<PAGE> 1
Filed Pursuant to Rule 424(b)(4)
Registration No. 333-56293
966,184 SHARES
NOVEN PHARMACEUTICALS, INC.
COMMON STOCK
This Prospectus relates to the sale of 966,184 shares of Common Stock
which are offered by the holder thereof identified as the "Selling Security
Holder" in this Prospectus. See "SELLING SECURITY HOLDER.
The Company will not receive any proceeds from the sale of shares of
Common Stock by the Selling Security Holder. Sales of shares of Common Stock may
be made from time to time in transactions (which may include block transactions)
by or for the account of the Selling Security Holder on the NASDAQ National
Market, or in negotiated transactions, or otherwise, at market prices prevailing
at the time of sale or at negotiated prices. The Company has informed the
Selling Security Holder that the anti-manipulative rules under the Securities
Exchange Act of 1934, Regulation M, may apply to its sales in the market and has
furnished the Selling Security Holder with a copy of these rules. The Company
has also informed the Selling Security Holder of the need for delivery of copies
of this Prospectus. See "SELLING SECURITY HOLDER" and "PLAN OF DISTRIBUTION."
The Common Stock offered hereby involves a high degree of risk. See
"RISK FACTORS."
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
--------------------
<TABLE>
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PRICE TO PUBLIC UNDERWRITING DISCOUNTS PROCEEDS TO THE PROCEEDS TO THE SELLING
CLASS OF SECURITY COMPANY SECURITY HOLDER
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<S> <C> <C> <C> <C>
Shares of Common
Stock............. $6.375 (1) N/A N/A $6,159,423(2)
=================================================================================================================
</TABLE>
(1) Represents the anticipated sale by the Selling Security Holder of
shares of Common Stock at $6.375 the closing sales price on June 24,
1998. There can be no assurances, however, that the Selling Security
Holder will be able to sell its shares of Common Stock at this price.
(2) Does not give effect to ordinary brokerage commissions or other costs
of sale which will be borne solely by the Selling Security Holder.
The Common Stock is traded on the NASDAQ National Market under the
symbol "NOVN".
-----------------------
THE DATE OF THIS PROSPECTUS IS JUNE 25, 1998
<PAGE> 2
NOVEN PHARMACEUTICALS, INC.
Cross-Reference Sheet Showing Location or
Caption in Prospectus of Information
Required by Items of Form S-3
<TABLE>
<CAPTION>
Registration Statement Location or Caption in Prospectus
Item Number and Heading ---------------------------------
- -----------------------
<S> <C>
1. Forepart of the Registration Statement Outside front cover page of Prospectus
and Outside Front Cover Page of
Prospectus
2. Inside Front and Outside Back Cover Inside front and outside back cover pages of
Pages of Prospectus Prospectus
3. Summary Information, Risk Factors Prospectus Summary; Risk Factors; Not
and Ratio of Earnings to Fixed Applicable
Charges
4. Use of Proceeds Not Applicable
5. Determination of Offering Price Not Applicable
6 Dilution Not Applicable
7. Selling Security Holders Selling Security Holder
8. Plan of Distribution Outside front cover page; Plan of Distribution
9. Description of Securities Not Applicable
10. Interests of Named Experts and Legal Matters; Experts
Counsel
11. Material Changes Not Applicable
12. Incorporation of Certain Information Incorporation of Certain Documents by
by Reference Reference
13. Disclosure of Commission Position on Not Applicable
Indemnification for Securities Act
Liabilities
</TABLE>
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports and other information with the Securities
and Exchange Commission (the "Commission"). Such reports and other information
filed by the Company with the Commission may be inspected and copied at the
public reference facilities maintained by the Commission at 450 Fifth Street,
N.W. Washington, D.C. 20549, and are also available for inspection and copying
at the regional offices of the Commission located at 1401 Brickell Avenue, Suite
200, Miami, FL 33131 and at Seven World Trade Center, New York, New York 10048.
Copies of such information can also be obtained by mail from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549 at prescribed rates. Reports and other information concerning the Company
can also be inspected at the offices of the National Association of Securities
Dealers, Inc., 1735 K Street, N.W., Washington, D.C. 20006. The Company is an
electronic filer with the Commission. The Commission maintains a Web site
(http://www.sec.gov) which contains reports, proxy and information statements
and other information regarding registrants that file electronically with the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 1997, all other reports filed pursuant to Section 13(a) or 15(d)
since the end of the fiscal year ended December 31, 1997, and the description of
the Company's Common Stock contained in the Registration Statement on Form S-2
filed with the Commission on February 18, 1992, Commission File No. 33-45784,
are incorporated by reference into this Prospectus.
All documents filed by the Company with the Commission pursuant to
Section 13(a), 13(c), 14 or 15(d) of the Exchange Act, after the date of this
Prospectus and prior to the termination of the offering to which this Prospectus
relates, shall be deemed to be incorporated by reference into this Prospectus
from the date of filing except as to any portion of any future Annual or
Quarterly Report to Shareholders which is not deemed to be filed under such
provisions.
For the purposes of this Prospectus, any statement in a document
incorporated by reference shall be deemed to be modified or superseded to the
extent that a statement contained in this Prospectus modifies or supersedes the
statement in such document. Any statements so modified or superseded shall not
be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Company will provide without charge to any person to whom a copy of
this Prospectus has been delivered, on the written or oral request of such
person, a copy of any or all of the documents referred to above which have been
or may be incorporated in this Prospectus, other than exhibits to such documents
(unless such exhibits are specifically incorporated by reference into the
information that this Prospectus incorporates). Written or oral requests should
be directed to William A. Pecora, Vice President of Finance and Chief Financial
Officer, Noven Pharmaceuticals, Inc., 11960 Southwest 144th Street, Miami,
Florida 33186, telephone number (305) 253-5099.
<PAGE> 4
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS, INCLUDING INFORMATION UNDER
"RISK FACTORS," AND INFORMATION INCORPORATED BY REFERENCE.
THE COMPANY
Noven Pharmaceuticals, Inc. ("Noven" or the "Company") is a leader in
developing and manufacturing transdermal and transoral drug delivery systems.
These systems utilize an adhesive patch containing medication which, when
adhered to the skin or the mucosa of the oral cavity, allows the delivery of
drugs across the tissues and into the bloodstream over an extended period of
time. Noven has developed and patented thin, solid state, multi-laminate
transdermal and transoral drug delivery systems that have a small surface area
and are adaptable to deliver numerous drug entities.
The Company's first product, an estrogen patch for the treatment of
menopausal symptoms, was launched in the U.S. in March 1996 by Ciba-Geigy
Corporation ("Ciba-Geigy") under the brand name Vivelle(R). (In December 1996,
Ciba-Geigy's parent corporation was merged with Sandoz, Ltd. to form Novartis,
AG, hereinafter "Novartis". All references to Novartis herein shall include
Ciba-Geigy). Novartis also launched the same product in Canada in June 1996. On
May 1, 1998, Novartis and the Company entered into a joint venture for the
development and commercialization in the United States of women's health care
products, and, in particular, Vivelle(R). The new joint venture company, Vivelle
Ventures LLC ( "Ventures"), is owned 51% by Novartis and 49% by Noven. Noven
will manufacture the product for Ventures at a fixed price. Noven will also
market the product and will receive royalties from Ventures on product sales.
Finally, Noven will be entitled to a percentage of the profits of Ventures. The
Company anticipates that commercial sales of its second generation estrogen
patch, which is approximately one-third the size of its existing estrogen patch,
will commence in the United States during the first quarter of 1999. This
product will also be sold by Ventures. Rhone-Poulenc Rorer, Inc. ("RPR") has
received regulatory approval to market the estrogen patch under the brand name
Menorest for the treatment of menopausal symptoms in 36 countries and has
launched the product in 19 countries including Germany, France and the United
Kingdom. Menorest has also been approved in 36 countries as a preventative
treatment for osteoporosis and clinical trials of Vivelle(R) in the U.S. for
this indication is being conducted by Novartis.
The Company's other major development in hormonal replacement therapy
("HRT"), a combination patch of estrogen and progestogen, completed Phase III
clinical trials in the U.S. and Europe. In August 1997 RPR submitted a New Drug
Application ("NDA") with the Food and Drug Administration ("FDA") for this
product and has made similar regulatory filings for this product in Europe. This
product is presently being sold by RPR in Sweden under the trade name
Estalis(TM). Estalis(TM) has significant advantages over the single entity
transdermal estrogen replacement system, inasmuch as the combination of the two
hormones reduces the incidences of endometrial hyperplasia
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<PAGE> 5
and in low dosage forms, taken over several months, may eliminate bleeding for
menopausal women. It also eliminates the need to take two single entity drugs
(ie. two pills). RPR has worldwide marketing rights to this product. It is
anticipated that this product will be approved by the FDA in the United States
in the fourth quarter of 1998.
DentiPatch(R), the Company's novel transoral anesthetic delivery
system, was approved for marketing by the FDA in May 1996. A regional launch of
this product by the Company commenced in the second half of 1996, and on a
national basis in 1997. The Company is also developing a range of new products
utilizing transdermal and transoral technologies for cardiovascular, central
nervous system and inflammatory disorders.
The Company conducts its operations in Miami-Dade County, Florida. Its
primary manufacturing facility, located on approximately 15 acres, was approved
by the FDA in April 1996 and expanded Noven's manufacturing capability from
approximately 100 million patches to approximately 500 million patches per year.
The Company was incorporated in Delaware in January 1987. The Company's
principal executive offices are located at 11960 Southwest 144th Street, Miami,
Florida 33186. Its telephone number is (305) 253-5099.
3
<PAGE> 6
THE OFFERING
Securities Being Offered ......... This Prospectus relates to an offering by
the Selling Security Holder of 966,184
shares of common stock (the "Common Stock")
issued to it through the exercise of a
certain Warrant dated November 15, 1991, as
amended (the "Warrant").
The shares of Common Stock offered by the
Selling Security Holder may be offered for
sale from time to time by the holder in
regular brokerage transactions, either
directly or through brokers or to dealers,
in private sales or negotiated transactions,
or otherwise, at prices related to then
prevailing market prices.
The Company will not receive any proceeds
from the sale of shares of Common Stock by
the Selling Security Holder. All expenses of
the registration of such securities are,
however, being borne by the Company.
The Selling Security Holder, and not the
Company, will pay or assume such brokerage
commissions as may be incurred in the sale
of its securities.
The Common Stock is traded on the NASDAQ
National Market under the symbol "NOVN." On
June 24, 1998 the closing sales price was
$6.375.
Total number of shares of
Common Stock outstanding ........ 21,441,715
Total number of shares of Common
Stock being offered by Selling
Security Holder ................. 966,184
Risk Factors ..................... The Common Stock offered hereby involves a
high degree of risk and prospective
investors should consider carefully the
factors specified under "Risk Factors"
before electing to invest. See "RISK
FACTORS."
Transfer Agent ................... American Stock Transfer & Trust Company, 40
Wall Street, New York, New York, telephone
number (718) 921-8254.
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<PAGE> 7
RISK FACTORS
PROSPECTIVE INVESTORS IN SHARES OF COMMON STOCK OFFERED HEREBY SHOULD
CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS, IN ADDITION TO THE OTHER
INFORMATION IN THIS PROSPECTUS.
OPERATING LOSSES; NEED FOR CAPITAL; FUTURE PROFITABILITY UNCERTAIN
Noven has incurred net losses in each year since its inception in
January 1987. At March 31, 1998, the Company's accumulated deficit was
approximately $36,880,217. The Company anticipates additional losses in 1998.
Further, as a result of the formation of the joint venture with Novartis, Noven
contributed $7.5 million for its 49% share of the equity. Accordingly, Noven
will be required to raise additional funds in order to cover operating deficits
in 1998 and into early 1999. No assurances can be given that such funds will be
available. If sufficient funds are not raised, Noven will be required to either
license products under development and/or reduce expenditures, probably
including reductions in clinical studies and research and development. Such
licensing and expenditures reductions would have a material adverse effect on
Noven's prospects for profitability.
COMPETITION AND TECHNOLOGICAL CHANGES
The Company is in competition with major pharmaceutical companies and
others engaged in transdermal drug delivery system research, development,
testing, manufacturing and marketing. Many of these competitors are well
established and have substantially greater financial, technical and marketing
resources than the Company. There can be no assurance that the Company will be
able to compete effectively with respect to the development, manufacture,
marketing or sale of transdermal drug delivery systems.
In 1997, Noven's Vivelle(R) product, marketed by Novartis, captured
approximately 16% of the U.S. market for transdermal estrogen delivery systems.
Although management believes that the formation of the joint venture with
Novartis, and the introduction of Noven's second generation estrogen delivery
system, will improve Noven's competitive position, no assurances can be given
that such market share can be increased or even maintained in the short or long
term.
Noven's new product, the combination estrogen progestogen transdermal
delivery system, presently being sold by RPR in Sweden under the trade name
Estalis(TM), could receive approval from the FDA in the fourth quarter of 1998.
However, the impact that this product will have on future operating results is
difficult to determine at this time.
New drugs or future developments in alternate drug delivery
technologies, such as controlled release oral delivery, liposomes and implants,
may provide therapeutic or cost advantages over transdermal drug delivery
systems. Changes in transdermal drug delivery technology will require
substantial investments by companies to maintain their competitive position and
may provide
5
<PAGE> 8
opportunities for new competitors to enter the industry. There can be no
assurance that developments by others will not render the Company's products or
technologies noncompetitive or obsolete.
THE JOINT VENTURE; MARKETING UNCERTAINTIES
A substantial portion of Noven's revenues in the past have been derived
from the sale of Vivelle(R) to Novartis pursuant to a licensing agreement. In
May 1998, Novartis and Noven altered their business relationship through the
formation of Ventures, a joint venture designed to promote, in the United
States, women's health care products and, in particular, Vivelle(R). This new
company, owned by Novartis (51%) and Noven (49%), will purchase Vivelle(R) from
Noven and market and sell the product in the United States; Noven will continue
to receive royalties from the sale of this product. The joint venture is managed
by a committee consisting of three representatives of Novartis and two
representatives of Noven, with Robert C. Strauss, Noven's President, serving as
the president of Ventures, and with certain acts subject to a super majority
vote of committee members. The ability of Ventures to operate profitably
depends, in large part, upon the effectiveness of its management. No assurances
can be given that such joint management will be effective.
Through agreements entered into among Ventures, Noven and Novartis,
marketing, sales and promotional field activities to physicians will be
performed by Noven. Although management believes that by directing the marketing
activities in the United States, Noven can effectively increase Vivelle(R)
sales, Noven must implement an effective marketing sales force and plan. This
activity will require the expenditure of substantial resources and the hiring,
training and supervision of a sales force. The failure to implement an effective
marketing sales force and plan could have a material adverse effect on Noven's
financial condition, results of operations and prospects.
Finally, the success of Ventures will depend upon general competitive
factors affecting the transdermal estrogen replacement market, including the
introduction of competitive products and technologies.
GOVERNMENT REGULATION
The Company's products require the approval of the FDA before they can
be marketed in the U.S. In order to obtain FDA approval for a product, the
Company must submit to the FDA either a New Drug Application ("NDA") or an
Abbreviated New Drug Application ("ANDA"). A product must undergo extensive
pre-clinical and clinical trials before an NDA is filed, and extensive
bio-equivalency studies before an ANDA is filed. The Company must submit to the
FDA an Investigational New Drug Application ("IND"), which must be approved
before clinical trials may commence. The time required for regulatory approval
of the Company's products after filing an ANDA or NDA is uncertain. In addition,
approvals are required from health authorities in foreign countries before the
Company's products can be marketed in such countries. The process of obtaining
required regulatory approvals for these products from the FDA and from foreign
regulatory authorities takes a number of years and involves the expenditure of
substantial resources.
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<PAGE> 9
There can be no assurance that problems will not arise that could delay
or prevent the commercialization of the Company's pipeline products or that the
FDA and foreign regulatory agencies will be satisfied with the results of the
clinical trials and approve the marketing of any products. Even if regulatory
approvals are obtained, post-market evaluation or surveillance of the products,
if required, could result in suspension or limitation of approvals.
Additionally, there is the possibility that existing or new governmental
regulation may (i) prevent or substantially delay the marketing of any products
developed by the Company, (ii) cause the Company to undertake further costly
testing and development procedures, or (iii) furnish an advantage to the more
substantially capitalized competitors of the Company.
DEPENDENCE ON LICENSING PARTNERS
Noven has a licensing agreement with and depends on RPR for the
marketing in Europe of its transdermal estrogen replacement system, under the
trade name Menorest, and for the marketing of its transdermal combination
estrogen/progestogen delivery system under the trade name Estalis(TM) in Europe
and eventually in the United States. Noven expects to receive revenues from RPR
from product sales and milestone payments. Factors not in Noven's control,
including, but not limited to, RPR's strategic plans as well as business
decisions affecting the utilization of RPR's resources, could adversely affect
the commercialization of these products, which would therefore affect Noven's
revenues.
To the extent Noven enters into licensing agreements for other
products, which may be required due to the financial resources needed to develop
and commercialize such products, it will become dependent upon the efforts of
such licensing partner(s). Accordingly, factors not in Noven's control could
adversely impact the commercialization of such products.
PATENTS AND PROPRIETARY RIGHTS
The Company has obtained 14 patents in the U.S. and has over 100 patent
applications pending worldwide, including nine in the United States. However,
there can be no assurance that (i) patents applied for will be granted, (ii)
patents owned by the Company or that may be granted to or obtained by the
Company in the future will be enforceable or will provide the Company with
meaningful protection from competition, or (iii) any products developed by the
Company will not infringe on any patent or intellectual property rights of
others. Further, no assurance can be given that challenges or claims to Noven's
patents or products will not be asserted in the future. Noven also relies on
trade secrets and proprietary knowledge which it generally seeks to protect by
confidentiality and non-disclosure agreements with employees, consultants,
universities, licensing partners or agents. There can be no assurance, however,
that these agreements will not be breached, that the Company will have adequate
remedies for any breach or that the Company's trade secrets will not otherwise
become known or developed independently by competitors.
7
<PAGE> 10
PRODUCT LIABILITY AND INSURANCE
The design, development and manufacture of the Company's products
involves an inherent risk of product liability claims. The Company has obtained
product liability insurance in an amount of $12 million per incident and $12
million in the aggregate per annum on a claims made basis. The Company's license
agreements provide for indemnification under certain circumstances in connection
with claims relating to its products. However, there can be no assurance that
the coverage limits of the Company's insurance policy and/or the indemnification
provisions will be sufficient and/or applicable to offset potential claims. A
successful claim against the Company in excess of the insurance coverage and not
subject to indemnification could have a material adverse effect upon the Company
and its financial condition.
DEPENDENCE ON KEY PERSONNEL
The Company is dependent, to a substantial degree, on the expertise of
its founder and Chairman of the Board, Steven Sablotsky and on its President and
Chief Executive Officer, Robert C. Strauss. Mr. Sablotsky does not have an
employment agreement with the Company. Mr. Strauss is employed under a five-year
agreement which will expire on December 31, 2002. The loss or interruption of
either of their services could have a material adverse effect upon the Company's
operations. Further, the joint venture could be dissolved by Novartis if, before
April 30, 2000, Mr. Strauss' employment is terminated "without cause" or Mr.
Strauss terminates the agreement "for good cause," all as defined in his
employment agreement. A dissolution of the joint venture would have a material
adverse effect on the Company's operations, financial condition and prospects.
Additionally, as a result of the specialized nature of its business, the Company
is dependent upon its ability to attract and retain other qualified personnel.
There is significant competition for such qualified personnel from numerous
pharmaceutical and health care companies and there is no assurance that the
Company will be successful in recruiting and retaining such personnel.
FUTURE CAPITAL REQUIREMENTS
The Company's future capital requirements depend upon numerous factors,
including (i) the revenues generated by sales of its products, (ii) the progress
of its product development programs, (iii) the time required to obtain
government regulatory approvals of products in development, (iv) the resources
that the Company devotes to the development of self-funded products, proprietary
manufacturing methods, advanced technologies and a marketing and sales
administration infrastructure, and (v) the ability of the Company to obtain
additional licensing agreements and to manufacture products pursuant to those
agreements. No assurances can be given that such capital will be available on
acceptable terms, or at all.
DEPENDENCE ON SOLE SOURCE SUPPLIERS
Some materials used in the Company's products are currently available
only from certain suppliers. Although Noven has not experienced difficulty
acquiring these materials for the
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<PAGE> 11
manufacture of products for clinical trials, no assurances can be given that
interruptions in supplies will not occur in the future. Further, no assurances
can be given that the use of substitute vendors will not require additional
regulatory submissions or approvals. Any interruption of supply could have a
material adverse effect on the Company's ability to manufacture its products.
HEALTH CARE REFORM
The levels of revenues and profitability of pharmaceutical companies
may be affected by the continuing efforts of U.S. and foreign governmental and
third-party payors to contain or reduce the costs of health care, including the
prices or profits of prescription drugs, through various means. In the United
States, there have been, and the Company expects that there will continue to be,
a number of federal and state proposals to implement similar government control.
In addition, there have been a number of federal and state proposals to subject
pharmaceutical pricing to government control. The Company cannot predict the
nature of health care reforms or the effect that they may have on its business,
and no assurance can be given that any such reforms will not have a material
adverse effect on the Company. Further, to the extent that such proposals or
reforms have a material adverse effect on the business, financial condition and
profitability of other pharmaceutical companies that are licensees or
prospective licensees for certain of the Company's products, the Company's
ability to commercialize its products may be adversely affected.
HEALTH CARE REIMBURSEMENTS
In both the United States and elsewhere, sales of prescription
pharmaceuticals currently are dependent in part on the availability of
reimbursement to the consumer from third-party payors, such as government and
private insurance plans. Third-party payors are increasingly challenging the
prices charged for medical products and services and engaging in the use of
restrictive formularies for prescription drugs as part of efforts to control or
reduce drug costs. If the Company succeeds in bringing products to market, there
can be no assurance that the Company's products will be considered
cost-effective or outcome-effective by such third-party payors and that
reimbursement to the consumer will be available or will be sufficient to allow
the Company or its licensees to sell its products on a competitive basis.
VOLATILITY OF STOCK PRICE
The Company believes that factors, such as announcements of new
products or developments by the Company or its competitors, or period-to-period
variances in the Company's financial results, could cause the market price of
the Common Stock to fluctuate substantially. In addition, the stock market has
experienced extreme price and volume fluctuations that have particularly
affected the market price for many high technology and bio-technology companies
and that have often been unrelated to the operating performance of these
companies. These broad market fluctuations may adversely effect the market price
of the Common Stock.
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SELLING SECURITY HOLDER
The shares of Common Stock of the Company offered by this Prospectus
are being sold for the account of Novartis Pharmaceuticals Corporation
("Novartis").
Novartis is offering for sale an aggregate of 966,184 shares of Common
Stock issued to it on May 7, 1998 pursuant to the exercise of a certain Warrant
dated November 15, 1991, as subsequently amended.
The following table sets forth certain information concerning the
shares of Common Stock owned of record and beneficially (to the extent known by
the Company) by Novartis.
<TABLE>
<CAPTION>
NUMBER OF
NUMBER OF SHARES OF NUMBER OF
SHARES OF COMMON STOCK SHARES OF PERCENTAGE PERCENTAGE
COMMON STOCK TO BE SOLD IN COMMON STOCK BEFORE AFTER
NAME BEFORE OFFERING(1) OFFERING AFTER OFFERING(1) OFFERING OFFERING
- ---- ------------------ ------------- ----------------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Novartis Pharmaceuticals
Corporation 1,047,649 966,184 81,465 4.87% *
59 Route 10
East Hanover, NJ 07936
</TABLE>
(1) Includes 81,465 shares subject to an outstanding warrant exercisable at
$15.34 prior to November 27, 1999.
- -----------------------
* less than 1%
On May 1, 1998, the Company entered into a joint venture with Novartis
for the commercialization of women's health care products, including Vivelle(R).
Novartis owns 51% of the joint venture, and Noven owns 49%. Noven contributed
$7.5 million to Ventures and Novartis contributed its right to Vivelle(R) in the
United States under an existing License Agreement and also licensed the right to
use the Vivelle(R) trademark to Ventures. Ventures will purchase Vivelle(R) from
Noven and pay to Noven a fixed price for the product and a royalty on sales. In
addition, after a preferred return of $6.1 million to Novartis, income generated
by Ventures is to be allocated and distributed between Novartis and Noven
pursuant to a specified formula based on levels of products sales. Noven's
allocable and distributable share increases as product sales increase. Prior to
May 1, 1998, and since 1991, Noven and Novartis' predecessor, Ciba-Geigy, were
parties to a License Agreement with respect to the development and
commercialization in the United States and Canada of a transdermal estrogen
replacement system. In 1996, this product was launched in the United States (and
subsequently in Canada) under the name Vivelle(R). Noven manufactured the
product for
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Novartis and received royalty payments upon sale. During 1996 and 1997, Novartis
was one of Noven's two main sources of revenues.
PLAN OF DISTRIBUTION
Novartis is offering shares of Common Stock for its own account and not
for the account of the Company. The Company will not receive any proceeds from
the sale of the shares of Common Stock by Novartis.
Novartis will, prior to any sales, agree (a) not to effect any offers
or sales of the Common Stock in any manner other than as specified in this
Prospectus and (b) not to purchase or induce others to purchase Common Stock in
violation of Regulation M under the Exchange Act.
The shares of Common Stock may be sold from time to time to purchasers
directly by Novartis acting as principal for its own account in one or more
transactions in the over-the-counter market or in negotiated transactions at
market prices prevailing at the time of sale or at prices otherwise negotiated.
Alternatively, the shares of Common Stock may be offered from time to time
through agents, brokers, dealers or underwriters designated from time to time,
and such agents, brokers, dealers or underwriters may receive compensation in
the form of commissions or concessions from Novartis or the purchasers of the
Common Stock.
Under the Exchange Act, and the regulations thereunder, any person
engaged in a distribution of the shares of Common Stock of the Company offered
by this Prospectus may not simultaneously engage in market making activities
with respect to the Common Stock of the Company during the applicable "cooling
off" periods prior to the commencement of such distribution. In addition, and
without limiting the foregoing, Novartis will be subject to applicable
provisions of the Exchange Act and the rules and regulations thereunder
including, without limitation, Regulation M, which provisions may limit the
timing of purchases and sales of Common Stock by Novartis.
The Company will use its best efforts to file, during any period in
which offers or sales are being made, one or more post-effective amendments to
the Registration Statement, of which this Prospectus is a part, to describe any
material information with respect to the plan of distribution not previously
disclosed in this Prospectus or any material change to such information in this
Prospectus.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed upon for
the Company by Shapo, Freedman & Bloom, P.A., 200 South Biscayne Blvd., Suite
4750, Miami, Florida 33131.
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EXPERTS
The financial statements incorporated in this Prospectus by reference
from the Annual Report on Form 10-K of the Company for the year ended December
31, 1997 have been audited by Deloitte & Touche LLP, independent auditors, as
stated in their reports, which is incorporated herein by reference, and have
been so incorporated in reliance upon the reports of such firm, given upon their
authority as experts in auditing and accounting.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration Statement on
Form S-3 (together with all amendments and exhibits thereto, the "Registration
Statement") under the Act with respect to the Common Stock offered in this
offering. This Prospectus does not contain all of the information set forth in
the Registration Statement, certain parts of which are omitted in accordance
with the rules and regulations of the Commission. For further information with
respect to the Company and such Common Stock, reference is made to the
Registration Statement.
12
<PAGE> 15
================================================================================
No dealer, salesperson or other person has been authorized in
connection with this offering to give any information or to make any
representations other than those contained in this Prospectus. This Prospectus
does not constitute an offer or a solicitation in any jurisdiction to any person
to whom it is unlawful to make such an offer or solicitation. Neither the
delivery of this prospectus nor any sale made hereunder shall, under any
circumstances, create an implication that there has been no change in the
circumstances of the Company or the facts herein set forth since the date
hereof.
--------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary .......................................................... 2
Risk Factors ................................................................ 5
Selling Security Holder ..................................................... 10
Plan of Distribution ........................................................ 11
Legal Matters ............................................................... 11
Experts ..................................................................... 12
Additional Information ...................................................... 12
</TABLE>
================================================================================
================================================================================
-------------------
UNTIL SEPTEMBER 23, 1998 (90 DAYS AFTER THE DATE OF THE PROSPECTUS),
ALL DEALERS EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
--------------------
966,184 Shares of Common Stock
offered by the Selling Security Holder
--------------------
NOVEN
PHARMACEUTICALS,
INC.
--------------------
PROSPECTUS
--------------------
June 25, 1998
================================================================================
13
