Noven Pharmaceuticals Inc.

CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

On February 26, 2004, Noven Pharmaceuticals, Inc. (“Noven”) entered into an exclusive license agreement with Endo Pharmaceuticals, Inc. (“Endo”) pursuant to which Noven granted Endo the right to market its fentanyl transdermal system in the United States and Canada. Noven retained all rights to the fentanyl patch outside of the U.S. and Canada, and Noven is exploring strategies to commercialize the product in other territories. Noven earned an up-front payment of $8.0 million from Endo upon the signing of the agreement. The agreement provides that, upon Endo’s first commercial sale of the fentanyl patch, Noven is entitled to receive an additional milestone payment ranging from $5.0 million to $10.0 million, depending on the timing of launch and the number of generic competitors on the market. Under a long-term supply agreement entered into between the parties, Noven will manufacture and supply the product at its cost and will share in Endo’s profit from U.S. product sales.

Under the terms of the transaction, Noven remains responsible for securing final regulatory approval for its fentanyl transdermal system. The agreement provides that Endo may terminate the agreement, and thereby avoid its obligation to launch the product, if launch is delayed either because of a delayed FDA approval or Noven’s failure to supply Endo with its launch requirements after approval. Endo’s termination right will be triggered if such a delay results in additional generic competition beyond that currently expected by the parties. The earliest that this right could be triggered under the agreement is May 2005. In the event of such a termination, rights to the fentanyl patch would return to Noven.

The agreement provides that Endo is responsible for seeking regulatory approval to market the product in Canada. If such efforts are successful, Noven will supply product for sale in Canada on a cost-plus basis, with no royalty or profit sharing arrangement.

In addition to the fentanyl license, Noven has established a collaboration with Endo to identify and develop new transdermal therapies. Of the $8.0 million received at signing, $1.5 million will be allocated to fund feasibility studies undertaken by Noven to determine whether certain compounds identified by the parties can be delivered through Noven’s transdermal patch technology. Endo is expected to fund and manage clinical development of those compounds proceeding into clinical trials.

Noven’s press release announcing the transaction, a copy of which is filed as Exhibit 99.1, includes cautionary factors related to the Endo transaction and is incorporated in to this Item 5 by reference.

	99.1		Press release dated November 26, 2004 announcing the license of Noven Pharmaceuticals, Inc.’s transdermal fentanyl system to Endo Pharmaceuticals Inc.

	99.2		Press release dated February 26, 2004 announcing the financial results of Noven Pharmaceuticals, Inc. for the year ended December 31, 2003.

On February 26, 2004, Noven issued a press release announcing its financial results for the year ended December 31, 2003. This press release, a copy of which is attached hereto as Exhibit 99.2, is “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”) or incorporated by reference into a filing under the Securities Act of 1933 or the Exchange Act.

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.
	/s/ Jeffrey F. Eisenberg
	Jeffrey F. Eisenberg
	Vice President, General Counsel and Corporate Secretary


Exhibit No.		Description

99.1		Press Release, dated February 26, 2004, announcing the license of Noven Pharmaceuticals Inc.’s transdermal fentanyl system to Endo Pharmaceuticals Inc.

99.2		Press Release, dated February 26, 2004, announcing the financial results of Noven Pharmaceuticals, Inc. for the year ended December 31, 2003

Agreement Includes Collaboration for Development of New Prescription Patches

MIAMI, FL, and CHADDS FORD, PA, February 26, 2004 – Noven Pharmaceuticals, Inc. (NASDAQ: NOVN) and Endo Pharmaceuticals Inc., a wholly owned subsidiary of Endo Pharmaceuticals Holdings Inc. (NASDAQ: ENDP), today announced that they have signed an agreement under which Noven will license the U.S. and Canadian rights to its developmental transdermal fentanyl patch to Endo. The agreement also establishes an ongoing collaboration between the two companies for the development of additional prescription transdermal products.

Noven’s fentanyl patch is a transdermal delivery system for the management of chronic pain. It is intended to be the generic equivalent of Johnson & Johnson’s Duragesic® (fentanyl transdermal system), which had U.S. sales of approximately $1.3 billion in 2003. An Abbreviated New Drug Application for Noven’s patch is pending at the U.S. Food & Drug Administration.

“With market leadership in pain management and outstanding generic drug distribution capabilities, Endo is an ideal commercialization partner for our fentanyl patch,” said Robert C. Strauss, Noven’s President, CEO and Chairman.

“With our proven success within selective generic markets, including pain management, we see this agreement with Noven to market a generic fentanyl patch as a natural fit, and we also look forward to benefiting from their considerable expertise in patch technology to potentially develop and commercialize innovative branded transdermal products as well,” said Carol A. Ammon, Endo’s Chairman and Chief Executive Officer.

Noven received $8.0 million from Endo upon signing the agreement. Upon Endo’s first commercial sale of the fentanyl patch, Noven is entitled to receive an additional payment ranging from $5.0 million to $10.0 million, depending on the timing of launch and the number of generic competitors on the market. Noven will manufacture and supply the product at its cost, and the two companies will share profits on undisclosed terms.

Based on the current patent and exclusivity status of Duragesic®, the companies believe that the generic fentanyl patch could be launched in January 2005, assuming FDA approval is received by that time. Noven has retained all rights to the fentanyl patch outside of the U.S. and Canada, and is exploring strategies to commercialize the product in other territories.

In addition to the fentanyl license, Noven and Endo have established a collaboration to identify and develop additional new transdermal therapies. As part of this effort, Noven will undertake feasibility studies to determine whether certain compounds identified by the parties can be delivered through Noven’s transdermal patch technology. Endo is expected to fund and manage clinical development of those compounds proceeding into clinical trials.

“Endo shares our commitment to developing a range of innovative prescription transdermal products,” said Strauss. “We hope to build a successful and productive collaboration that extends beyond generic fentanyl and ultimately expands the universe of proprietary transdermal therapies.”

About Endo
A wholly owned subsidiary of Endo Pharmaceuticals Holdings Inc. (Nasdaq: ENDP), Endo Pharmaceuticals Inc. is a fully integrated specialty pharmaceutical company with market leadership in pain management products. The company researches, develops, produces and markets a broad product offering of branded and generic pharmaceuticals, meeting the needs of healthcare professionals and consumers alike. Endo’s pain

management franchise includes Lidoderm® (lidocaine patch 5%) and Percocet® (oxycodone and acetaminophen tablets, USP). As a result of the strong growth of these products, the company’s net sales in 2003 increased 49% to $595.6 million. More information on Endo, including this and past press releases, is available online at www.endo.com.

About Noven
Noven Pharmaceuticals, Inc., headquartered in Miami, Florida, is a leading developer of advanced transdermal drug delivery technologies and prescription transdermal products. Noven’s existing prescription patches are sold in over 30 countries, and a range of new patches are being developed in collaboration with Novartis Pharma AG, Shire Pharmaceuticals Group plc, P&G Pharmaceuticals, Endo Pharmaceuticals Inc. and others. Together with Novartis Pharmaceuticals Corporation, Noven owns Novogyne Pharmaceuticals, a profitable women’s health products company with over $100 million in annual sales. Among other products, Novogyne markets and sells Noven’s Vivelle-Dot® product — the smallest estrogen patch in the world, and the most dispended estrogen patch in the U.S. With the most efficient and broadly applicable transdermal technology in its class, Noven is committed to expanding the universe of available transdermal therapies for the benefit of patients, partners and shareholders. See for additional information.

Information for Endo Investors. This press release contains forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended, that are based on management’s beliefs and assumptions, current expectations, estimates and projections. Statements that are not historical facts, including statements which are preceded by, followed by, or that include, the words “believes,” “anticipates,” “plans,” “expects” or similar expressions and statements are forward-looking statements. Endo’s estimated or anticipated future results, product performance or other non-

historical facts are forward-looking and reflect Endo’s current perspective on existing trends and information. Many of the factors that will determine the Company’s future results are beyond the ability of the Company to control or predict. These statements are subject to risks and uncertainties and, therefore, actual results may differ materially from those expressed or implied by these forward-looking statements. The reader should not rely on any forward-looking statement. The Company undertakes no obligation to update any forward-looking statements whether as a result of new information, future events or otherwise. Several important factors, in addition to the specific factors discussed in connection with these forward-looking statements individually, could affect the future results of Endo and could cause those results to differ materially from those expressed in the forward-looking statements contained in this press release. Important factors that may affect future results include, but are not limited to: market acceptance of the Company’s products and the impact of competitive products and pricing; dependence on sole source suppliers; the success of the Company’s product development activities and the timeliness with which regulatory authorizations and product launches may be achieved; successful compliance with extensive, costly, complex and evolving governmental regulations and restrictions; the availability on commercially reasonable terms of raw materials and other third party manufactured products; exposure to product liability and other lawsuits and contingencies; dependence on third party suppliers, distributors and collaboration partners; the ability to timely and cost effectively integrate acquisitions; uncertainty associated with pre-clinical studies and clinical trials and regulatory approval; uncertainty of market acceptance of new products; the difficulty of predicting FDA approvals; risks with respect to technology and product development; the effect of competing products and prices; uncertainties regarding intellectual property protection; uncertainties as to the outcome of litigation; changes in operating results; impact of competitive products and pricing; product development; changes in laws and regulations; customer demand; possible future litigation; availability of future financing and reimbursement policies of government and private health insurers and others; and other risks and uncertainties detailed in Endo’s filings with the Securities and Exchange Commission, including its Registration Statement on Form S-3 filed with the SEC on July 1, 2003. Readers should evaluate any statement in light of these important factors.

Information for Noven Investors. Except for historical information contained herein, the matters discussed in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve substantial risks and uncertainties. When used in this press release, the words “believe,” “expect,” “hope,” “ will” and similar expressions identify certain of such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the current expectations of Noven and are subject to a number of risks and uncertainties that are subject to change based on factors which are, in many instances, beyond Noven’s control, including: the possibility that Noven’s fentanyl patch may not be approved by the FDA on a timely basis or at all; the possibility that milestone payments may be reduced and/or Endo may exercise its contractual right to terminate the license agreement if the product launch is delayed for any reason, including delay in obtaining FDA approval; patent or other strategies by third parties could delay or prevent the launch of Noven’s fentanyl patch or other products; the possibility that Noven may be unable to recover significant costs to manufacture fentanyl patches prior to product launch if FDA approval is not obtained on a timely basis or at all; the possibility that Noven may experience difficulties in manufacturing the product on a commercial scale; the possibility that Endo and/or Noven may be unable to obtain sufficient DEA quota of fentanyl to satisfy their marketing requirements; the possibility that supply of the active ingredient may be limited or that the active ingredient is unavailable in

sufficient quantities to satisfy the parties’ marketing requirements; the possibility that, even if approved, Noven’s fentanyl patch or other products may not be successfully commercialized due to product pricing and other competitive factors, including physician/patient preferences for other therapies; the possibility that Noven’s technologies may not be approvable or suitable for use in additional therapeutic categories, including those categories proposed to be addressed through products developed with Endo; the possibility that Endo does not advance any additional Noven products through the regulatory process; and Noven’s success at managing the risks relating to the foregoing. In addition to the risks and factors identified above, reference is also made to the other risks and factors detailed in reports filed by Noven with the Securities and Exchange Commission. Noven cautions that the foregoing list of factors is not exhaustive.

Miami, FL, February 26, 2004 — Noven Pharmaceuticals, Inc. (NASDAQ: NOVN), a leading developer of advanced transdermal drug delivery technologies and prescription transdermal products, today announced financial results for the quarter and year ended December 31, 2003, and provided an update on its business, prospects and collaborations.

“While managing the impact of the Women’s Health Initiative on our base business, we successfully established collaborations with leading pharmaceutical companies for the development and commercialization of new prescription patches,” said Robert C. Strauss, Noven’s President, CEO & Chairman. “In 2004, we will be working to advance these and possibly other collaborations that could drive substantial growth in 2005 and thereafter.”

Fourth Quarter Results
Net revenues for the quarter ended December 31, 2003 (the “current quarter”) were $11.8 million compared to $13.3 million for the quarter ended December 31, 2002 (the “2002 quarter”). The decline primarily reflects lower unit sales of menopausal hormone therapy (“HT”) products as a continuing result of the July 2002 publication of the Women’s Health Initiative (“WHI”) study, as well as the establishment of recall-related allowances in the current quarter. Research and development expense for the current quarter decreased 36% to $1.5 million, primarily due to completion of fentanyl bioequivalence studies in the 2002 quarter.

Noven recognized $7.2 million in earnings from Novogyne Pharmaceuticals (“Novogyne”), Noven’s U.S.-based joint venture with Novartis Pharmaceuticals

Corporation, compared to $3.7 million in the 2002 quarter, an increase of 95%. Noven’s net income increased 87% to $5.7 million ($0.24 diluted earnings per share), compared to $3.0 million ($0.13 diluted earnings per share) in the 2002 quarter.

Novogyne’s current quarter net revenues increased 50% to $30.8 million. Noven believes that this increase was primarily related to price increases implemented during 2003 and the timing of orders placed by trade customers, not to an increase in aggregate prescriptions for Novogyne’s products. In addition, net revenues benefited from a $2.3 million (or 31%) decrease in sales allowances and returns, primarily reflecting a $3.8 million reduction in Novogyne’s sales allowances and returns for expiring product, partially offset by a $1.5 million increase in allowances for recall-related returns. Novogyne reduced its allowance for expiration dating returns in response to significant declines in Vivelle inventories, returns, and sales volume. Net income at Novogyne increased 92% to $15.5 million.

Full Year Results
For the year ended December 31, 2003, Noven reported net revenues of $43.2 million compared to $55.4 million in 2002. This 22% decline primarily reflects lower unit sales for Noven’s HT products as a continuing result of WHI, as well as the establishment of recall-related allowances. Research and development expense decreased 31% to $8.1 million, reflecting the completion of MethyPatch® and fentanyl studies in 2002.

Noven recognized $17.1 million in earnings from Novogyne compared to $14.4 million in 2002, an increase of 19%. Noven’s net income was $11.2 million ($0.49 diluted earnings per share) for 2003, compared to $13.9 million ($0.60 diluted earnings per share) in 2002.

Novogyne’s 2003 net revenues decreased 1% to $101.1 million, primarily reflecting lower unit sales of Vivelle and CombiPatch, partially offset by lower sales allowances and returns and increased Vivelle-Dot sales. The increase in Vivelle-Dot sales in 2003 includes the effect of a customary price increase early in the year and higher unit sales.

In addition, net revenues benefited from an $8.7 million (or 31%) decline in sales allowances and returns, primarily reflecting a $15.2 million reduction in Novogyne’s sales allowances and returns for expiring product, partially offset by a $6.5 million increase in allowances for recall-related returns. Net income at Novogyne increased 15% to $42.9 million.

HT Prescription Overview
“Although the WHI and other study results caused the HT market to decrease, we are pleased that our U.S. HT products significantly outperformed their respective market segments in 2003. This confirms the strength of our technology and Novogyne’s marketing and sales capabilities, “ said Strauss.

Due principally to the publication of the WHI studies in July 2002, the overall U.S. HT market declined 29.7% in 2003 compared to the prior year. For the same period, aggregate prescriptions for Noven’s products (Vivelle, Vivelle-Dot and CombiPatch) decreased just 5.5%.

Vivelle family prescriptions decreased 1.1% in 2003, while the estrogen segment of the U.S. HT market declined 24.9%. Vivelle-Dot, which represented approximately 74% of total prescriptions for Noven’s U.S. products in December 2003, increased 8.9%. At the end of 2003, the Vivelle family held a 41.1% share of total prescriptions in the estrogen patch segment, compared to a 37.2% share at the end of 2002, extending Vivelle family’s lead as the most dispensed estrogen patch brand in the U.S.

CombiPatch, which represented approximately 16% of total prescriptions for Noven’s U.S. products in December 2003, declined 23.1% in 2003, while the fixed combination HT segment of the U.S. HT market declined 48.4%. At the end of 2003, CombiPatch had increased its share of total prescriptions in the fixed combination segment to 4.6% from 3.9% at the end of 2002.

“The oral and transdermal estrogen therapy markets in the U.S. continue to represent a market opportunity of well over $1.0 billion,” said Neil Jones, Noven’s Vice President – Marketing & Sales. “Launched just a few years ago, our Vivelle-Dot patch is now the number two product in this market (behind only the oral product Premarin®) and is the most dispensed estrogen patch in the country. In this large market, there remains room for Vivelle-Dot to grow, and we are committed to maintaining momentum through efficient and effective marketing and sales strategies.”

“Our R&D team has developed and patented among the most advanced transdermal drug delivery platforms in the industry,” said Strauss. “New development collaborations that leverage this technology across broader applications are central to our growth strategy. Since the beginning of 2003, we have announced several new collaborations for development of new transdermal therapies.”

P&G Pharmaceuticals. “In April 2003, we established a collaboration with P&G Pharmaceuticals (“P&GP”), the pharmaceutical unit of The Procter & Gamble Company, for the development of new prescription patches,” said Strauss. “We are collaborating with P&GP to explore follow-on product opportunities for Intrinsa®, their in-licensed investigational transdermal testosterone patch designed to help restore desire in menopausal women who have Hypoactive Sexual Desire Disorder. As part of this collaboration, P&GP has recently initiated studies of the first product in humans.”

Shire. “In April 2003, Shire Pharmaceuticals licensed our MethyPatch transdermal methylphenidate system for ADHD — Attention Deficit Hyperactivity Disorder,” said Strauss. “Noven and Shire are working to address issues raised in a not approvable letter received from the FDA. As previously announced, Shire is expected to manage additional clinical studies that we believe will be required to gain FDA approval, and Noven will fund the studies. Although the path to approval presents challenge and uncertainty, milestones of up to $125 million remain to be earned if the product is approved and successfully commercialized by Shire.”

Endo. “As announced separately today, we have partnered with Endo Pharmaceuticals Inc. for the commercialization of our fentanyl patch for chronic pain. The patch is intended to be the generic equivalent of Johnson & Johnson’s Duragesic® (fentanyl transdermal system), which had U.S. sales of over $1.0 billion in 2003. An Abbreviated New Drug Application for the product is pending at the FDA. With market leadership in pain management and outstanding generic drug distribution capabilities, we believe that Endo is well positioned to help us capitalize on the fentanyl opportunity,” said Strauss.

“In addition to the fentanyl license, we have established a collaboration with Endo to identify and develop new transdermal therapies. Under our agreement, Noven will undertake feasibility analyses of certain compounds, and Endo will fund and manage projects that advance to clinical trials. We hope to build a successful and productive collaboration that extends well beyond fentanyl.”

“Our goal is to lead the industry in the development of new transdermal therapies. Not all projects will succeed, but if just a few of our collaborations result in commercialized products, we could see substantial growth, with increased revenues and profits from a variety of sources, including the accumulated effect of up-front development payments, milestones earned over the course of development, royalties earned from product sales, profit sharing arrangements and/or ongoing manufacturing fees.”

Financial Guidance
For full-year 2004, Noven currently expects net revenues to approximate 2003 results, research and development spending to increase compared to 2003, and fully diluted earnings per share to be in the $0.40 to $0.45 range.

Novogyne’s 2004 net revenues and net income are currently expected to approximate 2003 results. Operating results will vary by quarter. Novogyne’s first quarter contribution to Noven’s profit is expected to be lower than in subsequent quarters due to satisfaction of an annual $6.1 million preferred distribution to Novartis under the joint venture agreement. In addition, Noven expects that Novogyne’s first quarter sales may

be lower than sales in the 2003 fourth quarter due to the timing of orders placed by trade customers.

This guidance assumes that there are no acquisitions, unusual transactions, changes in accounting, or material changes in demand for Noven’s HT products or in its business relationships/collaborations. Noven cannot assure that it will achieve results consistent with this guidance, and refers you to the risks, uncertainties and cautionary factors discussed at the end of this press release that could impact its ability to achieve such results.

Analyst Conference Call
A conference call with management relating to Noven’s financial results will be broadcast live via the Internet at www.noven.com beginning at 10:00 a.m. Eastern time this morning, February 26. Thereafter, a rebroadcast of the call will be accessible at the same website. A taped replay of the conference call will be available by telephone from February 26 at 12:00 p.m. Eastern time until March 1 by calling 877-660-6853 (from within the U.S.) or 201-612-7415 (from outside the U.S.) and entering the access code 1628 and I.D. #93644. The conference call will contain forward-looking information in addition to that contained in this press release.

About Noven
Noven Pharmaceuticals, Inc., headquartered in Miami, Florida, is a leading developer of advanced transdermal drug delivery technologies and prescription transdermal products. Noven’s prescription patches are sold in over 30 countries, and a range of new patches are being developed in collaboration with Novartis Pharma AG, Shire Pharmaceuticals Group plc, P&G Pharmaceuticals, Endo Pharmaceuticals Inc. and others. Together with Novartis Pharmaceuticals Corporation, Noven owns Novogyne Pharmaceuticals, a profitable women’s health products company with over $100 million in annual sales. Among other products, Novogyne markets and sells Noven’s Vivelle-Dot product — the smallest estrogen patch in the world, and the most dispensed estrogen patch in the U.S. With the most advanced and broadly applicable transdermal technology in its class, Noven is committed to expanding the universe of available transdermal therapies for the

benefit of patients, partners and shareholders. See www.noven.com for additional information.

Contact:
Joseph C. Jones
Vice President – Corporate Affairs
(305) 253-1916

Except for historical information contained herein, the matters discussed in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 that involve substantial risks and uncertainties. When used in this press release, the words “believe,” “could”,” expects”, “hopes”, “will” and similar expressions identify certain of such forward-looking statements. Actual results, performance or achievements could differ materially from those contemplated, expressed or implied by the forward-looking statements contained herein. These forward-looking statements are based largely on the current expectations of Noven and are subject to a number of risks and uncertainties that are subject to change based on factors which are, in many instances, beyond Noven’s control, including risks and uncertainties associated with: HT Market, including any further impact on the U.S. or international HT business including any arising from mandated product label changes, the announcement of additional negative clinical results or other reasons, which could reduce or eliminate any profit contribution by Novogyne to Noven and/or sales of HT products from Noven to Novartis Pharma AG; the risk that Novogyne may not be able to realize the full value of the CombiPatch marketing rights; risks associated with increased competition in the HT market as a result of the recent launch of a combination estrogen/progestin patch and a vaginal estrogen delivery system and the expected launches of estrogen cream and gel products, each of which is a new dosage form in this category, as well as the expected launch of an ultra-low dose estrogen patch; the European market may be limited due to pricing pressures; Regulatory Matters, including actions that may be taken against Noven by the FDA or other regulators, whether relating to manufacturing processes, suppliers, commercialized products, products in development or otherwise, and any related costs; the timing of any FDA approval, which is outside Noven’s control and which may impact the success of product launch and market penetration; Production Matters, including the timing and magnitude of any product recalls; the impact of the recalls or related issues on Novartis’ strategy for the commercialization of Noven’s products; the possibility that Noven’s estimates of the impact of future returns and charges may prove inaccurate, incomplete or otherwise incorrect; the impact of detected or undetected product stability failures or other product defects on Noven’s ability to estimate its reserves for sales returns and other accounting consequences associated therewith; Noven’s Partners, including the risk that Noven’s development partners, including Novartis, Shire, P&GP and Endo may have different or conflicting priorities than Noven’s, which may adversely impact their ability or willingness to assist in the development and commercialization of Noven’s products; Noven’s ability to attract additional development partners; the possibility that Noven’s technologies may not be approvable or suitable for use in additional therapeutic categories, including those categories proposed to be addressed through products developed with P&GP, Shire and Endo; the possibility that Noven may be unsuccessful in achieving milestone objectives under its development programs with P&GP, Shire or Endo and may not receive any further payments; the possibility that Noven’s development programs with P&GP and Endo may not proceed on schedule or as expected; the possibility that Noven’s current development priorities could render it unable to advance its other development projects or increase the cost of advancing those pro jects; risks related to our dependence on Novartis to monitor trade inventory

levels for Novogyne and to perform Novogyne’s financial, accounting, inventory and sales deductions functions; MethyPatch, including the FDA’s review of the proposed MethyPatch protocol, including the risk that FDA may determine that proposed protocols and/or proposed clinical strategies are not acceptable or do not address FDA’s concerns regarding approval of the MethyPatch NDA; the possibility that additional MethyPatch studies may not be commenced in a timely manner or at all due to FDA concerns or otherwise; Shire’s control over the management of any additional MethyPatch clinical trials, including the risk that Shire may elect to manage any such studies differently than Noven might have, incorrectly or inadequately; the possibility that any additional studies of MethyPatch will not produce results that support approval or that, even if the additional studies are completed and is successful, MethyPatch may not ultimately be approved or commercialized; the availability of other once-daily ADHD therapies could negatively impact MethyPatch’s market penetration; the possibility that the cost of any additional MethyPatch study and related expenses may be higher than anticipated and may exceed the total amount of license revenues available to offset such costs and expenses; the possibility that Noven’s method of accounting for the $25 million received from Shire could change under certain circumstances, including if the parties’ MethyPatch strategy changes or if MethyPatch development is discontinued; the possibility that Noven’s development strategy could change if Shire were to terminate the agreement under certain circumstances, or if MethyPatch were not ultimately approved or were abandoned; Fentanyl Patch, including the risks and uncertainties associated with the FDA’s review of the ANDA submitted with respect to Noven’s fentanyl patch, the possibility that milestone payments may be reduced and/or Endo may exercise its contractual right to terminate the license agreement if the product launch is delayed for any reason, including delay in obtaining FDA approval; patent or other strategies by third parties could delay or prevent the launch of Noven’s fentanyl patch or other products; the possibility that Noven may be unable to recover significant costs to manufacture fentanyl patches prior to product launch if FDA approval is not obtained on a timely basis or at all; the possibility that, even if approved, Noven’s fentanyl patch or other products may not be successfully commercialized due to competitive market conditions or other factors, including physician/patient preferences for other therapies; Other Matters, including risks related to our reliance on suppliers for certain raw materials used in our products; expected fluctuations in quarterly revenues and research and development expenses; and Noven’s success at managing the risks relating to the foregoing. In addition to the risks and factors identified above, reference is also made to the other risks and factors detailed in reports filed by Noven with the Securities and Exchange Commission. Noven cautions that the foregoing list of factors is not exhaustive.


Statements of Operations Data:	Three Months Ended				Twelve Months Ended
(amounts in thousands, except	December 31,				December 31,
per share amounts) (unaudited)	2003		2002		2003			2002

Revenues:
Product revenues — Novogyne	$	5,757	$	6,216	$	20,910		$	29,899
Product revenues — third parties		3,418		5,855		16,206			20,300

Total product revenues		9,175		12,071		37,116			50,199
License and contract revenues		2,609		1,212		6,050			5,173

Net revenues		11,784		13,283		43,166			55,372

Expenses:
Cost of products sold		5,221		5,941		19,482			22,973
Research and development		1,519		2,367		8,082			11,634
Marketing, general and administrative		3,593		4,153		15,858			14,257

Total expenses		10,333		12,461		43,422			48,864

Income (loss) from operations		1,451		822		(256	)		6,508
Equity in earnings of Novogyne		7,245		3,711		17,094			14,368
Interest income, net		154		197		659			822

Income before income taxes		8,850		4,730		17,497			21,698
Provision for income taxes		3,188		1,710		6,301			7,819

Net income	$	5,662	$	3,020	$	11,196		$	13,879

Basic earnings per share	$	0.25	$	0.13	$	0.50		$	0.62

Diluted earnings per share	$	0.24	$	0.13	$	0.49		$	0.60


Weighted average number of common shares outstanding:
Basic		22,595		22,557		22,544			22,532

Diluted		23,150		23,014		22,989			23,321


	As Of

	December 31,		December 31,
Balance Sheet Data:		2003		2002

(unaudited)
Cash and cash equivalents	$	83,381	$	58,684
Investment in Novogyne	$	28,368	$	34,684
Total assets	$	169,484	$	137,702
Deferred license revenues	$	50,005	$	29,445
Stockholders’ equity	$	108,823	$	96,741


Incorporated under the laws of the	Commission File Number	I.R.S. Employer Identification Number

State of Delaware	0-17254	59-2767632


	Item 5. Other Events
	Item 7. Exhibits
	Item 12. Results of Operations and Financial Condition
SIGNATURES
INDEX TO EXHIBITS
Exhibit 99.1
Exhibit 99.2

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