<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, 1998
-------------
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 23, 1998
----- ----------------------------
Common stock $.0001 par value 21,472,423
<PAGE> 2
NOVEN PHARMACEUTICALS, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page No.
- ------ --------------------- --------
Item 1 - Financial Statements
<S> <C> <C>
Statements of Operations and Accumulated Deficit
for the three months ended June 30, 1998 and 1997 3
Statements of Operations and Accumulated Deficit
for the six months ended June 30, 1998 and 1997 4
Balance Sheets as of June 30, 1998 and
December 31, 1997 5
Statements of Cash Flows for the six months ended
June 30, 1998 and 1997 6
Notes to Financial Statements 7 - 9
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
</TABLE>
Page 2
<PAGE> 3
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
NOVEN PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
THREE MONTHS ENDED
-------------------------------------------------------
JUNE 30, JUNE 30,
1998 1997
------------------------- ------------------------
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUES:
Product sales $ 6,338,375 $ 3,918,709
License revenue 56,499 56,499
Interest income 85,839 188,501
------------------------- ------------------------
Total revenues 6,480,713 4,163,709
------------------------- ------------------------
EXPENSES:
Cost of products sold 3,194,713 1,581,560
Research and development 1,981,511 2,200,145
Marketing, general and administrative 2,861,945 2,411,138
------------------------- ------------------------
Total expenses 8,038,169 6,192,843
------------------------- ------------------------
NET LOSS FOR THE PERIOD (1,557,456) (2,029,134)
ACCUMULATED DEFICIT BEGINNING OF PERIOD (36,880,217) (26,806,924)
------------------------- ------------------------
ACCUMULATED DEFICIT END OF PERIOD $ (38,437,673) $ (28,836,058)
========================= ========================
BASIC AND DILUTED LOSS PER SHARE $ (0.08) $ (0.10)
========================= ========================
WEIGHTED AVERAGE SHARES OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS 20,605,185 19,958,166
========================= ========================
</TABLE>
The accompanying notes are an integral part of this statement.
Page 3
<PAGE> 4
NOVEN PHARMACEUTICALS, INC.
STATEMENTS OF OPERATIONS AND ACCUMULATED DEFICIT
<TABLE>
<CAPTION>
SIX MONTHS ENDED
-------------------------------------------------------
JUNE 30, JUNE 30,
1998 1997
------------------------- ------------------------
(Unaudited) (Unaudited)
<S> <C> <C>
REVENUES:
Product sales $ 8,826,947 $ 5,265,230
License revenue 115,498 137,998
Interest income 275,990 410,435
Other income -- 31,325
------------------------- ------------------------
Total revenues 9,218,435 5,844,988
------------------------- ------------------------
EXPENSES:
Cost of products sold 4,227,481 2,174,816
Research and development 3,982,008 4,149,043
Marketing, general and administrative 5,842,802 4,309,872
------------------------- ------------------------
Total expenses 14,052,291 10,633,731
------------------------- ------------------------
NET LOSS FOR THE PERIOD (4,833,856) (4,788,743)
ACCUMULATED DEFICIT BEGINNING OF PERIOD (33,603,817) (24,047,315)
------------------------- ------------------------
ACCUMULATED DEFICIT END OF PERIOD $ (38,437,673) $ (28,836,058)
========================= ========================
BASIC AND DILUTED LOSS PER SHARE $ (0.24) $ (0.24)
========================= ========================
WEIGHTED AVERAGE SHARES OF COMMON STOCK
AND COMMON STOCK EQUIVALENTS 20,540,716 19,921,007
========================= ========================
</TABLE>
The accompanying notes are an integral part of this statement.
Page 4
<PAGE> 5
NOVEN PHARMACEUTICALS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
------------------------ -------------------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 5,737,720 $ 11,267,555
Securities held to maturity -- 5,880,430
Accounts receivable 3,703,242 1,224,492
Inventories 2,635,154 2,500,660
Prepaid and other current assets 347,208 282,472
------------------------ -------------------------
Total current assets 12,423,324 21,155,609
------------------------ -------------------------
PROPERTY AND EQUIPMENT, at cost,
net of accumulated depreciation and amortization of
$4,243,182 at June 30, 1998 and $3,746,846 at
December 31, 1997 15,244,339 15,243,267
------------------------ -------------------------
OTHER ASSETS:
Investment in Vivelle Ventures 7,500,000 --
Patent development costs, net 1,787,051 1,761,122
Other assets 468,218 64,053
------------------------ -------------------------
Total other assets 9,755,269 1,825,175
------------------------ -------------------------
TOTAL $ 37,422,932 $ 38,224,051
======================== =========================
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 3,110,450 $ 2,163,177
Accrued liabilities 1,008,259 309,798
------------------------ -------------------------
Total current liabilities 4,118,709 2,472,975
------------------------ -------------------------
DEFERRED LICENSE REVENUE 5,757,021 5,870,019
------------------------ -------------------------
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 - 21,458,465
shares at June 30, 1998 and 20,475,531 shares at
December 31, 1997 2,146 2,048
Additional paid-in capital 66,645,964 64,146,061
Accumulated deficit (38,437,673) (33,603,817)
Treasury stock, 97,100 shares at cost (663,235) (663,235)
------------------------ -------------------------
Total stockholders' equity 27,547,202 29,881,057
------------------------ -------------------------
TOTAL $ 37,422,932 $ 38,224,051
======================== =========================
</TABLE>
The accompanying notes are an integral part of this statement.
Page 5
<PAGE> 6
NOVEN PHARMACEUTICALS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SIX MONTHS ENDED
---------------------------------------------------
JUNE 30, JUNE 30,
1998 1997
----------------------- -----------------------
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (4,833,856) $ ( 4,788,743)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization 600,088 553,012
(Increase) decrease in accounts receivable (2,478,750) 1,005,068
Increase in inventories (134,494) (19,081)
Increase in prepaid and other current assets (64,736) (24,420)
Increase (decrease) in accounts payable 947,273 (55,883)
Increase in accrued liabilities 698,461 293,210
Decrease in deferred license revenue (112,998) (112,998)
----------------------- -----------------------
Cash flows used in operating activities (5,379,012) (3,149,835)
----------------------- -----------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment in Vivelle Ventures (7,500,000) --
Maturity of securities, net 5,880,430 8,818,652
Purchase of fixed assets, net (497,408) (346,438)
Payment for patent development costs (129,681) (110,836)
(Payment) refund of other assets (404,165) 1,059
----------------------- -----------------------
Cash flows (used in) provided by investing
activities (2,650,824) 8,362,437
----------------------- -----------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Sale of common stock 2,500,001 3,850
----------------------- -----------------------
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS (5,529,835) 5,216,452
CASH AND CASH EQUIVALENTS - BEGINNING OF
PERIOD 11,267,555 5,456,826
----------------------- -----------------------
CASH AND CASH EQUIVALENTS - END OF PERIOD $ 5,737,720 $ 10,673,278
======================= =======================
</TABLE>
The accompanying notes are an integral part of this statement.
Page 6
<PAGE> 7
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, 1997 included in
the Company's annual report on Form 10-K.
The interim financial statements for the six months ended June 30, 1998
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 statement of operations for the periods ended
June 30, 1998 is not necessarily indicative of the results to be expected
for the year ending December 31, 1998.
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, 1998
are related primarily to the Company's transdermal and transoral delivery
systems. To date the Company has not experienced and does not anticipate
in the future, any difficulty acquiring materials necessary to
manufacture its transdermal and transoral systems. The following are the
major classes of inventory:
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------- ------------
<S> <C> <C>
Finished goods $ 857,203 $ 857,219
Work in process 366,618 335,650
Raw materials 1,411,333 1,307,791
------------------- --------------------
Total $ 2,635,154 $ 2,500,660
=================== ====================
</TABLE>
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.
Patent Development Cost - 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.
Page 7
<PAGE> 8
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
Loss Per Share - The Company adopted SFAS No. 128, Earnings Per Share,
for fiscal year 1997. Under SFAS No. 128, basic loss per share excludes
dilution and is computed based on the average number of common shares
outstanding and diluted loss per share is computed based on the average
number of common and common equivalent shares outstanding. Under the
treasury stock method, common equivalent shares are not included in the
per share calculations where the effect of their inclusion would be
antidilutive. SFAS No. 128 required the restatement of all prior-period
earnings per share data. For purposes of the financial statements herein
net loss per share represents basic and diluted loss per share.
New Accounting Standards - In June 1997, the FASB issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information", ("SFAS No. 131"). SFAS No. 131,
establishes standards for the way that public companies report selected
information about operating segments in annual financial statements and
requires that those companies report selected information about segments
in interim financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services, geographic
areas, and major customers. SFAS No. 131 is effective for financial
statements for the periods beginning after December 15, 1997. The Company
does not believe that SFAS No. 131 will have an impact on its disclosures
to the financial statements.
Reclassification - Certain amounts in the 1997 financial statements have
been reclassified to conform with the 1998 presentation.
3. STOCKHOLDERS' EQUITY
A schedule of the transactions in common stock, additional paid-in
capital and treasury stock accounts is as follows:
<TABLE>
<CAPTION>
Common Stock Additional
---------------------- Paid-in Treasury
Shares Amount Capital Stock Total
------ ------ ----------- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1998 20,475,531 $2,048 $64,146,061 $(663,235) $63,484,874
Issuance of 16,750 shares of stock
pursuant to stock option plan, net 16,750 2 (2) -- --
Issuance of 966,184 shares of stock
pursuant to exercise of warrant 966,184 96 2,499,905 -- 2,500,001
------- ------ --------- --------- ---------
Balance, June 30, 1998 21,458,465 $2,146 $66,645,964 $(663,235) $65,984,875
========== ====== =========== ========= ===========
</TABLE>
Page 8
<PAGE> 9
NOTES TO FINANCIAL STATEMENTS
(CONTINUED)
4. INVESTMENT IN JOINT VENTURE
The Company and Novartis Pharmaceuticals Corporation ("Novartis") entered
into a joint venture, Vivelle Ventures LLC, ("Ventures") effective May 1,
1998, to market and sell women's healthcare products, including
Vivelle(R). The Company contributed $7.5 million in return for a 49%
equity interest. Novartis contributed its rights to Vivelle in the United
States under existing license and supply agreements with Noven and also
licensed the right to use the Vivelle trademark for a 51% equity
interest. The Company accounts for its investment in Ventures under the
equity method. The associated legal and investment banking fees have been
capitalized in other assets and will be amortized over 10 years. The
Company shares in the income of Ventures according to an established
formula after an annual preferred return of $6.1 million to Novartis. As
this preferred return has not yet been obtained, no income has been
recognized by the Company from the operations of Ventures as of June 30,
1998.
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, Novartis and Rhone-Poulenc Rorer ("RPR"). In 1996, revenues
from the sale of these products increased substantially as the Company's
licensing partners purchased product to supply their distribution
channels and build their own inventory positions.
Although in-market sales on Noven's estrogen delivery systems continued
to increase on a global basis, Noven experienced lower product sales
during 1997 as compared to 1996 as the inventory levels of its licensee
partners and distribution channels diminished without resupply. Noven
anticipates increased product sales in 1998; however, losses are expected
for 1998 due to the fact that product sales still will not be sufficient
to offset operating costs, which will include significant research and
development expenditures.
During calendar year 1996, the Company commenced the marketing of its
DentiPatch(R) system on a regional basis. The product was launched
nationally in the second quarter of 1997, with the first national
advertising program commencing at the beginning of the fourth quarter of
1997. Revenues from this product are anticipated to increase during 1998.
During May 1998, Noven entered into a joint venture with Novartis for the
commercialization of women's healthcare products, and in particular,
Vivelle(R). Noven will continue to manufacture Vivelle(R) for Ventures
for a fixed price and will continue to receive royalty payments on sales
of Vivelle(R).
Page 9
<PAGE> 10
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
RESULTS OF OPERATIONS
Total revenues increased approximately $2,317,000 or 56% for the three
month period ended June 30, 1998 from the same period in the prior year
and increased approximately $3,373,000 or 58% for the comparable six
month period. This increase in revenues was the result of the increase
in product sales of the Company's estrogen delivery system, its
DentiPatch(R) system and shipments of its combination
estrogen/progestogen delivery system to its licensing partner. Royalties
from the estrogen delivery system are included in product sales. Interest
income decreased approximately $103,000 or 54% for the three month period
ended June 30, 1998 from the same period in the prior year and decreased
approximately $134,000 or 33% for the comparable six month period,
primarily due to lower balances in securities.
Cost of product sold increased approximately $1,613,000 or 102% for the
three month period ended June 30, 1998 from the same period in the prior
year and increased approximately $2,053,000 or 94% for the comparable six
month period. The gross margin percentage was 50% for the three month
period of 1998 as compared to 60% for the same period of the prior year
and 52% for the six months of 1998 as compared to 59% for the comparable
period in 1997. The gross margins vary depending on the product mix and
manufacturing efficiencies including those relating to production
volumes.
Research and development decreased approximately $218,000 or 10% for the
three month period ended June 30, 1998 from the same period in the prior
year and decreased approximately $167,000 or 4% for the comparable six
months period. New product development included work related to
transdermal delivery systems for hormone replacement, central nervous
system, cardiovascular drugs, nonsteriodal anti-inflammatory agents and
transoral delivery systems for dental therapeutics. Marketing, general
and administrative expenses increased approximately $451,000 or 19% for
the three month period ended June 30, 1998 from the same period in the
prior year and increased approximately $1,533,000 or 36% for the
comparable six month period. The increase in marketing, general and
administrative expenses is primarily due to increases in staffing and
associated office expenses.
LIQUIDITY AND CAPITAL RESOURCES
Net cash used in operating activities for the six months ended June 30,
1998 was approximately $5,379,000. This funded the net loss of
approximately $4,834,000, increases in accounts receivable of
approximately $2,479,000, increases in inventories of approximately
$134,000 and in prepaid and other current assets of approximately
$65,000; partially offset by increases in accounts payable of
approximately $947,000 and in accrued liabilities of approximately
$698,000. For the same period in 1997, net cash used was approximately
$3,150,000 to fund the net operating loss of approximately $4,789,000,
decreases in accounts receivable and increases in accounts payable.
Page 10
<PAGE> 11
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
During the six months ended June 30, 1998 the Company's investing
activities used approximately $2,651,000 compared to approximately
$8,362,000 provided in the same period in the prior year. In 1998
approximately $7,910,000 was used for the investment in Vivelle Ventures
and other assets, approximately $498,000 was used for capital
expenditures for manufacturing equipment and approximately $129,000 for
patent development, offset by the maturity of securities of approximately
$5,880,000. In 1997, net cash provided was from the maturity of
securities offset by expenditures for commercial manufacturing equipment,
improvements at the manufacturing site and investment in patents. As of
June 30, 1998, the Company had commitments for capital expenditures of
approximately $124,000.
Net cash of approximately $2,500,000 provided by financing activities for
the six months ended June 30, 1998 resulted from the exercise of a common
stock warrant by Novartis for 966,184 shares of Noven Common Stock. In
1997, net cash of approximately $4,000 resulted from the exercise of
options under the stock option plan.
The Company expects to incur additional operating losses in 1998. In
addition, on May 1, 1998, the Company entered into a joint venture with
Novartis Pharmaceuticals Corporation ("Novartis") one of its licensing
partners, for the commercialization of women's healthcare products,
including Vivelle(R). Noven contributed $7.5 million dollars in return
for a 49% equity interest in Vivelle Ventures LLC ("Ventures") the joint
venture. Due to these factors, the Company will be required to raise
additional funds to support its operations during 1998 and into early
1999. The Company is presently exploring various alternatives, including
the sale of equity securities and lines of credit. If sufficient funds
are not raised, the Company will be required to license products under
development and/or reduce expenditures probably including reductions in
clinical studies and research and development. It is also likely that
Noven will seek to raise capital for the longer term to support continued
research and product development. The time and extent of these future
capital-raising activities will depend, to a great degree, upon the
Company's performance, including the performance of the joint venture, as
well as general market conditions.
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. The ability of Ventures to market and sell Vivelle(R) and
to operate profitably.
2. Dependence upon RPR, its licensing partner, with respect to
(i) the marketing of Menorest, and the commercialization of Estalis(TM)
(combination estrogen/progestogen transdermal delivery system), and (ii)
obtaining regulatory approval of certain other transdermal hormonal
products.
Page 11
<PAGE> 12
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(CONTINUED)
3. Uncertainties regarding (i) the market share for Noven's
transdermal hormonal products, which can be captured by RPR and
Ventures, and (ii) the market for the DentiPatch(R) product and Noven's
ability to successfully establish and effectuate a marketing program.
4. Uncertainties affecting Noven's ability to secure
additional capital including general market conditions.
5. 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.
6. 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.
7. The time required to obtain regulatory approval of products
and its associated expenses.
8. Unanticipated difficulties associated with the
manufacturing process of Menorest and Vivelle(R) for its licensing
partners as well as the DentiPatch(R) product, that could result in
delays in delivery and shortage of product.
9. 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 29, 1998.
(i) Election of Directors
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
Steven Sablotsky 15,058,788 168,732 0
Robert C. Strauss 15,062,088 165,432 0
Mitchell Goldberg 15,062,088 165,432 0
Sheldon H. Becher 15,062,088 165,432 0
Sidney Braginsky 15,062,088 165,432 0
Lawrence J. DuBow 15,062,088 165,432 0
Fred G. Weiss 15,062,088 165,432 0
</TABLE>
Page 12
<PAGE> 13
PART II - OTHER INFORMATION
(CONTINUED)
(ii) The ratification of the appointment of Deloitte
& Touche LLP as the independent certified public accountants for 1998
was approved by an affirmative vote of 15,153,639 shares to a negative
vote of 55,826 shares, with 18,055 shares abstaining.
Item 6. Exhibits and Reports on Form 8-K
27...Financial Data Schedule (for SEC 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, 1998 By: /s/ Robert C. Strauss
----------------------- -------------------------------
Robert C. Strauss
President and Chief
Executive Officer
By: /s/ William A. Pecora
-------------------------------
William A. Pecora
Vice President of Finance and
Chief Financial Officer
Page 14
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> JUN-30-1998
<CASH> 5,737,720
<SECURITIES> 0
<RECEIVABLES> 3,703,242
<ALLOWANCES> 0
<INVENTORY> 2,635,154
<CURRENT-ASSETS> 12,423,324
<PP&E> 19,487,521
<DEPRECIATION> 4,243,182
<TOTAL-ASSETS> 37,422,932
<CURRENT-LIABILITIES> 4,118,709
<BONDS> 0
0
0
<COMMON> 2,146
<OTHER-SE> 27,547,202
<TOTAL-LIABILITY-AND-EQUITY> 37,422,932
<SALES> 8,826,947
<TOTAL-REVENUES> 9,218,435
<CGS> 4,227,481
<TOTAL-COSTS> 4,227,481
<OTHER-EXPENSES> 3,982,008
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (4,833,856)
<INCOME-TAX> 0
<INCOME-CONTINUING> (4,833,856)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,833,856)
<EPS-PRIMARY> (.24)
<EPS-DILUTED> (.24)
</TABLE>
