Noven Reports Second Quarter 2005 Financial Results

"Our Novogyne joint venture had a very good quarter, andprescriptions for our Vivelle-Dot(TM) estrogen patch continued toincrease," said Robert C. Strauss, Noven's President, CEO & Chairman."Total prescriptions for Vivelle-Dot(TM) grew 13% compared to thesecond quarter of last year, and aggregate total prescriptions forNovogyne's three products grew 6%," said Strauss. "With a solidbusiness at Novogyne, two products pending at the U.S. Food and DrugAdministration, other products in development, and continued activityin our business development program, we believe we are making goodprogress toward our goal of growth from diversified sources."

Second Quarter Results

Noven's net revenues for the quarter ended June 30, 2005 (the"current quarter") were $11.8 million compared to $12.0 million forthe quarter ended June 30, 2004 (the "2004 quarter"), reflecting lowercontract and license revenues, partially offset by higher productrevenues. Research and development expenses for the current quarterincreased 15% to $3.1 million, primarily due to higher non-clinicaldevelopment expenses related to Noven's fentanyl transdermal patch.Marketing, general and administrative expenses increased 11% to $4.2million, primarily reflecting increased costs associated withexpansion for anticipated new product launches, as well as increasedprofessional fees. Noven recognized $8.1 million in earnings fromNovogyne Pharmaceuticals (a women's health products company ownedjointly by Noven and Novartis Pharmaceuticals Corporation), slightlylower than the $8.2 million recognized in the 2004 quarter. For thecurrent quarter, Noven reported net income of $5.1 million ($0.21diluted earnings per share), a 10% decrease from the $5.7 million($0.23 diluted earnings per share) reported in the 2004 quarter.

Current quarter net revenues at Novogyne decreased 1% to $31.9million, reflecting increased sales returns and allowances, partiallyoffset by increased sales of Vivelle-Dot(TM). Novogyne's selling,general and administrative expense increased 12% to $7.8 million,reflecting increased insurance costs and sales force expenses.Novogyne's net income for the current quarter was $16.9 million,slightly lower than the $17.0 million reported in the 2004 quarter.

First Half Results

Noven's net revenues for the six-month period ended June 30, 2005(the "current period") were $23.5 million compared to the $23.1million reported for the six-months ended June 30, 2004 (the "2004period"), reflecting higher product revenues, partially offset bylower contract and license revenues. Research and development expensesincreased 23% to $6.2 million, primarily due to higher non-clinicaldevelopment expenses related to Noven's fentanyl transdermal patch.Marketing, general and administrative expenses increased 8% to $8.2 million, primarily reflecting increased costs associated withexpansion for anticipated new product launches, as well as increasedprofessional fees. Noven recognized $9.0 million in earnings fromNovogyne, slightly higher than the $8.9 million recognized in the 2004period. Noven reported net income of $5.3 million ($0.22 dilutedearnings per share), a 9% decrease compared to the $5.8 million ($0.24 diluted earnings per share) reported in the 2004 period.

Novogyne's current period net revenues increased 2% to $54.6million, reflecting increased sales of Vivelle-Dot(TM), partiallyoffset by lower sales of Novogyne's other products. Novogyne'sselling, general and administrative expense increased 13% to $16.4million, primarily due to increased Vivelle-Dot(TM) promotionalexpenses. Novogyne's net income for the current period was $24.9million, slightly higher than the $24.4 million reported in the 2004period.

At June 30, 2005, Noven had an aggregate $77.9 million in cash andcash equivalents and short-term investments. At December 31, 2004,Noven had $94.0 million in cash and cash equivalents and no short-terminvestments. Net cash used in operating activities for the first sixmonths of 2005 reflected payment of amounts owed to ShirePharmaceuticals in connection with development of Noven'smethylphenidate patch, as well as purchases of fentanyl and otherinventory, partially offset by distributions received from Novogyne.Noven's working capital at June 30, 2005 was $95.9 million compared to$97.3 million at December 31, 2004.

HT Prescription Overview

Total prescriptions in the overall U.S. hormone therapy ("HT")market declined 8% in the second quarter of 2005 compared to thesecond quarter of 2004. For the same period, aggregate totalprescriptions for Novogyne's products (Vivelle(R), Vivelle-Dot(TM) andCombiPatch(R) combined) increased 6%. Total prescriptions forVivelle-Dot(TM), which represented approximately 84% of totalprescriptions for Noven's U.S. products, increased 13% for the sameperiod, while the estrogen segment of the U.S. HT market decreased 8%.For the same period, total prescriptions for the Vivelle(R) productfamily (Vivelle-Dot(TM) and Vivelle(R) combined) increased 9%. Noven'sVivelle-Dot(TM) patch remains the most frequently prescribedtransdermal estrogen therapy product in the U.S.

Business Update

Strauss said: "Given recent prescription trends forVivelle-Dot(TM) and our belief that trade inventory levels for thatproduct were within the desired range at the end of the 2005 secondquarter, we continue to expect Novogyne's revenues and net income for2005 to modestly exceed 2004 levels."

"Together with Endo Pharmaceuticals, we are working to obtainapproval of our pending Abbreviated New Drug Application for ourtransdermal fentanyl system," said Strauss. "We are also working withShire Pharmaceuticals to advance our methylphenidate patch for ADHDtoward commercialization. In late June, Noven and Shire submitted anamendment to the pending New Drug Application that included new datafrom our most recent clinical trials. The amendment was accepted forfiling by the FDA and is currently undergoing what we expect will be asix-month review."

Analyst Conference Call

A conference call with management relating to Noven's financialresults will be broadcast live via the Internet athttp://www.noven.com beginning at 10:00 a.m. Eastern time thismorning, August 4. Thereafter, a rebroadcast of the call will beaccessible at the same website. A taped replay of the conference callwill be available by telephone from August 4 at 12:00 Noon Easterntime until August 6 by calling 877-660-6853 (from within the U.S.) or201-612-7415 (from outside the U.S.) and entering the access codenumber 286 and I.D. number 162121. The conference call will containforward-looking information in addition to that contained in thispress release.

About Noven

Noven Pharmaceuticals, Inc., headquartered in Miami, Florida, is aleading developer of advanced transdermal drug delivery technologiesand prescription transdermal products. Noven's prescription patchesare sold in over 30 countries, and a range of new patches are beingdeveloped in collaboration with Novartis Pharma AG, ShirePharmaceuticals Group plc, P&G Pharmaceuticals, Endo PharmaceuticalsInc. and others. Together with Novartis Pharmaceuticals Corporation,Noven owns Novogyne Pharmaceuticals, a women's health products companywith over $100 million in annual sales. Among other products, Novogynemarkets and sells Noven's Vivelle-Dot(TM) product -- the smallestestrogen patch in the world, and the most prescribed estrogen patch inthe U.S. Noven is committed to expanding the universe of availabletransdermal therapies for the benefit of patients, partners andshareholders. See http://www.noven.com for additional information.

Except for historical information contained herein, the mattersdiscussed in this press release contain forward-looking statementswithin the meaning of Section 27A of the Securities Act of 1933 andSection 21E of the Securities Exchange Act of 1934 that involvesubstantial risks and uncertainties. When used in this press release,the words "believe," "could," "expect," "plan," "will," and similarexpressions identify certain of such forward-looking statements.Actual results, performance or achievements could differ materiallyfrom those contemplated, expressed or implied by the forward-lookingstatements contained herein. These forward-looking statements arebased largely on the current expectations of Noven and are subject toa number of risks and uncertainties that are subject to change basedon factors which are, in many instances, beyond Noven's control. Bycategory, these risks and uncertainties include: HT Market - risksassociated with increased competition in the HT market; any furtherimpact on Noven's HT business due to the announcement of additionalnegative clinical results or otherwise, which could reduce oreliminate any profit contribution by Novogyne to Noven and/or sales ofHT products from Noven to Novogyne and Novartis Pharma; the risk thatNovogyne may not be able to realize the full value of the marketingrights for Noven's CombiPatch product; and the risk of productliability claims resulting from the use of HT products, such as thelawsuits pending against Novartis with respect to Noven's products, aswell as any indemnification or contribution obligations that Noven mayhave to Novartis or Novogyne related to product liability claims.Regulatory Matters - uncertainties related to the FDA's discretion toapprove or not approve a product; and the timing of any FDA approvalfor any of Noven's products in development, which is outside Noven'scontrol and which may impact the success of product launch and marketpenetration. Noven's Partners - the risk that Noven's developmentpartners may have different or conflicting priorities than Noven's,which may adversely impact their ability or willingness to assist inthe development and commercialization of Noven's products or tocontinue the development programs; uncertainties regarding Noven'sability to attract additional development partners; the possibilitythat Noven's development programs may not proceed on schedule or asexpected, which could, among other things, prevent Noven fromachieving milestone objectives under Noven's development programsand/or cause delays or cancellations of programs; the possibility thatNoven's current development priorities could render Noven unable toadvance Noven's other development projects or increase the cost ofadvancing those projects; risks related to Noven's dependence onNovartis to perform all of Novogyne's financial, accounting,inventory, distribution, revenues and sales deductions functions;risks and uncertainties related to the fact that Vivelle-Dot(TM)comprises a substantial majority of Novogyne's aggregate totalprescriptions. Fentanyl Patch - risks and uncertainties associatedwith the FDA's review of Noven's fentanyl patch ANDA; risks anduncertainties relating to Noven's manufacture of fentanyl patchinventories in advance of regulatory approval, including thepossibility that Noven may be unable to recover significant costs ifFDA approval is not obtained or if all or a portion of Noven'sexisting fentanyl inventory cannot be sold due to insufficientremaining shelf-life; the possibility that Noven may be unable torecover from Endo their agreed upon portion of the production costs ofthe launch quantities of Noven's fentanyl patch that Noven hasproduced; risks related to the FDA's recently issued public advisorythat it is investigating reports of death and other serious sideeffects from overdoses involving both the branded and generic fentanylpatches, including the possibility that this investigation couldmaterially and adversely affect the market for all fentanyl patchproducts and could delay or prevent approval of pending ANDAs forfentanyl, including Noven's pending application; the impact ofoverhead and other expenses associated with the development andproduction of Noven's fentanyl patch on Noven's profitability if thefentanyl patch continues to be delayed or is never approved; patent orother strategies by third parties could delay or prevent the launch ofNoven's fentanyl patch or other products; the possibility thatmilestone payments may be reduced and/or that Endo may exercise itscontractual right to terminate the license agreement if the productlaunch is delayed; and the possibility that, even if approved, Noven'sfentanyl patch or other products may not be successfullycommercialized due to competitive market conditions or other factors.Methylphenidate Patch - the possibility that FDA will determine thatNoven's amended NDA for Noven's methylphenidate patch does not supportapproval or that Noven's methylphenidate patch may not ultimately beapproved or commercialized; risks and uncertainties related to the2005 study by researchers at the M.D. Anderson Cancer Center of theeffects of oral methylphenidate therapy on 12 children; any exerciseof Shire's right to terminate Noven's methylphenidate patchdevelopment agreement; and the likelihood that Noven's developmentstrategy would change if Shire were to terminate the agreement undercertain circumstances, or if Noven's methylphenidate patch were notultimately approved or were abandoned. Other Matters - expectedfluctuations in quarterly revenues and research and developmentexpenses and risks related to estimated trade inventory levels. Foradditional information regarding these and other risks associated withour business, readers should refer to Noven's Annual Report on Form10-K for the year ended December 31, 2004 as well as other reportsfiled from time to time with the Securities and Exchange Commission.

Noven Pharmaceuticals, Inc.

Statements of Operations Data: Three Months Six Months
(amounts in thousands, except per Ended Ended
share amounts) (unaudited) June 30, June 30,
--------------- ----------------
2005 2004 2005 2004
------- ------- ------- --------

Revenues:
Product revenues - Novogyne:
Product sales $4,714 $4,886 $9,692 $10,694
Royalties 1,713 1,608 2,827 2,498
------- ------- ------- --------
Total product revenues - Novogyne 6,427 6,494 12,519 13,192
Product revenues - third parties 3,933 3,564 7,971 6,541
------- ------- ------- --------
Total product revenues 10,360 10,058 20,490 19,733
Contract and license revenues:
Contract 429 853 1,024 1,372
License 982 1,044 1,993 1,980
------- ------- ------- --------
Contract and license revenues 1,411 1,897 3,017 3,352
Net revenues 11,771 11,955 23,507 23,085

Expenses:
Cost of products sold 5,124 4,975 10,881 10,493
Research and development 3,145 2,734 6,155 4,989
Marketing, general and
administrative 4,189 3,762 8,244 7,666
------- ------- ------- --------
Total expenses 12,458 11,471 25,280 23,148
------- ------- ------- --------
Income (loss) from operations (687) 484 (1,773) (63)

Equity in earnings of Novogyne 8,101 8,228 9,013 8,865
Interest income, net 593 184 1,096 340
------- ------- ------- --------
Income before income taxes 8,007 8,896 8,336 9,142
Provision for income taxes 2,886 3,218 3,004 3,306
------- ------- ------- --------
Net income $5,121 $5,678 $5,332 $5,836
======= ======= ======= ========
Basic earnings per share $0.22 $0.24 $0.23 $0.25
======= ======= ======= ========
Diluted earnings per share $0.21 $0.23 $0.22 $0.24
======= ======= ======= ========
Weighted average number of common
shares outstanding:
Basic 23,565 23,386 23,537 23,226
======= ======= ======= ========
Diluted 24,068 24,387 24,017 24,334
======= ======= ======= ========


As of
----------------
Balance Sheet Data: June 30, Dec. 31,
(amounts in thousands) (unaudited) 2005 2004
---------------
Cash and cash equivalents $33,333 $93,958
Short-term investments 44,600 -
Investment in Novogyne 24,863 26,233
Total assets 188,385 201,975
Deferred license revenues 32,270 39,085
Stockholders' equity 135,585 129,039