Noven Reports Third Quarter 2005 Financial Results

For the third quarter, Noven reported net revenues of $12.2million and a net loss of $1.4 million ($0.06 diluted loss per share).Net loss and diluted loss per share include a previously-announcedcharge associated with the write-off of existing inventories relatedto Noven's developmental fentanyl patch (the "Inventory Charge") inthe amount of $9.5 million. Excluding the Inventory Charge and relatedtax effects, Noven would have reported quarterly net income of $4.7million or $0.19 diluted earnings per share. These measures arenon-GAAP financial measures which are reconciled to GAAP in anattachment to this news release.

"The FDA's decision to cease review of our fentanyl patchapplication overshadowed an otherwise solid quarter at Noven andrecord revenues at our Novogyne joint venture," said Robert C.Strauss, Noven's President, CEO & Chairman. "Certainly our short-termresults were impacted by this disappointing development, but we remainconfident in our long-term prospects, and our commitment to apply ourpatented drug delivery technology across a range of molecules inseveral therapeutic categories remains unchanged," said Strauss. "Inthat regard, our developmental methylphenidate patch, licensed toShire Pharmaceuticals, is currently under review at the U.S. Food andDrug Administration and will be the subject of a December 2nd FDAAdvisory Committee meeting. In addition, we are developing otherpatches with Shire, Endo Pharmaceuticals and others, and we areworking to establish new collaborations to further leverage ourtechnology and enhance growth."

Third Quarter Results

Noven's net revenues for the quarter ended September 30, 2005 (the"current quarter") were $12.2 million, a 21% increase over the $10.1million reported in the quarter ended September 30, 2004 (the "2004quarter"), reflecting increases in U.S. and international productrevenues and higher contract revenues. Research and developmentexpenses for the current quarter increased 44% to $4.0 million,primarily due to higher non-clinical development expenses, includingexpenses related to production and launch preparations for Noven'sdevelopmental methylphenidate and fentanyl patches. Noven recognized$8.1 million in earnings from Novogyne Pharmaceuticals (the women'shealth products company owned jointly by Noven and NovartisPharmaceuticals Corporation), representing a 30% increase over the$6.2 million recognized in the 2004 quarter.

Noven reported a net loss of $1.4 million ($0.06 diluted loss pershare) in the current quarter, compared to net income of $2.6 million($0.11 diluted earnings per share) in the 2004 quarter. Excluding theInventory Charge and related tax effects, Noven's net income anddiluted earnings per share for the current quarter were $4.7 millionand $0.19, reflecting increases of 78% and 73%, respectively, over the2004 quarter. These non-GAAP measures are reconciled to GAAP in anattachment to this news release.

Current quarter net revenues at Novogyne increased 23% to $33.8million (the highest in Novogyne's history), reflecting increasedsales of Vivelle-Dot, increased sales of Estradot to Novartis inCanada, and decreased sales and returns allowances. Novogyne'sselling, general and administrative expense increased 15% to $9.2million due primarily to increased costs associated with litigation,product samples, insurance and other costs. Novogyne's net income forthe current quarter was $16.8 million, representing a 33% increasefrom the $12.7 million reported in the 2004 quarter.

Nine Month Results

Noven's net revenues for the nine-months ended September 30, 2005(the "current period") were $35.7 million, an 8% increase over the$33.2 million reported for the nine-months ended September 30, 2004(the "2004 period"), reflecting higher international product revenuesand higher contract revenues. Research and development expensesincreased 31% to $10.1 million, primarily due to higher non-clinicaldevelopment expenses, including expenses related to production andlaunch preparations for Noven's developmental methylphenidate andfentanyl products. Noven recognized $17.1 million in earnings fromNovogyne, 13% higher than the $15.1 million recognized in the 2004period.

Noven reported net income of $3.9 million ($0.16 diluted earningsper share), compared to $8.5 million ($0.35 diluted earnings pershare) reported in the 2004 period. Excluding the Inventory Charge andrelated tax effects, Noven would have reported net income for thecurrent period of $10.0 million ($0.42 diluted earnings per share).These non-GAAP measures are reconciled to GAAP in an attachment tothis news release.

Novogyne's current period net revenues increased 9% to $88.4million, reflecting increased sales of Vivelle-Dot(TM) and lower salesand returns allowances. Novogyne's selling, general and administrativeexpense increased 14% to $25.6 million, primarily due to increasedcosts associated with the sales force, insurance, litigation and othercosts. Novogyne's net income for the current period was $41.7 million,13% higher than the $37.1 million reported in the 2004 period.

Balance Sheet

At September 30, 2005, Noven had an aggregate $83.2 million incash and cash equivalents and short-term investments. At December 31,2004, Noven had $94.0 million in cash and cash equivalents and noshort-term investments. Net cash used in operating activities for thefirst nine months 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 September 30, 2005 was $90.6 millioncompared to $97.3 million at December 31, 2004.

HT Prescription Overview

Aggregate total prescriptions for Novogyne's products (Vivelle(R),Vivelle-Dot(TM) and CombiPatch(R) combined) increased 5% in the thirdquarter of 2005 compared to the third quarter of 2004, while theoverall U.S. hormone therapy ("HT") market declined 8% for the sameperiod. Total prescriptions for Vivelle-Dot(TM), which representedapproximately 84% of total prescriptions for Noven's U.S. products,increased 11% compared to the third quarter of 2004, while theestrogen segment of the U.S. HT market decreased 9%. For the sameperiod, total prescriptions for the Vivelle(R) product family(Vivelle-Dot(TM) and Vivelle(R) combined) increased 8%. Noven'sVivelle-Dot(TM) patch remains the most frequently prescribedtransdermal estrogen therapy product in the U.S., and held a 43% shareof the transdermal estrogen therapy market at the end of the 2005third quarter.

"The Novogyne sales force continues to do an outstanding jobagainst larger sales forces with greater resources," said Strauss. "Iam very pleased to report that, effective January 1, 2006, theNovogyne sales force, formerly a contract sales force, will becomedirect employees of Noven, with Novogyne continuing to bear theassociated expenses. This move reflects our commitment to the hormonetherapy category, and our confidence in a sales team that has takenVivelle-Dot(TM) to market leadership," said Strauss.

Analyst Conference Call

A conference call with management relating to Noven's financialresults will be broadcast live via the Internet at www.noven.combeginning at 11:00 a.m. Eastern time this morning, November 3.Thereafter, a rebroadcast of the call will be accessible at the samewebsite. A taped replay of the conference call will be available bytelephone from November 3 at 1:00 p.m. Eastern time until November 5by calling 877-660-6853 (from within the U.S.) or 201-612-7415 (fromoutside the U.S.) and entering the access code number 286 and I.D.number 173951. The conference call will contain forward-lookinginformation in addition to that contained in this press release.

Non-GAAP Financial Information

Under accounting principles generally accepted in the UnitedStates ("GAAP"), "net income" and "diluted earnings per share" includeall charges for the periods reported. In addition to resultsdetermined in accordance with GAAP, Noven has provided net income anddiluted earnings per share for the quarter and nine-months endedSeptember 30, 2005 excluding a $9.5 million charge related to thewrite-off of fentanyl inventories and related tax effects in thequarter. Management believes that presenting non-GAAP net income anddiluted earnings per share under these circumstances are useful toinvestors in order to meaningfully evaluate Noven's ongoing,underlying business and compare Noven's financial results in thecurrent period to those in the prior period. For the same reasons,management uses these non-GAAP financial measures to evaluate Noven'songoing, underlying business. These measures should not be consideredalternatives to measures computed in accordance with GAAP, nor shouldthey be considered indicators of the overall financial performance ofthe company. Adjusted net income and adjusted earnings per share arelimited by the fact that companies may not necessarily compute them inthe same manner, thereby making these measures less useful than incomefrom continuing operations calculated in accordance with GAAP. Noven'snon-GAAP measures are reconciled to those determined in accordancewith GAAP in an attachment to this press 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 transdermalestrogen therapy in the U.S. Noven is committed to expanding theuniverse of available transdermal therapies for the benefit ofpatients, partners and shareholders. See www.noven.com for additionalinformation.

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," "expect," "will," and similar expressionsidentify certain of such forward-looking statements. Actual results,performance or achievements could differ materially from thosecontemplated, expressed or implied by the forward-looking statementscontained herein. These forward-looking statements are based largelyon the current expectations of Noven and are subject to a number ofrisks and uncertainties that are subject to change based on factorswhich are, in many instances, beyond Noven's control. By category,these risks and uncertainties include: HT Market - risks associatedwith increased competition in the HT market; any further impact onNoven's HT business due to the announcement of additional negativeclinical results or otherwise, which could reduce or eliminate anyprofit contribution by Novogyne to Noven and/or sales of HT productsfrom Noven to Novogyne and Novartis Pharma; the risk that Novogyne maynot be able to realize the full value of the marketing rights forNoven's CombiPatch product; and the risk of product liability claimsresulting from the use of HT products, such as the lawsuits pendingagainst Noven, Novogyne and Novartis with respect to Noven's products,as well as any indemnification or contribution obligations that Novenmay have 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; risks and uncertainties relating to the integration ofNovogyne's contract sales force into Noven's employee force, includingthe risk that such integration may be unsuccessful or prove morecostly than expected. Fentanyl Patch - the risk that Endo may exerciseits contractual right to terminate the license agreement; the riskthat Noven may not receive any milestone payments under the licenseagreement; and the risk that Noven's results of operations may beadversely affected by increased overhead expenses associated withfentanyl production unless and until Noven successfully redeploys thepersonnel and other assets previously associated with fentanylproduction. Methylphenidate Patch - the possibility that FDA and/orthe advisory committee scheduled to review the amended NDA for Noven'smethylphenidate patch (MTS) will determine that the amended NDA doesnot support approval or that MTS may not ultimately be approved orcommercialized; the possibility that safety concerns regarding the useof controlled substances in patches may delay or prevent approval ofMTS; risks and uncertainties related to the fact that MTS is a noveldelivery system for this controlled substance, which may result in newand additional concerns for the advisory committee and/or the FDA;uncertainties related to the FDA's discretion to approve or notapprove a product, as well as the timing of any FDA approval for MTSand the timing of any DEA award of methylphenidate procurement quota,which are outside Noven's control and may impact the success ofproduct launch and market penetration; any exercise of Shire's rightto terminate the MTS development agreement; and the likelihood thatNoven's development strategy would change if Shire were to terminatethe agreement under certain circumstances, or if MTS were notultimately approved or were abandoned. Other Matters - expectedfluctuations in quarterly revenues and research and developmentexpenses and risks related to estimated trade inventory levels.
Noven Pharmaceuticals, Inc.

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

Revenues:
Product revenues - Novogyne:
Product sales $4,740 $4,364 $14,432 $15,058
Royalties 1,790 1,411 4,617 3,909
-------- ------- -------- --------
Total product revenues - Novogyne 6,530 5,775 19,049 18,967
Product revenues - third parties 3,917 3,287 11,888 9,828
-------- ------- -------- --------
Total product revenues 10,447 9,062 30,937 28,795
Contract and license revenues:
Contract 769 43 1,793 1,415
License 1,024 996 3,017 2,976
-------- ------- -------- --------
Contract and license revenues 1,793 1,039 4,810 4,391
Net revenues: 12,240 10,101 35,747 33,186

Expenses:
Cost of products sold 15,289 4,984 26,170 15,477
Research and development 3,953 2,741 10,108 7,730
Marketing, general and
administrative 4,237 4,358 12,481 12,024
-------- ------- -------- --------
Total expenses 23,479 12,083 48,759 35,231
-------- ------- -------- --------
Loss from operations (11,239) (1,982) (13,012) (2,045)

Equity in earnings of Novogyne 8,081 6,232 17,094 15,097
Interest income, net 512 279 1,608 619
-------- ------- -------- --------
Income (loss) before income taxes (2,646) 4,529 5,690 13,671
Provision (benefit) for income
taxes (1,224) 1,895 1,780 5,201
-------- ------- -------- --------
Net income (loss) $(1,422) $2,634 $3,910 $8,470
======== ======= ======== ========
Basic earnings (loss) per share $(0.06) $0.11 $0.17 $0.36
======== ======= ======== ========
Diluted earnings (loss) per share $(0.06) $0.11 $0.16 $0.35
======== ======= ======== ========
Weighted average number of common
shares outstanding:
Basic 23,586 23,416 23,554 23,290
======== ======= ======== ========
Diluted 23,586 24,361 24,021 24,344
======== ======= ======== ========

As Of
--------------------------
Balance Sheet Data: September December
(amounts in thousands) 30, 2005 31, 2004
(unaudited) ------------- ------------
Cash and cash equivalents $32,340 $93,958
Short-term investments 50,825 -
Investment in Novogyne 23,778 26,233
Total assets 186,721 201,975
Deferred license revenues 30,898 39,085
Stockholders' equity 134,378 129,039


Noven Pharmaceuticals, Inc.
Reconciliation of Non-GAAP Measures to GAAP

Statements of Operations Data:
(amounts in thousands, except
per share amounts) Three Months Ended
(unaudited) September 30, 2005
----------------------------
Non-GAAP(1) Difference GAAP(2)
----------------------------

Net revenues $12,240 $12,240

Expenses:
Cost of products sold 5,814 9,475 15,289
Research and development 3,953 3,953
Marketing, general and
administrative 4,237 4,237
----------------------------
Total expenses 14,004 9,475 23,479
----------------------------
Loss from operations (1,764) (9,475) (11,239)

Equity in earnings of Novogyne 8,081 8,081
Interest income, net 512 512
----------------------------
Income (loss) before income taxes 6,829 (9,475) (2,646)
Provision (benefit) for income taxes 2,152 (3,376) (1,224)

----------------------------
Net income (loss) $4,677 $(6,099) $(1,422)

============================
Basic earnings (loss) per share $0.20 $(0.26) $(0.06)
============================
Diluted earnings (loss) per share $0.19 $(0.25) $(0.06)
============================
Weighted average number of common
shares outstanding:

Basic 23,586 23,586
============================
Diluted 24,028 (442)(3) 23,586
============================



Statements of Operations Data:
(amounts in thousands,
except per share amounts) Nine Months Ended
(unaudited) September 30, 2005
----------------------------
Non-GAAP(1) Difference GAAP(2)
----------------------------

Net revenues $35,747 $35,747

Expenses:
Cost of products sold 16,695 9,475 26,170
Research and development 10,108 10,108
Marketing, general and
administrative 12,481 12,481

----------------------------
Total expenses 39,284 9,475 48,759
----------------------------
Loss from operations (3,537) (9,475) (13,012)

Equity in earnings of Novogyne 17,094 17,094
Interest income, net 1,608 1,608

----------------------------
Income (loss) before income taxes 15,165 (9,475) 5,690

Provision (benefit) for income taxes 5,156 (3,376) 1,780

----------------------------
Net income (loss) $10,009 $(6,099) $3,910

============================
Basic earnings (loss) per share $0.42 $(0.25) $0.17
============================
Diluted earnings (loss) per share $0.42 $(0.26) $0.16

============================
Weighted average number of common
shares outstanding:

Basic 23,554 23,554
============================
Diluted 24,021 24,021
============================

(1) Non-GAAP amounts exclude adjustments associated with the write-off
of existing inventories related to Noven's developmental fentanyl
patch, net of incremental income taxes. Noven's non-GAAP effective
tax rate for the nine months ended September 30, 2005 was
approximately 34% as compared to its GAAP effective tax rate of
31%.

(2) Reflects operating results in accordance with accounting
principles generally accepted in the United States (GAAP).

(3) Diluted weighted average number of shares outstanding for the
three months ended September 30, 2005 on a non-GAAP basis was
adjusted to include shares that were excluded from the GAAP
calculation as the shares were antidilutive.