------
Cash flows provided by (used in) investing
activities 8,362,437 (7,335,946)
------------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 3,850 16,885
------------- ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,216,452 (6,368,016)
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 5,456,826 16,131,263
------------- ------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 10,673,278 $ 9,763,247
============= ============
</TABLE>
The accompanying notes are an integral part of this statement.
Page 6
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NOTES TO FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The financial statements of Noven Pharmaceuticals, Inc. (the "Company"),
included herein, do not include all footnote disclosures normally
included in annual financial statements and, therefore, should be read in
conjunction with the Company's financial statements and notes thereto for
each of the three years in the period ended December 31, 1996 included in
the Company's annual report on Form 10-K.
The interim financial statements for the three months and six months
ended June 30, 1997 are unaudited and, in the opinion of management,
reflect all adjustments (consisting only of normal recurring accruals)
necessary for fair presentation of the balance sheets, statements of
operations and cash flows of the Company. The statements of operations
for the three months and six months ended June 30, 1997 are not
necessarily indicative of the results to be expected for the year ending
December 31, 1997.
2. SUMMARY OF ACCOUNTING POLICIES
The following is a summary of the significant accounting policies
consistently applied in the preparation of the Company's financial
statements:
"INVENTORIES"
Inventories are stated at the lower of cost (first-in, first-out method)
or net realizable value. Inventories at June 30, 1997 related primarily
to the Company's transdermal estrogen delivery system. To date the
Company has not experienced and does not anticipate in the future, any
difficulty acquiring materials necessary to manufacture its transdermal
systems. The following are the major classes of inventory:
June 30, December 31,
1997 1996
---- ----
Finished goods $ 1,978,987 $ 1,399,858
Work in process 370,658 491,014
Raw materials 1,820,456 2,260,148
------------ -------------
Total $ 4,170,101 $ 4,151,020
============ =============
"PROPERTY AND EQUIPMENT"
Property and equipment is recorded at cost. Depreciation is provided over
the estimated useful lives of the assets. Leasehold improvements are
amortized over the life of the lease or the service life of the
improvements, whichever is shorter. The straight-line method of
depreciation is primarily followed for financial purposes.
Page 7
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NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
"PATENT DEVELOPMENT COSTS"
Costs, principally legal fees related to the development of patents, are
capitalized and amortized over the lesser of their estimated economic
useful lives or their remaining legal lives.
"EARNINGS AND LOSS PER SHARE"
Earnings per share is based on the weighted average number of shares
including common stock and common stock equivalent shares. Common stock
equivalent shares include outstanding warrants and options (using the
Treasury Stock Method). The loss per share is based only on the weighted
average number of shares outstanding.
"NEW ACCOUNTING STANDARDS"
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standard (SFAS) No. 128, "Earnings per
Share." The statement is effective for financial statements for periods
ending after December 15, 1997, and changes the method in which earnings
per share will be determined. Adoption of this statement by the Company
will not have a material impact on earnings per share.
3. STOCKHOLDERS' EQUITY
A schedule of the transactions in the common stock and the additional
paid in capital accounts is as follows:
<TABLE>
<CAPTION>
Common Stock Additional
------------------------ Paid-in
Shares Amount Capital
---------- -------- ------------
<S> <C> <C> <C>
Balance, January 1, 1997 19,831,538 $ 1,983 $ 60,122,275
Issuance of 129,746 shares of
stock pursuant to stock option plan, net 129,746 13 3,837
------- -- -----
Balance, June 30, 1997 19,961,284 $ 1,996 $ 60,126,112
============ ======= ============
</TABLE>
On June 26, 1997 Noven extended RPR's warrant to purchase its common
stock in consideration for RPR's agreement to purchase 500,000 shares of
common stock under the warrant. On July 1, 1997 RPR remitted $4 million
to purchase 500,000 shares at $8 per share. Noven extended RPR's warrant
for the remaining 500,000 shares for a period of 18 months.
Page 8
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ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
-------
From inception (1987) through 1994, the Company primarily engaged in the
research and development of transdermal drug delivery systems. During
this period, the Company's revenues were principally generated by license
fees, milestone payments pursuant to various license agreements and
interest earned on funds raised through the sale of its common stock. In
1995, due to the receipt of regulatory approvals for its transdermal
estrogen delivery system, a significant portion of the Company's revenues
were derived from the sale of this product to the Company's two licensing
partners, Rhone-Poulenc Rorer Pharmaceuticals, Inc. ("RPR") and Novartis
Pharmaceuticals Corporation ("Novartis"). In 1996, revenues from the sale
of these products increased substantially as the Company's licensing
partners, initiated marketing and distribution. Noven expects that
revenues from product sales to its licensing partners will fluctuate from
quarter to quarter and year to year depending upon various factors not in
Noven's control, including, but not limited to, the inventory
requirements of each licensing partner at different times throughout the
year, possible special selling efforts undertaken by each licensing
partner at different times during the year, and, in the case of RPR the
introduction of the product into new territories.
Noven experienced fluctuations in sales of its transdermal estrogen
delivery systems, Vivelle(TM) and MENOREST, to its licensing partners
from the first three quarters to the last quarter of 1996 and the first
half of 1997, when sales to these licensing partners declined. Although
in-market sales of Noven's estrogen delivery system continue to increase
on a global basis, inventory balancing by the Company's licensing
partners resulted in significantly lower levels of reorders during the
first half of 1997, causing losses. Noven believes this circumstance has
been corrected and expects that product sales to its licensing partners
will increase in the second half of 1997.
Noven also expects to generate revenues in the second half of 1997 from
licensing agreements with respect to products under development, although
such revenues will fluctuate from period to period depending upon such
factors as the number of new agreements finalized, timely achievement of
milestones and strategic decisions affecting self-funding of products.
Finally, during calendar year 1996, the Company commenced the marketing
of its DentiPatch(TM) system on a regional basis. The product was
launched nationally early in the second quarter of 1997 and increasing
revenues are anticipated during the remainder of the year.
RESULTS OF OPERATIONS
---------------------
Total revenues decreased approximately $1,586,000 or 28% for the three
month period ended June 30, 1997 from the same period in the prior year
and decreased approximately $5,459,000 or 48% for the comparable six
month period. This decrease in revenues was primarily the result of the
decrease of approximately $5,058,000 in sales of the Company's
transdermal estrogen delivery system to its two licensing partners during
the first half of 1997. Royalties from transdermal estrogen delivery
system are included in product sales. Licensing income decreased
approximately $200,000 or 78% for
Page 9
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
the three month period ended June 30, 1997 from the same period in the
prior year and decreased approximately $225,000 or 62% for the comparable
six month period. Interest income decreased approximately $117,000 or 38%
for the three month period ended June 30, 1997 from the same period in
the prior year and decreased approximately $171,000 or 29% for the
comparable six month period, primarily due to lower balances in
securities.
Cost of product sold decreased approximately $1,115,000 or 41% for the
three month period ended June 30, 1997 from the same period in the prior
year and approximately $3,414,000 or 61% from the comparable six month
period. The gross margin percentage was 60% for the three month period of
1997 as compared to 48% for the same period of the prior year and 59% for
the first half of 1997 as compared to 46% in 1996. The gross margins vary
depending on the amount of product sold to each licensing partner and
manufacturing efficiencies including those relating to production volumes
and in the first half of 1997 were favorably impacted by the sale of the
DentiPatch product.
Research and development increased approximately $393,000 or 20% for the
three month period ended June 30, 1997 from the same period in the prior
year and increased approximately $123,000 or 3% from the comparable six
month period. In 1997 research and development expenses for new product
development continued at approximately the same rate as in 1996. New
product development included work related to transoral delivery systems
in the areas of dental therapeutics, glucose metabolism, hormone
deficiency and cardiovascular disease, in addition to transdermal
delivery systems for NSAIDs and other widely sold drugs. Marketing,
general and administrative expenses increased approximately $1,348,000 or
146% for the three month period ended June 30, 1997 from the same period
in the prior year and approximately $2,183,000 or 122% for the comparable
six month period. The increase in marketing, general and administrative
expenses was primarily due to marketing expenses to support the launch of
the DentiPatch system, increases in staffing and associated office
expenses.
LIQUIDITY AND CAPITAL RESOURCES
The Company has historically financed its operations through public
offerings of common stock, including the exercise of warrants issued in
connection with the first such offerings, private placements of its
equity securities, license and contract revenues, and interest income.
However, since the launch of its first commercial product in 1995, the
Company's operations have been principally financed increasingly by
revenues from the sale of its transdermal estrogen delivery system to its
licensing partners. The Company has neither utilized debt nor has it
engaged in significant commercial lease transactions to finance its
operations.
Net cash used in operating activities for the six months ended June 30,
1997 was approximately $3,150,000. In 1997 this funded the net loss of
approximately $4,789,000 partially offset by a decrease in accounts
receivable of approximately $1,005,000 and an increase in accounts
payable of approximately $237,000. In 1996, operating activities provided
approximately $951,000. In 1996 the decrease in accounts receivable of
approximately $2,300,000 funded the net loss of approximately $438,000,
the decrease in accounts payable of approximately $1,176,000 and the
increase in inventory of approximately $228,000.
Page 10
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED )
During the six months ended June 30, 1997 the Company's investing
activities provided approximately $8,400,000 compared to approximately
$7,300,000 used in the six months ended June 30, 1996. Net cash provided
during 1997 in investing activities resulted primarily from the sale of
securities held to maturity to finance operating activities partially
offset by capital expenditures for commercial manufacturing equipment,
improvements at the new manufacturing site and investments in patents.
Net cash used in 1996, resulted primarily from the purchase of securities
held to maturity, partially offset by capital expenditures for
manufacturing equipment, improvements at the new manufacturing site and
investments in patents. As of June 30, 1997 the Company had commitments
for capital expenditures of approximately $16,000.
Net cash provided by financing activities of approximately $4,000 and
$17,000 for six months ended June 30, 1997 and 1996 respectively,
resulted from the exercise of options in the employee stock option plan.
The Company expects to incur additional costs related to product
development activities, increased marketing, general and administrative
expenses and the completion of its manufacturing facilities. Although the
Company believes that existing cash, anticipated contract and
manufacturing revenues will be adequate for the foreseeable future,
circumstances could arise which may result in a desire to raise
additional capital. There can be no assurance that such capital will be
available on acceptable terms, or at all.
FORWARD LOOKING STATEMENTS
--------------------------
From time to time, Noven may publish forward looking statements relating
to such matters as anticipated financial performance, business
prospects, technological developments, new products, usage and
development activities and some other matters. The words "may", "will",
"expect", "anticipate", "continue", "estimate", "project", "intend" and
similar expressions are intended to identify such forward looking
statements. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward looking statements. In order to
comply with the terms of the safe harbor, Noven notes that a variety of
factors could cause its actual results and experience to differ
materially from anticipated results and other expectations expressed by
Noven's forward looking statements. The risks and uncertainties that may
effect the operations, performance, development and results of Noven's
business, include the following:
1. Dependence upon RPR and Novartis, its two licensing
partners, with respect to (i) the commercialization and marketing of
certain transdermal hormonal products and (ii) obtaining regulatory
approval of certain other transdermal hormonal products.
2. Uncertainties regarding (i) the market share for
Noven's transdermal hormonal products which can be captured by Noven's
licensing partners, and (ii) the market for DentiPatch(TM) product and
Noven's ability to successfully establish and effectuate a marketing
program.
3. Unanticipated difficulties associated with the
manufacturing process of Menorest and Vivelle(TM) for its licensing
partners as well as its DentiPatch(TM) product, that could result in
delays in delivery and shortages of product.
Page 11
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
4. Competition from other entities engaged in
transdermal and/or transoral research, development, manufacturing and
marketing, as well as other entities engaged in alternative drug
delivery technologies.
5. Difficulties associated with (i) identifying
appropriate licensing partners capable of meeting the financial
requirements of research and development and/or marketing new products,
and (ii) consummating satisfactory licensing agreements.
6. The time required to obtain regulatory approval of
products and its associated expenses.
7. The possible exposure to product liability suits in
excess of insurance policy limits or excluded from insurance coverage.
Readers are cautioned not to place undue reliance on forward looking
statements when made, which speak only as of the date made. Noven
undertakes no obligation to publicly release the results of any revision
of these forward looking statements to reflect events or circumstances
after the date they are made or to reflect the occurrence of
unanticipated events. Also, unless expressly stated, Noven does not
adopt projections, forecasts or other forward looking statements which
may be disseminated from time to time by analysts and others.
PART II - OTHER INFORMATION
---------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Annual Meeting of Stockholders held on June 3, 1997.
(i) Election of Directors
<TABLE>
<CAPTION>
FOR AGAINST ABSTAIN
--- ------- -------
<S> <C> <C> <C> <C>
Steven Sablotsky 16,287,428 399,652 0
Mitchell Goldberg 16,310,828 376,252 0
Sheldon H. Becher 15,548,328 1,138,752 0
Sidney Braginsky 16,310,828 376,252 0
Lawrence J. DuBow 16,310,828 376,252 0
</TABLE>
(ii) The ratification and approval of an
amendment to the Certificate of Incorporation increasing the authorized
shares of common stock ($.0001 par value) from 30,000,000 to 40,000,000
was approved by an affirmative vote of 16,069,470 shares to a negative
vote of 493,787 shares, with 123,823 shares abstaining.
Page 12
<PAGE> 13
PART II - OTHER INFORMATION
(CONTINUED)
(iii) The ratification and approval of the 1997
Stock Option Plan which provides for the grant of incentive stock
options and non-qualified stock options was approved by an affirmative
vote of 13,947,171 shares to a negative vote of 1,621,676 shares, with
144,855 shares abstaining and 973,378 broker non-votes.
(iv) The ratification of the appointment of
Deloitte & Touche LLP as the independent certified public accountants
for 1997 was approved by an affirmative vote of 16,532,771 shares to a
negative vote of 45,997 shares, with 108,312 shares abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
------- --------------------------------
3.7 Certificate of Amendment of Certificate of Incorporation
of Noven Pharmaceuticals, Inc. filed with the Secretary
of State of Delaware on June 13, 1997.
10.29 Amendment dated June 26, 1997 to the warrant to
purchase 1,000,000 shares of common stock dated
June 26, 1992 by and between the Company and
Rhone-Poulenc Rorer Pharmaceuticals, Inc.
27 Financial Data Schedule (for S.E.C. use only).
Page 13
<PAGE> 14
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
NOVEN PHARMACEUTICALS, INC .
(Registrant)
Date: August 12, 1997 By: /s/ Steven Sablotsky
------------------------ ---------------------------------
Steven Sablotsky, Chairman of the
Board and President
By: /s/ William A.Pecora
---------------------------------
William A. Pecora
Chief Financial Officer
Page 14
<PAGE> 1
EXHIBIT 3.7
CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
NOVEN PHARMACEUTICALS, INC.
NOVEN PHARMACEUTICALS, INC., a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware,
DOES HEREBY CERTIFY:
FIRST: That by unanimous consent of the Board of Directors of Noven
Pharmaceuticals, Inc. resolutions were duly adopted setting forth a proposed
amendment to the Certificate of Incorporation of said corporation, declaring
said amendment to be advisable and submitting it to the stockholders entitled to
vote thereto for adoption at a meeting of stockholders. The resolution setting
forth the proposed amendment is as follows:
RESOLVED, that the Certificate of Incorporation of this corporation be
amended by changing the Article thereof numbered "Fourth" so that, as amended,
said Article shall be and read as follows:
The total number of shares of capital stock which the
corporation shall have authority to issue is 40,100,000, of which
40,000,000 shall be common stock of $.0001 par value per share and of
which 100,000 shall be preferred stock of $.01 par value per share.
The Preferred Stock may be issued from time to time in one or
more series. The Board of Directors is expressly authorized, in the
resolution or any resolutions providing for the issue of any wholly
unissued series of Preferred Stock, to fix, state and express the
powers, rights, designations, preferences, qualifications, limitations
and restrictions thereof, including, without limitation: the rate of
dividends upon which and the times at which dividends on shares of such
series shall be payable and the preferences, if any,
<PAGE> 2
which such dividends shall have relative to dividends on shares of any
other class or classes or any other series of stock of this
corporation, whether such dividends shall be cumulative or
non-cumulative, and if cumulative, the date or dates from which
dividends on shares of such series shall be cumulative; the voting
rights, if any, to be provided for shares of such series; the rights,
if any, which the holders of shares of such series shall have in the
event of any voluntary or involuntary liquidation, dissolution or
winding up of the corporation; the rights, if any, which the holders of
shares of such series shall have to convert such shares into or
exchange such shares for shares of Common Stock of this Company and the
terms and conditions, including price and rate of exchange of such
conversion or exchange; the redemption (including sinking fund
provisions), if any, of shares of such series; and such other powers,
rights, designations, preferences, qualifications, limitations and
restrictions as the Board of Directors may desire to so fix. The Board
of Directors is also expressly authorized to fix the number of shares
constituting such series and to increase or decrease the number of
shares of any series prior to the issue of shares of that series and to
decrease, but not increase, the number of shares of any series
subsequent to the issue of shares of that series, but not below, the
number of shares of such series then outstanding. In case the number of
shares of any series shall be so decreased, the shares constituting
such decrease shall resume the status which they had prior to the
adoption of the resolution originally fixing the number of shares of
such series.
SECOND: That thereafter, pursuant to resolution of its Board of
Directors, the amendment was submitted to the stockholders entitled to vote
thereon for adoption at the annual meeting of stockholders with the required
notice in accordance with Section 242 of the General Corporation Law of the
State of Delaware and at which the necessary number of shares as required by
statute were voted in favor of the amendment.
<PAGE> 3
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
IN WITNESS WHEREOF, said Noven Pharmaceuticals, Inc. caused
this certificate to be signed by Steven Sablotsky, its President
and Noreen Sablotsky, its Secretary, this 9th day of June, 1997.
/s/ Steven Sablotsky
---------------------------
STEVEN SABLOTSKY, President
/s/ Noreen Sablotsky
---------------------------
NOREEN SABLOTSKY, Secretary
The foregoing instrument was acknowledged before me this 9th day of
June, 1997 by STEVEN SABLOTSKY and NOREEN SABLOTSKY, President and Secretary,
respectively, of Noven Pharmaceuticals, Inc., a Delaware corporation, who are
personally known to me, and did not take an oath.
Monica A. Holliday /s/ Monica A. Holliday
- ------------------------------- ---------------------------
Typed, Printed or Stamped Notary Public -- State of
Name of Notary Public Florida at large
My Commission expires: August 11, 2000
[SEAL]
<PAGE> 1
Exhibit 10.29
AMENDMENT TO WARRANT TO PURCHASE
1,000,000 SHARES OF COMMON STOCK OF
NOVEN PHARMACEUTICALS, INC. DATED JUNE 26, 1992
AND ISSUED TO RHONE POULENC RORER PHARMACEUTICALS, INC.
WHEREAS, Rhone-Poulenc Rorer Pharmaceuticals, Inc. ("RPR") has certain
rights pursuant to a certain Warrant to purchase 1,000,000 shares of common
stock of Noven Pharmaceuticals, Inc. ("Noven") dated June 26, 1992 (the
"Warrant"); and
WHEREAS, Noven has agreed, at RPR's request, to extend the term of the
Warrant;
NOW THEREFORE, in consideration of $10.00 and other good and valuable
consideration, receipt of which is hereby acknowledged, the parties hereto agree
as follows:
1. The term of the Warrant with respect to 500,000 shares shall be
extended until 3 P.M., July 1, 1997 (the "Exercise Date").
2. Upon receipt of $4,000,000 by Noven with respect to the exercise of
the Warrant for 500,000 shares no later than the Exercise Date, the term of the
Warrant for the remaining 500,000 shares shall be deemed extended for a period
of eighteen months and therefore can be exercised at any time and from time to
time on or before 3:00 P.M. Eastern Day Light Time, December 26, 1998, but not
thereafter.
3. Notwithstanding the provisions of 2 above, the right to exercise the
Warrant will terminate, if not exercised, within ten (10) days from the filing
by RPR of a marketing authorization application for the second generation
Menorest product with the appropriate regulatory agency of any country in the
European Union.
<PAGE> 2
4. Other than the modifications set forth herein, the terms of the
Warrant shall remain the same.
Dated: June 26, 1997 NOVEN PHARMACEUTICALS, INC.
By: /s/ Robin Norris
------------------------
ROBIN NORRIS , M.D., Vice-President
ACCEPTED AND AGREED this ___ day
of June, 1997.
RHONE POULENC RORER
PHARMACEUTICALS, INC.
By: /s/
---------------------------
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